PHC-Minden, L.P. D/B/A Minden Medical Center v. Kimberly-Clark Corporation

• Court: Court of Appeals of Texas
• Decided: August 31, 2007
• Docket: 12-04-00259-CV
• Status: Published

Opinion

THE SUPREME COURT OF TEXAS Post Office Box 12248 Austin, Texas 78711 (512)463-1312 X3URT OF APPEALS ;uurt or Appals uiswitt August 31, 2007

Ms. Diana L. Faust Mr. David G. Cabrales Cooper & Scully, P.C. Locke Liddell & Sapp LLP 900 Jackson Street, Suite 100 2200 Ross Avenue, Suite 2200 TYLER,TEXAS CATHY S. LUSK, CLERK Dallas, TX 75202 Dallas, TX 75201-6776

Mr. Mark A. Stinnett Stinnett Thiebaud & Remington L.L.P. 1445 Ross Avenue, Ste. 2500 Dallas, TX 75202

RE: Case Number: 05-0823 Court of Appeals Number: 12-04-00259-CV Trial Court Number: 2003-42-CCL2

Style: PHC-MINDEN, L.P. D/B/A MINDEN MEDICAL CENTER v-

KIMBERLY-CLARK CORPORATION

Dear Counsel:

Today the Supreme Court of Texas delivered the enclosed opinion and judgment in the above-referenced cause.

Sincerely,

E>u>*<^ a. v4oa^^ Blake A. Hawthorne, Clerk by Claudia Jenks, Chief Deputy Clerk Enclosures cc: Mr. James K. Horstman Ms. Susan Cassidy Cooley Mr. Stephen A. Madsen Mr. Kenneth Charles Cunningham Ms. Cathy S. Lusk Ms. Barbara Duncan Mr. Roger Townsend Mr. C. W. "Rocky" Rhodes FILED IN COURT OF APPEALS

IN THE SUPREME COURT OF TEXAS TYLER,TEXAS =====

No. 05-0823

PHC-MINDEN, L.P. D/B/A MlNDEN MEDICAL CENTER, PETITIONER,

Kimberly-Clark Corporation, Respondent

On Petition for Review from the Court of Appeals for the Twelfth District of Texas

Argued November 16, 2006

Chief Justice Jefferson delivered the opinion of the Court.

TheUnited States Constitution prohibits acourt from exercising jurisdiction overa party that

lacks minimum contacts with the forum. Personal jurisdiction has been described as either

specific—that is, based on contacts arising from the dispute at issue—or general, predicated on a

party's "continuous and systematic" contacts with the forum. Minimum-contacts analysis iseasily

muddled, however, as courts frequently import contacts relevant to one type of jurisdiction when

deciding the other. Additionally, courts sometimes impute contacts of related entities toeach other,

when mere relatedness is an insufficient basis on which to confer jurisdiction. Today, we must determine whether a Louisiana hospital, either independently or through its parent corporation, has

continuous and systematic contacts with Texas. We conclude that it does not.

I Factual and Procedural Background

While traveling through Louisiana on December 10, 2000, Texas resident Jajah Eddington

sought medical care at MHC-Minden Hospital ("Minden Hospital"), a 159-bed acute care hospital

located in Minden, Louisiana. Medical personnel treated Eddington's flu-like symptoms in the

emergency room and advised her to consult her primary care physician if her condition did not

improve. Four days later, Eddington was admitted to Good Shepherd Medical Center in Longview,

Texas, where she ultimately was diagnosed with toxic shock syndrome. That infection led to her

death on December 28, 2000.

DeWayne Eddington, individually and as next friend of Dewyn Eddington, and as

representative of Jajah Eddington's estate, sued Kimberly-Clark Corporation asserting product

liability, breach of warranty, and negligence claims. He alleged that Eddington's use of Kotex

tampons led to the infection that caused her death. On February 28, 2003, Kimberly-Clark filed a

third-party petition againstPHC-Minden, L.P. ("Minden"), whichownsMindenHospital, asserting

that Minden's negligence proximately caused Eddington's death.' Minden is a nonresident ofTexas

anda wholly ownedsubsidiary of Province Health Care("Province"). Kimberly-Clark pleaded that

Province, whose headquarters is in Tennessee, did business in Texas and that its forum-related acts

1Kimberly-Clark also filed third-party claims against Good Shepherd Medical Center; Longview Emergency Medicine Associates; Schumacher Groupof Louisiana; Dr. Russell Riggs; Dr. Rodney Slone;Dr. DonFerguson; D.Lea, R.N.; C Bennett, R.N.; and C Coleman, R.N. should be imputed to Minden because: (1) Province owns Minden; (2) Province and Minden share

officers, directors, and "common departments or business"; (3) Province and Minden do not

differentiate their operations and have failed to erect "formal barriers" between themselves; and (4)

Province's officers anddirectors control Minden's policies. Minden filed a special appearance and,

subject thereto, a general denial. The parties conducted extensive discovery relating to the

jurisdictional issue. After a hearing, thetrial court concluded ithadgeneral jurisdiction overMinden

and denied the special appearance.

