United States District Court, D. Nebraska
THE EDGE IN COLLEGE PREPARATION, LLC, a New York limited liability company, Plaintiff and Counterclaim Defendant,
PETERSON'S NELNET, LLC, a Nebraska limited liability company, Defendant and Counterclaimant. The Edge's Manuscript Nelnet's ACT Prep Guide
MEMORANDUM AND ORDER
M. GERRARD CHIEF UNITED STATES DISTRICT JUDGE.
parties in this lawsuit are generally in the business of test
preparation for college entrance exams. Filing 100 at 1. The
plaintiff, the Edge in College Preparation, agreed to write
an ACT test preparation manuscript for the defendant,
Peterson's Nelnet. Filing 111-9 at 23; see also
filing 111-9 at 1-25. But at some point, Nelnet decided it no
longer wanted to work with the Edge. Now, the Edge is suing
Nelnet for allegedly breaching its contractual obligations
and infringing on the Edge's copyrighted work. Filing 76
at 3-8. Nelnet has filed a counterclaim arguing that the
Edge, too, breached the parties' agreement. Filing 77 at
matter is before the Court on the parties' cross-motions
for summary judgment (filing 93 and filing 99). For the
reasons set forth below, the Court will grant the Edge's
motion for partial summary judgment (filing 93) in part and
deny it in part. The Court will also deny Nelnet's motion
for summary judgment (filing 99) in its entirety.
Davidoff is the sole member of the Edge in College
Preparations, a New York limited liability company. The Edge
specializes in providing one-on-one tutoring for high school
students taking college entrance exams such as the ACT or
SAT. Filing 101 at 1. Peterson's Nelnet is generally in
the business of creating test guides and study materials for
students taking those same college entrance exams. Filing 101
series of negotiations, the Edge and Nelnet entered into a
Publishing Agreement. Filing 111-2 at 12-14; filing 111-9 at
1. Under that agreement, the Edge promised to write the
manuscript for Nelnet's 2016 ACT Preparation Guide, in
several batches. Those batches were deliverable to Nelnet on
a periodic basis from July 2015 to December 2015.
Specifically, the Edge agreed to submit the following
portions of work "in a form ready for review": (1)
Introductory Material (2) English, (3) Math, (4) Reading, (5)
Science, and (6) Essay Samples. Filing 111-9 at 5; filing
112-3; filing 112-8 at 1-2. In return, Nelnet agreed to pay
the Edge $60, 000 within ten days of the execution of the
agreement, another $60, 000 on September 1, 2015, and a final
$60, 000 upon final written acceptance of the Edge's
work. Filing 95-18 at 5.
soon as the Edge submitted its first "batch" of the
manuscript- introductory material-a dispute arose. Filing 101
at 13. According to Nelnet, the manuscript was not the
quality of work Nelnet anticipated or expected. Filing 101 at
13. Specifically, Nelnet claims that the Edge omitted
material required under the parties' agreement, and the
work that was submitted was woefully inadequate. Filing 101
at 13. Nelnet expressed its concern with the quality of the
manuscript and gave the Edge the opportunity to revise its
work and submit a second draft. Filing 101 at 14. The Edge
agreed to do so, and submitted a revised version of the
introductory material on July 22, 2015. Around the same time,
the Edge turned in its next batch of the manuscript--
English. Filing 101 at 14.
after receiving the Edge's revised "batch one"
submission and the second batch of the manuscript, Nelnet
decided to exercise its right to terminate the parties'
agreement. Filing 112-13 at 2. That intention was orally
communicated to the Edge and further confirmed through a
series of emails on August 10, 2015. Filing 95-3 at 44-45;
filing 112-13 at 2; see also filing 111-3 at 47.
Specifically, in one email communication, Nelnet told the
Edge that it would be "working on the official
Termination Notice with [its] legal counsel," but that
the Edge should "consider this response confirmation to
our conversation and termination." Filing 95-3 at 41.
days later, but before sending the Edge an
"official" termination notice, Nelnet initiated
discussions with a different author, Red Letter Content.
