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IN THE COURT OF COMMON PLEAS
FRANKLIN COUNTY, OHIO
ED MAP, INC.,
Plaintiff, Case No. 18-CV-002305
vs.
DELTA CAREER EDUCATION Judge David Cain
CORPORATION, ET AL.,
Defendants.
ANCORA DEFENDANTS’ MEMORANDUM CONTRA
PLAINTIFF’S MOTION FOR RECONSIDERATION
OR RULE 54(B) CERTIFICATION
I INTRODUCTION
This Court correctly ruled that Plaintiff failed to make the requisite prima facie showing
of personal jurisdiction over the Ancora Defendants. In reaching this conclusion, the Court
properly relied on the lack of any evidence in the record that the Ancora Defendants assumed the
purchasing agreement between Plaintiff and Defendant Delta Career Education Corporation (the
“Delta Contract”). Plaintiff had the burden to produce such evidence, as the Ancora Defendants
supported their Rule 12(B)(2) motion to dismiss with the affidavit of their CEO. The CEO testified
unequivocally that the Delta Contract was not assumed under the asset purchase agreement (the
“APA”) entered with Delta and certain of its affiliates (collectively, “Delta”)
Now, after extensive briefing — including a surreply — in which Plaintiff did not
meaningfully address the text of the APA, Plaintiff faults the Court for “fail[ing] to analyze” the
APA and contends, again without any evidence, that the APA “includes terms that undermine the
Court’s finding.” Motion at 1 As detailed below, the terms that Plaintiff identifies neither
undermine this Court’s finding nor contradict the affidavit submitted by the Ancora Defendants
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Indeed, the record still contains no evidence that the Ancora Defendants assumed the Delta
Contract. For these reasons, dismissal of the Ancora Defendants was correct and the Court should
deny Plaintiff's motion for reconsideration.
As alternative relief, Plaintiff requests that the Court retroactively amend its dismissal order
to certify under Rule 54(B) that there is “no just reason for delay” of appellate review. No such
certification is warranted. Plaintiff has not provided a record adequate to justify an immediate
appeal from the interlocutory order. In particular, Plaintiff has not explained how it could be
prejudiced by having to await an appeal in the ordinary course when, at any time, it may proceed
with its supposed claims against the Ancora Defendants in a forum where personal jurisdiction
exists. The Court should decline to certify its order under Rule 54(B).
IL. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
In its First Amended Complaint, Plaintiff alleges that it entered the Delta Contract in 2012
and, pursuant to that agreement, supplied textbooks and other educational materials to students
enrolled at various schools affiliated with Delta. Am. Compl. 45. Delta allegedly defaulted on its
payment obligations no later than December 2017 and has recently declared bankruptcy. Plaintiff
now seeks to recover from the Ancora Defendants some or all of the $2.4 million allegedly owed
by Delta. Am. Compl. {35,51
The Ancora Defendants acquired certain assets of Delta through the APA on January 18,
2018. The First Amended Complaint alleges that the Ancora Defendants assumed the Delta
Contract as part of the APA, but Plaintiff has introduced no evidence substantiating this claim
Am. Compl. §§] 46, 47. The Ancora Defendants moved to dismiss for lack of personal jurisdiction
on June 15, 2018. In support of their motion, the Ancora Defendants submitted the detailed
affidavit of their CEO, Michael Zawisky (the “Zawisky Aff.”). This affidavit demonstrates that
the Ancora Defendants neither assumed nor benefitted from the Delta Contract. Zawisky Aff
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7-9. Further, Zawisky offers unrebutted testimony that the Ancora Defendants are based in Texas,
have no physical presence in Ohio, did not acquire any schools based in Ohio under the APA, and
did not make or authorize any payment assurances to Plaintiff. Zawisky Aff. J] 2-4, 10-16.
Plaintiff opposed the motion to dismiss on June 29, 2018. Plaintiff argued that the Delta
Contract contains a provision consenting to personal jurisdiction in Ohio, and that the Ancora
Defendants are bound by this provision because, purportedly, they assumed the Delta Contract.
Memo Contra at 5-7. Crucially, Plaintiff did not introduce any evidence to rebut Zawisky’s
testimony, including his statement that the Ancora Defendants had not assumed the Delta Contract.
Plaintiff instead adopted the position that the mere allegations of its pleadings were sufficient
Memo Contra at 7
In a reply filed on July 6, 2018, the Ancora Defendants demonstrated that Plaintiff could
not satisfy its burden to make a prima facie showing of personal jurisdiction without any evidence.
