The Edge in College Preparation, LLC v. Peterson's Nelnet, LLC

Filing 128

MEMORANDUM AND ORDER granting in part and denying in part 93 Motion for Partial Summary Judgment; denying 99 Motion for Summary Judgment. The Edge in College Preparation's motion for partial summary judgment is granted in part and denied in part. Peterson's Nelnet's motion for summary judgment is denied. Ordered by Chief Judge John M. Gerrard. (DCD)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
THE EDGE IN COLLEGE
PREPARATION,
LLC, a New York limited liability
company,
Plaintiff and
Counterclaim
Defendant,

8:16-CV-559
MEMORANDUM AND ORDER

vs.
PETERSON'S NELNET, LLC, a
Nebraska limited liability company,
Defendant and
Counterclaimant.

The 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 9-10.
This 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.
BACKGROUND
Jessica Davidoff is the sole member of the Edge in College Preparations,
a New York limited liability company. The Edge specializes in providing oneon-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 at 1-2.
After a 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.
But as 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
2

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.
But 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.
A few 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.
On 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
3

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.
Filing 112-15 at 3.
The 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
Once 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
4

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.
STANDARD OF REVIEW
Summary 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.
On a 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
5

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.
DISCUSSION
I. BREACH OF CONTRACT
The 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).
Neither 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.
(a) The Edge's Breach of Contract Claim
Nelnet 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
6

the agreement because Nelnet could terminate the parties' obligations at its
sole discretion. Filing 101 at 7.
Nelnet's 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.1 Filing 11215 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.
The 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

1

Nelnet's argument is taken for what it is worth. In a subsequent brief opposing the Edge's

motion for summary judgment on its copyright infringement claim, Nelnet explicitly admits
that it "terminated the Contract, at the earliest, on August 17, 2015, when it mailed written
notice to [the Edge], as expressly required by the Contract." Filing 116 at 6.

7

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 11215 at 3.
In 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.2 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.
Nelnet's 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
parties' agreement, Nelnet points to § 8 of the parties' Publishing Agreement.
Under § 8, if
the manuscript delivered [by the Edge] is not satisfactory to
[Nelnet] at its sole discretion, [Nelnet] may at its option and its
sole discretion terminate this agreement by notice in writing
mailed to the [Edge's] last known address, in which case [the Edge]
shall be assigned all rights to created by [the Edge] for the

2

To be clear, and as the Court will explain in more detail below, there is some dispute as to

whether Nelnet actually terminated the parties' agreement on August 10, 2015. But whether
the August 17 letter is construed as a confirmation of prior termination or as a final
termination, there can be no dispute that it is not a modification.

8

manuscript. . . . If the [Edge] agrees to finish, correct, or improve
the Work and if the revised version of the work, once delivered, is
not satisfactory to [Nelnet] at its sole discretion (or if [the Edge] is
unwilling to make further changes), [Nelnet] may avail itself of the
remedies set forth in this paragraph 8.
Filing 111-9 at 10.
According to Nelnet, § 8 provided it with two options in the event that it
determined the Edge's manuscript was not satisfactory: (1) Nelnet could
unilaterally terminate the agreement or (2) Nelnet could offer the Edge the
opportunity to revise the manuscript. Filing 101 at 7. Under the latter option,
if the Edge agreed to revise the manuscript, Nelnet could still terminate the
agreement if the revised portion remained unsatisfactory. Filing 101 at 7. The
Edge, on the other hand, reads § 8 as giving Nelnet a right to terminate the
agreement only if Nelnet determines the Edge's revised manuscript is
unsatisfactory. Filing 118 at 13. That is, according to the Edge, it had the
absolute right to make revisions to its initial manuscript before Nelnet could
terminate the agreement.
But the Edge's understanding of § 8 defies basic principles of contract
interpretation. It is a fundamental rule of contract law that "words must be
given their plain and ordinary meaning as reasonable persons would
understand them." Kreikemeier v. McIntosh, 391 N.W.2d 563 (Neb. 1986). And
here, the plain understanding of the words "if" and "agree" undermine the
Edge's construction of § 8. Filing 111-9 at 10.
To begin with, the word "if" describes a contingency––that is, whatever
follows might or might not happen. If, New Oxford American Dictionary (2nd
ed. 2005). Here, the contingency of § 8 is that Nelnet could determine the
manuscript is not satisfactory. If that occurred, Nelnet had two options, one
9

