Court Opinion

ID: 7801221
Source: CourtListenerOpinion
Date Created: 2022-08-17 10:08:40.059455+00
Date Added: 2024-06-11T16:29:14.858173
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                   TOMOKO CHOO; LARIAN STUDIOS                               No. 83527
                   US INC.; AND LARIAN STUDIOS,
                   Petitioners,
                   vs.
                   THE EIGHTH JUDICIAL DISTRICT
                   COURT OF THE STATE OF NEVADA,
                   IN AND FOR THE COUNTY OF
                                                                                  FILE
                   CLARK; AND THE HONORABLE                                       AUG 1 1 2022
                   JOANNA KISHNER, DISTRICT
                                                                               ELIZABETH A BROWN
                   JUDGE,                                                    CLERK OF SUPREME COURT
                                                                             BY
                   Respondents,                                                    DEPUIY
                                                                                        I
                   and
                   STREAMLINE MEDIA GROUP, INC.;
                   STREAMLINE STUDIOS MALAYSIA
                   SDN BHD; AND STREAMFRAME
                   CORPORATION,
                   Real Parties in Interest.

                        ORDER GRANTING PETITION FOR WRIT OF PROHIBITION

                               This original petition for a writ of prohibition challenges district
                   court orders denying motions to dismiss for lack of personal jurisdiction.
                               Real parties in interest filed a complaint alleging that
                   petitioner Tomoko Choo, a Malaysian citizen, breached a separation
                   agreement with real party in interest Streamline Media Group, Inc.
                   (Streamline) and conspired with nonparty The Dragon Commander, Ltd.
                   (TDC), an Irish company, to obtain the confidential and proprietary
                   information of Streamline and its subsidiaries, real parties in interest
                   Streamframe Corporation (Streamframe) and Streamline Studios Malaysia
                   (Streamline Studios).
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                             Real parties in interest alleged that personal jurisdiction over
                petitioners and foreign sister entities, Arrakis Naamloze Vennootschap
                (Arrakis),1 a Belgian company, and Larian Studios US, Inc. (Larian Studios
                US), a Delaware company, was proper under either the agency, alter-ego,
                or conspiracy theories of imputation based on the conduct of their nonparty
                sister entity, TDC. After both of these petitioners separately moved to
                dismiss for lack of personal jurisdiction, the district court denied Larian
                Studios US's motion and exercised personal jurisdiction over it on the basis
                that TDC had acted as its agent, alter ego, or co-conspirator with Choo.2
                The district court also denied Arrakis's motion to dismiss, granting
                jurisdictional discovery instead. Arguing that the district court incorrectly
                decided their motions, Larian Studios US and Arrakis now seek a writ of
                prohibition barring the district court from proceeding with the action
                against them.
                             Having considered the petition, answer, reply, and supporting
                documents, we conclude that writ relief is warranted because the district
                court improperly exercised personal jurisdiction over Larian Studios US
                and improperly granted jurisdictional discovery as to Arrakis. See NRS
                34.320 (providing that a writ of prohibition is available to arrest or remedy

                      1Arrakis has been identified in the caption as Larian Studios, which
                is the name by which it does business; however, we refer to the entity by its
                incorporated name to avoid confusion.