Reply at 2-3. In response, Plaintiff sought leave to file a surreply on July 30, 2018. Plaintiff
attached to its proposed surreply the affidavit of its CFO, Gregory Smith, and the redacted APA
that Plaintiff obtained before the commencement of this litigation. Plaintiffs analysis of the APA
was confined to a single sentence in the surreply: “In fact, under the APA, Ancora Holdings
expressly assumed liabilities for the ongoing operation of the Delta assets that Ancora Holdings
acquired.” Surreply at 5. The proposed surreply then alleged, without any evidentiary support,
that educational materials Plaintiff claims to have shipped in January 2018 were sent “to students
who were enrolled in courses at colleges that Ancora Holdings acquired from Delta.”! /d. Based
1 In support of this statement, Plaintiff cited Paragraph 11 of the Smith Affidavit, which merely avers that Plaintiff,
under the Delta Contract, “shipped books and educational materials to students, including students residing in Ohio,
in January 2018.” Neither the Smith Affidavit nor any evidence in the record indicates at which schools the students
who allegedly received these materials were enrolled and whether said schools were acquired by the Ancora
Defendants. Further, there is no indication whether the alleged “students residing in Ohio” were enrolled in schools
located in Ohio.
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entirely upon this bare allegation that materials delivered in January 2018 “related to the ongoing
operation of the Delta assets that Ancora Holdings acquired,” Plaintiff argued that the Delta
Contract was “expressly assumed” under the APA. Surreply at 5
The Ancora Defendants opposed Plaintiffs motion for leave to file a surreply on July 31,
2018, specifically identifying the lack of any evidentiary basis for Plaintiff's assertion that the
materials allegedly shipped to students in January 2018 related to the operation of assets acquired
from Delta. Memo Contra Surreply at 5-6 & n.2
On August 22, 2018, the Court entered an order dismissing all claims against the Ancora
Defendants for lack of personal jurisdiction.” In doing so, the Court correctly held that Plaintiff
failed to meet its burden to present evidence rather than “mere allegation.” See Decision at 2 &
n.l. Plaintiff now seeks reconsideration of this order or, alternatively, retroactive certification
under Rule 54(B). In apparent anticipation of the possibility of Rule 54(B) certification, Plaintiff
also filed a notice of appeal on September 20, 2018
Til. LAW AND ARGUMENT
A. Plaintiff's Motion For Reconsideration Should Be Denied Because The Record
Still Contains No Evidence That The Ancora Defendants Assumed The Delta
Contract
Plaintiff has now supplemented the record to include the various schedules and exhibits to
the APA. Critically, though, Plaintiff has not remedied the evidentiary void that has existed from
the outset. Specifically, Plaintiff has introduced no evidence whatsoever that the educational
materials purportedly shipped under the Delta Contract in January 2018 relate to the “business of
owning and operating” any school that the Ancora Defendants acquired from Delta. In the absence
? The Court’s order also granted Plaintiff's motion for leave to file a surreply. The Court thus accepted and
considered the proposed surreply and accompanying materials filed by Plaintiff on July 30, 2018.
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of such evidence, Plaintiff cannot make its required prima facie showing that the Ancora
Defendants assumed the Delta Contract and its concomitant forum-selection clause
Under the APA, the Ancora Defendants “shall not assume, and shall not be deemed to have
assumed, any liability or obligation of [Delta] other than the Assumed Liabilities..., including,
without limitation, the Excluded Contracts.” APA § 2.43 The term “Excluded Contracts” is
defined as those contracts listed on Schedule 2.2(a). APA, § 2.2(a). Plaintiff emphasizes that the
Delta Contract is not listed on Schedule 2.2(a). While true, Plaintiff's observation provides no
evidence that the Delta Contract is within the definition of “Assumed Liabilities” in the first place.
Tf the Delta Contract does not meet the definition of “Assumed Liabilities,” then it is not assumed
under the APA irrespective of whether it is listed as an “Excluded Contract.” APA § 2.4. The
Ancora Defendants’ CEO expressly attested that the Delta Contract is not among the “Assumed
Liabilities” in the APA. Zawisky Aff J 9.
Plaintiff's interpretation of the APA fails because it cannot show that the Delta Contract
relates to the ongoing operation of a “School” — a defined term in the APA that refers only to the
chools purchased by the Ancora Defendants. APA § 1.1. This is significant because, contrary to
Plaintiffs strained argument, only contracts that relate to the ongoing operation of a “School” are
“Assumed Liabilities” under the APA. Plaintiffs interpretation of the APA proceeds as follows
1 “Assumed Liabilities” include “all liabilities and obligations of [Delta] under or
relating to each of the Purchased Contracts (except for liabilities arising out of any
breach or default of any such Purchased Contract on or prior to the Closing Date).”
APA § 2.3(a)(i)
“Purchased Contracts” are contracts “that relate to the Business that are not
Excluded Contracts.” APA § 1.1.
“Business” is defined as “the business of owning and operating the Schools (as such
business is conducted by [Delta] on the date of [the APA].” APA § 1.1
3 The APA and its schedules and exhibits are attached as Exhibit 1 to Plaintiff’s Motion for Reconsideration.
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Plaintiff wrongly stops here, eliding the particularized definition of “School” and thereby
incorrectly suggesting that a contract relating to the ownership and operation of any Delta school
falls within the definition of “Assumed Liabilities.” Motion at 4, 7. Instead, the APA defines
“School” to include only the purchased institutions listed on Schedule Ion the APA. APA § 1.1
This definition reflects the critical fact that the Ancora Defendants did not acquire all Delta
schools. APA at Schedule I; see Zawisky Aff. J 6. Accordingly, in order to show that a contract is
within the definition of “Assumed Liabilities’ under the APA, there must be some evidence
indicating that the contract, as of the date of the APA, related to ownership and operation of a
school listed on Schedule I (i.e., a“School”). APA §§ 1.1, 2.3(a)(i).
