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Lewis v. Kennebec County

United States District Court, D. Maine

September 10, 2018

BRANDEE A. LEWIS, Plaintiff,
KENNEBEC COUNTY, et al., Defendants.



         The Court affirms a recommended decision of the Magistrate Judge to dismiss an out-of-state corporate parent of a subsidiary corporation on the ground that the parent did not have sufficient minimal contacts with the forum state to justify jurisdiction. The Court also affirms the Magistrate Judge's recommendation not to allow jurisdictional discovery.

         I. BACKGROUND

         On November 7, 2016, Brandee A. Lewis filed a complaint against Kennebec County, the Kennebec County Sheriff's Office and its Corrections Division, the Kennebec County Correctional Facility (KCCF), a number of Kennebec County officials and employees, Crisis & Counseling Centers, Correctional Health Partners (CHP), and Kimberly Arlene Vigue, alleging that while Ms. Lewis was housed in the KCCF, she was “brutally sexually assaulted and physically assaulted by a nurse and multiple staff members at the [KCCF].” Compl. ¶ 1 (ECF No. 1). Ms. Lewis alleged that at the time of the assault, Nurse Vigue was employed by CHP, which had its principal place of business in the city of Denver, state of Colorado. Id. ¶¶ 16-17. On October 20, 2017, Ms. Lewis filed a motion to amend the complaint to add as a party defendant Physician Health Partners, LLC (PHP), CHP's parent company. Pl., Brandee A. Lewis's Mot. for Leave to File Amended Compl. and Add Parties (ECF No. 76); Attach. 3, Am. Compl. On December 22, 2017, the Magistrate Judge granted the Plaintiff's motion to amend complaint. Decision and Order on Pl.'s Mot. to Am. and Defs.' Mots. to Strike (ECF No. 96). On December 26, 2017, Ms. Lewis filed the amended complaint. First Am. Compl. (ECF No. 97).

         On January 31, 2018, PHP filed a motion to dismiss for lack of jurisdiction. Def. PHP's Mot. to Dismiss (ECF No. 108) (PHP Mot.). On February 22, 2018, Ms. Lewis responded in opposition to PHP's motion to dismiss and, in the alternative, she filed a motion for jurisdictional discovery. Pl.'s Reply in Opp'n to PHP's Mot. to Dismiss or, in the Alternative, Mot. for Jurisdictional Disc. (ECF No. 116) (Pl.'s Opp'n) (ECF No. 118) (Pl.'s Mot.). On March 6, 2018, PHP filed its reply to Ms. Lewis' opposition to the motion to dismiss. Def. PHP Reply in Support of Mot. to Dismiss (ECF No. 122) (PHP Reply). On March 14, 2018, PHP filed its opposition to Ms. Lewis' motion for jurisdictional discovery. Def. PHP's Opp'n to Pl.'s Mot. for Jurisdictional Disc. (ECF No. 123) (PHP's Opp'n). On March 28, 2018, Ms. Lewis filed her reply to PHP's response. Pl.'s Resp. to PHP's Obj. to Pl.'s Mot. for Jurisdictional Disc. (ECF No. 130) (Pl.'s Reply).

         On April 23, 2018, the Magistrate Judge issued a recommended decision on PHP's motion to dismiss and Ms. Lewis' motion for jurisdictional discovery. Recommended Decision on PHP's Mot. to Dismiss and Pl.'s Mot. for Jurisdictional Disc. (ECF No. 131) (Recommended Decision). On May 6, 2018, Ms. Lewis filed an objection to the Magistrate Judge's recommended decision and moved the Magistrate Judge to reconsider the recommended decision. Pl.'s Mot. to Recons. and Obj. to Recommended Decision on PHP's Mot. to Dismiss and Pl.'s Req. for Oral Argument (ECF No. 136) (Pl.'s Obj.); (ECF No. 137) (Pl.'s Mot. for Recons.). On May 21, 2018, PHP replied to Ms. Lewis' objection to the Magistrate Judge's recommended decision. Def. PHP's Resp. in Opp'n to Pl.'s Mot. to Recons. and Obj. to the Magistrate Judge's Recommended Decision (ECF No. 142) (Def.'s Resp. to Pl.'s Obj. and Mot. for Recons.). On June 4, 2018, the Magistrate Judge denied the motion for reconsideration. Order (ECF No. 143).