Filing 111-4 at 12. Specifically, on August 13, 2015,
Nelnet's managing editor sent Red Letter Content an email
that attached both batches of the Edge's manuscript.
Filing 95-3 at 49. In this email, Nelnet asked Red Letter
Content to "take a look [at the Edge's manuscript]
and give [Nelnet] an evaluation on what you think you could
repurpose from these sections and use in the book you are
currently writing for us." Filing 95-3 at 50. After
reviewing the Edge's manuscript, Red Letter Content
agreed to write the manuscript for Nelnet's 2016 ACT
Preparation Guide. Filing 95-2 at 44.
August 17, 2015--the same day that Nelnet finalized its new
agreement to work with Red Letter Content, see
filing 95-2 at 44--Nelnet also sent the Edge a letter that,
at least in Nelnet's view, purported to amend the
parties' Publishing Agreement. Filing 112-15 at 3. That
letter gave the Edge two options: it could either "pay
to [Nelnet] the sum of $51, 000" or
enter into (and execute and deliver) a separate agreement
mutually acceptable to both [the Edge] and [Nelnet] pursuant
to which [the Edge] will commit to develop and deliver to
[Nelnet] a manuscript for a derivative work entitled
"Countdown to the ACT" (or a similar title), the
necessary effort and work with respect to which will be
commensurate with a work for which [Nelnet] would be willing
to pay the sum of approximately $60, 000.
112-15 at 3.
Edge rejected both proposed amendments in an August 18
response letter. Filing 112-16. There, the Edge acknowledged
Nelnet's right "pursuant to Section 8 of the
Agreement . . . to exercise its discretion to terminate"
the agreement. Filing 112-16 at 13. But the Edge also noted
that Nelnet had terminated the parties' agreement on
August 10, 2017 when it provided the Edge with confirmation
of termination. Filing 112-16 at 13. Based on its
understanding of the August 10 conversation, the Edge
explained its position that although Nelnet would not be
required to pay the Edge any additional payments, the Edge
would retain the $60, 000 it already received from Nelnet for
its work on the first two batches of the manuscript. Filing
112-16 at 13.
Nelnet and the Edge officially parted ways, this litigation
ensued. According to the Edge, much of its allegedly
unworkable content actually ended up in Nelnet's final
preparation guide. See filing 76 at 6. Based on the
substantial similarities between the two works, the Edge sued
Nelnet for copyright infringement. The Edge also claims that
Nelnet breached the parties' Publishing Agreement by
terminating the contract without "affording [the Edge]
the reasonable opportunity to improve or correct" the
manuscript. Filing 76 at 6. Nelnet filed its own breach of
contract counterclaim, alleging that the Edge breached the
terms of the parties' original Publishing Agreement by
not providing Nelnet with quality work. Filing 77 at 7.
judgment is proper if the movant shows that there is no
genuine dispute as to any material fact and that the movant
is entitled to judgment as a matter of law. See Fed.
R. Civ. P. 56(a). The movant bears the initial responsibility
of informing the Court of the basis for the motion, and must
identify those portions of the record which the movant
believes demonstrate the absence of a genuine issue of
material fact. Torgerson v. City of Rochester, 643
F.3d 1031, 1042 (8th Cir. 2011) (en banc). If the movant does
so, the nonmovant must respond by submitting evidentiary
materials that set out specific facts showing that there is a
genuine issue for trial. Id.
motion for summary judgment, facts must be viewed in the
light most favorable to the nonmoving party only if there is
a genuine dispute as to those facts. Id. Credibility
determinations, the weighing of the evidence, and the drawing
of legitimate inferences from the evidence are jury
functions, not those of a judge. Id. But the
nonmovant must do more than simply show that there is some
metaphysical doubt as to the material facts. Id. In
order to show that disputed facts are material, the party
opposing summary judgment must cite to the relevant
substantive law in identifying facts that might affect the
outcome of the suit. Quinn v. St. Louis County, 653
F.3d 745, 751 (8th Cir. 2011). The mere existence of a
scintilla of evidence in support of the nonmovant's
position will be insufficient; there must be evidence on
which the jury could conceivably find for the nonmovant.