The court of appeals affirmed, reasoning that (1) Minden itself had "continuous and

systematic contacts with Texas"; and (2) Minden and Province operated as a single business

enterprise, and Minden, through Province, did business in Texas. 202 S.W.3d 193, 203-04. We

granted Minden's petitionfor review to decide whether Texas courtshave general jurisdiction over

Minden.2 49 Tex. Sup. Ct. J. 950 (Aug. 25, 2006).

II General Jurisdiction

The Texas long-arm statute governs Texas courts' exercise of jurisdiction over nonresident

defendants. See Tex. Civ. Prac. & Rem. Code §§ 17.041-.045. That statute permits Texas courts

to exercise jurisdiction over a nonresident defendant that "does business" in Texas, and the statute

identifies some activities that constitute "doing business." Id. § 17.042. The list, however, is not

exclusive. BMC Software Belg., N. V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). Wehave held

that section 17.042's language extends Texas courts' personal jurisdiction "as far as the federal

Charles W. "Rocky" Rhodes and Riata Energy, Inc. submittedamicus curiae briefs.

3 constitutional requirements ofdue process will permit." U-AnchorAdver., Inc. v. Burt, 553 S.W.2d 760,762 (Tex. 1977). Thus, we rely on precedent from the United States Supreme Court and other federal courts, as well as our own decisions, in determining whether a nonresident defendant has

negated all bases ofjurisdiction. See BMC Software, 83 S.W.3d at 795-796. Personal jurisdiction over nonresident defendants is constitutional when: (1) the defendant has established minimum

contacts with the forum state, and (2) the exercise ofjurisdiction comports with traditional notions

offair play and substantial justice. Int'lShoe Co. v. Washington, 326 U.S. 310, 316 (1945). In Helicopteros Nacionales de Colombia, S.A. v. Hall, the Supreme Court adopted the terms "specific" and "general" to describe the differing types ofpersonal jurisdiction. Helicopteros, 466 U.S. 408, 414 (1984) (citing Arthur T. von Mehren & Donald T. Trautman, Jurisdiction to

Adjudicate: ASuggestedAnalysis, 79 Harv. L. Rev. 1121,1144-1164 (1966)). The Court defined specific jurisdiction as "arising out of or related to the defendant's contacts with the forum." Id. at

n.8. By contrast, the Court referred togeneral jurisdiction as"personal jurisdiction over a defendant

ina suit not arising out oforrelated tothe defendant's contacts with the forum."3 Id. atn.9 (citations omitted).

In Helicopteros, the Court concluded that Texas courts did not have general jurisdiction over

a Colombian company, Helicol. One ofHelicol's helicopters had been involved ina crash in Peru,

3The use ofthe terms "specific" and "general" to connote differing types ofpersonal jurisdiction has been criticized as contributing to the confusion among courts as to the quality and quantity ofcontacts required for each. See Mary Twitchell, The Myth of General Jurisdiction, 101 Harv. L. Rev. 610, 612-13 (1988) (suggesting that the ''general/specific framework" has led to ambiguity and suggesting the terms "dispute-blind" and "dispute-specific" instead). Ironically, Professors von Mehren and Trautman suggested the terms "specific" and "general" to alleviate the confusion associated with the "in rem," "quasi in rem," and "in personam" jurisdictional terminology, von Mehren & Trautman, Jurisdiction to Adjudicate, 79 Harv. L. Rev. at 1135-36 (noting that "some ofthe terminology conventionally employed in Anglo-American discussions ofjurisdiction to adjudicate is not very helpful"). and the survivors and representatives of the decedents sued Helicol in state district court in Harris

County, Texas. Helicol filed a special appearance and moved to dismiss the case, but the trial court denied the motion. The court ofappeals, however, agreed with Helicol that in personam jurisdiction over Helicol was lacking. Helicopteros Nacionales de Colombia, S.A. v. Hall, 616 S.W.2d 247 (Tex. App.—Houston 1981). Our Court reversed. Hall v. Helicopteros Nacionales de Colombia, S.A., 638 S.W.2d 870 (1982).

The Supreme Court granted certiorari, and it summarized the pertinent jurisdictional facts: Itis undisputed thatHelicol does nothave a place of business in Texas and never has been licensed to do business in the State. Basically, Helicol's contacts with Texas consisted ofsending its chiefexecutive officer to Houston for acontract-negotiation session; accepting into its New York bank account checks drawn on a Houston bank; purchasing helicopters, equipment, and training services from Bell Helicopter for substantial sums; and sending personnel to Bell's facilities in Fort Worth for training. Helicopteros, 466 U.S. at 416. The Court concluded that the CEO's trip to Houston could not be described as a"continuous or systematic" contact. Id. Similarly, it held that Helicol's acceptance ofchecks drawn on a Houston bank was of"negligible significance." Id. at 416. The Court held, relying on a 1923 unanimous opinion written by Justice Brandeis, that "purchases and related trips, standing alone, are not a sufficient basis for a State's assertion ofjurisdiction." Id. at 417 (citing Rosenberg Bros. &Co. v. Curtis Brown Co., 260 U.S. 516 (1923)).

