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CHG Companies, Inc. v. Medina Memorial Hospital

United States District Court, D. Utah

November 27, 2017

CHG COMPANIES, INC. d/b/a COMPHEALTH, a Delaware corporation, Plaintiffs,
v.
MEDINA MEMORIAL HOSPITAL, a New York corporation Defendants.

          MEMORANDUM DECISION AND ORDER

          Dee Benson United States District Judge

         Before the court is Defendant Medina Memorial Hospital's (“Medina”) Motion to Dismiss for lack of personal jurisdiction claims brought by Plaintiff CHG Companies, Inc. (“CHG”). (Dkt. No. 12). At oral argument on the motion, CHG was represented by Michael C. Barnhill, and Medina was represented by Wesley D. Felix. At the conclusion of the hearing, the Court took the matter under advisement. Now, having considered the law and facts relating to the motion, the Court renders the following Memorandum Decision and Order.

         BACKGROUND

         Plaintiff CHG is a Delaware corporation registered to do business in Utah with its headquarters in Salt Lake City, Utah. (Compl. at ¶ 1; decl. of Steve Riding at ¶¶ 3-4). From its office in Salt Lake City, CHG provides locum tenens[1] services to hospitals and clinics throughout the country. Id. Defendant Medina is a New York corporation with its principal place of business in Medina, New York. (Compl. at ¶ 2). Medina does not have a physical presence in Utah, is not registered to do business in Utah, and does not pay any taxes in Utah (Decl. of Wendy Jacobson at ¶¶ 9-14).

         It is unclear from the record which party initially contacted the other, but in 2016 CHG and Medina began negotiating over a locum tenens agreement in which CHG would arrange for a physician to work temporarily at Medina's hospital in New York. (Decl. of Steve Riding at ¶¶ 6-10). Throughout the negotiations, Medina and CHG exchanged emails and phone calls. (Decl. of Wendy Jacobson at ¶ 7). However, no one from Medina traveled to Utah as part of the negotiation process. (Id. at ¶ 5).

         The two parties entered into a written agreement on July 27, 2016. (Agreement). CHG screened potential candidates, and Medina approved Dr. Ian Cole, who began performing services for Medina in New York in August, 2016 and ceased in November, 2016 when Medina terminated its relationship with CHG. (Compl. at ¶¶ 6-13). CHG alleges that throughout this time period it sent bi-weekly invoices to Medina based upon Dr. Cole's submitted work records, and that Medina has failed to pay the full amount of the invoices. Id. The contract contains a Utah choice of law provision. (Agreement at ¶ 8.E).

         DISCUSSION

         To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show (1) that jurisdiction is legitimate under the laws of the forum state, and (2) that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment. Soma Medical Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir. 1999).

         I. Jurisdiction Under State Law

         Utah law expressly states that the Utah state long arm statute must be interpreted broadly “so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of the Fourteenth Amendment to the United States Constitution.” Utah Code § 78B-3-201; see also Starways, Inc. v. Curry, 980 F.2d 204, 206 (Utah 1999) (“We have held that the Utah long-arm statute ‘must be extended to the fullest extent allowed by due process of law.”) (quoting Synergetics v. Marathon Ranching Co., 701 F.2d 1106, 1110 (Utah 1985)). Because the Utah long-arm statute confers the maximum jurisdiction permissible consistent with the Due Process Clause, the court proceeds to determine whether the exercise of personal jurisdiction over Medina in the instant case meets federal due process standards.

         II. Due Process Analysis

         “The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful ‘contacts, ties, or relations.'” Burger King, 471 U.S. at 471-72 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)). Accordingly, a “court may exercise personal jurisdiction over a nonresident defendant only so long as there exist ‘minimum contacts' between the defendant and the forum state.” World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (quoting International Shoe, 326 U.S. at 316).

         In order to establish specific personal jurisdiction[2], the court must determine whether the defendant has such “minimum contacts” with the forum state “that he should reasonably anticipate being haled into court there.” World-Wide Volkswagen, 444 U.S. at 297. These “minimum contacts” are established “‘if the defendant has “purposefully directed” his activities at residents of the forum and the litigation results from alleged injuries that “arise out of or relate to” those activities.'” OMI Holdings, 149 F.3d at 1091 (quoting Burger King, 471 U.S. at 472). Second, if the defendant's activities create sufficient minimum contacts, then the court must consider “whether the exercise of personal jurisdiction over the defendant offends ‘traditional notions of fair play and substantial justice.'” Id. (quoting Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 113 (1987)). The latter inquiry requires a determination of whether a district court's exercise of personal jurisdiction over a defendant with minimum contacts is “reasonable” in light of the circumstances surrounding the case. OMI Holdings, 149 F.3d at 1091.

         When examining the contacts with the forum state, the “relationship must arise out of contacts that the defendant himself creates with the forum State.” Walden v. Fiore, 134 S.Ct. 1115, 1122 (2014) (internal quotation omitted) (emphasis in original). The United States Supreme Court has “consistently rejected attempts to satisfy the defendant-focused ‘minimum contacts' inquiry by demonstrating contacts between the plaintiff (or third party) and the forum State.” Id. The analysis “looks to the defendant's contacts with the forum State itself, not the defendant's contacts with persons who reside there.” Id. To be sure, the existence of a contract between the defendant and a party of the forum state establishes some contacts with the forum, but “[i]f the question is whether an individual's contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party's home forum . . . the answer is clearly is that it cannot.” Burger King, 471 U.S. at 472. Jurisdiction can only be found if the out-of-state party “purposefully reach[es] out beyond their State and into another by, for example, entering a contractual relationship that envisioned continuing and wide-reaching contacts in the forum State.” Walden, 134 S.Ct. at 1122 ...


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