Petition for Writ of Certiorari — Stanley V. Campbell, Petitioner v. Eagle Force Holdings, LLC, et al.
Supreme Court briefOct 6, 2020
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No. _________
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In The
Supreme Court of the United States
---------------------------------♦--------------------------------STANLEY V. CAMPBELL,
Petitioner,
v.
EAGLE FORCE HOLDINGS, LLC AND
EF INVESTMENTS, LLC,
Respondent.
---------------------------------♦--------------------------------On Petition For A Writ Of Certiorari
To The Delaware Supreme Court
---------------------------------♦--------------------------------PETITION FOR A WRIT OF CERTIORARI
---------------------------------♦--------------------------------DAVID L. FINGER
Counsel of Record for Petitioner
FINGER & SLANINA, LLC
One Commerce Center
1201 N. Orange St., 7th fl.
Wilmington, DE 19801
(302) 573-2525
dfinger@delawgroup.com
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COCKLE LEGAL BRIEFS (800) 225-6964
WWW.COCKLELEGALBRIEFS.COM
i
QUESTION PRESENTED
1. Can a finding of civil contempt and the imposition of a sanction be sustained consistent with the
Due Process Clause of the 14th Amendment to the
Constitution of the United States when the defense is
expressly preserved and it is subsequently determined
that the court lacks personal jurisdiction over the
claimed contemnor?
ii
PARTIES TO THE PROCEEDINGS AND RULE
29.6 CORPORATE DISCLOSURE STATEMENT
The parties to the proceedings include only those
listed on the cover. The respondents are nongovernmental entities.
LIST OF ALL PROCEEDINGS
DIRECTLY RELATED
•
Eagle Force Holdings, LLC and EF Investments, LLC v. Stanley V. Campbell, Civil Action No. 10803, Court of Chancery of the State
of Delaware. Judgment entered on August 28,
2017.
•
Eagle Force Holdings, LLC and EF Investments, LLC v. Stanley V. Campbell, No. 399,
2017, Supreme Court of the State of Delaware.
Judgment entered on May 24, 2017.
•
Eagle Force Holdings, LLC and EF Investments, LLC v. Stanley V. Campbell, Civil Action No. 10803, Court of Chancery of the State
of Delaware. Order Granting Plaintiffs’ Three
Motions for Contempt, dated April 23, 2019.
•
Eagle Force Holdings, LLC and EF Investments, LLC v. Stanley V. Campbell, Civil Action No. 10803, Court of Chancery of the State
of Delaware. Order Addressing Plaintiffs’ Motion for Contempt, dated April 23, 2019.
iii
LIST OF ALL PROCEEDINGS
DIRECTLY RELATED – Continued
•
Eagle Force Holdings, LLC and EF Investments, LLC v. Stanley V. Campbell, Civil Action No. 10803, Court of Chancery of the State
of Delaware. Order Resolving Plaintiffs’ Motion for Contempt, dated May 17, 2019.
•
Eagle Force Holdings, LLC and EF Investments, LLC v. Stanley V. Campbell, Civil Action No. 10803, Court of Chancery of the State
of Delaware. Judgment on remand entered on
August 29, 2019.
•
Eagle Force Holdings, LLC and EF Investments, LLC v. Stanley V. Campbell, No. 399,
2017, Supreme Court of the State of Delaware.
Judgment on appeal after remand entered on
July 8, 2020.
iv
TABLE OF CONTENTS
Page
QUESTION PRESENTED...................................
i
PARTIES TO THE PROCEEDINGS AND RULE
29.6 CORPORATE DISCLOSURE STATEMENT ...............................................................
ii
LIST OF ALL PROCEEDINGS DIRECTLY RELATED ..............................................................
ii
TABLE OF CONTENTS ......................................
iv
TABLE OF AUTHORITIES .................................
vi
INTRODUCTION ................................................
1
OPINIONS BELOW.............................................
1
JURISDICTION ...................................................
2
CONSTITUTIONAL PROVISIONS INVOLVED ...
2
STATEMENT .......................................................
3
REASONS FOR GRANTING THE PETITION ...