The point at which jurisdictional contacts reach atipping point, however, has eluded precise formulation. Beyond stating that mere purchases and related travel are not enough, the Supreme Court has given little guidance on the appropriate inquiry for general jurisdiction, although its Helicopteros conclusion that general jurisdiction was improper suggests that the requisite level of contacts is fairly substantial. 16 James Wm. Moore et al., Moore's Federal Practice § 108.41 [3] (3d ed. 2007); 4 charles Alan Wright & Arthur R. Miller, Federal Practice &

Procedure § 1067.5 (2007) (noting that the Court's rejection of each contact and its failure to

aggregate contacts "suggests very stronglythat the threshold contacts required for a constitutional

assertion ofgeneral jurisdiction over anonresident defendant are very substantial, indeed"). Perkins

v. Benguet Consolidated Mining Co., the only case in which that court has upheld a finding of

general jurisdiction, offers aninsight into thenature of thecontacts required. Perkins, 342 U.S. 437

(1952). In assessing whether the nonresident defendant's Ohio contacts were sufficient to warrant

a finding of general jurisdiction, the Court noted that the company's president, who was also the

general manager and principal shareholder, maintained an Ohio office inwhich he "did many things

on behalf of the company." Id. at 447-48. He maintained company files in Ohio, carried on

correspondence from there, drew and distributed salarychecksfrom his Ohio office, used two Ohio

bank accounts for company funds and had an Ohio bank act as transfer agent for the company's

stock, held directors' meetings in Ohio, supervised policies dealing with the rehabilitation of the

corporation's properties in the Philippines there, and dispatched funds from Ohio bank accounts to

cover purchases of machinery for such rehabilitation. Id. The Court concluded that the company

"carried on in Ohio a continuous and systematic supervision of the necessarily limited wartime

activities of thecompany," andeven though "nomining properties in Ohio were owned oroperated

by the company, many of its wartime activities were directed from Ohio and were being given the

personal attention of its president in that State at the time he was served with summons." Id. at 448. The Court held that "under the circumstances above recited, itwould not violate federal due process for Ohio either to take or decline jurisdiction ofthe corporation in this proceeding." Id. Ageneral jurisdiction inquiry, therefore, is very different from aspecific jurisdiction inquiry and involves a "more demanding minimum contacts analysis," CSR, Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996), with a "substantially higher" threshold, 4 Wright &Miller, Federal Practice

&PROCEDURE § 1067.5. Usually, "the defendant must be engaged in longstanding business in the forum state, such as marketing or shipping products, or performing services or maintaining one or more offices there; activities that are less extensive than that will not qualify for general in personam jurisdiction." 4Wright &Miller, Federal Practice &Procedure § 1067.5; see also Hall, 638

S.W.2d at 882 (Pope, J., dissenting) (noting that "substantial and continuous activity" required for general jurisdiction suggests that defendant "must establishsome close substantial connection with

the state approaching the relationship between the state and its own residents"); 16 MOORE'S

Federal Practice § 108.41 [3] (stating that general jurisdiction "typically requires the defendant

to have an office in the forum state"); Lea Brilmayer, AGeneral Look at General Jurisdiction, 66 Tex. L. Rev. 723, 742 (1988) (proposing that "the basic inquiry must be whether the defendant's

level of activity rises to the level of activity of an insider, so that relegating the defendant to the

political processes isfair"); Charles W. "Rocky" Rhodes, Clarifying GeneralJurisdiction, 34 Seton Hall L. Rev. 807, 811 (2004) (suggesting that a proper general jurisdiction query should evaluate

whether the defendant engaged in activities in the forum state similar in frequency and nature to the activities oflocal businesses); Mary Twitchell, The Myth ofGeneralJurisdiction, 101 HARV. L. REV.

610,635 (1988) (noting that "traditional indicia" ofgeneral jurisdiction are "a home base, an agent for the service ofprocess, a local office, or the pursuance ofbusiness from a tangible locale within the state").

General jurisdiction has been described as "dispute-blind," an exercise of the court's

jurisdiction made without regard to the nature of the claim presented. Twitchell, The Myth of General Jurisdiction, 101 HARV. L. Rev. at 613. It involves acourt's ability to exercise jurisdiction over a nonresident defendant based on any claim, including claims unrelated to the defendant's

contacts with the state. 16 Moore's FederalPractice §108.40. Some commentators suggest that courts assessing general jurisdiction employ an analytical device to determine whether the

jurisdiction is, in fact, dispute-blind. Twitchell, The Myth ofGeneral Jurisdiction, at 680; Rhodes, Clarifying General Jurisdiction, 34 SETON Hall L. Rev. at 819. They propose that the court construct a hypothetical claim without any forum connection "to insure that any related forum

activities of the defendant are not improperly infiltrating the dispute-blind query." Clarifying General Jurisdiction, 34 Seton Hall L. Rev. at 819. For example:

[A]re the corporate defendant's actual activities in California so pervasive and extensive that it should be amenable to theadjudicatory jurisdiction of California for a hypothetical employment discrimination claim filed by a New York citizen employed at corporate headquarters in New York? Or, with respect to a foreign corporation, dothecorporation's actual California contacts support jurisdiction even for a hypothetical cause of action arising from its sale of a product in Germany that injured a German citizen?