                      2The  district court's exercise of personal jurisdiction over petitioner
                Choo is not implicated in this matter, as she does not seek any relief in this
                petition or otherwise challenge the district court's decision that she
                consented to personal jurisdiction pursuant to a separation agreement
                between her and Streamline. Thus, our references to petitioners include
                only Arrakis and Larian Studios US.
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                district court actions taken without or in excess of jurisdiction); Viega
                GmbH v. Eighth judicial Dist. Court, 130 Nev. 368, 374, 328 P.3d 1152,
                1156 (2014) ("As no adequate and speedy legal remedy typically exists to
                correct an invalid exercise of personal jurisdiction, a writ of prohibition is
                an appropriate method for challenging district court orders when it is
                alleged that the district court has exceeded its jurisdiction.").         As we
                explained in Viega GmbH, a plaintiff who relies on an imputation theory of
                personal jurisdiction premised on the corporate relationship between the
                defendant and a nonparty entity, as real parties in interest do here, must
                make a prima-facie showing that "overcom[es] the presumption of
                separateness" between entities "of a carefully structured corporate family."
                130 Nev. at 382, 328 P.3d at 1161.         A failure to do so precludes both
                jurisdictional discovery and personal jurisdiction. Id. (explaining that the
                plaintiff did not offer "facts ... sufficient . . . to allow" it "to proceed with
                jurisdictional discovery" to obtain evidence to prove personal jurisdiction
                where it had "shown no more than a typical parent-subsidiary relationship,
                the separateness of which is a basic premise of corporate law"). We do not
                need to decide whether a prima-facie showing for jurisdictional discovery
                requires less evidence than a prima-facie showing for personal jurisdiction,
                as both issues necessarily require the plaintiff to at least rebut the
                presumption of corporate separateness. See id. at 375, 328 P.3d at 1157. It
                follows that if, as discussed below, real parties in interest fail to make a
                prima-facie showing sufficient in this regard, then the district court erred
                both in the decision to grant jurisdictional discovery over Arrakis and to
                exercise personal jurisdiction over Larian Studios US.
                             Reviewing both decisions de novo, see In re Halverson, 123 Nev.
                493, 509, 169 P.3d 1161, 1173 (2007), we agree with Arrakis and Larian

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                Studios US that real parties in interest failed to offer sufficient evidence to
                overcome the presumption of corporate separateness to support their
                imputation theories of personal jurisdiction. Pursuant to Nevada's long-
                arm statute, NRS 14.065, personal "blurisdiction over a nonresident
                defendant is proper" to the full extent permitted by the Due Process Clause
                "under the Fourteenth Amendment." Viega GmbH, 130 Nev. at 374-75, 328
                P.3d at 1156. Accordingly, the defendant must have sufficient "minimum
                contacts with the state" such that "the defendant could reasonably
                anticipate" litigation in the forum and such that the exercise of personal
                jurisdiction comports "with 'traditional notions of fair play and substantial
                justice." Id. at 375, 328 P.3d at 1156 (internal quotations omitted) (quoting
                Arbella Mut. Ins. Co. v. Eighth Judicial Dist. Court, 122 Nev. 509, 512, 134
                P.3d 710, 712 (2006)).
                Agency theory of personal jurisdiction
                            Real parties in interest argue that they set forth sufficient
                evidence that TDC was the agent of Arrakis and Larian Studios US for the
                purpose of competing against them and conspiring to obtain their
                confidential information, such that personal jurisdiction is proper under the
                agency theory. They rely on three aspects of a pilot agreement between
                nonparty TDC and Streamline to support the existence of an agency
                relationship between TDC, Arrakis, and Larian Studios US: (1) the
                agreement's identification of Swen Vincke, Arrakis's founder and director,
                as TDC's CEO and representative for purposes of the agreement; (2) the
                agreement's inclusion of an email address used by TDC that included an
                "@larian.com" domain name, which other sister entities or subsidiaries
                presumably used; and (3) the agreement's requirement for TDC to send
                payment to Streamline's bank account, which Arrakis and Larian Studios

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                US allegedly completed one time on TDC's behalf.3 We disagree that the
                pilot agreement suggests an agency relationship.
                            The agency theory of personal jurisdiction recognizes the
                separate "corporate identity of the parent company" but nonetheless
                attributes "the acts of the subsidiary agent" to the parent corporation on the
                rationale that the parent directed the subsidiary's actions. Id. at 376, 328
                P.3d at 1157 (alterations omitted) (quoting, in the second phrase, F.
                Hoffrnan-La Roche, Ltd. v. Superior Court of Santa Clara Cty., 30 Cal. Rptr.
                3d 407, 418 (Ct. App. 2005)). Even assuming the agency theory extends to
                sister entities, the threshold issue is the existence of "an agency
                relationship" between the corporate entities. Id. at 377, 328 P.3d at 1158.

