Medicus Radiology v. Florida Hosp. CV-10-300-PB 01/03/11
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Medicus Radiology, LLC
v. Case No. 10-cv-300-PB Opinion No. 2011 DNH 001 Nortek Medical Staffing, Inc.
MEMORANDUM AND ORDER
Medicus Radiology, LLC has filed a complaint against NorTek
Medical Staffing, Inc. alleging tortious interference with
contractual relations. NorTek now moves to dismiss pursuant to
Federal Rules of Civil Procedure 12(b)(2), or, alternatively, to
transfer venue pursuant to 28 U.S.C. § 1404(a). Medicus objects.
For the reasons set forth below, I grant NorTek's motion to
dismiss.
I. BACKGROUND
Medicus, a New Hampshire company based in Salem, New
Hampshire, is a locum tenens staffing company that connects
health care providers in need of temporary radiology services
with radiologists able to fulfill short term assignments. NorTek, a Texas company with its principal place of business in
Kingwood, Texas, is in the same locum tenens business.1
In January 2008, Medicus entered into an Independent
Physician Agreement with Dr. Robert Latta, a locum tenens
radiologist residing in Florida. Under the agreement, Medicus
arranged for Latta to provide temporary radiology services to
various medical facilities in Florida, including Radiology
Specialists of Florida. Radiology Specialists of Florida
operated at Florida Hospital Ormond Memorial, now known as
Florida Hospital Memorial Medical Center ("Florida Hospital").
Under his contract with Medicus, Latta agreed to certain
restrictive covenants, including a non-competition provision.
The non-compete clause prohibits Latta from returning to any
facility for two years after the completion of his assignment,
unless he does so through Medicus. The contract also contains a
choice-of-law clause providing that the agreement will be
governed by New Hampshire law, and a choice-of-venue provision
stipulating that any dispute between the parties will be subject
1 Both Medicus and NorTek belong to the industry group known as the National Association of Locum Tenens Organizations ("NALTO").
- 2 - to the exclusive jurisdiction of New Hampshire's state and
federal courts. Latta provided radiology services at placements
arranged through Medicus for 135 days.
In May 2009, Florida Hospital contacted NorTek in search of
temporary radiologists. On June 3, 2009, NorTek spoke with
Latta, and recruited him to work for the hospital. Latta
informed NorTek that Medicus had previously placed him with
Radiology Specialists of Florida, and through that placement he
had provided radiology services at Florida Hospital. Although
NorTek was unable to review the terms of Latta's contract because
he had apparently misplaced it, Latta indicated that it was a
standard contract that NorTek assumed to be similar to its own.
While NorTek presumed that Latta's contract likely contained a
restrictive covenant, based on its interpretation of its own
contract's restrictive provisions, NorTek believed that Latta's
service at Florida Hospital would not be prohibited.2 In
2 NorTek made this assumption because Latta had not technically been placed at Florida Hospital, but rather provided temporary radiology services through Radiology Specialists at Florida Hospital's predecessor (Florida Hospital Ormond Medical). Additionally, at the time NorTek and Latta entered into the agreement. Radiology Specialists of Florida was no longer affiliated with Florida Hospital.
- 3 - addition, NorTek spoke with a Florida Hospital representative who
indicated that Latta's service at the hospital would not violate
Latta's contract with Medicus.
Satisfied that it could employ Latta, in July 2009 NorTek
contracted Latta to provide temporary radiology services at
Florida Hospital. The contract was negotiated between a NorTek
representative (based in Kingwood, Texas), Latta (a Florida
resident) and Florida Hospital (based in Daytona Beach, Florida) .
On July 7, 2009, NorTek submitted Latta for service at Florida
Hospital.
On March 31, 2010, Medicus contacted NorTek and explained
that Latta's employment at Florida Hospital constituted a
violation of its agreement with Latta and indicated that it would
be filing an ethics complaint with the industry group NALTO.
NorTek argued that the placement was not improper and also
suggested that NALTO review Medicus' complaint. In the interim,
NorTek continued to employ Latta at Florida Hospital until June.
Medicus filed suit in Rockingham County Superior Court in June,
2010, and NorTek removed the case to this court in July, 2010.