Id. at 819-20. Such an inquiry properly frames the issue, as general jurisdiction is based solely on

the defendant's "continuous and systematic" contacts with the forum. Helicopteros, 466 U.S. at416. A Minden's Contacts

With this inmind, we turn to an analysis ofMinden's Texas contacts, as the court ofappeals

concluded that Minden had "continuous and systematic contacts with Texas" sufficient to support

general jurisdiction. 202 S.W.3d at 204. We first determine the appropriate time period for

assessing contacts for purposes of general jurisdiction, an issue on which our courts of appeals are

in conflict. Some examine the defendant's forum-related activities up to the timeof theoccurrence

that prompted thesuit. See MedCost, LLC v. Loiseau, 166 S.W.3d 421,434(Tex. App.—Austin

2005, no pet.); Schott Glas v. Adame, 178 S.W.3d 307, 313-14 (Tex. App.—Houston [14th Dist.]

2005, pet. denied); AmQuip Corp. v. Cloud, 73 S.W.3d 380, 388 (Tex. App.—Houston [1st Dist.]

2002, nopet.). Others focus on contacts upto thetime of filing suit. See, e.g., Equitable Prod. Co.

v. Canales-Trevino, 136 S.W.3d 235, 237-38, 245 (Tex. App.—San Antonio 2004, pet. denied)

(considering corporate defendant's relocation from Texas, which occurred after the cause of action

accrued but before suit was filed, for purposes of determining jurisdiction); see also Tuscano v.

Osterberg, 82 S.W.3d 457, 467 (Tex. App.—El Paso 2002, no pet.) (holding that jurisdictional

contacts were "too attenuated in time," because such activities occurred more than "three years

before service of this suit was effected"). Another—the court of appeals in this case—noted the

conflict and assessed contacts under both timetables.4 202 S.W.3d at 203 ("A relevant continuous

contact inthis analysis includes those contacts overa period up to the date of injury ... or upto and

including the date suit commenced ... .").

4This conflict gives us jurisdiction over this interlocutory appeal. Tex. Gov't Code §22.225(c).

9 We conclude that the relevant period ends atthe time suit is filed. As noted above, general

jurisdiction is dispute-blind; accordingly, and in contrast to specific jurisdiction, the incident made

the basis of the suit should not be the focus in assessing continuous and systematic

contacts—contacts on which jurisdiction over any claim may be based. See Charles W. "Rocky"

Rhodes, The Predictability Principle in Personal Jurisdiction Doctrine: ACase Study ofthe Effects

ofa "Generally" Too Broad, But "Specifically" Too Narrow Approach to Minimum Contacts, 57

Baylor L. Rev. 135, 238 (2005) (noting that "analyzing the contacts at the time of accrual is not

appropriate under the proper explanation ofgeneral jurisdiction asdispute-blind general adjudicative

authority"); see also 4 Wright &Miller, Federal Practice &Procedure § 1067.5 (noting that

"a court should consider all of a defendant's contacts with the forum state prior to the filing of the

lawsuit"). We also agree that "amere one-time snapshot ofthe defendant's in-state activities" may

not be sufficient, see Rhodes, Predictability Principle, 57 Baylor L. Rev. at 239, and contacts

should be assessed over a reasonable number of years, up to the date suit is filed, see Access

Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 717 (5th Cir. 1999). This includes contacts

at the time the cause of action arose, and it comports with the Supreme Court's guidance on the

issue, as well as our prior caselaw. See Helicopteros, 466 U.S. at 409-11 (evaluating contacts over

the seven-year periodbeforesuit was filed); American Type Culture Collection, Inc. v. Coleman, 83

S.W.3d 801, 807-08 (Tex. 2002) (assessing contacts over the twenty-year period preceding suit).

We nowturnto Minden'scontacts up to thetime of suit. A general jurisdiction inquiry can

be tedious, as it "demands . . . that all contacts be carefully investigated, compiled, sorted, and

analyzed for proofof a pattern of continuing and systematic activity." Schlobohm v. Schapiro, 784

10 S.W.2d 355, 359 (Tex. 1990). In conducting this dispute-blind inquiry, Jajah's Eddington's status

as a Texas resident, her treatment in Minden Hospital's emergency room, and her family's choice

not to sue Minden are irrelevant. Instead, we focus solely on Minden's contacts with Texas. Minden

is a nonresident limited partnership that owns a hospital licensed by the state ofLouisiana. Minden's

only facility is in Minden, Louisiana, and ninety percent of its patients reside within a twenty-five

mile radius ofMinden Hospital. Minden does notadvertise inTexas. ItownsnoTexas property and

has no Texas office or bankaccounts, nor does it maintain a registered agent for service of process

here. Thecourtof appealsreliedon threecategories of contacts in determining that Minden'sTexas

contacts were continuous and systematic: (1) Minden employees' attendance at seminars in Texas;

(2) Minden's purchases from vendors with Texas addresses; and (3) three contracts with Texas

entities. We examine each in turn.

