Nebraska Court Kicks Case To California

Applied Sad Saint BernardHere is another in a continuing string of decisions against Applied Underwriters’ efforts to force California employers into Nebraska courts. Nebraska’s Court of Appeals says a California employer’s dispute over Applied Underwriters’ EquityComp program should be heard in California. The Nebraska Court of Appeal says a forum selection clause that Applied included in a promissory note signed by O’Connell Landscape Maintenance is unenforceable. The same court last week also kicked out an Applied Underwriters lawsuit against a New York company because it too had no connections to Nebraska.

Applied sued O’Connell in Nebraska to collect on $621,752.97 that it alleges is still owed on a $1 million promissory noted that O’Connell signed in 2014. O’Connell maintains that it signed the promissory note under duress as Applied was threatening to cancel its workers’ comp coverage.

“Evidence submitted by O’Connell established it has never transacted any business in Nebraska; it does not have any employees, directors, or property located in Nebraska; it has not caused any tortious injury in Nebraska; nor has it ever registered with the Nebraska Secretary of State,” the Nebraska Court of Appeal notes. “All of the witnesses O’Connell needs to defend this case are in California, as are all the documents and other sources of proof.”

The lower court held the forum selection clause was unenforceable because of O’Connell’s lack of contact with Nebraska, which was a similar finding to the Court of Appeal’s earlier holding in Applied Underwriters v. E.M. Pizza. The court of appeal notes that the only wrinkle here is that the forum selection language was in a promissory note rather than the reinsurance participation agreement that’s been deemed illegal and unenforceable under California law.

For the court of appeal, this was a distinction without a difference.

“[I]n order to determine whether O’Connell has raised a legitimate defense, the court will need to examine the RPA which, in turn, requires an analysis of California’s workers’ compensation laws,” the court writes. “It is this factor which led to the above-mentioned findings and lack of personal jurisdiction in E.M. Pizza and, similarly, results in the same conclusion here. We hold that the court did not err in determining that the Nebraska court lacked personal jurisdiction over O’Connell.”

Copies of the Nebraska Court of Appeal’s decision in Applied Underwriters v. O’Connell Landscape Maintenance is available in our Resources section or by clicking on the case title.