As previously discussed, Plaintiff has placed no evidence in the record demonstrating that,
as of the date of the APA, the Delta Contract related to ownership and operation of any school
listed on Schedule I. Plaintiff's motion for reconsideration simply reprises the bare allegation of
its surreply. Although Plaintiff cites to the Smith Affidavit in support of this statement, the
affidavit provides no evidentiary basis for Plaintiff's claim. The relevant portion of the affidavit
simply states that “[Plaintiff] shipped books and educational materials to students, including
students residing in Ohio, in January 2018.” Smith Aff. § 11. Plaintiff
has still not produced any
evidence to show the schools at which these students were enrolled, thus there is still no basis upon
which to conclude that Plaintiff shipped the materials to students at schools listed on Schedule I.
As a result, Plaintiff cannot make the required prima facie showing that the Delta Contract is
among the “Assumed Liabilities” under the APA.
The Ancora Defendants submitted evidence with their motion to dismiss plainly
demonstrating that they did not assume or benefit from the Delta Contract and have no relevant
contacts with Ohio. Zawisky Aff. JJ 2-12. Plaintiff has now opposed that motion in a memo contra,
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a surreply, and a motion for reconsideration, but still has provided no evidence rebutting that
offered by the Ancora Defendants. The Court’s decision that personal jurisdiction does not lie
against the Ancora Defendants is correct and should remain undisturbed.
B. Plaintiff Faces No Hardship Warranting Certification Under Rule 54(B)
In the alternative, Plaintiff requests retroactive certification under Rule 54(B). Without
this certification, Plaintiff may appeal only after the adjudication of all claims against all parties.
Civil Rule 54(B); see also CitiMortgage, Inc. v. Roznowski, 139 Ohio St. 3d 299, 303 (2014).
Plaintiff, however, has not established any need for this uncommon remedy
Rule 54(B) effectuates the “strong policy against piecemeal litigation” but recognizes “the
possible injustice of delayed appeals in special situations.” Dywidag Sys. Int'l v. Ohio DOT, 10th
Dist. Franklin No. 87AP-837, 2010-Ohio-3211, § 26. As a result, in cases where not all claims
against all parties have been adjudicated by the trial court, Rule 54(B) permits the immediate
appellate review of a final order under R.C. 2505.02' in “the infrequent, harsh situation” where
“undue prejudice, hardship or injustice may be avoided and judicial administration interests
furthered.” Noble v. Colwell, 44 Ohio St. 3d 92, 97 (1989). The express certification of such
circumstances, which Rule 54(B) requires as a precondition to immediate appellate review, is
discretionary. /d. at 97, n.7. Even so, “[a] trial court does not have unlimited discretion” under
Rule 54(B), and certification “is not to be granted as a matter of course but is to make a reasonable
4 R.C. 2505.02 defines what constitutes a “final order” as to which appellate jurisdiction may be exercised. Gehm
v. Timberline Post & Frame, 112 Ohio St. 3d 514, 517-518 (2007). As Plaintiff notes, orders dismissing claims for
lack of personal jurisdiction — at least where the asserted basis for personal jurisdiction is an allegedly applicable
forum-selection clause — meet the definition of “final order” set forth in R.C. 2505.02(B)(1). Nat'l City Commercial
Capital Corp. v. AAAA At Your Service, Inc., 114 Ohio St. 3d 82, 83-84 (2007); Residential Fin. Corp. v. Greenpoint
Mortgage Funding, Inc., 10th Dist. Franklin No. 09AP-497, 2010-Ohio-1322, 4] 11-12; see R.C. 2505.02(B) (“An
order is a final order... when it is one of the following: (1) An order that affects a substantial right in an action that in
effect determines the action and prevents a judgment....”). That said, even a “final order” under R.C. 2505.02 is
subject to the requirements of Rule 54(B). CitiMortgage, 139 Ohio St. 3d at 303 (“An order of a court is a final
appealable order only if the requirements of both R.C. 2505.02 and, if applicable, Civ. R. 54(B), are met.”).
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accommodation of the policy against piecemeal appeals with the possible injustice sometimes
created by the delay of appeals.” Lewis v. Surgery & Gynecology, Inc., 1988 Ohio App. LEXIS
887, *6 (10th Dist. Mar. 15, 1988).