explicit and one implicit. One option, which was clearly articulated by the
parties, is that Nelnet could terminate the agreement. Filing 111-9 at 10.
Another option, clearly implied, is that Nelnet could ask the Edge to make
revisions. See filing 111-9 at 10. If the Edge agreed to improve the manuscript,
Nelnet could still terminate the parties agreement if, in Nelnet's view, the
revised manuscript was still unsatisfactory. See filing 111-9 at 10. Any other
reading of the "if" statements in § 8 would render at least half of that provision
superfluous. See Reisig v. Allstate Ins. Co., 645 N.W.2d 544, 551 (Neb. 2002).
And that interpretation of § 8 is bolstered by the word "agree" in the
parties' latter option. Agree, New Oxford American Dictionary (2nd. ed. 2005)
(defining agree as the "consent to do something that has been suggested by
another person"). That definition necessarily implies that, under these
circumstances, Nelnet must have offered the Edge the opportunity to revise its
manuscript before the Edge could agree to the revision. After all, the Edge
could not trigger the right to revise the manuscript by agreeing with itself. So,
based on the plain language of § 8 and general rules of contract interpretation,
Nelnet could terminate the agreement without affording the Edge the
opportunity to revise its manuscript if Nelnet determined the manuscript was
not satisfactory.3
Even if the Court were, for sake of argument, persuaded by the Edge's
interpretation of § 8 of the Publishing Agreement, it is undisputed that Nelnet
did allow the Edge to revise its "batch one" submission. Filing 111-2 at 98-99.

3

That conclusion is also bolstered by the Edge's own statements in the days following

Nelnet's termination of the agreement. Indeed, in the Edge's August 18, 2015 response letter,
it noted that the Edge "has not disputed that pursuant to Section 8 of the Agreement,
[Nelnet's] remedy for performance concerns identified by [Nelnet] is termination." Filing 9519 at 6.

10

After Nelnet submitted its "batch one" revisions, Nelnet informed the Edge
that despite those revisions, the manuscript "is still not at the level [Nelnet]
thought it would be this time around." Filing 112-9 at 1. Nelnet also told the
Edge that "we are finding issues with grammar, organization, and spelling just
to name a few. . . [we] cannot afford to have manuscript come in with these
types of errors." Filing 112-9 at 1. And if the Edge's unsatisfactory revisions
were, in fact, the catalyst for Nelnet's decision to terminate the agreement,
then even by the Edge's own interpretation, Nelnet's remedy would be
termination. See filing 111-9 at 10; see also filing 95-19 at 6.
Even so, that does not mean that summary judgment is warranted.
Indeed, despite Nelnet's statements about the poor quality of the Edge's
manuscript, the record also includes evidence from which a reasonable jury
could conclude that Nelnet might have actually been satisfied with the Edge's
work on the manuscript. See filing 118 at 14; filing 95-23 at 1; filing 95-3 at 10.
For example, after the Edge submitted its revised manuscript to Nelnet,
Nelnet took steps to further solidify the parties' relationship by initiating
negotiations about leasing the Edge's online training and study videos. Filing
118 at 15; filing 95-23 at 1. Nelnet's editorial team also congratulated its staff
on "steering the ship back on course." See filing 95-19 at 2.
And even after Nelnet informed the Edge that it would be terminating
the parties' agreement, Nelnet sought to retain the copyright in that work and
forwarded the allegedly deficient work to Red Letter Content to "[l]icense asis." Filing

95-3 at 10.

