Judge Cory Rescinds Contempt Order in ‘Consipio v Private’

LAS VEGAS—District Court Judge Kenneth C. Cory today rescinded the order he issued Sept. 27 in Consipio v. Private that found Private Media Group and several of its directors, including board chair and CEO Berth Milton, in contempt of court, with individual fines of $72,000 levied against each individual as well as against Private as a corporate entity.

The decision to rescind was made by Judge Cory because his order conflicted with an order issued a day earlier by the Supreme Court of Nevada that temporarily stayed all lower court proceedings against Milton. The discrepancy was pointed out in an article published Friday by AVN that included a statement by the executive assistant to Judge Cory claiming that the judge was unaware of the order issued by the higher court the day before he filed his order.

The Minute Order issued shortly after 10 a.m. this morning by Judge Cory corroborates that claim. “It has come to the Court's attention the Supreme Court has issued an Order Granting Temporary Stay in this matter on September 26, 2011, one day in advance of this Court's Order in regards to contempt sanction,” the Minute Order read. “COURT ORDERS, The Findings of Fact, Conclusions of Law and Order regarding Contempt issued by this Court on September 27, 2011, is therefore RESCINDED pending further order of the Supreme Court.”

The legal terrain now appears cleared for the Supreme Court of Nevada to address all of the Consipio v. Private cases pending before it, which, according to a Sept. 26 Order Directed Expediting Briefing, the court now wants to consider in one fell swoop on a expedited basis. From the various orders issued in the four related cases before the Supreme Court, the expedited briefing schedules ordered by the court mandate that all briefs and motions must be filed either by Oct. 17 or by the end of the month, depending on the case, following which the court will review the arguments and issue its rulings. However, an imminent ruling is expected on the renewal of the request for an emergency stay of the receivership order pending a final decision by the Supreme Court of Nevada.

In a related matter, Laxalt & Nomura, the law firm representing Private Media Group's independent directors, filed a motion Thursday with the Nevada Supreme Court asking to be dismissed from one of the cases pending before the court.

The directors—Johan Calrberg, Peter Dixinger (who recently resigned from the board), Bo Rodebrant, Johan Gollborg and Philip Christmas—were dismissed from the underlying District Court action, Consipio Holdings v. Private Media Group, for lack of personal jurisdiction. The plaintiffs in Consipio appealed that decision in April of this year and on April 10 filed their opening brief seeking to have Judge Gonzalez’s order overturned.

On Sept. 7, Laxalt & Nomura filed a request for an extension of time to reply to the opening brief, citing as reasons an Aug. 25 email from the just-appointed receiver’s personal attorney restricting “counsel's ability to communicate with those individuals at Private Media Group who are individual defendants in this underlying case, and are the respondents in this instant appeal,” as well as the expedited briefing schedule and, as the final straw, a Sept 29 email from the receiver’s counsel alerting Laxalt & Nomura that it is no longer “authorized to represent the independent directors or Berth Milton in this matter.”

The law firm concluded, “In light of the foregoing, and pursuant to Supreme Court Rule 48, Laxalt & Nomura, Ltd. hereby requests that it be permitted to withdraw as counsel for Respondents, due to the fact that it has been terminated by the Receiver. Counsel anticipates that the Receiver will promptly provide new counsel on behalf of Respondents.”

Indeed, in an email reply to the receiver’s counsel on the same day the above email was received, Laxalt attorney Justin Vance wrote, “I understand this to be a termination; accordingly, please be advised that we will cease all work on the appeal and seek withdrawal with respect thereto, and request that you provide counsel for the individuals implicated in the appeal, as well as the contempt proceeding, within 24 hours (noon tomorrow).”

There has as yet been no indication from the Supreme Court that it will accept counsel’s motion for permission to withdraw from the case, or whether the receiver has provided new counsel for the “individuals implicated in the appeal.”

Also today, the Real Parties in Interest—Consipio Holding, Ilan Bunimovitz, Tisbury Services and Claudio Gianascio—filed an opposition to petitioner Berth Milton’s renewed motion for an emergency stay of contempt proceedings against him in the District Court, arguing, “In his renewed motion for a stay, Milton attempts to portray himself as the victim of circumstances beyond his control that have forced him to make a terrible choice—either to defend against a contempt hearing before the district court and risk mooting his writ petition appealing the district court's denial of his motion to dismiss for lack of personal jurisdiction, or else fail to defend himself at the contempt hearing and risk receiving some type of sanction from the district court. This is a false dilemma.”

The motion further asserts that Milton will not waive his right to assert that he is not subject to the personal jurisdiction of the Nevada courts by appearing in Nevada to “face charges that he is in contempt of the preliminary injunction and order appointing receiver,” and that a stay at this point is premature, arguing, “If the contempt proceedings against Milton are not stayed and Milton appears and expressly asserts his defense of lack of personal jurisdiction (thereby not waiving it), the worst that will happen to him will be an order rejecting that defense, finding him in contempt and imposing an appropriate penalty. If Milton appeals the order, which is his right, he will suffer no irreparable harm until this Court validates the district court's determinations and actions.”

Needless to say, Milton’s camp does not agree that an appearance by him in Nevada will not be construed by the court as a waiver of his claim that the court lacks personal jurisdiction over him, and cite comments made by Judge Elizabeth Gonzalez to Milton’s personal attorney, John S. Delikanakis, during a June 15 evidentiary hearing, saying that he should limit the extent of his participation in the hearing and not “…unknowingly get placed in a position where somebody says, gosh, he went beyond the request he was making related to jurisdiction, Judge.”

“Thus," their motion states, "the district court has made it quite clear that any attempt to seek redress unrelated to Milton’s jurisdictional defense may be deemed by the district court to be a general appearance and a waiver of any jurisdictional defenses.”

Whether that assertion is accurate or not, Milton’s attorney will not let his client appear in Nevada at this point in time, and continues to seek a ruling by the Supreme Court that the state does not have personal jurisdiction over him for the same reasons as those successfully asserted by the independent directors but denied him by the lower court.

The plaintiffs in Consipio, on the other hand, argue that Nevada’s corporate laws are all but meaningless if the state cannot exert at least some control over individual directors, no matter where they live or how much actual interaction they have with the state. “Where,” they argue, “as here, the most senior director and officer and largest shareholder of a Nevada corporation, in breach of his fiduciary duties imposed on him under Nevada law, is looting the corporation for his own personal benefit, specific jurisdiction is appropriate and such a malefactor should reasonably anticipate being hauled into court in Nevada to answer for his malevolent acts.”