Here, there is nothing unjust or harsh about enforcing the strong general policy against
piecemeal appellate review. Indeed, Plaintiff has immediate recourse that does not require any
appellate review at all — it may simply sue the Ancora Defendants in a forum where personal
jurisdiction actually exists.° It would not promote sound judicial administration to expedite
Plaintiff's efforts to seek appellate review of its unfounded jurisdictional arguments when such an
obvious and straightforward alternative exists. Cf Gehm v. Timberline Post & Frame, 112 Ohio
St. 3d 514, 517-18 (2007) (denial of a motion to intervene is not a “final order” when the purpose
for which intervention was sought may be accomplished by initiating a separate action).
Plaintiff speciously argues that there is no just reason to delay appellate review of the
dismissal of the Ancora Defendants because all other defendants have filed for bankruptcy
protection. Motion at 9-10. The fact this this litigation has already been fragmented by Delta’s
petition for bankruptcy does not weigh in favor of further fracturing these proceedings by allowing
piecemeal appeals to proceed. That approach would cause the simultaneous involvement of three
courts — this Court, the U.S. Bankruptcy Court, and the Tenth District Court of Appeals — and
invite procedural complexity and the risks of inconsistent outcomes and duplicative litigation. See
Portco, Inc. v. Eye Specialists, Inc., 173 Ohio App. 3d 108, 112 (4th Dist. 2007) (abuse of
discretion to certify under Rule 54(B) where unresolved claims involve “same facts, legal issues
5 Plaintiff's pursuit of claims against the Ancora Defendants in the face of the unambiguous terms of the APA
borders on frivolous. The Ancora Defendants reserve the right and opportunity to seek sanctions against Plaintiff
should it determine to pursue such frivolous claims against them in another jurisdiction.
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and circumstances” as certified claims); Shakeir v. American Speedy Printing Centers, Inc., 1989
Ohio App. LEXIS 4052, *5-6 (10th Dist. Oct. 26, 1989) (same).
Cc. This Court Retains Jurisdiction Because Plaintiff's Notice Of Appeal Is
Premature
As detailed above, the interlocutory order dismissing the Ancora Defendants cannot be
appealed absent certification under Rule 54(B). For this reason, the Notice of Appeal that Plaintiff
filed on September 20, 2018 is premature. Under Appellate Rule 4(C), “[a] notice of appeal filed
after the announcement of a decision, order, or sentence but before entry of the judgment or order
that begins the running of the appeal time period is treated as filed immediately after the entry.”
Further, “a premature notice of appeal under App. R. 4(C) does not divest the trial court of
jurisdiction to proceed because the appeal has not yet been perfected.” State ex rel. Everhart v.
MeIntosh, 115 Ohio St. 3d 195, 198 (2007); see also Beavers v. Knapp, 175 Ohio App. 3d 758,
789 (10th Dist. 2008) (notice of appeal filed without required Rule 54(B) certification did not
divest trial court of jurisdiction)
Iv. CONCLUSION
Despite having now filed at least three separate briefs on the jurisdictional issue raised by
the Ancora Defendants, Plaintiff has still introduced no evidence contradicting the Zawisky
Affidavit and has not satisfied its burden to make a prima facie showing of personal jurisdiction.
In addition, Plaintiff can show no hardship attendant to awaiting an appeal in the ordinary course.
For these reasons, the Court’s order dismissing all counts against the Ancora Defendants should
stand, without certification under Rule 54(B).
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Respectfully submitted,
/s/ C. Craig Woods
C. Craig Woods (0010732)
Andrew H. King (0092539)
Michael T. Mullaly (0090202)
SQUIRE PATTON BoGcs (US) LLP
2000 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: (614) 365-2700
Facsimile: (614) 365-2499
craig. woods@squirepb.com
andrew.king@squirepb.com
michael.mullaly@squirepb.com
Attorneys for the Ancora Defendants
10
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CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and accurate copy of the foregoing was served
this 3rd day of October, 2018, via the Court’s electronic filing system and/or by regular U.S. Mail,
upon the following
Elizabeth L. Moyo Delta Career Education Corporation
Allen T. Carter 99 Canal Center Plaza, Suite 501
Porter, Wright, Morris & Arthur LLP Alexandria, VA 22314
41 South High Street
Columbus, OH 43215
emoyo@porterwright.com
acarter@porterwright.com
Attorneys for Plaintiff
Atlantic Coast Colleges, Inc. Berks Technical Institute, Inc
c/o Corporation Service Company c/o Corporation Service Company
2626 Glenwood Ave., Suite 550 251 Little Falls Drive
Raleigh, NC 27608 Wilmington, DE 19808
McCann Education Centers, Inc. McCann School of Business and
c/o Corporation Service Company Technology, Inc.