That evidence, the Edge argues, creates factual

questions for the jury to resolve. Indeed, why would Nelnet want to retain the
copyright or license a work that, in its view, was so inadequate it warranted
termination of the agreement? And why, as the Court will explain in more
detail below, did portions of that allegedly deficient manuscript appear in
11

Nelnet's final publication? Compare filing 112-2 at 1-33 with filing 103-4 at 137. Those questions are for the jury to decide. So, the Court will deny Nelnet's
motion for summary judgment on the Edge's breach of contract claim.
(b) Nelnet's Breach of Contract Counterclaim
The Edge moves for summary judgment on Nelnet's breach of contract
counterclaim. Filing 94 at 17. According to the Edge, Nelnet's counterclaim
necessarily fails because the contract provides "no provision to which [Nelnet]
can point as having been breached." Filing 94 at 17. Nelnet, on the other hand,
argues that there is evidence to support its contention that the Edge breached
the terms of the Publishing Agreement. More specifically, Nelnet claims that
there is evidence, if believed by a jury, from which a reasonable fact finder
could determine that the Edge breached the Publishing Agreement by failing
to submit its manuscript "in a timely manner, having been carefully edited for
content" and in a form "ready for review." Filing 111-9 at 16; filing 111-7 at 15.
The Court agrees. As explained in the previous section, there is evidence
from which a reasonable jury could conclude that the Edge did not submit a
satisfactory work product. And that conduct would at least arguably breach
the Edge's obligation under the agreement to submit its manuscript in a form
"ready for review." Filing 111-9 at 16; see also filing 116 at 20. So, the Court
will deny the Edge's motion for summary judgment on Nelnet's counterclaim.
II. COPYRIGHT INFRINGEMENT
The parties have also filed cross-motions for summary judgment on the
Edge's copyright infringement claim. Specifically, Nelnet argues that the
Edge's copyright infringement claim necessarily fails because no reasonable
jury could conclude that Nelnet's final 2016 ACT Preparation Guide is
12

substantially similar to the Edge's copyrighted manuscript. Filing 101 at 26.
The Edge, on the other hand, claims that the undisputed evidence
demonstrates that Nelnet infringed on its copyright on at least two occasions—
first when Nelnet distributed the Edge's copyrighted work to Red Letter
Content, and again when the Edge's copyrighted manuscript was incorporated
into Nelnet's final publication. See filing 94 at 13.
The Court will begin with the Edge's contention that it is entitled to
summary judgment on its first allegation of copyright infringement: the
distribution of the Edge's manuscript to Red Letter Content. As a threshold
matter, however, Nelnet contends that claim is not even an issue in this
litigation. That is true, Nelnet argues, because the Edge failed to adequately
plead the Red Letter Content infringement. Filing 116 at 14.
But that argument is without merit. After all, the operative complaint
specifically alleges that Nelnet "used, reproduced and/or distributed the
copyrighted Work." Filing 76 at 6. And that allegation clearly places Nelnet on
notice of the Edge's contention that Nelnet infringed on its copyright when it
"distributed that copyrighted Work" to Red Letter Content on August 13, 2015.
Filing 76 at 6; see Hamilton v. Palm, 621 F.3d 816, 818 (8th Cir. 2010); Fed. R.
Civ. P. 8(a)(2). So, the relevant question before the Court is whether a genuine
dispute of material fact exists on this allegation of copyright infringement.
To establish its claim for copyright infringement, the Edge must prove
(1) it owns a valid copyright; (2) that Nelnet had access to the copyrighted
material; and (3) there is a substantial similarity, in both ideas and expression,
between the Edge's manuscript and Nelnet's final publication. Hartman v.
Hallmark Cards, Inc., 833 F.2d 117, 119 (8th Cir. 1987); see also McCulloch v.
Albert E. Price, Inc., 823 F.2d 316, 318 (9th Cir. 1987). Nelnet does not dispute
the fact that it forwarded the Edge's manuscript to Red Letter Content. Filing
13