7
CONCLUSION..................................................... 13
APPENDIX
Appendix A – Court of Chancery, Memorandum
Opinion, September 1, 2017............................. App. 1
Appendix B – Delaware Supreme Court, Opinion, May 24, 2018 ........................................... App. 61
Appendix C – Court of Chancery, Order Granting Plaintiffs’ Three Motions for Contempt,
April 23, 2019 ............................................... App. 143
v
TABLE OF CONTENTS – Continued
Page
Appendix D – Court of Chancery, Order Addressing Plaintiffs’ Motion for Contempt,
April 23, 2019 ............................................... App. 154
Appendix E – Court of Chancery, Order Resolving Plaintiffs’ Motion for Contempt, May 17,
2019 .............................................................. App. 158
Appendix F – Court of Chancery, Memorandum
Opinion, August 29, 2019............................. App. 161
Appendix G – Delaware Supreme Court, Opinion, July 8, 2020 ........................................... App. 229
Appendix H – Motion to Dismiss the First
Amended Complaint, filed in the Court of
Chancery, June 19, 2015 .............................. App. 265
Appendix I – Excerpt of Oral Argument in the
Court of Chancery, July 9, 2015 ................... App. 267
vi
TABLE OF AUTHORITIES
Page
CASES
Appriva Shareholder Litigation Co., LLC v. EV3,
Inc., 937 A.2d 1275 (Del. 2007) ...............................12
Eagle Force Holdings, LLC v. Campbell, 2017
WL 3833210 (Del. Ch. Sept. 1, 2017), rev’d, 187
A.3d 1209 (Del. 2018) ............................................... ii
Eagle Force Holdings, LLC v. Campbell, 187
A.3d 1209 (Del. 2018) ............................................ 1, 5
Eagle Force Holdings, LLC v. Campbell, 2019
WL 4072124 (Del. Ch. Aug. 29, 2019), aff ’d in
part, rev’d in part, 2020 WL 3866620 (Del.
July 8, 2020) ............................................................. ii
Eagle Force Holdings, LLC v. Campbell, 2020
WL 3866620 (Del. July 8, 2020) ............................... ii
Hansen v. Denkla, 357 U.S. 235 (1958) ........................8
International Shoe Co. v. State of Wash., Office of
Unemployment Compensation and Placement,
326 U.S. 310 (1945) ...................................................8
Kulko v. Superior Court of California In and For
City and County of San Francisco, 436 U.S. 84
(1978) ............................................................... 8, 9, 10
Pennoyer v. Neff, 95 U.S. 714 (1877) .............................7
United Elec., Radio and Mach. Workers of America v. 163 Pleasant Street Corp., 960 F.2d 1080
(1st Cir. 1992) ..........................................................10
United States v. Thompson, 921 F.3d 82 (2d Cir.
2019) ........................................................................10
vii
TABLE OF AUTHORITIES – Continued
Page
United States v. United Mine Workers of America, 330 U.S. 258 (1947) .............................................9
Willy v. Coastal Corp., 503 U.S. 131 (1992) ............ 9, 10
World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286 (1980) ..........................................................9
Zenith Radio Corp. v. Hazeltine Research, Inc.,
395 U.S. 100 (1969) ...................................................9
OTHER AUTHORITIES
Fourteenth Amendment to the Constitution of
the United States .......................................... 1, 2, 8, 9
28 U.S.C. §1257(a) .........................................................2
1
INTRODUCTION
For over 140 years it has been a settled rule of due
process that a court may not enter a judgment binding
on an individual in the absence of personal jurisdiction
over that individual.
The Delaware Supreme Court has created a new
and unsupportable exception to that rule, holding that
a person can be held in civil contempt and sanctioned
even if it is ultimately determined that the court lacks
personal jurisdiction over the person, as long as the
contempt finding occurs before the court determines
that there is a lack of personal jurisdiction.
This decision erodes important protections provided to out-of-state parties by the 14th Amendment to
the Constitution of the United States as well as the
idea that states have geographically-limited judicial
power.
The Delaware Supreme Court has decided an important federal question in a way that clearly conflicts
with relevant decisions of this Court. For this reason,
this Court should grant certiorari.
---------------------------------♦---------------------------------
OPINIONS BELOW
The initial decision of the Court of Chancery is unreported. (App. A). The decision of the Delaware Supreme Court reversing and remanding that decision is
reported at 187 A.3d 1209 (Del. 2018). (App. B).
2
The Order Granting Plaintiffs’ Three Motions for
Contempt, dated April 23, 2019, is unreported. (App.
C).
The Order Addressing Plaintiffs’ Motion for Contempt, dated April 23, 2019, is unreported. (App. D).
The Order Resolving Plaintiffs’ Motion for Contempt, dated May 17, 2019, is unreported. (App. E).
The remand decision of the Court of Chancery is
unreported. (App. F). The post-remand decision of the
Delaware Supreme Court is, as of this date, unreported. (App. G).