1. Texas Trips

Theevidence showedthat,since 1999, Minden employees attended two Province-sponsored

meetings in Dallas. These isolated trips fall short of the "continuous and systematic contact" the

Supreme Courtrequires. In Helicopteros, the Supreme Court rejectedthe notion that multiple trips

to Fort Worth supported generaljurisdiction, noting that the trips did not "in any way enhance[] the

company's contacts with Texas." 466 U.S. at 418; see also Kulko v. California Superior Court, 436

U.S. 84,93 (1978) (basing Californiajurisdiction on 3-dayand 1-daystopovers in that State"would

make a mockery of due process limitations on assertion of personal jurisdiction); Nat 7Indus. Sand

Ass 'n v. Gibson, 897 S.W.2d 769, 774 (Tex. 1995) (concluding that attending a meeting in Texas, as well as periodic mailings to Texas members, "presented no evidence of general jurisdiction"). We agree with that analysis.

2. Payments to Texas Vendors

Since October 1,1999, Minden paid $1,508,467.20 to 136 entities with Texas addresses. The

largest payment, $515,650.15, was to Alcon Laboratories in Dallas, Texas, and the second largest, $209,997.36, to Centerpoint Energy in Houston, Texas. Most ofthe remaining payments are for less than $10,000.00 each. In Helicopteros, 466 U.S. at 418, the Supreme Court held that "mere purchases, even if occurring at regular intervals, are not enough to warrant a State's assertion ofin

personam jurisdiction over a nonresident corporation in a cause of action not related to those

purchase transactions." And we have recognized that "purchases from Texas vendors will not alone

support the exercise ofgeneral jurisdiction." American Type Culture Collection, 83 S.W.3d at808.

We conclude that the payments to Texas vendors do not support general jurisdiction over Minden in Texas.

3. Contracts with Texas Entities

The court ofappeals also identified three contracts with aTexas connection: (1) aSeptember 23, 2003 contract with Cox Business Services, a Tyler, Texas-based company, for internet service (at a charge of $59.95 per month) and a cable modem; (2) a July 2002 contract with Lone Star

Research, located in The Woodlands, Texas, pursuant to which Lone Star Research would conduct

a one-time marketing survey of200 adult residents in Minden Hospital's service area; and (3) an April 2001 professional services agreement with Horizon Radiology, P.A., a Texas company,

12 whereby Horizon would provide specialty coverage (via teleradiology equipment) to Minden Hospital, in exchange for $1600 per month.

We agree with the court of appeals that the 2003 Cox contract, entered into after suit was

filed, is irrelevant to the jurisdictional inquiry here. 202 S.W.3d at 203. The 2002 Lone Star

contract pursuant to which a Texas company conducted a marketing study of residents in Minden

Hospital's service area—presumably Louisiana, as ninety percent of the hospital's patients live

within twenty-five miles of the hospital—does not establish a continuous and systematic Texas contact. Lone Star agreed to conduct 200 telephone interviews and analyze the data within a week

of the survey's completion, in exchange for $5,200. This type of sporadic Texas contact is not substantial enough for general jurisdiction.

Of the three contracts, the Horizonagreement has the most substantial connection to Texas.

The agreement, signed in 2001 and renewed twice thereafter, required that Louisiana-licensed

physicians (located in Texas) provide teleradiology services, for which Minden supplied the necessary equipment, in exchange for $1600 per month. Even this agreement, however, does not

support general jurisdiction. Hiring a contractor to perform such limited services in the forum state

does not equate to "continuous and systematic contacts."

Even when amassed, Minden's Texas contacts simply are not "continuous and systematic

general business contacts" sufficient to support general jurisdiction, particularly when compared to

the substantial, regular business activities conducted by the nonresident defendant in Perkins.

Helicopteros, 466 U.S. at 416; Perkins, 342 U.S. at 447-48. Instead, the facts here are more like

13 those described in Helicopteros:the nonresident defendant had limited contacts with Texas but none

sufficient to support general jurisdiction. Accordingly, the court of appeals erred in holding otherwise.

B

Jurisdictional Veil-Piercing

As its second basis for general jurisdiction, the court of appeals imputed Province's Texas

contacts to Minden, concluding the two entities operated as a single business enterprise and that

Minden, through Province, did business in Texas. In 1925, the Supreme Court of the United States

considered whether a North Carolina court had jurisdiction over a nonresident parent corporation

whose subsidiary did business in North Carolina. Cannon Mfg. Co. v. Cudahy Packing Co., 267

U.S. 333, 335 (1925). In affirming the district court's dismissal for lack of jurisdiction, the Court

held:

Through ownership ofthe entire capital stock and otherwise, the defendant dominates [its subsidiary], immediately and completely; and exerts its control both commercially and financially in substantiallythe same way, and mainly through the same individuals, as it does over those selling branches or departments ofits business not separately incorporated which are established to market the [defendant's] products in other states. The existence of the [subsidiary] as a distinct corporate entity is, however, in all respects observed. Its books are kept separate. All transactions between the two corporations are represented by appropriate entries in their respective books in the same way as if the two were wholly independent corporations.

Id. The Court concluded that "the corporate separation, though perhaps merely formal, was real. It

was not pure fiction." Id. at 337.