- 4 - II. STANDARD OF REVIEW
On a motion to dismiss for lack of personal jurisdiction,
the plaintiff bears the burden of persuading the court that
jurisdiction exists. Hannon v. Beard, 524 F.3d 275, 279 (1st
Cir. 2008). Because I have not held an evidentiary hearing, I
must apply the "prima facie" standard of review. See, e.g., U.S.
v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001) .
Applying the prima facie standard, I "accept the plaintiff's
(properly documented) evidentiary proffers as true for the
purpose of determining the adeguacy of the prima facie
jurisdictional showing." Adelson v. Hananel, 510 F.3d 43, 48
(1st Cir. 2007). The defendant's facts "become part of the mix
only to the extent that they are uncontradicted." Id.
III. ANALYSIS
When assessing personal jurisdiction over a non-resident
defendant in a diversity of citizenship case such as this one,
the federal court "is the functional eguivalent of a state court
sitting in the forum state." Sawtelle v. Farrell, 70 F.3d 1381,
1387 (1st Cir. 1995). New Hampshire's long arm statute, N.H.
- 5 - Rev. Stat. Ann. § 510:4, authorizes jurisdiction to the full
extent permitted by the Federal Constitution. See N.H. Rev.
Stat. Ann. § 510:4; Alacron, Inc. v. Swanson, 765 A.2d 1043,
1045-46 (N.H. 2000). Therefore, the sole inquiry in this case is
"whether the exercise of personal jurisdiction comports with
federal constitutional standards." Sawtelle, 70 F.3d at 1388.
Due Process under the Fourteenth Amendment requires that the
defendant have "sufficient minimum contacts with the [forum]
state, such that 'maintenance of the suit does not "offend
traditional notions of fair play and substantial justice."'"
Adelson, 510 F.3d at 49 (quotinq Int'l Shoe Co. v. Wash., 326
U.S. 310, 316 (1945)). The inquiry into "minimum contacts" is
necessarily fact-specific, "involvinq an individualized
assessment and factual analysis of the precise mix of contacts
that characterize each case." Pritzker v. Yari, 42 F.3d 53, 60
(1st Cir. 1994) .
A court may exercise authority over a defendant by means of
qeneral or specific jurisdiction. N. Laminate Sales, Inc. v.
Davis, 403 F.3d 14, 24 (1st Cir. 2005). General jurisdiction
exists over a defendant who has maintained "continuous and
systematic" activity in a forum sufficient to establish
- 6 - jurisdiction over all matters, including those unrelated to the
defendant's contacts in the forum state. Harlow v. Children's
Hosp., 432 F.3d 50, 57 (1st Cir. 2005). Specific jurisdiction is
narrower, and exists only where the plaintiff's cause of action
arises from or relates to the defendant's contacts with the forum
state. Id. Medicus has not asserted that general jurisdiction
exists over NorTek. Accordingly, I address only its claim for
specific jurisdiction.
A. Specific Jurisdiction
The First Circuit analyzes specific jurisdiction using a
three-part test: (1) whether the claims arise out of or are
related to the defendant's in state activities ("relatedness"),
(2) whether the defendant has purposefully availed itself of the
benefits and protections of the forum state's laws ("purposeful
availment"), and (3) whether the exercise of jurisdiction is
reasonable under the circumstances (the "gestalt factors") .
Phillips v. Prairie Eye Ctr., 530 F.3d 22, 27 (1st Cir. 2008) .
" [A]n affirmative finding on each of the three elements of the
test is reguired to support a finding of specific jurisdiction."
Negron-Torres v. Verizon Commc'ns, Inc., 478 F.3d 19, 24 (1st
Cir. 2007). I will address each element in turn.
- 7 - 1. Relatedness
The relatedness inquiry asks whether "the cause of action
[underlying the litigation] either arises directly out of, or is
related to, the defendant's forum-based contacts." Harlow, 432
F.3d at 61. The relatedness prong is applied "through the prism"
of the plaintiff's claims. Sawtelle, 70 F.3d at 1389. When the
plaintiff's claims sound in tort, a court "must probe the causal
nexus between the defendant's contacts and the plaintiff's cause
of action." Phillips Exeter Acad, v. Howard Phillips Fund, 196
F.3d 284, 289 (1st Cir. 1999). In contract cases, the court
"must look to the elements of the cause of action and ask whether
the defendant's contacts with the forum were instrumental either
in the formation of the contract or in its breach." Id. When
however "the tort is intentional interference with a contractual
or business relationship, the two inquiries begin to resemble
each other." Jet Wine & Spirits, Inc. v. Bacardi & Co., 298 F.3d
1, 10 (1st Cir. 2002) .