                      3Although   real parties in interest attempt to rely on other "facts,"
                those facts are either allegations in the complaint or unsubstantiated
                assumptions, which we have repeatedly held fail to satisfy the showing
                required for personal jurisdiction. See Trump v. Eighth Judicial Dist.
                Court, 109 Nev. 687, 693, 857 P.2d 740, 744 (1993) ("However, the plaintiff
                must introduce some evidence and may not simply rely on the allegations
                of the complaint to establish personal jurisdiction."). Similarly, their
                reliance on the district court's order does not help, as the district court's
                recitation of the parties' arguments in a finding-of-facts section does not
                transform those arguments into facts.

                      Although we provisionally granted real parties in interest's December
                22, 2021 motion to supplement the record on March 11, 2022, we now deny
                that motion, as the evidence attached was not presented to the district
                court; we have not considered that evidence in resolving this writ petition.
                Cf. Archon Corp. v. Eighth Judicial Dist. Court, 133 Nev. 816, 822, 407 P.3d
                702, 708 (2017) (recognizing, in addressing whether to consider a petition
                for mandamus relief, that "in the context of extraordinary writ relief,
                consideration of legal arguments not properly presented to and resolved by
                the district court will almost never be appropriate"); Vacation Vill., Inc. v.
                Hitachi Arn., Ltd., 111 Nev. 1218, 1220, 901 P.2d 706, 707 (1995) (declining
                to consider evidence that was "never presented to the district court").
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                While "[g]enerally, an agency relationship" gives "one person . . . the right
                to control the performance of another," corporate relationships "necessarily
                include[] some elements of control."      Id. at •377-78, 328 P.3d at 1158.
                Accordingly, jurisdiction over the foreign parent company based on an
                agency relationship requires "a degree [of control] 'more pervasive than
                common features' of ownership" under corporate law. Id. at 378-79, 328
                P.3d at 1159 (alterations omitted) (quoting F. Hoffman-La Roche, 30 Cal.
                Rptr. 3d at 418).
                            Real parties in interest failed to demonstrate the type of
                pervasive corporate control required to impute contacts from a nonparty to
                a defendant for an agency theory of personal jurisdiction. See id. at 379,
                328 P.3d at 1159 (explaining that the control exercised by the principal
                must "move[ ] beyond the establishment of general policy and direction for
                the subsidiary and in effect take[ ] over performance of the subsidiary's day-
                to-day operations in carrying out that policy" (quoting F. Hoffman-La
                Roche, 30 Cal. Rptr. 3d at 419)). The fact that Vincke serves as an officer
                or director of Arrakis, Larian Studios US, and TDC, coupled with the use of
                the same corporate-family email domain, shows at most "the amount of
                control typical in a" corporate family and thus fails to demonstrate an
                agency relationship. See id. at 380, 328 P.3d at 1160 (deeming evidence
                that subsidiaries and foreign parents shared a board member, corporate
                logo, and website sufficient only to "show the amount of control typical in a
                parent-subsidiary relationship" and thus "insufficient to demonstrate
                agency"). Moreover, real parties in interest point to only one instance in
                which Arrakis and Larian Studios US together wired payment to
                Streamline's Nevada bank account on behalf of TDC, but one isolated
                payment made on behalf of a sister entity in connection with one agreement