---------------------------------♦---------------------------------
JURISDICTION
The Delaware Supreme Court entered its judgment on July 8, 2020. This Court has jurisdiction under
28 U.S.C. §1257(a).
---------------------------------♦---------------------------------
CONSTITUTIONAL PROVISIONS INVOLVED
Section 1 of the Fourteenth Amendment to the
Constitution of the United States reads as follows:
All persons born or naturalized in the United
States, and subject to the jurisdiction thereof,
are citizens of the United States and of the
state wherein they reside. No state shall make
or enforce any law which shall abridge the
privileges or immunities of citizens of the
United States; nor shall any state deprive any
3
person of life, liberty, or property, without due
process of law; nor deny to any person within
its jurisdiction the equal protection of the
laws.
---------------------------------♦---------------------------------
STATEMENT
On March 17, 2015, Respondents Eagle Force
Holdings, LLC and EF Investments, LLC, two limited
liability companies organized (with no involvement by
or knowledge of the petitioner) and existing under the
laws of the State of Delaware, filed a lawsuit in the
Court of Chancery of the State of Delaware against
petitioner Stanley V. Campbell, a resident of the Commonwealth of Virginia, alleging breach of contract,
fraud and breach of fiduciary duty.
On May 7, 2015, Respondents filed a Motion for
Interim Emergency Relief, seeking to restrict Campbell’s actions as owner of non-party Eagleforce Associates, LLC.
On June 5, 2015, Respondents filed their First
Amended Complaint. On June 19, 2015, Campbell filed
a Motion to Dismiss on the ground, among others, of
lack of personal jurisdiction. (App. H). That same day,
Campbell filed his Opposition to Plaintiffs’ Motion for
Interim Emergency Relief, raising the issue of personal
jurisdiction.
4
At the hearing on the Motion for Interim Relief on
July 9, 2015, the Court granted the motion, and stated:
I don’t think the Court’s going to be able to
resolve whether there is or isn’t personal jurisdiction without resolving whether there
were or were not agreements reached between
these parties. And I, frankly, don’t really have
any intention, now that we’ve gotten at this
point, to probably even hear the personal jurisdiction until – until I hear the whole thing
or someone else hears it on the merits.
(App. 268).
During the ensuing litigation, Respondents filed
several motions for contempt against Campbell. The
Court of Chancery held hearings on those motions.
Campbell asserted lack of personal jurisdiction, among
other defenses. At Campbell’s request, the Court of
Chancery deferred its decision on the contempt motions during which Campbell raised the issue of personal jurisdiction until the Court ruled on the merits.
On September 1, 2017, the Court of Chancery issued a Memorandum Opinion, finding in favor of
Campbell on the ground that the claimed contracts
were too vague to be enforceable, and ended the Opinion as follows: “Because this Court lacks personal jurisdiction over Campbell, he was not bound by the
Order and cannot have committed contempt by violating the Order. Plaintiffs’ motions for contempt are denied.” (App. 60).
5
On September 28, 2017, Respondents filed a Notice of Appeal to the Delaware Supreme Court. On May
24, 2018, the Delaware Supreme Court issued its Opinion reversing and remanding the matter to the Court
of Chancery. 187 A.3d 1209 (Del. 2018). (App. 61-142).
On the merits, the Delaware Supreme Court determined that the contracts were clear enough to be enforceable.
Even though the parties had neither briefed nor
argued any issue regarding the contempt dismissal,
the Delaware Supreme Court sua sponte held that
“when a Delaware court issues a status quo order
pending its adjudication of questions concerning its
own jurisdiction, it may punish violations of those orders with contempt and for sanctions, no matter
whether it ultimately finds that it lacked jurisdiction.”
(App. 128). The Delaware Supreme Court reasoned
that Campbell was before the Court at the time the
Status Quo Order was entered (even though he had objected on the ground of lack of personal jurisdiction at
the outset) and that orders granting ancillary injunctive relief to protect its jurisdiction over (and the parties’ entitlement to a meaningful adjudication of their
rights in) the property would be meaningless absent
the power to enforce them. (App. 127). The Delaware
Supreme Court remanded the case to the Court of
Chancery for further proceedings on the merits and on
the contempt motions.
On April 23, 2019, the Court of Chancery issued
an Order Granting Plaintiffs’ Three Motions for Contempt. (App. 143-153). The Court ordered Campbell to
disgorge $213,886.80 in company funds he had used to
6
pay commissions and expenses during the litigation
and to pay respondents’ attorneys’ fees in the amount
of $148,830.50, which Plaintiffs incurred in bringing
those Motions.