Barber v. C1 Truck Driver Training, LLC, 656 F.3d
782, 791-92 (8th Cir. 2011). Where the record taken as a
whole could not lead a rational trier of fact to find for the
nonmoving party, there is no genuine issue for trial.
Torgerson, 643 F.3d at 1042.
BREACH OF CONTRACT
parties have moved for summary judgment on various
contractual allegations concerning the parties'
Publishing Agreement. Filing 93; filing 99. Under Nebraska
law, to recover in an action for breach of contract, the
plaintiff must prove the existence of a promise, its breach,
damage, and compliance with any conditions precedent that
activate the defendant's duty. Solar Motors v. First
Nat. Bank of Chadron, 545 N.W.2d 714 (Neb. 1996).
party disputes the validity of the agreement, but the parties
do generally dispute whether the terms of that agreement were
breached. See filing 93; filing 99. More
specifically, Nelnet argues that because the Edge failed to
submit a complete, quality work product, the Edge necessarily
breached the terms of its agreement. And the Edge, for its
part, claims that Nelnet breached the agreement when it
terminated the parties' obligations without giving the
Edge the opportunity to revise its manuscript. The Court will
consider each of those arguments in turn below.
The Edge's Breach of Contract Claim
claims that it is entitled to summary judgment on the
Edge's breach of contract claim for at least two reasons.
First, Nelnet contends that the Edge, rather than Nelnet,
actually terminated that agreement, warranting dismissal of
the Edge's breach of contract claim. See filing
101 at 21. Alternatively, Nelnet argues that even if it did
terminate the Publishing Agreement, that termination cannot,
as a matter of law, amount to a breach of the agreement
because Nelnet could terminate the parties' obligations
at its sole discretion. Filing 101 at 7.
former contention is easily disposed of. According to Nelnet,
it did not breach the terms of the Publishing Agreement.
Filing 112-15 at 1. That is true, Nelnet contends, because
its August 17, 2015 letter is not a termination, but rather,
a modification of the parties' agreement. Filing 112-15 at 1. In
support of that argument, Nelnet points out that it gave the
Edge two options for modification: the Edge could either
execute a separate agreement agreeable to both parties, or
pay back a portion of the funds it already received under the
initial Publishing Agreement. Filing 112-15 at 3. So, Nelnet
concludes, the Edge actually terminated the Publishing
Agreement by rejecting those modifications.
problem with that argument, though, is that either option
necessarily requires the termination of the original
Publishing Agreement: that is, the Edge could either (1)
execute a separate agreement for a smaller manuscript
(i.e., terminating the initial Publishing
Agreement), or (2) the Edge could pay back the funds it
received from Nelnet for its promise to deliver a
satisfactory manuscript under the initial agreement
(i.e., terminating the parties' obligation under
the Publishing Agreement). And that construction of
Nelnet's August 17 letter makes sense when considering
the letter in its entirety. See generally Eastep
v. Nw. Nat. Life Ins. Co., 208 N.W. 632, 634 (Neb.
1926). Indeed, an earlier paragraph of that letter makes it
clear that the Edge "shall not be obligated to furnish
any more services or deliver any further or additional
portions of the Work to [Nelnet] under the Agreement,"
and Nelnet "shall not be obligated to furnish any more
services or pay any further or additional amounts of money to
[the Edge] under the Agreement." Filing 112-15 at 3.
other words, the August 17 letter does not modify the terms
of the Publishing Agreement: instead, it makes clear that the
parties' obligations under the original
agreement are terminated. So, to the extent that Nelnet's motion
for summary judgment rests on a construction of its August 17
letter as a "modification," that motion will be
denied. Solar Motors, 545 N.W.2d at 721.
alternative argument, that it cannot be liable under the
Edge's contract theory because the contract permitted
Nelnet to part ways with the Edge, fares somewhat better, but
still ultimately fails at this point of the proceeding. To
support why, in its view, it did not breach the terms of the