In this case, Medicus claims that NorTek intentionally
interfered with its contract with Latta. To prove such a claim,
a plaintiff must establish that: "(1) the plaintiff had an
economic relationship with a third party; (2) the defendant knew of this relationship; (3) the defendant intentionally and
improperly interfered with this relationship; and (4) the
plaintiff was damaged by such interference." Singer Asset Fin.
Co. v. Wyner, 937 A.2d 303, 312 (N.H. 2007).
The problem here, and in related cases, is that NorTek has
had no apparent contact with the State of New Hampshire.
Instead, all of the offending acts occurred outside the forum
state. Medicus' contractual relationship with Latta was formed
while he was a resident of Florida. The contract concerned the
provision of radiology services in Florida and performance was
contemplated to occur at various medical facilities in Florida.
NorTek, a Texas company, allegedly interfered with this contract
when it negotiated with Latta and placed Latta at Florida
Hospital. None of NorTek's alleged interference was connected
with New Hampshire.
The connection Medicus draws between its claims and the
forum state are based on the effect of NorTek's interference,
specifically the injury to Medicus, which was felt in New
Hampshire. The First Circuit has freguently noted that the
"effects test" is not applicable when assessing relatedness.
See, e.g., Swiss Am. Bank, 274 F.3d at 623 ("[T]he 'effects' test is a gauge for purposeful availment and is to be applied only
after the relatedness prong has already been satisfied"); Mass.
Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 36
(1st Cir. 1998) ("We have wrestled before with this issue of
whether the in-forum effects of extra-forum activities suffice to
constitute minimum contacts and have found in the negative").
However, at least with respect to contractual interference
claims, this way of thinking appears to be in flux. See Astro-
Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 21-22 (1st Cir.
2009) (Howard, J., concurring); N. Laminate, 403 F.3d at 25.
In Astro-Med v. Nihon Kohden American the First Circuit
considered whether specific jurisdiction existed over an out-of-
state defendant whose contractual interference occurred outside
the forum state. See Astro-Med, 591 F.3d at 9-10. The court
determined that a sufficiently close nexus existed between the
plaintiff's claim and the forum state, even though the defendant
"from all appearances . . . did not engage in any in-forum
conduct or activity that [was] causally connected to the alleged
tort." Id. at 21 (Howard, J., concurring). Instead of
connecting the plaintiff's claim with an in-forum activity, the
court found the relatedness prong had been satisfied primarily
- 10 - because the plaintiff's injury, the breach of an in-state
contract, was felt in the forum state and thus was causally
connected to the plaintiff's contractual interference claim.
See id. at 10, 22-23; see also N. Laminate, 403 F.3d at 25 ("a
defendant need not be physically present in the forum state to
cause injury (and thus 'activity' for jurisdictional purposes) in
the forum state").
Similar to Astro-Med, while Medicus did not engage in any
in-forum conduct, its out-of-state interference with Medicus'
contract is arguably related to Medicus' contractual interference
claim because it caused injury in the forum state (a reguisite
element of the tort). See Astro-Med, 591 F.3d at 22 (Howard, J.,
concurring) (explaining that contractual interference claim was
related to the forum state based on its in-forum effects because
the tort was not complete until the plaintiff suffered injury in
the forum state); Singer Asset, 937 A.2d at 312 (detailing
elements of tortious interference with contract claim). Based on
the reasoning of Astro-Med, Medicus has made out a sufficient
showing of relatedness between its claim and the forum state.3
3 This case arguably differs from Astro-Med because the evidence does not indicate that Medicus's contract with Latta was
- 11 - 2. Purposeful Availment
Next Medicus must demonstrate that NorTek's contacts
"represent a purposeful availment of the privilege of conducting
activities in [New Hampshire], thereby invoking the benefits and
protections of [its] laws and making the defendant's involuntary
presence before [a New Hampshire] court foreseeable." Mass.