That same day, the Court of Chancery issued an
Order Addressing Plaintiffs’ Motion for Contempt.
(App. 154-157). In that Order the Court, addressing a
separate contempt motion, found Campbell in contempt for withdrawing money from his business
shortly after the issuance of the September 1, 2017,
finding in Campbell’s favor. The Court of Chancery so
found notwithstanding that there was no stay pending
appeal. The Court of Chancery concluded that the reversal by the Delaware Supreme Court retroactively
reinstated the Status Quo Order such that Campbell
could be held in contempt during the appellate process
even though there was no grant of a stay pending appeal.
On May 17, 2019, the Court of Chancery issued an
additional Order Resolving Plaintiffs’ Motion for Contempt. (App. 158-160).
On August 29, 2019, the Court of Chancery issued
its decision on the merits, again finding in favor of
Campbell and determining that it lacked personal jurisdiction over Campbell. (App. 161-228).
On September 24, 2019, respondents filed a Notice
of Appeal to the Delaware Supreme Court. Campbell
filed a Notice of Cross-Appeal as to the Orders finding
him in contempt of court. Campbell argued that the
7
contempt orders were void as a result of the finding
(again) of a lack of personal jurisdiction.
The Delaware Supreme Court issued its decision
on July 8, 2020. (App. 229-264). The Delaware Supreme Court rejected Campbell’s argument on the
ground that he did not file a motion for reargument in
the first appeal to address that issue (although there
had been no ruling yet from the Court of Chancery on
the merits of the contempt motions, and so there was
no final appealable order to be addressed).
---------------------------------♦---------------------------------
REASONS FOR GRANTING THE PETITION
The decision of the Delaware Supreme Court subjecting Campbell to contempt and sanctions even
though the Delaware courts lacked personal jurisdiction over him flies in the face of over 140 years of this
Court’s Due Process jurisprudence and threatens serious erosion of national policy (here, the due process
right against subjection to excessive state assertions of
personal jurisdiction).
In Pennoyer v. Neff, 95 U.S. 714 (1877), this Court
determined that no state can exercise direct jurisdiction and authority over persons or property without its
territory. Id. at 720 (“The authority of every tribunal is
necessarily restricted by the territorial limits of the
State in which it is established. Any attempt to exercise authority beyond those limits would be deemed in
every other forum, as has been said by this court, in
illegitimate assumption of power, and be resisted as
mere abuse”).
8
Sixty-eight years later, in International Shoe Co. v.
State of Wash., Office of Unemployment Compensation
and Placement, 326 U.S. 310 (1945), this Court held
that “due process requires only that in order to subject
a defendant to a judgment in personam, if he be not
present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of
fair play and substantial justice.’ ” Id. at 316 (citation
omitted).
Ten years later, in Hansen v. Denkla, 357 U.S. 235
(1958), this Court again recognized that “[p]rior to the
Fourteenth Amendment an exercise of jurisdiction
over persons or property outside the forum State was
thought to be an absolute nullity, but the matter remained a question of state law over which this Court
exercised no authority. With the adoption of that
Amendment, any judgment purporting to bind the person of a defendant over whom the court had not acquired in personam jurisdiction was void within the
State as well as without.” Id. at 250 (footnotes omitted).
In Kulko v. Superior Court of California In and For
City and County of San Francisco, 436 U.S. 84 (1978),
this Court reiterated that “the Due Process Clause of
the Fourteenth Amendment operates as a limitation on
the jurisdiction of state courts to enter judgments affecting rights or interests of nonresident defendants. It
has long been the rule that a valid judgment imposing
a personal obligation or duty in favor of the plaintiff
may be entered only by a court having jurisdiction over
9
the person of the defendant.” Id. at 91 (citation omitted).
In World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286 (1980), this Court declared: “The Due Process
Clause of the Fourteenth Amendment limits the power
of a state court to render a valid personal judgment
against a nonresident defendant. A judgment rendered
in violation of due process is void and in the rendering
State and is not entitled to full faith and credit elsewhere. Due process requires that the defendant . . . be
subject to the personal jurisdiction of the court.” Id. at
292 (citations omitted).
“The consistent constitutional rule has been that
a court has no power to adjudicate a personal claim or
obligation unless it has jurisdiction over the person of
the defendant.” Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 110 (1969).