2595 Interstate Drive, Suite 103 c/o Donald C. Douglass, Jr.
Harrisburg, PA 17110 3320 West Esplanade Ave. North
Metairie, LA 70002
Miller-Motte Business College, Inc Palmetto Technical College, Inc.
c/o Corporation Service Company c/o VB Business Services, LLC
2626 Glenwood Ave., Suite 550 500 World Trade Ctr.
Raleigh, NC 27608 101 W. Main Street
Norfolk, VA 23510
Piedmont Business Colleges, Inc.
c/o Corporation Service Company
2626 Glenwood Ave., Suite 550
Raleigh, NC 27608
/s/ Michael T. Mullaly
Michael T. Mullaly (0090202)
11
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Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - O7 IN THE COURT OF COMMON PLEAS FRANKLIN COUNTY, OHIO ED MAP, INC., Plaintiff, Case No. 18-CV-002305 vs. DELTA CAREER EDUCATION Judge David Cain CORPORATION, ET AL., Defendants. ANCORA DEFENDANTS’ MEMORANDUM CONTRA PLAINTIFF’S MOTION FOR RECONSIDERATION OR RULE 54(B) CERTIFICATION I INTRODUCTION This Court correctly ruled that Plaintiff failed to make the requisite prima facie showing of personal jurisdiction over the Ancora Defendants. In reaching this conclusion, the Court properly relied on the lack of any evidence in the record that the Ancora Defendants assumed the purchasing agreement between Plaintiff and Defendant Delta Career Education Corporation (the “Delta Contract”). Plaintiff had the burden to produce such evidence, as the Ancora Defendants supported their Rule 12(B)(2) motion to dismiss with the affidavit of their CEO. The CEO testified unequivocally that the Delta Contract was not assumed under the asset purchase agreement (the “APA”) entered with Delta and certain of its affiliates (collectively, “Delta”) Now, after extensive briefing — including a surreply — in which Plaintiff did not meaningfully address the text of the APA, Plaintiff faults the Court for “fail[ing] to analyze” the APA and contends, again without any evidence, that the APA “includes terms that undermine the Court’s finding.” Motion at 1 As detailed below, the terms that Plaintiff identifies neither undermine this Court’s finding nor contradict the affidavit submitted by the Ancora Defendants Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - O77 Indeed, the record still contains no evidence that the Ancora Defendants assumed the Delta Contract. For these reasons, dismissal of the Ancora Defendants was correct and the Court should deny Plaintiff's motion for reconsideration. As alternative relief, Plaintiff requests that the Court retroactively amend its dismissal order to certify under Rule 54(B) that there is “no just reason for delay” of appellate review. No such certification is warranted. Plaintiff has not provided a record adequate to justify an immediate appeal from the interlocutory order. In particular, Plaintiff has not explained how it could be prejudiced by having to await an appeal in the ordinary course when, at any time, it may proceed with its supposed claims against the Ancora Defendants in a forum where personal jurisdiction exists. The Court should decline to certify its order under Rule 54(B). IL. FACTUAL BACKGROUND AND PROCEDURAL HISTORY In its First Amended Complaint, Plaintiff alleges that it entered the Delta Contract in 2012 and, pursuant to that agreement, supplied textbooks and other educational materials to students enrolled at various schools affiliated with Delta. Am. Compl. 45. Delta allegedly defaulted on its payment obligations no later than December 2017 and has recently declared bankruptcy. Plaintiff now seeks to recover from the Ancora Defendants some or all of the $2.4 million allegedly owed by Delta. Am. Compl. {35,51 The Ancora Defendants acquired certain assets of Delta through the APA on January 18, 2018. The First Amended Complaint alleges that the Ancora Defendants assumed the Delta Contract as part of the APA, but Plaintiff has introduced no evidence substantiating this claim Am. Compl. §§] 46, 47. The Ancora Defendants moved to dismiss for lack of personal jurisdiction on June 15, 2018. In support of their motion, the Ancora Defendants submitted the detailed affidavit of their CEO, Michael Zawisky (the “Zawisky Aff.”). This affidavit demonstrates that the Ancora Defendants neither assumed nor benefitted from the Delta Contract. Zawisky Aff Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - O78 7-9. Further, Zawisky offers unrebutted testimony that the Ancora Defendants are based in Texas, have no physical presence in Ohio, did not acquire any schools based in Ohio under the APA, and did not make or authorize any payment assurances to Plaintiff. Zawisky Aff. J] 2-4, 10-16. Plaintiff opposed the motion to dismiss on June 29, 2018. Plaintiff argued that the Delta Contract contains a provision consenting to personal jurisdiction in Ohio, and that the Ancora Defendants are bound by this provision because, purportedly, they assumed the Delta Contract. Memo Contra at 5-7. Crucially, Plaintiff did not introduce any evidence to rebut Zawisky’s testimony, including his statement that the Ancora Defendants had not assumed the Delta Contract. Plaintiff instead adopted the position that the mere allegations of its pleadings were sufficient Memo Contra at 7 In a reply filed on July 6, 2018, the Ancora Defendants demonstrated that Plaintiff could not satisfy its burden to make a prima facie showing of personal jurisdiction without any evidence. Reply at 2-3. In response, Plaintiff sought leave to file a surreply on July 30, 2018. Plaintiff attached to its proposed surreply the affidavit of its CFO, Gregory Smith, and the redacted APA that Plaintiff obtained before the commencement of this litigation. Plaintiffs analysis of the APA was confined to a single sentence in the surreply: “In fact, under the APA, Ancora Holdings expressly assumed liabilities for the ongoing operation of the Delta assets that Ancora Holdings acquired.” Surreply at 5. The proposed surreply then alleged, without any evidentiary support, that educational materials Plaintiff claims to have shipped in January 2018 were sent “to students who were enrolled in courses at colleges that Ancora Holdings acquired from Delta.”