112-17 at 1-2. But Nelnet does dispute the Edge's contention that it owned a
valid copyright in the distributed material at the time of the alleged
infringement. See filing 116 at 14. More specifically, Nelnet argues that under
§ 3 of the parties' Publication Agreement, the Edge agreed to assign "the
copyright and all the exclusive rights comprised in the copyright in the Work
and all revisions thereof, including, but not limited to, the exclusive right to
publish, reproduce, display, and distribute the Work. . . ." to Nelnet. Filing 1119 at 5. And given that language, Nelnet contends that whatever copyright the
Edge may have had in its manuscript belonged to Nelnet on August 13, 2015.
According to the Edge, however, the parties' agreement also included
language providing that if Nelnet exercised its right to terminate the
agreement, "all rights transferred to [Nelnet] by this agreement shall
immediately revert to the [Edge]." Filing 95-14 at 5. And because, in the Edge's
view, Nelnet terminated the agreement before it distributed the manuscript to
Red Letter Content, the Edge contends it cannot be disputed that Nelnet
infringed on the Edge's valid copyright when it distributed the manuscript.
Filing 118 at 18.
Determining which party owned the copyright at the time of the alleged
infringement, however, requires the resolution of a factual dispute underlying
much of this litigation: on what date did Nelnet actually terminate the
Publishing Agreement? If the agreement was terminated on August 10, 2015
as the Edge contends, then the Edge owned the copyright to the manuscript on
August 13 when Nelnet distributed that material. On the other hand, if Nelnet
did not terminate the parties' agreement until August 17, as it contends, then
Nelnet would have been assigned the copyright at the time of the August 13
distribution. So, ruling on the Red Letter Content infringement necessarily

14

requires the Court to take a brief detour through the arguments with respect
to termination of the Publishing Agreement.
As briefly noted above, the Edge contends Nelnet terminated the parties'
agreement on August 10 when it notified the Edge of its intent to terminate to
do so by both telephone and email. See filing 116 at 3. More specifically, the
Edge points out that on August 10, 2015 Nelnet sent the Edge an email
informing the Edge that it should "consider this response as confirmation of
our conversation and termination." Filing 112-13 at 1. That conduct, the Edge
argues, necessarily terminated the parties' obligations under the Publishing
Agreement. But Nelnet claims that its August 10 communications cannot, as
a matter of law, terminate the Publishing Agreement. That is true, Nelnet
argues, because the parties agreed that a termination notice must be "in
writing [and] mailed to [the Edge.]" Filing 111-9 at 10. And because it did not
mail a final termination notice until August 17, in Nelnet's view, the
Publishing Agreement could not have been terminated before that date.
But the Court is not persuaded by Nelnet's technical argument. Indeed,
Nebraska law generally follows the Restatement of Contracts (Second) §§ 1–
385 (1981). See Lee Sapp Leasing, Inc. v. Catholic Archbishop of Omaha, 248
540 N.W.2d 101, 104–105 (Neb. 1995); Whorley v. First Westside Bank, 485
N.W.2d 578, 582 (Neb. 1992); Spittler v. Nicola, 479 N.W.2d 803, 807–08 (Neb.
1992); Rosnick v. Dinsmore, 235 Neb. 738, 748, 457 N.W.2d 793, 799 (Neb.
1990). And under the Restatement of Contracts (Second), clauses requiring
contract termination to be in writing, such as the provision at issue here, are
not necessarily determinative. "[A] self-imposed limitation does not limit the
power of the parties subsequently to contract." Restatement of Contracts
(Second) § 283 cmt. b (2019). "Even a provision of the earlier contract to the
effect that [the agreement] can be rescinded only in writing does not impair
15