14 The Court has never disavowed Cannon, despite an opportunity to do so. Instead, it

essentially echoed the Cannon rule in Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13

(1984). See William A. Voxman, Comment, Jurisdiction over a Parent Corporation in Its

Subsidiary's State ofIncorporation, 141 U.Pa. L. Rev. 327,339(1992) (noting thatKeeton footnote

implicitly recognized Cannon's continuing validity). In that case, then-Justice Rehnquist, writing

for the Court, noted that "jurisdiction over a parent corporation [does not] automatically establish

jurisdiction over a wholly owned subsidiary. . . . Each defendant's contacts with the forum State

must be assessed individually." Keeton, 465 U.S. at 781 n. 13;see also Voxman, 141 U.Pa. L. Rev.

at 338 (noting that "[t]heclear implication of Rehnquist's assertion is thatthe nature of the parent-

subsidiary relationship may wellbe a factor in determining whether jurisdiction comports with due

process, but the existence of the relationship will not, in andof itself, be dispositive of the issue").

The Fifth Circuit Court of Appeals followed Cannon in Hargrave v. Fibreboard Corp.:

Cannon . . . stands for the proposition that so long as a parent and subsidiary maintain separate and distinct corporate entities, the presence ofone in a forum state may not be attributed to the other. Cases in this circuit appear to have followed the Cannon rule in applying the Texas long-arm statute, although sometimes without explicitcitation. We have notedoftenthat 100% stockownership and commonality ofofficers and directors are notalone sufficient to establish analter ego relationship between two corporations. Generally, our cases demand proof of control by the parent over the internal business operations and affairs of the subsidiary in order to fuse the two for jurisdictional purposes. The degree of control exercised by the parent must be greater than that normally associated with common ownership and directorship. All the relevant facts andcircumstances surrounding the operations of the parent and subsidiary must beexamined to determine whether two separate and distinct corporate entities exist.

15 Hargrove, 710 F.2d 1154, 1160 (5th Cir. 1983)(citations omitted). The court held that the two

corporations at issue "maintained a degree ofcorporate separation that was more than superficial" and "[t]he policy making authority held and exercised by [the parent] was no more than that

appropriate for a sole shareholder of a corporation" and not enough to warrant the extraterritorial

exercise ofjurisdiction over that shareholder. Id. at 1161. The court concluded: "The Lone Star of

Texas may shine brightly throughout the world, but its long arm is not judicially all encompassing." Id.

We recently followed Hargrave (and, by implication, Cannon) in explaining when the contacts of a related corporate entity may be considered for purposes of determining general jurisdiction. BMC Software Belg, N.V. v. Marchand, 83 S.W.3d 789, 795-796 (Tex. 2002). We held that "[personal jurisdiction may exist over anonresident defendant ifthe relationship between the foreign corporation and its parentcorporation thatdoesbusiness in Texas is onethatwould allow

the court to impute the parent corporation's 'doing business' to the subsidiary." Id. at 798 (citing Hargrave, 710 F.2d at 1159 and Walker v. Newgent, 583 F.2d 163, 167 (5th Cir. 1978)). The rationale for exercising jurisdiction is that "the parent corporation exerts such domination and

control over its subsidiary 'that they do not in reality constitute separate and distinct corporate entities but are one and the same corporation for purposes ofjurisdiction.'" Id. (quoting Hargrave,

710 F.2d at 1159 (citations omitted)). We required that the party seeking to ascribe one

corporation's actions to another by disregarding their distinct corporate entities prove this allegation,

because Texas law presumes that two separate corporations are distinct entities. Id.; accord 4A

Wright & Miller, Federal Practice & Procedure § 1069.4 (noting a "reluctance to exercise 1O personal jurisdiction overa subsidiary merely because itsparent corporation is doing business inthe

forum state"). We concluded that there was no evidence to support the trial court's finding of

general jurisdiction over a Belgian subsidiary based on allegations it was the alter ego of its

American parent. BMCSoftware, 83 S.W.3d at 801.

1. Single Business Enterprise

Here, the court of appeals held that Province and Minden operated as a single business

enterprise—a theory we have never endorsed—and, therefore, Province's Texas contacts could be

imputed to Minden.5 202 S.W.3d at 202; see Southern Union Co. v. City ofEdinburg, 129 S.W.3d 74, 86-87 (Tex. 2003) (noting that this Court "has never considered the 'single business enterprise'

concept in any detail" and declining to decide "whether a theory of'single business enterprise' isa

necessary addition to Texas law regarding the theory of alter ego for disregarding corporate

structure"). In doing so, the court of appeals examined eight factors as theyrelated to Minden and

Province: (1) common employees, (2) common offices, (3) centralized accounting, (4) payment of

wages by one corporation to another corporation's employees, (5) common business name, (6)

services rendered by the employees of one corporation on behalf of another corporation, (7)

undocumented transfers of funds between corporations, and (8) unclear allocation of profits and

losses between corporations. 202 S.W.3d at 201-02. The court's analysis failed to recognize,

5The record contains no evidence regarding the structure ofProvince's ownership ofTexas hospitals. That is, there is no evidence regarding whether those hospitals are owned directly by Province or instead by a wholly owned subsidiary like Minden. The parties assume that Province (rather than its subsidiaries) does business in Texas; for purposes of our analysis, we make the same assumption.