! /d. Based 1 In support of this statement, Plaintiff cited Paragraph 11 of the Smith Affidavit, which merely avers that Plaintiff, under the Delta Contract, “shipped books and educational materials to students, including students residing in Ohio, in January 2018.” Neither the Smith Affidavit nor any evidence in the record indicates at which schools the students who allegedly received these materials were enrolled and whether said schools were acquired by the Ancora Defendants. Further, there is no indication whether the alleged “students residing in Ohio” were enrolled in schools located in Ohio. Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - O7 entirely upon this bare allegation that materials delivered in January 2018 “related to the ongoing operation of the Delta assets that Ancora Holdings acquired,” Plaintiff argued that the Delta Contract was “expressly assumed” under the APA. Surreply at 5 The Ancora Defendants opposed Plaintiffs motion for leave to file a surreply on July 31, 2018, specifically identifying the lack of any evidentiary basis for Plaintiff's assertion that the materials allegedly shipped to students in January 2018 related to the operation of assets acquired from Delta. Memo Contra Surreply at 5-6 & n.2 On August 22, 2018, the Court entered an order dismissing all claims against the Ancora Defendants for lack of personal jurisdiction.” In doing so, the Court correctly held that Plaintiff failed to meet its burden to present evidence rather than “mere allegation.” See Decision at 2 & n.l. Plaintiff now seeks reconsideration of this order or, alternatively, retroactive certification under Rule 54(B). In apparent anticipation of the possibility of Rule 54(B) certification, Plaintiff also filed a notice of appeal on September 20, 2018 Til. LAW AND ARGUMENT A. Plaintiff's Motion For Reconsideration Should Be Denied Because The Record Still Contains No Evidence That The Ancora Defendants Assumed The Delta Contract Plaintiff has now supplemented the record to include the various schedules and exhibits to the APA. Critically, though, Plaintiff has not remedied the evidentiary void that has existed from the outset. Specifically, Plaintiff has introduced no evidence whatsoever that the educational materials purportedly shipped under the Delta Contract in January 2018 relate to the “business of owning and operating” any school that the Ancora Defendants acquired from Delta. In the absence ? The Court’s order also granted Plaintiff's motion for leave to file a surreply. The Court thus accepted and considered the proposed surreply and accompanying materials filed by Plaintiff on July 30, 2018. Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - 080 of such evidence, Plaintiff cannot make its required prima facie showing that the Ancora Defendants assumed the Delta Contract and its concomitant forum-selection clause Under the APA, the Ancora Defendants “shall not assume, and shall not be deemed to have assumed, any liability or obligation of [Delta] other than the Assumed Liabilities..., including, without limitation, the Excluded Contracts.” APA § 2.43 The term “Excluded Contracts” is defined as those contracts listed on Schedule 2.2(a). APA, § 2.2(a). Plaintiff emphasizes that the Delta Contract is not listed on Schedule 2.2(a). While true, Plaintiff's observation provides no evidence that the Delta Contract is within the definition of “Assumed Liabilities” in the first place. Tf the Delta Contract does not meet the definition of “Assumed Liabilities,” then it is not assumed under the APA irrespective of whether it is listed as an “Excluded Contract.” APA § 2.4. The Ancora Defendants’ CEO expressly attested that the Delta Contract is not among the “Assumed Liabilities” in the APA. Zawisky Aff J 9. Plaintiff's interpretation of the APA fails because it cannot show that the Delta Contract relates to the ongoing operation of a “School” — a defined term in the APA that refers only to the chools purchased by the Ancora Defendants. APA § 1.1. This is significant because, contrary to Plaintiffs strained argument, only contracts that relate to the ongoing operation of a “School” are “Assumed Liabilities” under the APA. Plaintiffs interpretation of the APA proceeds as follows 1 “Assumed Liabilities” include “all liabilities and obligations of [Delta] under or relating to each of the Purchased Contracts (except for liabilities arising out of any breach or default of any such Purchased Contract on or prior to the Closing Date).” APA § 2.3(a)(i) “Purchased Contracts” are contracts “that relate to the Business that are not Excluded Contracts.” APA § 1.1. “Business” is defined as “the business of owning and operating the Schools (as such business is conducted by [Delta] on the date of [the APA].” APA § 1.1 3 The APA and its schedules and exhibits are attached as Exhibit 1 to Plaintiff’s Motion for Reconsideration. Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - O81 Plaintiff wrongly stops here, eliding the particularized definition of “School” and thereby incorrectly suggesting that a contract relating to the ownership and operation of any Delta school falls within the definition of “Assumed Liabilities.” Motion at 4, 7. Instead, the APA defines “School” to include only the purchased institutions listed on Schedule Ion the APA. APA § 1.1 This definition reflects the critical fact that the Ancora Defendants did not acquire all Delta schools. APA at Schedule I; see Zawisky Aff. J 6. Accordingly, in order to show that a contract is within the definition of “Assumed Liabilities’ under the APA, there must be some evidence indicating that the contract, as of the date of the APA, related to ownership and operation of a school listed on Schedule I (i.e., a“School”). APA §§ 1.1, 2.3(a)(i). As previously discussed, Plaintiff has placed no evidence in the record demonstrating that, as of the date of the APA, the Delta Contract related to ownership and operation of any school listed on Schedule I. Plaintiff's motion for reconsideration simply reprises the bare allegation of its surreply. Although Plaintiff cites to the Smith Affidavit in support of this statement, the affidavit provides no evidentiary basis for Plaintiff's claim. The relevant portion of the affidavit simply states that “[Plaintiff] shipped books and educational materials to students, including students residing in Ohio, in January 2018.” Smith Aff. § 11. Plaintiff has still not produced any evidence to show the schools at which these students were enrolled, thus there is still no basis upon which to conclude that Plaintiff shipped the materials to students at schools listed on Schedule I. As a result, Plaintiff cannot make the required prima facie showing that the Delta Contract is among the “Assumed Liabilities” under the APA. The Ancora Defendants submitted evidence with their motion to dismiss plainly demonstrating that they did not assume or benefit from the Delta Contract and have no relevant contacts with Ohio. Zawisky Aff. JJ 2-12. Plaintiff has now opposed that motion in a memo contra, Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - 082 a surreply, and a motion for reconsideration, but still has provided no evidence rebutting that offered by the Ancora Defendants. The Court’s decision that personal jurisdiction does not lie against the Ancora Defendants is correct and should remain undisturbed. B. Plaintiff Faces No Hardship Warranting Certification Under Rule 54(B) In the alternative, Plaintiff requests retroactive certification under Rule 54(B). Without this certification, Plaintiff may appeal only after the adjudication of all claims against all parties. Civil Rule 54(B); see also CitiMortgage, Inc. v. Roznowski, 139 Ohio St. 3d 299, 303 (2014). Plaintiff, however, has not established any need for this uncommon remedy Rule 54(B) effectuates the “strong policy against piecemeal litigation” but recognizes “the possible injustice of delayed appeals in special situations.” Dywidag Sys. Int'l v. Ohio DOT, 10th Dist. Franklin No. 87AP-837, 2010-Ohio-3211, § 26. As a result, in cases where not all claims against all parties have been adjudicated by the trial court, Rule 54(B) permits the immediate appellate review of a final order under R.C. 2505.02' in “the infrequent, harsh situation” where “undue prejudice, hardship or injustice may be avoided and judicial administration interests furthered.” Noble v. Colwell, 44 Ohio St. 3d 92, 97 (1989). The express certification of such circumstances, which Rule 54(B) requires as a precondition to immediate appellate review, is discretionary. /d. at 97, n.7. Even so, “[a] trial court does not have unlimited discretion” under Rule 54(B), and certification “is not to be granted as a matter of course but is to make a reasonable 4 R.C. 2505.02 defines what constitutes a “final order” as to which appellate jurisdiction may be exercised. Gehm v. Timberline Post & Frame, 112 Ohio St. 3d 514, 517-518 (2007). As Plaintiff notes, orders dismissing claims for lack of personal jurisdiction — at least where the asserted basis for personal jurisdiction is an allegedly applicable forum-selection clause — meet the definition of “final order” set forth in R.C. 2505.02(B)(1). Nat'l City Commercial Capital Corp. v. AAAA At Your Service, Inc., 114 Ohio St. 3d 82, 83-84 (2007); Residential Fin. Corp. v. Greenpoint Mortgage Funding, Inc., 10th Dist. Franklin No. 09AP-497, 2010-Ohio-1322, 4] 11-12; see R.C. 2505.02(B) (“An order is a final order... when it is one of the following: (1) An order that affects a substantial right in an action that in effect determines the action and prevents a judgment....”). That said, even a “final order” under R.C. 2505.02 is subject to the requirements of Rule 54(B). CitiMortgage, 139 Ohio St. 3d at 303 (“An order of a court is a final appealable order only if the requirements of both R.C. 2505.02 and, if applicable, Civ. R. 54(B), are met.”). Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - 08 accommodation of the policy against piecemeal appeals with the possible injustice sometimes created by the delay of appeals.” Lewis v. Surgery & Gynecology, Inc., 1988 Ohio App. LEXIS 887, *6 (10th Dist. Mar. 15, 1988). Here, there is nothing unjust or harsh about enforcing the strong general policy against piecemeal appellate review. Indeed, Plaintiff has immediate recourse that does not require any appellate review at all — it may simply sue the Ancora Defendants in a forum where personal jurisdiction actually exists.