School of Law, 142 F.3d at 36. "[T]he cornerstones upon which
the concept of purposeful availment rest are voluntariness and
foreseeability." Sawtelle, 70 F.3d at 1391. In intentional tort
cases, the Supreme Court has identified an "effects test" to
determine whether the purposeful availment prong has been
satisfied. See Calder v. Jones, 465 U.S. 783, 788-89 (1984) . To
satisfy the effects test, more than the defendant's mere
knowledge that the plaintiff resides in the forum state is
reguired. See id. The plaintiff must also show that the
defendant expressly aimed an act at the plaintiff, knowing that
formed in the forum state. While it is still clear that Medicus's injury was felt in the forum, thus nominally satisfying Astro-Med's reasoning, the contract's connection with the forum state is more tenuous than in that case because the agreement between Medicus and Latta was formed while Latta was in Florida. I need not speculate on the impact of this distinction as I determine that the plaintiff has not carried its burden of proof with respect to the gestalt factors.
- 12 - it would be felt by the plaintiff in the forum state. Id.at
789; Swiss Am. Bank, 274 F.3d at 624.
The instant case presents a less convincing showing of
intentionality, and thus a less persuasive case for purposeful
availment, than that of Astro-Med. In Astro-Med, the court's
finding of purposeful availment was based on the defendant's
knowledge that his out-of state conduct would have an effect in
the forum state. See Astro-Med, 591 F.3d at 10, 22. In that
case, the defendant reviewed the plaintiff's contract, noticed
the restrictive covenants and the forum-selection clause,
received legal advice indicating that it was exposing itself to
liability, and decided to act in the face of this knowledge.
See id. at 10. The defendant's knowledge that its conduct would
affect the plaintiff in the forum state, when coupled with the
decision to proceed in spite of this knowledge, amounted to a
sufficient showing of purposeful availment. See id.
In this case, Nortek was aware of Medicus' relationship with
Latta, that the contract between the two parties contained a non
competition provision, and that Latta had previously provided
services at Florida Hospital through his placement with Radiology
Specialists of Florida. See Skeckowski Aff. 20, 21, 25, 26, Aug.
- 13 - 19, 2010 (Doc. No. 8-2). Because NorTek was unable to review
Latta's contract, however, its exposure to litigation in New
Hampshire was not as apparent. Further, based on NorTek's
understanding of Latta's contract and its conversation with
Florida Hospital, it believed its placement of Latta would not
violate Medicus's contract. See Skeckowski Aff. 25-29, Aug. 19,
2010 (Doc. No. 8-2). As a result, NorTek is not chargeable with
the same knowledge as the Astro-Med defendant that its actions
would have an effect in another state.
Nevertheless, while NorTek may plead ignorance based on its
initial hiring and placement of Latta, it cannot claim that it
was unaware that its actions might have an effect in New
Hampshire after it was notified by Medicus on March 31, 2010 that
its placement violated Medicus' contract with Latta. Muise Aff.
9 (Doc. No. 11-2). Despite this knowledge, NorTek continued to
place Latta at Florida Hospital for an additional three months.
Skeckowski Aff. 36, Aug. 19, 2010 (Doc. No. 8-2). By continuing
its placement of Latta after receiving notification from Medicus,
NorTek knew that its conduct in Florida might cause injury in New
Hampshire. While not a particularly strong showing, I find that
Medicus has satisfied the purposeful availment prong of the
- 14 - minimum contacts analysis. See Astro-Med, 591 F.3d at 10.
3. Reasonableness
The exercise of jurisdiction over NorTek must also be
reasonable based on an evaluation of the "gestalt factors." The
gestalt factors include:
the defendant's burden of appearing; the forum State's interest in adjudicating the dispute; the plaintiff's interest in obtaining convenient and effective relief; the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and the shared interest of the several States in furthering fundamental substantive social policies.
N. Laminate, 403 F.3d at 26.
The "reasonableness prong of the due process inguiry evokes
a sliding scale." Ticketmaster-N.Y ., Inc. v. Alioto, 26 F.3d
201, 210 (1st Cir. 1994). In other words, "the weaker the
plaintiff's showing on the first two prongs (relatedness and
purposeful availment), the less a defendant need show in terms of
unreasonableness to defeat jurisdiction. The reverse is egually
true: an especially strong showing of reasonableness may serve to
fortify a borderline showing of relatedness and purposefulness."
Id.
- 15 - a. The Defendant's Burden of Appearance
This factor clearly weighs in favor of the defendant,
NorTek. NorTek is located in Texas. NorTek has no presence in
the forum state, and the burden of forcing a Texas resident to
appear in New Hampshire is onerous. See Prairie Eye, 530 F.3d at
30 (holding that burden on Illinois resident with no connection
to forum state was disproportionate). "This burden, and its
inevitable concomitant, great inconvenience, are entitled to
substantial weight in calibrating the jurisdictional scales."