17 however, that veil-piercing for purposes of liability ("substantive veil-piercing") is distinct from imputing one entity's contacts to another for jurisdictional purposes ("jurisdictional veil-piercing").

Courts have acknowledged that jurisdictional veil-piercing and substantive veil-piercing involve different elements ofproof. See, e.g., Wells Fargo &Co. v. Wells Fargo Express Co., 556 F.2d 406, 425 (9th Cir. 1977) (noting that undercapitalization, "which is important to deciding whether to pierce the veil raised by asubsidiary corporation in order to hold the parent corporation liable for failure ofthe subsidiary to meet its debts, may not be relevant to a showing that the two corporations are in fact one so as to establish that the out-of-state corporation—be it parent or subsidiary—is present within the forum forjurisdictional purposes"; instead, "the operative question is whether the two corporations are in fact mere 'divisions' or 'branches' of a larger whole"); Daimler-Benz Aktiengesellschaft v. Olson, 21 S.W.3d 707, 721 n.5 (Tex. App.—Austin 2000, pet. dism'd w.o.j.) ("Although many of the factors relevant to [determining whether subsidiaries' contacts should be imputed to parent] may also be relevant in determining whether a parent corporation should be liable for the actions ofits subsidiary, the determination whether two corporate entities are one and the same for jurisdictional purposes is distinct."), cert, denied, 535 U.S. 1077

(2002); see also 2-32 William V. Dorsaneo, Texas Litigation Guide § 32.06 (2005). This makes sense in light of the fact that personal jurisdiction involves due process considerations that

may not be overriden by statutes or the common law. Cf City ofMonroe Employees Ret. Sys. v. Bridgestone Corp., 399 F.3d 651,667-668 (6th Cir. 2005) (refusing, in case involving jurisdictional allegations based on alleged "control person" under the securities laws, to "substitute our analysis ofthe securities laws' substantive bases for liability for the required, due-process based personal 18 jurisdiction analysis"); AT&TCo. v. Compagnie Bruxelles Lambert, 94F.3d 586,591 (9thCir. 1996)

(concluding that "liability is not to be conflated with amenability to suit in a particular forum.

Personal jurisdiction has constitutional dimensions, and regardless ofpolicy goals, Congress cannot

override the due process clause, the source ofprotection for non-resident defendants."); In re Baan

Co. Sec. Litig., 245 F. Supp. 2d 117,129 (D.D.C. 2003) (noting thatliability under theSecurities Act

"cannot on its own support personal jurisdiction," as such an approach "impermissibly conflates

statutory liability with the Constitution's command that the exercise ofpersonal jurisdiction must be

fundamentally fair"); Michiana EasyLivin' Country, Inc. v. Holten, 168 S.W.3d 777, 790-91 (Tex.

2005) (rejecting theory that where defendant "directed a tort" was relevant inquiry for specific jurisdiction, as such a rule improperly "equat[ed] the jurisdictional inquiry with the underlying merits"); Natl Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995) (observing that

"[conspiracy as an independent basis for jurisdiction has been criticized as distracting from the

ultimate due process inquiry: whether the out-of-statedefendant's contact with the forum was such

that it should reasonably anticipate being haled into a court in the forum state" and declining to

recognize personal jurisdiction based on conspiracy allegation); John A. Swain &Edwin E. Aguilar, Piercing the Veil to Assert Personal Jurisdiction Over Corporate Affiliates: An Empirical Study of

the Cannon Doctrine, 84 B.U.L. Rev. 445,453 (2004) (noting that "the principle oflimited liability is statutory and does not speak to judicial jurisdiction").

For this reason, fraud—which is vital to piercing the corporate veil under section 21.223 of

the Business Organizations Code—has no place inassessing contacts to determine jurisdiction. See

Tex. Bus. ORGS. Code § 21.223. Similarly, some of the factors courts look to in determining 19 whether an entity may be held liable as a "single business enterprise" are irrelevant to an analysis ofjurisdictional contacts. Forexample, thecourtofappeals examined whetherProvince andMinden

shared acommon name and concluded that "[Minden's] partnership name and initials, PHC-Minden,

L.P. can be construed as a reference to Province Healthcare Company." 202 S.W.3d 201. Whether

two related entities share a common name, however, does not affect whether each has sufficient

contacts with the forum for jurisdictional purposes.

2. Factors

Instead, we recently outlined the relevant factors for jurisdictional veil-piercing:

To "fuse" the parent company and its subsidiary for jurisdictional purposes, the plaintiffs must prove the parentcontrols the internal business operations and affairs ofthesubsidiary. Butthedegree ofcontrol theparent exercises must be greater than that normally associated with common ownership and directorship; the evidence must show that the two entities cease to be separate so that the corporate fiction should be disregarded to prevent fraud or injustice.