         On June 7, 2018, Ms. Lewis filed a renewed objection to the recommended decision and requested oral argument. Pl.'s Renewed Obj. to Recommended Decision on PHP's Mot. to Dismiss and Pl.'s Mot. for Jurisdictional Disc. and Pl.'s Req. for Oral Argument Before the District Court Judge (ECF No. 144) (Pl.'s Renewed Obj. and Req.). On June 11, 2018, PHP filed a response to Ms. Lewis' renewed objection to the recommended decision and request for oral argument. Def. PHP's Resp. in Opp'n to Pl.'s Renewed Objection to the Recommended Decision (ECF 144) and Req. for Oral Argument (ECF 145) (ECF No. 146) (Def.'s Renewed Resp.).


         To support its motion, PHP submitted an affidavit of Ken Nielsen, the President and Chief Executive Officer of PHP. Id. Attach. 1, Aff. of Ken Nielsen ¶ 1 (Nielsen Aff.). Mr. Nielsen states that PHP is “a healthcare management company that was founded in 1996, ” and that CHP “originated as a division of [PHP] ¶ 2005.” Id. ¶¶ 2-3. He says that in 2010, CHP “split off as a subsidiary of [PHP] because [CHP] was engaged in a completely different business than [PHP].” Id. ¶ 4. PHP, Mr. Nielsen explained, is “in the business of helping private medical practice in Colorado deliver primary care.” Id. ¶ 5. CHP is “a company that is engaged in the business of providing correctional healthcare and third party administration services for state and county correctional facilities.” Id. ¶ 6. Mr. Nielsen asserts that while PHP “is the parent company of [CHP], the two companies exist as separate and distinct corporate entities.” Id. ¶ 7. He says that PHP and CHP “have different boards of directors and have different managers”, that PHP “does not operate or control [CHP] and it does not dictate the business activities of [CHP], ” and that PHP and CHP “maintain different bank accounts and the two companies do not co-mingle their assets in any way.” Id. ¶¶ 8-10.

         Furthermore, Mr. Nielsen states, PHP “only does business in the State of Colorado.” Id. ¶ 11. Mr. Nielsen avers that “[n]o employee of [PHP] has ever traveled to Maine for any reason on behalf of [PHP], ” that PHP “has never had any contracts for services with Maine-based clients, and it has never been subject to suit in Maine, ” and that PHP “has never done any business in Maine, and it has never advertised or solicited business in Maine.” Id. ¶¶ 12-14.

         Finally, Mr. Nielsen states that PHP “is not a party to the contract that [CHP] has to provide healthcare services at the Kennebec County Correctional Facility” and that during the times relevant to this lawsuit, PHP did not “hire, fire, train, or supervise any employees of [CHP].” Id. ¶¶ 15-16. Mr. Nielsen says that “[t]here are no allegations in the Amended Complaint that involve or implicate anyone employed by [PHP].” Id. ¶ 17.


         A. PHP's Motion to Dismiss

         1. PHP's Position

         PHP contends that Ms. Lewis failed to meet her burden of establishing that PHP has the required “minimum contacts” with the state of Maine to establish general or specific jurisdiction over PHP. PHP Mot. at 2. PHP notes that it is the parent company for CHP and, even though Ms. Lewis alleges in her amended complaint that PHP has “substantial affairs” within the state of Maine, PHP denies that it has sufficient contacts within the state of Maine to justify the assertion of federal jurisdiction over it in Maine. Id. at 3.

         In order to assert jurisdiction over a defendant, the plaintiff must demonstrate that the defendant has “minimum contacts” with the forum. Id. at 5 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). PHP notes that “[i]n keeping with the Due Process Clause, courts may not exercise personal jurisdiction ‘under circumstances that would offend ‘traditional notions of fair play and substantial justice.'” Id. (citing Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 113 (1987) (quoting Int'l Shoe, 326 U.S. at 316) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). In assessing this issue, PHP points to the factors set out by the First Circuit in United Electrical, Radio and Machine Workers of America v. 163 Pleasant Street Corporation, 960 F.2d 1080 (1st Cir. 1992). Id. at 5 (citing United Elec., 960 F.2d at 1088).

         PHP says that if a plaintiff makes a prima facie showing that a non-resident defendant has sufficient minimum contacts with the forum state, the burden shifts to the defendant to convince the court that the “Gestalt factors militate against the exercise of jurisdiction.” Id. PHP states that the First Circuit set forth five Gestalt factors: (1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies. Id. at 5-6 (quoting 163 Pleasant St., 960 F.2d at 1088).