the effectiveness of an oral agreement of recession." Id; See also Joseph M.
Perillo, Corbin on Contracts § 7.14 (1993); E. Allan Farnsworth, Farnsworth
on Contracts § 7.6 (2003).
Based on that understanding, it is possible that Nelnet terminated the
agreement before Nelnet mailed the August 17, 2015 letter. But determining
the date of termination requires the fact finder to evaluate the objective intent
of the parties' communications. See generally Viking Broad. Corp. v. Snell Pub.
Co., 497 N.W.2d 383, 384 (Neb. 1993). And after careful review of the evidence,
a reasonable jury could construe Nelnet's August 10 telephone call and email
communications with the Edge as terminating the parties' agreement. See id.
But a reasonable fact finder could also conclude that Nelnet did not terminate
the parties' agreement until August 17. Id.
And because a dispute of material fact exists as to the date Nelnet
terminated the agreement, summary judgment is not appropriate with respect
to the alleged Red Letter Content distribution. Hartman, 833 F.2d at 119.
Accordingly, the Court will deny the Edge's motion for summary judgment with
respect to its first copyright infringement claim.
That brings the Court to the Edge's second allegation of copyright
infringement—its contention that Nelnet's 2016 ACT Prep Guide: The
Ultimate Guide to Mastering the ACT (and all subsequent versions of that
publication) infringed on the Edge's copyright. With respect to this allegation
of infringement, the parties dispute neither that the Edge owned a valid
copyright in this material, nor that Nelnet had access to this material.4 But
the parties do disagree on the issue of substantial similarity. Hartman, 833
F.2d at 119.
4

At this point, it is undisputed that the parties had terminated the Publishing Agreement,

and the Edge's copyright in its manuscript had reverted back to the Edge. Filing 101 at 26.

16

To establish substantial similarity, there must be similarity, both in
ideas and expression, between the original elements of the Edge's manuscript
and the final publication. Schoolhouse, Inc. v. Anderson, 275 F.3d 726, 729-30
(8th Cir. 2002). Determination of substantial similarity involves a two-step
analysis. . Rottlund Co. v. Pinnacle Corp., 452 F.3d 726, 732 (8th Cir. 2006).
There must be substantial similarity both of ideas and of expression. Id.
Similarity of ideas is evaluated extrinsically, focusing on objective similarities
in the details of the works. Id. If the ideas are substantially similar, then
similarity of expression is evaluated using an intrinsic test depending on the
response of the ordinary, reasonable person to the forms of expression. Id. In
other words, the Court must first consider whether the general idea of the
works is objectively similar (i.e., the "extrinsic" portion of the test) and then
determine whether there is similarity of expression (i.e., the "intrinsic" portion
of the test). See Taylor Corp. v. Four Seasons Greetings, LLC, 315 F.3d 1039,
1043 (8th Cir. 2003).
(i) Extrinsic Similarity
To begin, the extrinsic inquiry is an objective one, looking only "to the
specific and external criteria of substantial similarity between the original
elements (and only the original elements) of a protected work and an alleged
copy." Copeland v. Bieber, 789 F.3d 484, 489 (4th Cir. 2015) (internal
quotations omitted). And because it is focused only on the original elements of
the copyrighted work, when examining extrinsic similarity, the fact finder
must first engage in "analytic dissection," separating out those parts of the
work that are original and protected from those that are not. Id.; see Three Boys
Music Corp. v. Bolton, 212 F.3d 477, 485 (9th Cir. 2000); Herzog v. Castle Rock
Entm't, 193 F.3d 1241, 1257 (11th Cir. 1999). In other words, extrinsic
similarity cannot be shown by cherry-picking common ideas between the
17

works—at least, not without considering whether those common ideas are
original, copyrightable elements of the copyrighted works. See Universal
Furniture Int'l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 436 (4th Cir.
2010); see also Herzog, 193 F.3d at 1257.
Here, Nelnet argues that the identical elements of the two works, if any,
are not copyrightable. Filing 101 at 29. More specifically, Nelnet argues that
the Edge's manuscript is largely made up of facts, not original expression. And
because original works are copyrightable, but facts are not, Nelnet argues that
the Edge cannot demonstrate extrinsic similarity. Feist Publ'ns, Inc. v. Rural
Tel. Serv., Co., 499 U.S. 340, 344-45 (1991); Experian Info. Sols., Inc. v.
Nationwide Mktg. Servs. Inc., 893 F.3d 1176, 1185 (9th Cir. 2018);
Schoolhouse, 275 F.3d at 729-30.
But facts are entitled to copyright protection when they are arranged or
selected in such a way that the resulting work as a whole constitutes an
original work of authorship. Schoolhouse, 275 F.3d at 728. And here, the
manner in which the Edge selected and arranged various information––
specifically, in the way the Edge determined would be helpful for students
studying for the ACT––is entitled to copyright protection. See Feist, 499 U.S.
at 349, see also Kregos, 937 F.2d at 702, 709. That means the question before
the Court is whether a reasonable jury could conclude that the manner in
which the Edge selected and arranged that information is objectively similar
to the manner in which Nelnet chose to express its ideas. See Feist, 499 U.S. at
349; Funkhouser v. Loew's, Inc., 208 F.2d 185, 189 (8th Cir. 1953) (citations
omitted).
When evaluating the similarity of factual works, such as college prep
material, similarity of expression generally must amount to nearly verbatim
reproduction or, at the very least, close paraphrasing before a factual work will
18