This fundamental principle of constitutional law
has been applied in the context of contempt proceedings. In United States v. United Mine Workers of America, 330 U.S. 258 (1947), this Court stated that “[t]he
right to remedial relief falls with an injunction which
events prove was erroneously issued, and a fortiori
when the injunction or restraining order was beyond
the jurisdiction of the court.” Id. at 295 (citations omitted).
In Willy v. Coastal Corp., 503 U.S. 131 (1992), this
Court said: “Given that civil contempt is designed to
coerce compliance with the court’s decree, it is logical
that the order itself should fall with a showing that the
10
court was without authority to enter the decree.” Id. at
139.
Federal Courts of Appeals have similarly recognized that the absence of jurisdictional authority renders a contempt decree void. E.g., United Elec., Radio
and Mach. Workers of America v. 163 Pleasant Street
Corp., 960 F.2d 1080, 1084 (1st Cir. 1992) (citing Kulko
and Willy); United States v. Thompson, 921 F.3d 82, 8788 (2d Cir. 2019) (“Contempt proceedings may move
forward upon a showing of actual notice, but only so
long as the court making the contempt finding already
has personal jurisdiction over the defendant”).
The fact that the Court of Chancery deferred a decision on personal jurisdiction pending a trial on the
merits does not mean that Campbell was subject to liability for contempt even if the Court of Chancery ultimately determined (as it did) that it lacked personal
jurisdiction over Campbell. In other words, the fact
that the contempt orders were issued prior to the finding of a lack of personal jurisdiction does not validate
them.
If a party held in contempt can be released from a
contempt sanction upon a subsequent determination
on appeal that the trial court lacked personal jurisdiction over the claimed contemnor,1 then it follows logically that a claimed contemnor is free from any
contempt finding and sanction if the trial court
1
E.g., United Elec., Radio and Mach. Workers of America v.
163 Pleasant Street Corp., 960 F.2d 1080 (1st Cir. 1992).
11
subsequently determines that it lacked personal jurisdiction.
Campbell did not waive his defense of lack of personal jurisdiction. He asserted the defense in both a
motion to dismiss and his Answer. At the hearing on
the Motion for Preliminary Relief, the Vice Chancellor
stated:
I think – I don’t think the Court’s going to be
able to resolve whether there is or isn’t personal jurisdiction without resolving whether
there were or were not agreements reached
between these parties. And I, frankly, don’t
really have any intention, now that we’ve gotten at this point, to probably even hear the
personal jurisdiction until – until I hear the
whole thing or someone else hears it on the
merits.
***
it doesn’t make sense to have them being
made available for some truncated purpose
related to personal jurisdiction that depends
somewhat on whether we had an agreement
or not, which is the main issue in the case. I
really suggest that you ought to be talking
about full-fledged discovery, unfortunately.
It’s not that complicated. You haven’t been
dealing with one another for more than a couple of years. All issues as far as the personal
jurisdiction are preserved and they may come
up in a summary judgment context or some
sort of thing like that that the Court will have
enough before it. And then at that point we’d
12
have to decide how are we going to go by summary judgment or just have a – you know, a
trial.
(App. 268-269, italics added).2
In light of this, there is no legitimate argument
that Campbell waived his personal jurisdiction argument by participating in the trial.
Similarly, Campbell did not waive the right to assert the defense as a result of not seeking a rehearing
on the issue in the first appeal. At that point there were
no final appealable contempt orders, and it was possible that Campbell could win the motions in the trial
court, rendering an appeal moot. As such, the issue was
not ripe for decision in the first appeal.
The decision of the Delaware Supreme Court represents a significant violation of long-standing principles of due process and personal jurisdiction. This
Court should grant certiorari to correct this wrong and
avoid any further erosion of due process rights in litigation.
---------------------------------♦---------------------------------
2
The Delaware Supreme Court has stated that “where the
question of jurisdiction is dependent on the resolution of factual
issues going to the merits, the jurisdictional determination should
await a determination of the relevant facts on either a motion going to the merits or at trial.” Appriva Shareholder Litigation Co.,
LLC v. EV3, Inc., 937 A.2d 1275, 1292 (Del. 2007).
13
CONCLUSION
For the foregoing reasons, petitioner Stanley V.
Campbell respectfully requests that his petition for
certiorari be granted.
Respectfully submitted,
DAVID L. FINGER
Counsel of Record for Petitioner
FINGER & SLANINA, LLC
One Commerce Center
1201 N. Orange St., 7th fl.
Wilmington, DE 19801
(302) 573-2525
dfinger@delawgroup.com
Dated: Oct. 6, 2020
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