         With this background, PHP argues that this Court has neither general nor specific jurisdiction over it. Id. at 6-10. General jurisdiction, PHP maintains, requires that a defendant engage in “substantial or systematic and continuous activity inside the forum state such that the defendant is essentially at home in the forum state.” Id. (citing Daimler AG v. Bauman, 134 S.Ct. 746, 755 (2014)). PHP says that there is nothing in the Plaintiff's Amended Complaint that allows for a conclusion that this Court has general jurisdiction over it. Specific jurisdiction, PHP says, allows for jurisdiction over a nonresident defendant when “the cause of the action arises directly out of, or relates to, the defendant's forum-based contacts.” Id. at 8 (quoting 163 Pleasant St., 960 F.2d at 1089). PHP contends that Ms. Lewis has failed to allege facts that would confer specific jurisdiction over PHP for her claim. Id. at 8-10.

         2. Brandee Lewis' Response

         In response, Ms. Lewis argues that this Court has jurisdiction over PHP under Federal Rule of Civil Procedure 4(k)(2), which she says provides that personal jurisdiction is established with service of process for claims arising under federal law if “(A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.” Pl.'s Opp'n at 2 (quoting Fed.R.Civ.P. 4(k)(2)).

         Ms. Lewis contends that because PHP benefits “by receiving profits through its subsidiary which come from the State of Maine, ” Maine taxpayers “cause benefit to PHP via the services provided by CHP and receiving financial gain is a substantial contact with the State of Maine.” Id. at 3. Regarding PHP's forum-state activities, Ms. Lewis claims jurisdiction because “PHP is a direct beneficiary of” the contract between CHP and the Kennebec County Correctional Facility. Id. at 4. Ms. Lewis points to the Employee Handbook for the employees of PHP and CHP, which she contends is “one and the same.” Id. at 5. Ms. Lewis notes that in his welcome letter, Mr. Nielsen greets new employees to both PHP and CHP to “our company!” Id. (quoting Ex. 1 (Welcome letter to new employees in Employee Handbook)). In effect, Ms. Lewis says that the employee handbook does not differentiate between PHP and CHP employees. Id. at 5-6. Next, Ms. Lewis argues that because CHP is a “wholly owned division” of PHP, this constitutes sufficient direct evidence that PHP controls CHP's day-to-day operations. Id. at 6.

         Ms. Lewis also contends that CHP and PHP have “commingled staff and personnel.” Id. at 6-7. She notes that from December 8, 2009, when CHP was created, until sometime between December 8, 2015 and December 12, 2016, CHP used the “same exact business address and suite” as PHP. Id. at 7. Furthermore, the same person, Joelle Kernitzki, filed the annual reports for both companies. Id. at 7-8. Ms. Lewis thus contends PHP and CHP commingled their businesses. Id. at 8. She also notes that CHP announced in a press release that Dr. Steve Krebs “is the full-time Chief Medical Officer of both [CHP] and [PHP]”; that Abby Bookover, the media contact, worked for CHP but had an email address at PHP; and that Jeff Archambeau, the current CHP chief executive officer, was announced as having been with CHP and PHP “for more than five years.” Id. at 5-8. Id. Ms. Lewis further maintains that PHP has the final authority for resolving employee disputes within CHP and has hiring and firing authority of CHP personnel. Id. It follows, she argues, that PHP had “oversight of [CHP] operations within the State of Maine, to include personnel matters such as Defendant Vigue's torture of Brandee Lewis.” Id. at 8-9.

         Regarding the purposeful availment requirement, Ms. Lewis asserts that “PHP is the controlling company, overseeing the business it created to provide medical services to correctional facilities.” Id. at 8. She reiterates her earlier arguments concerning the mixture of personnel, PHP's final hiring and firing authority, and PHP's role in resolving employee disputes. Id. at 8-9.

         Finally, Ms. Lewis contends that the Gestalt factors favor this Court's assertion of jurisdiction over PHP. Id. at 9-10.

         3. PHP's Reply

         In reply, PHP disputes Ms. Lewis' contention that Federal Rule of Civil Procedure 4(k)(2) provides a basis for the assertion of federal jurisdiction because PHP “is not subject to jurisdiction in any state's courts of general ...

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