be deemed infringed. Landsberg v. Scrabble Crossword Game Players, Inc., 736
F.2d 485, 488 (9th Cir. 1984). That is true, because subsequent authors wishing
to express the ideas contained in a factual work often can choose from only a
narrow range of expression. Id.
After careful review of the record, the Court concludes that a reasonable
juror could determine that Nelnet duplicated the selection, coordination, and
arrangement of the ideas in the Edge's manuscript. See Feist, 499 U.S. at 349,
see also Kregos, 937 F.2d at 702, 709. To begin with, many of Nelnet's headings
and the overall organization structure closely track the Edge's headings and
organization. For example, both the Edge's manuscript and Nelnet's final
publication include the following headings in the introductory portion of the
works.
The Edge's Manuscript

Nelnet's ACT Prep Guide

Overview of the book structure

How This Book is Organized

How to Use This Book

How to Use This Book

What is the format of the ACT

What's on the ACT

When Should I Take the ACT

When and how Often to Take the
ACT

How Many Times Should I Take the

When and how Often to Take the

ACT

ACT

General Study Skills and Strategies

General Study Strategies

Compare filing 112-25 at 4-10 with filing 103-4 at 170.
Both works also include a designated area at the end of various sections
that highlight aparticular ideas deserving extra emphasis. For instance, the
Edge used a "tip box" to emphasize certain topics or common errors, filing 9510 at 12, 31, while Nelnet uses an "alert" to highlight common mistakes,
19

compare filing 103-4 at 9. In one of the Edge's tip boxes, the Edge told students
to never leave a question blank. Filing 95-20 at 11. And Nelnet used its "alert"
box to express a similar idea––that it should never leave a question blank
because "any answer, even a guess, is better than none!" Filing 103-4 at 22.
There are also instances where Nelnet's final publication includes the
exact same wording to describe an idea that exists in the Edge's initial
manuscript. For instance, the following sentences appear in the parties'
respective works.
The Edge's Manuscript

Nelnet's ACT Prep Guide

"While taking as many practice tests

"While taking as many practice tests

as you can is always a good thing,

as you can is always a good thing,

it's definitely not an effective

it's definitely not an effective

exercise unless . . .

exercise unless . . . "

"Now that you've learned some basic

"Now that you've learned some tried-

study skills and test-taking

and-true study skills and strategies,

strategies, you're going to want to

you're going to want to make a study

make a study plan to tackle all of

plan to tackle all of this material."

this material."
"On the next few pages, you will find

"On the next few pages, you will find

sample plans based on how much

study plans based on how much time

time you have before your test date."

you have before your test date."

Compare filing 112-25 at 9 with filing 103-4 at 10, 17, 19.5
5

The Court notes that Nelnet argues that it removed at least some of this language from

subsequent editions of the ACT Prep Guide. Filing 100 at 18. But even assuming that is true,
summary judgment is still not warranted.