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                  does not evidence the type of close financial connection characteristic of
                  even typical corporate control. See F. Hoffman-La Roche, 30 Cal. Rptr. 3d
                  at 418 (noting that normal corporate control, which is insufficient for an
                  agency theory of personal jurisdiction, encompasses "a close financial
                  connection between parent and subsidiary and a certain degree of direction
                  and management exercised by the former over the latter" (quoting Sonora
                  Diamond Corp. v. Superior Court of Tuolumne Cty., 99 Cal. Rptr. 2d 824,
                  838 (Ct. App. 2000)). Thus, real parties in interest's evidentiary showing
                  falls short of what we require to demonstrate control beyond the existence
                  of a typical corporate relationship. Without more, it was improper for the
                  district court to rely on the agency theory to exercise personal jurisdiction
                  over Larian Studios US and to allow jurisdictional discovery with respect to
                  Arrakis.
                  Alter-ego theory of personal jurisdiction
                              Real parties in interest argue that the same aspects of the pilot
                  agreement they relied on to assert an agency theory of personal jurisdiction
                  also establish that TDC acted as the alter ego of Arrakis and Larian Studios
                  US, such that the court may exercise personal jurisdiction under the alter-
                  ego theory. We disagree.
                              The alter-ego theory permits a party "to pierce the corporate
                  veil to impute a subsidiary's contacts to the parent company by showing
                  that the subsidiary and the parent are one and the same" on the rationale
                  that the entities are effectively the same. Viega GmbH, 130 Nev. at 376,
                  328 P.3d at 1157. Even assuming the alter-ego theory extends to sister
                  entities, the existence of an alter-ego relationship requires evidence that
                              (1) The corporation . .. [is] influenced and governed
                              by the person asserted to be its alter ego; (2)
                              There . . . [is] such unity of interest and ownership
                              that one [entity] is inseparable from the other; and
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                            (3) The facts... [are] such that adherence to the
                            fiction of separate entity would, under the
                            circumstances, sanction a fraud or promote
                            injustice.
                Truck Ins. Exch. v. Palmer J. Swanson, Inc., 124 Nev. 629, 635, 189 P.3d
                656, 660 (2008) (quoting Ecklund v. Neu. Wholesale Lumber Co., 93 Nev.
                196, 197, 562 P.2d 479, 479-80 (1977)).
                            As with the agency theory, real parties in interest failed to show
                that an alter-ego relationship exists to impute contacts from a nonparty to
                a defendant for an alter-ego theory of personal jurisdiction. The existence
                of a unified corporate-family identity, such as shared leadership and email
                domains, shows at most just that, i.e., the organizations form a corporate
                family, but it does not establish that Arrakis and Larian Studios US
                influenced or governed TDC. Cf. id. at 636, 189 P.3d at 660-61 (explaining
                that "[t]he mere fact that" the same party "owns a 100-percent interest in"
                one entity and "a 50-percent interest in" another entity, "while relevant, is
                insufficient to show that" one entity influences and governs the other
                entity). Additionally, the fact that Arrakis and Larian Studios US together
                made one isolated payment to Streamline's Nevada bank account on behalf
                of TDC in connection with one, short-term agreement does not support that
                the three entities were financially or commercially intertwined to such an
                extent that they collectively "share[d] a unity of interest." See id. at 636,
                189 P.3d at 661 (explaining the type and extent of evidence that may
                demonstrate "a unity of interest" necessary for an alter-ego relationship).
                Accordingly, we conclude that it was improper for the district court to rely
                on the alter-ego theory to exercise personal jurisdiction over Larian Studios
                US and to allow jurisdictional discovery with respect to Arrakis.
                Conspiracy theory of personal jurisdiction