Ticketmaster, 26 F.3d at 210.
b. Interest of the Forum
While this factor weighs in favor of Medicus, it has a
"milder than usual interest" in this case than one might expect.
See id. at 211. While "[t]he forum state has a demonstrable
interest in exercising jurisdiction over one who causes tortious
injury within its borders," New Hampshire's "interest in the
litigation sub judice is arguably lessened by the doubts
surrounding whether [the] defendant's act can be said to have
been committed in the forum." Id. at 211 (finding this factor
less persuasive because only the effects of the defendant's
- 16 - defamation were felt in the forum state). As noted above, the
defendant's acts were committed solely in Texas and Florida.4 As
a result. New Hampshire's interest in this litigation is
diminished because all of the alleged tortious conduct occurred
outside its borders. See id.
c. The Plaintiff's Convenience
While at first blush this factor appears to favor Medicus,
it is difficult to say whether it would be more convenient to try
this case in New Hampshire or Florida. While Medicus is a New
Hampshire corporation, it also has a presence in Florida.
Additionally, almost all of the relevant events occurred in
Florida and a majority of the witnesses and evidence are located
in that state. While the plaintiff's choice of forum is granted
a degree of deference with respect to convenience, "the
plaintiff's actual convenience seems to be at best a makeweight
in this situation." Id.
4 While "[t]he purpose of [this] inguiry is not to compare the forum's interest to that of some other jurisdiction, but to determine the extent to which the forum has an interest" as almost all of the conduct at issue in this case occurred in Florida, it is at least worth mentioning that Florida clearly has a greater interest in this litigation than New Hampshire. See Harlow, 432 F.3d at 67.
- 17 - d. The Administration of Justice
Aside from the location of the witnesses and other evidence,
I do not see any apparent interest of the judicial system that
weighs appreciably for either forum.
e. Fundamental Substantive Social Policies
No fundamental substantive social policies counsel for
jurisdiction in either forum.
B. Specific Jurisdiction Conclusion
The instant case presents a close question for the exercise
of specific jurisdiction. Without the benefit of the recent
decision in Astro-Med, my jurisdictional analysis would not have
proceeded as far as the gestalt factors. All of the operative
events in this litigation occurred outside the state of New
Hampshire. The only nexus between this litigation and the forum
state was the plaintiff's injury. Prior to the Astro-Med
decision, it was not apparent that this could be sufficient to
entertain jurisdiction over an out-of-state defendant.
While the present case is similar to Astro-Med, there are
also factual distinctions that diminish the plaintiff's showing
of relatedness and purposeful availment. In Astro-Med the
- 18 - defendant had a clear understanding that its actions might result
in litigation in the forum state. In this case, however, NorTek
was not assured that its conduct in Florida and Texas would
expose itself to suit in New Hampshire. While NorTek was later
apprised of this risk and thus arguably acted with sufficient
awareness that its conduct would have an effect in New Hampshire,
it only became aware of Medicus' interest eight months after its
initial placement of Latta. The meager showing in each of these
prongs ultimately affects the sliding scale of reasonableness.
As previously noted, "the weaker the plaintiff's showing on the
first two prongs (relatedness and purposeful availment), the less
a defendant need show in terms of unreasonableness to defeat
jurisdiction." Ticketmaster, 26 F.3d at 210.
In this case, NorTek is based in Texas and has no connection
whatsoever to the state of New Hampshire. As a result, the
burden of litigating this case in New Hampshire is significant.
Conversely, both NorTek and Medicus operate in Florida. Almost
all the relevant events occurred in Florida, and almost all of
the witnesses and evidence are present in that state as well.
Weighing all these considerations against the respective weakness
of the relatedness and purposeful availment prongs, I conclude
- 19 - that the plaintiff has not carried its burden of proving
jurisdiction. The exercise of specific jurisdiction under these
facts would be unreasonable. As a result, the Defendant's Motion
to Dismiss (Doc. No. 8) is granted.
SO ORDERED.
/s/Paul Barbadoro Paul Barbadoro United States District Judge
January 3, 2011
cc: James P. Harris, Esg. Jennifer Turco Beaudet, Esg. Steven A. Solomon, Esg. Thomas J. Pappas, Esg.
- 20 -