20

Nelnet's selection of examples in its English portion also closely resemble
the examples chosen by the Edge––despite the fact that there are several other
words that could illustrate the same grammatical principle. For instance, when
demonstrating the use of apostrophes for a possessive word that ends in the
letter "s" both works used the phrase "the bus' wheels." Filing 112-25 at 14;
filing 103-4 at 145. The word "committee" is used in both works as an example
of a collective noun. Filing 112-25 at 15; filing 103-4 at 152. And the words
"more" and "most" demonstrate superlative and comparisons in both works.
Filing 112-25 at 15; filing 103-4 at 156. When explaining correlative
conjunctions,

both

works

use

the

same

examples––"either…or",

"neither….nor", and "not only…but also". Compare filing 112-25 at 17 with
filing 103-4 at 178. Lastly, in its section on idioms, not only are both works
arranged in nearly identical fashions––first, by giving a general explanation of
idioms followed by a list of common idioms, compare filing 95-20 at 101 with
filing 103-4 at 170, but the similarities go as far as expressing the idea that, as
a concept, idioms are more difficult for non-native English speakers. Nelnet's
list of idiom examples also use nearly all, if not all, of the idioms used in the
Edge's initial manuscript. Compare filing 95-20 at 101 with filing 103-4 at 170.
Based on the foregoing, a reasonable juror could certainty conclude that
arrangement and selection of information in the two works are objectively
substantially similar. Hartman v. Hallmark Cards, Inc., 833 F.2d 117, 120–21
(8th Cir. 1987). Accordingly, the Court will proceed to the intrinsic part of the
substantial similarity test.
(ii) Intrinsic Similarity
The intrinsic portion of the two-part test is satisfied if the total concept
and feel of the works in question are substantially similar. Id.; see Taylor, 315
21

F.3d at 1043. To support why, in its view, the two works are not intrinsically
similar, Nelnet argues, among other things, that Nelnet's works are "finished,
bound, printed, and published" whereas the Edge's are not. Filing 101 at 43.
And Nelnet also claims that its publication "reflect[s] the care and attention of
professional editors" and is free of "typos, grammatical errors, or incorrect
lessons" and the Edge's manuscript is not. Filing 101 at 43.
In other words, Nelnet argues that because its manuscript is published,
the look and feel of the two works cannot, as a matter of law, be substantially
similar. The Court is not convinced. After all, the entire purpose of copyright
protection is to prevent publishers from publishing other people's copyrighted
manuscripts. And it would be absurd if a copyright claim could be defeated by
pointing out that the final work was actually published. The fact of publication
weighs in favor of the copyright claim, not against it.
Instead, the proper focus is on intrinsic similarities between the "total
concept" and "feel" of the two works. See id. Here, after comparing the overall
"concept" and "feel" of the two works, the Court concludes that a reasonable
jury could determine that Nelnet's publication is substantially similar to the
Edge's manuscript. Indeed, both works generally purport to provide students
studying for the ACT with an overview of the ACT, and provide each student
with specific lessons and teachings that might help that student excel or
improve his or her ACT score. Compare filing 112-25 at 1-35 with filing 103-4
at 1-25. Both works include an introductory section where the author explains
the purpose of the book, how it's organized, the format of the ACT, a brief
explanation of the five sections of the ACT, when to take the ACT, how many
times to take the ACT, how the ACT is scored, and the concept of super scoring.
Compare filing 112-25 at 3-5 with filing 103-4 at 8-34. And both works also
provide general study habits and strategies students should adhere to.
22

After the introductory material, the Edge's manuscript also included an
English portion of the manuscript. There, the Edge took common English
topics, such as idioms and transitions, and briefly explained them before
providing the reader with a list of common idioms or transitions. Filing 95-20
at 102; 108. Nelnet's final publication also organized its English section in a
similar way––by briefly introducing the topic at hand before providing the
reader with a list of common examples related to that concept. Filing 103-4 at
170.
Based on that evidence, a reasonable fact finder could conclude that the
works, when considered in their entirety, discuss similar ideas, in similar
contexts, with the exact same overall purpose. See Funkhouser, 208 F.2d at
190. Accordingly, the Court finds that there are genuine disputes of material
facts on the issue of substantial similarity. As such, the Court will deny
Nelnet's summary judgment on the Edge's copyright infringement claim.
(iii) Damage Calculation
The Edge also moves for summary judgment on Nelnet's gross revenue
evidence. Filing 94 at 14. Nelnet does not dispute those numbers, but it does
correctly point out that gross revenues generated by various editions of the
allegedly infringing work is not the final measure of damages. Filing 116 at 18.
A prevailing plaintiff in an infringement action is entitled to recover the
infringer's profits to the extent they are attributable to the infringement. 17
U.S.C. § 504(b); Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d
505, 514 (9th Cir. 1985). In establishing the infringer's profits, the plaintiff is
required to prove only the defendant's sales; the burden then shifts to the
defendant to prove the elements of costs to be deducted from sales in arriving
at profit. 17 U.S.C. § 504(b). If the infringing defendant does not meet its
23