° It would not promote sound judicial administration to expedite Plaintiff's efforts to seek appellate review of its unfounded jurisdictional arguments when such an obvious and straightforward alternative exists. Cf Gehm v. Timberline Post & Frame, 112 Ohio St. 3d 514, 517-18 (2007) (denial of a motion to intervene is not a “final order” when the purpose for which intervention was sought may be accomplished by initiating a separate action). Plaintiff speciously argues that there is no just reason to delay appellate review of the dismissal of the Ancora Defendants because all other defendants have filed for bankruptcy protection. Motion at 9-10. The fact this this litigation has already been fragmented by Delta’s petition for bankruptcy does not weigh in favor of further fracturing these proceedings by allowing piecemeal appeals to proceed. That approach would cause the simultaneous involvement of three courts — this Court, the U.S. Bankruptcy Court, and the Tenth District Court of Appeals — and invite procedural complexity and the risks of inconsistent outcomes and duplicative litigation. See Portco, Inc. v. Eye Specialists, Inc., 173 Ohio App. 3d 108, 112 (4th Dist. 2007) (abuse of discretion to certify under Rule 54(B) where unresolved claims involve “same facts, legal issues 5 Plaintiff's pursuit of claims against the Ancora Defendants in the face of the unambiguous terms of the APA borders on frivolous. The Ancora Defendants reserve the right and opportunity to seek sanctions against Plaintiff should it determine to pursue such frivolous claims against them in another jurisdiction. Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - O84 and circumstances” as certified claims); Shakeir v. American Speedy Printing Centers, Inc., 1989 Ohio App. LEXIS 4052, *5-6 (10th Dist. Oct. 26, 1989) (same). Cc. This Court Retains Jurisdiction Because Plaintiff's Notice Of Appeal Is Premature As detailed above, the interlocutory order dismissing the Ancora Defendants cannot be appealed absent certification under Rule 54(B). For this reason, the Notice of Appeal that Plaintiff filed on September 20, 2018 is premature. Under Appellate Rule 4(C), “[a] notice of appeal filed after the announcement of a decision, order, or sentence but before entry of the judgment or order that begins the running of the appeal time period is treated as filed immediately after the entry.” Further, “a premature notice of appeal under App. R. 4(C) does not divest the trial court of jurisdiction to proceed because the appeal has not yet been perfected.” State ex rel. Everhart v. MeIntosh, 115 Ohio St. 3d 195, 198 (2007); see also Beavers v. Knapp, 175 Ohio App. 3d 758, 789 (10th Dist. 2008) (notice of appeal filed without required Rule 54(B) certification did not divest trial court of jurisdiction) Iv. CONCLUSION Despite having now filed at least three separate briefs on the jurisdictional issue raised by the Ancora Defendants, Plaintiff has still introduced no evidence contradicting the Zawisky Affidavit and has not satisfied its burden to make a prima facie showing of personal jurisdiction. In addition, Plaintiff can show no hardship attendant to awaiting an appeal in the ordinary course. For these reasons, the Court’s order dismissing all counts against the Ancora Defendants should stand, without certification under Rule 54(B). Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - 08 Respectfully submitted, /s/ C. Craig Woods C. Craig Woods (0010732) Andrew H. King (0092539) Michael T. Mullaly (0090202) SQUIRE PATTON BoGcs (US) LLP 2000 Huntington Center 41 South High Street Columbus, Ohio 43215 Telephone: (614) 365-2700 Facsimile: (614) 365-2499 craig. woods@squirepb.com andrew.king@squirepb.com michael.mullaly@squirepb.com Attorneys for the Ancora Defendants 10 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Oct 03 1:54 PM-18CV002305 0E349 - 08 CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and accurate copy of the foregoing was served this 3rd day of October, 2018, via the Court’s electronic filing system and/or by regular U.S. Mail, upon the following Elizabeth L. Moyo Delta Career Education Corporation Allen T. Carter 99 Canal Center Plaza, Suite 501 Porter, Wright, Morris & Arthur LLP Alexandria, VA 22314 41 South High Street Columbus, OH 43215 emoyo@porterwright.com acarter@porterwright.com Attorneys for Plaintiff Atlantic Coast Colleges, Inc. Berks Technical Institute, Inc c/o Corporation Service Company c/o Corporation Service Company 2626 Glenwood Ave., Suite 550 251 Little Falls Drive Raleigh, NC 27608 Wilmington, DE 19808 McCann Education Centers, Inc. McCann School of Business and c/o Corporation Service Company Technology, Inc. 2595 Interstate Drive, Suite 103 c/o Donald C. Douglass, Jr. Harrisburg, PA 17110 3320 West Esplanade Ave. North Metairie, LA 70002 Miller-Motte Business College, Inc Palmetto Technical College, Inc. c/o Corporation Service Company c/o VB Business Services, LLC 2626 Glenwood Ave., Suite 550 500 World Trade Ctr. Raleigh, NC 27608 101 W. Main Street Norfolk, VA 23510 Piedmont Business Colleges, Inc. c/o Corporation Service Company 2626 Glenwood Ave., Suite 550 Raleigh, NC 27608 /s/ Michael T. Mullaly Michael T. Mullaly (0090202) 11