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.

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

(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,

(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.,

(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,

(1st Cir. 2007). The defendant's facts "become part of the mix

only to the extent that they are uncontradicted."

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,

(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

; Alacron, Inc. v. Swanson,

(N.H. 2000). Therefore, the sole inquiry in this case is

"whether the exercise of personal jurisdiction comports with

federal constitutional standards." Sawtelle,

.

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,

(quotinq Int'l Shoe Co. v. Wash.,

(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,

(1st Cir. 1994) .

A court may exercise authority over a defendant by means of

qeneral or specific jurisdiction. N. Laminate Sales, Inc. v.

Davis,

(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.,

(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.

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.,

(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.,

, 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,

. The relatedness prong is applied "through the prism"

of the plaintiff's claims. Sawtelle,

. 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,

(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."

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.,

(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,

(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,

("[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,

(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.,

(1st Cir.

2009) (Howard, J., concurring); N. Laminate,

.

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,

. 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."

(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

; see also N. Laminate,

("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,

(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,

(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,

. "[T]he cornerstones upon which

the concept of purposeful availment rest are voluntariness and

foreseeability." Sawtelle,

. 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,

(1984) . To

satisfy the effects test, more than the defendant's mere

knowledge that the plaintiff resides in the forum state is

reguired. See

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,

.

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,

. 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

. 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

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,

.

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,

.

The "reasonableness prong of the due process inguiry evokes

a sliding scale." Ticketmaster-N.Y ., Inc. v. Alioto,

(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."

- 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,

(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,

.

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

. 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."

(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

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."

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,

.

- 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,

.

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 -