burden of proving costs, the gross figure stands as the defendant's profits. See
Russell v. Price, 612 F.2d 1123, 1130-31 (9th Cir. 1979), cert. denied, 446 U.S.
952 (1980).
With those principles in mind, the Court will grant the Edge's motion for
summary judgment on Nelnet's gross revenue calculation with the caveat that
at trial, not only will Nelnet be permitted to offer evidence of the costs and
expenses deductible from those sales, it will be its burden to do so. 17 U.S.C. §
504(b); Frank Music Corp., 772 F.2d at 514.
IV. NELNET'S AFFIRMATIVE DEFENSES
As a final matter, the Edge moves for summary judgment on virtually
all of Nelnet's affirmative defenses. Nelnet does not oppose some of that
motion. For example, Nelnet agrees that its first, second, sixth, seventh,
eighth, and thirteenth affirmative defenses should be dismissed. Filing 116 at
24. And the Edge has apparently withdrawn its motion for summary judgment
with respect to Nelnet's third and fifth affirmative defenses. Filing 120 at 2.
But, the Edge does claim that it is, nonetheless, entitled to summary judgment
on two of the Edge's affirmative defenses––equitable estoppel and statute of
limitations. Filing 120 at 2.
Procedurally, however, the Edge's motion is better classified as a motion
to strike Nelnet's affirmative defenses. See GGA-PC v. Performance Eng'g, Inc.,
No. 8:16-CV-567, 2017 WL 2773532, at *2 (D. Neb. June 26, 2017). Under Fed.
R. Civ. P. 12(f), courts may strike "from a pleading an insufficient defense or
any redundant, immaterial, impertinent, or scandalous matter." Courts enjoy
liberal discretion to strike pleadings under this provision. BJC Health System
v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007). Striking a party's
pleading, however, is an extreme and disfavored measure. Id. A motion to
24

strike an affirmative defense may be granted where the defense has no basis
in law, is insufficient as a matter of law, and the moving party will suffer
prejudice in the absence of the court granting its motion to strike. See United
States v. Dico, Inc., 266 F.3d 864, 880 (8th Cir. 2001).
The Court finds that the Edge has not satisfied this high burden at this
time. Whether the Court will actually instruct on Nelnet's respective
affirmative defenses is a question that the Court will take up based on the
evidence adduced at trial. Until then, Nelnet's affirmative defenses will not be
stricken, and the Edge's motion on this matter will be denied.
CONCLUSION
In sum, the Court will grant the Edge's motion for summary judgment
in part and deny it in part. Specifically, the Court will grant the Edge's motion
with respect to the portions of that motion not disputed by Nelnet––namely,
the gross revenue calculations and the undisputed affirmative defenses. But
the Court will deny the Edge's motion for partial summary judgment with
respect to Nelnet's breach of contract counterclaim. There are several disputes
of material fact on the Edge's breach of contract and copyright infringement
claim. So, Court will also deny Nelnet's motion for summary judgment with
respect to those issues in its entirety.
IT IS ORDERED:
1.

The Edge's motion for partial summary judgment (filing 93)
is granted in part and denied in part as set forth above.

2.

Nelnet's motion for summary judgment (filing 99) is denied.

25

Dated this 8th day of August, 2019.
BY THE COURT:

John M. Gerrard
Chief United States District Judge

26