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                               Finally, real parties in interest assert that personal jurisdiction
                over Arrakis and Larian Studios US is proper under a conspiracy theory of
                personal jurisdiction based on two agreements that allegedly show a
                conspiracy between Arrakis, Larian Studios US, TDC, and Choo to harm
                real parties in interest: (1) the pilot agreement between Streamline and
                TDC and (2) a separation agreement between Streamline and Choo, which
                contains a noncompete clause. We disagree.
                               "A conspiracy theory of personal jurisdiction provides that a
                nonresident defendant who lacks sufficient minimum contacts with the
                forum may be subject to personal jurisdiction based on a co-conspirator's
                contacts with the forum." Tricarichi v. Coop. Rabobank, U.A., 135 Nev. 87,
                95, 440 P.3d 645, 653 (2019). The court attributes one conspirator's acts
                "with the forum" done "in furtherance of the conspiracy" to the other co-
                conspirators on the rationale that "co-conspirators are deemed ... each
                other's agents." Id. at 96, 440 P.3d at 653 (quoting In re LIBOR-Based Fin.
                Instruments Antitrust Litig., No. 11 MDL 2262 NRB, 2015 WL 6243526, at
                *29 (S.D.N.Y. Oct. 20, 2015)).        The conspiracy theory gives the court
                jurisdiction where (1) a conspiracy exists, "(2) the acts of co-conspirators
                meet minimum contacts with the forum, and (3) the co-conspirators could
                have reasonably expected at the time of entering into the conspiracy that
                their actions would have consequences in the forum state." Id. at 97, 440
                P.3d at 654.
                               Here, even assuming sufficient evidence supports a conspiracy
                between Choo and TDC, the pilot agreement and separation agreement
                provide no through line from Arrakis and Larian Studios US to Choo and
                TDC, and thus, they do not establish the threshold requirement of the
                existence of a conspiracy between Arrakis, Larian Studios US, TDC, and

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                Choo. See Guilfoyle v. Olde Monmouth Stock Transfer Co., 130 Nev. 801,
                813, 335 P.3d 190, 198 (2014) (explaining that a "civil conspiracy arises
                where two or more persons undertake some concerted action with the intent
                'to accomplish an unlawful objective for the purpose of harming another,'
                and damage results" (quoting Consol. Generator-Nev., Inc. v. Cummins
                Engine Co., 114 Nev. 1304, 1311, 971 P.2d 1251, 1256 (1998))). Because
                Choo entered into the separation agreement with Streamline after she
                allegedly conspired with TDC during her consultation services for TDC, the
                alleged breach of this agreement by violation of the noncompete clause does
                not establish a conspiracy between the entities that allegedly arose months
                earlier. Moreover, the fact that Larian Malaysia, a nonparty entity distinct
                from Arrakis and Larian Studios US, subsequently hired Choo to head its
                operations in Malaysia in alleged breach of the separation agreement does
                nothing to establish an agency or alter-ego relationship with Arrakis and
                Larian Studios US such that those actions may be imputed to Arrakis and
                Larian Studios US.
                            As to the pilot agreement, real parties in interest failed to show
                personal jurisdiction based on Arrakis's and Larian Studios US's alleged
                participation in the conspiracy based on that agreement, as the significance
                of their evidence necessarily relies on their unsuccessful agency or alter-ego
                imputation theories to attribute both Larian Malaysia's actions in hiring
                Choo and TDC's actions in acquiring confidential information to Arrakis
                and Larian Studios US. Accordingly, we conclude that the district court
                improperly relied on the conspiracy theory to exercise personal jurisdiction
                over Larian Studios US and to permit jurisdictional discovery as to Arrakis.
                            Accordingly, we

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                                 ORDER the petition GRANTED AND DIRECT THE CLERK
                OF THIS COURT TO ISSUE A WRIT OF PROHIBITION instructing the
                court to grant the motions to dismiss based on lack of personal jurisdiction
                filed by Larian Studios US and Arrakis.4

                                                          1   /4.1L'6,,,eD            J.
                                                       Silver
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                                                                                      J.
                                                       Cadish

                                                                                      J.

                cc:     Hon. Joanna Kishner, District Judge
                        Hutchison & Steffen, LLC/Las Vegas
                        McDonald Carano LLP/Las Vegas
                        Eighth District Court Clerk

                        4   In light of this disposition, we vacate our stay entered on May 18,
                2022.
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