BMC Software, 83 S.W.3d at 799(citations omitted). We also relied on ourprior precedent, which

held that"[a] subsidiary corporation will notbe regarded asthealter egoofitsparent merely because

of stock ownership, a duplication of some or all of the directors or officers, or an exercise of the

control that stock ownership gives to stockholders." Gentry v. Credit Plan Corp. ofHouston, 528

S.W.2d 571, 573 (Tex. 1975). A leading treatise suggests that in determining whether a subsidiary

corporation is subject to thejurisdiction of a forum state because its parent corporation is present or

doing business there, courts should determine whether the subsidiary is "separate anddistinct from

its parent corporation for personal jurisdiction purposes," taking into account the amount of the

20 subsidiary's stock owned by the parent corporation, the existence of separate headquarters, the observance of corporate formalities, and the degree of the parent's control over the general policy and administration ofthe subsidiary. 4A Wright &Miller, Federal Practice &Procedure § 1069.4.

Here, the courtof appeals cited the following as evidence that Province and Minden were a

single business enterprise:

the record shows that Province and [Minden] have at least one common employee and that Province pays certain [Minden] employees, although the salaries are intercompany payables. The names ofthe two companies are similar, and Province employees provide various services to assist [Minden] in its operations. Province exercises control over [Minden]'s revenues and expenditures and oversees [Minden]'s operations, financial performance, and completion of strategic initiatives. Further, Province audits [Minden]'s financial goals to determine if [Minden] will be able to meet these goals. Considering the totality of this evidence, we conclude that Province and[Minden] haveintegrated theirresources to achieve a common business purpose.

202 S.W.3d at 202.

Upon closer examination, however, it is clear that Province does not exercise the sort of

control over Minden that is required to fuse them for jurisdictional purposes. BMC Software, 83 S.W.3d at799. Much oftheevidence cited points toparental involvement—involvement consistent

with its investor status—not atypical control. See 16 Moore's Federal Practice §108.42[3][b]. "Appropriate parental involvement includes monitoring the subsidiary's performance, supervision of the subsidiary's finance and capital budget decisions, and articulation ofgeneral policies." Id. What is lacking here is the "plus" factor, "something beyond the subsidiary's mere presence within

21 the bosom ofthe corporate family." Dickson Marine, Inc. v. Panalpina, Inc., 179 F.3d 331,338 (5th Cir. 1999); see also Central States, Southeast &Southwest Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 943 (7th Cir. 2000) (holding that "constitutional due process requires that personal jurisdiction cannot be premised on corporate affiliation orstock ownership alone where

corporate formalities are substantially observed and the parent does not exercise an unusually high degree of control over the subsidiary"); De Castro v. Sanifill, Inc., 198 F.3d 282, 283-84 (1st Cir.

1999) (requiring "strong and robust" evidence of parental control over subsidiary, such that

subsidiary is"mere shell," before subsidiary's contacts could beimputed to parent). The two entities

maintain separate headquarters, Minden in Louisiana and Province in Tennessee. Minden's Board

of Governors approves Minden's budget and oversees day-to-day operations, and Minden alone

establishes its policies andprocedures forproviding health careto patients. Province is notinvolved

in Minden's physician recruitment, and the two entities share no directors. While Minden's chief

executive officer, chief nursing officer, and chieffinancial officer receive their paychecks from

Province, their salaries are intercompany payables; that is, the monies come from Minden's

revenues. Similarly, while Province provides Minden's general liability insurance and a group health

insurance policy for its employees, the policies are funded from Minden's revenues. There is no

indication that Minden and Province have disregarded corporate formalities. The court of appeals

cited evidence that two Minden employees received Province stock options, but we have said that

"a parent company'soffering a stockoptionplanto a subsidiary's employees is acceptable under IRS

regulations andis notevidence ofabnormal control overthesubsidiary." BMC Software, 83 S.W.3d

22 at 800. Put simply, we find no evidence ofcontrol other than that consistent with Province's investor

status, and the court of appeals erred in imputing Province's Texas contacts to Minden.

Ill

Conclusion

Minden does not have continuous and systematic contacts with Texas, nor is there any basis for imputing Province's Texas contacts to Minden. We reverse the court ofappeals' judgment and render judgment dismissing the claims against Minden for want ofjurisdiction. Tex. R. App. P. 60.2(c).

Wallace B. Jefferson Chief Justice

OPINION DELIVERED: August 31, 2007

23 IN THE SUPREME COURT OF TEXAS

TYLER, TEXAS NO. 05-0823 CATHY sT Lbs^. clerk

On Petition for Review from the Court of Appeals for the Twelfth District of Texas

Judgment

THE SUPREME COURT OF TEXAS, having heard this cause on petition for review from the Court of Appeals for the Twelfth District, and having considered the appellate record, counsels' briefs, and counsels' argument, concludes that the court of appeals' judgment should be reversed. IT IS THEREFORE ORDERED, in accordance with the Court's opinion, that:

1) The court of appeals' judgment is reversed;

2) Judgment is rendered dismissing the claims against PHC-Minden, L.P. d/b/a Minden Medical Center for want ofjurisdiction; and

3) PHC-Minden, L.P. d/b/a Minden Medical Center, shall recover, and Kimberly-Clark Corporation shall pay, the costs incurred in this Court and in the court of appeals. Copies of this judgment and the Court's opinion are certified to the Court of Appeals for the Twelfth District and to the County Court of Gregg County, Texas, for observance.

Opinion of the Court delivered by Chief Justice Jefferson.

August 31, 2007