Schwanke v. JB Medical Management Solutions, Inc. et al

Filing 39

ORDER: The McKesson Defendants' Corrected Motion to Transfer or Dismiss 25 is GRANTED in part, as follows: (a) the McKesson Defendants' motion to transfer is DENIED; (b) the McKesson Defendants' motion to dismiss is GRANTED; and (c) the Complaint is DISMISSED without prejudice as to McKesson Business Performance Services, McKesson Technology Solutions, McKesson Provider Technologies, and McKesson Technologies, Inc. The statutes of limitations for both the TCPA and conversi on claims are hereby tolled until June 9, 2017, so Plaintiff can conduct discovery to determine whether any other McKesson Defendants are proper defendants to this action, at which time the Court will consider any appropriate motion from Plaintiff. The McKesson Defendants' Motion for Leave to File Reply Memorandum 38 is DENIED as moot. Signed by Judge James S. Moody, Jr. on 1/9/2017. (LN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
OCALA DIVISION

LAWRENCE E. SCHWANKE, D.C., d/b/a
BACK TO BASICS FAMILY
CHIROPRACTIC, a Florida resident,
individually, and as the representative of a
class of similarly-situated persons,
Plaintiff,
v.

Case No: 5:16-cv-597-Oc-30PRL

JB MEDICAL MANAGEMENT
SOLUTIONS, INC., MCKESSON
CORPORATION, MCKESSON
BUSINESS PERFORMANCE
SERVICES, MCKESSON
TECHNOLOGY SOLUTIONS,
MCKESSON PROVIDER
TECHNOLOGIES, MCKESSON
TECHNOLOGIES, INC. and JOHN
DOES 1-12,
Defendants.

ORDER
The McKesson Defendants 1 raise two arguments: The first is that Plaintiff’s action
for violation of the Telephone Consumer Protection Act (“TCPA”) and conversion should
be transferred to the District Court for the Northern District of California because it
substantially overlaps with a case that was filed there first, or because transferring would

1

The McKesson Defendants are McKesson Corporation, McKesson Business Performance
Services, McKesson Technology Solutions, McKesson Provider Technologies, and McKesson
Technologies, Inc.

further the interests of convenience and justice. The second argument is that Plaintiff’s
action should be dismissed for failing to state a cause of action. Because Plaintiff’s case
does not substantially overlap with the Northern District of California case and because
transfer would not further convenience or justice, the case should not be transferred. The
Court also concludes that Plaintiff’s complaint fails to state a cause of action against all but
one of the McKesson Defendants and must be dismissed as to the other defendants.
FACTUAL BACKGROUND
McKesson Corporation, including its various divisions and subsidiaries, created a
medical software product called Medisoft. Medisoft is marketed to healthcare providers
nationwide. On October 4, 2012, Plaintiff received an unsolicited fax from Defendant JB
Medical Management Solutions, Inc. (“JB Medical”) advertising Medisoft and bearing
McKesson’s name and motto. The fax, though, does not list any particular McKesson
entity2 or any other information identifying what McKesson entity was involved.
Plaintiff claims the unsolicited fax violated the TCPA and unlawfully converted his
property. On September 29, 2016, Plaintiff filed a class action against JB Medical, the
McKesson Defendants, and 12 John Does. The proposed class is:

2

In an order from the Northern District of California case, the Honorable Judge Donna Ryu
explains McKesson’s corporate structure, which bears repeating here:
McKesson Corporation has over 600 subsidiaries or affiliated companies that are separate
legal entities; these entities collectively employ 70,400 full-time employees. Many of these
entities are subdivided into multiple business units.
True Health Chiropractic Inc v. McKesson Corp., No. 13-CV-02219-HSG-DMR, 2015 WL 5341592, at *2
(N.D. Cal. Sept. 12, 2015).

2

Every person sent one or more facsimiles from JB Medical at any time after
September 29, 2012, about “Medisoft” and which did not state that the fax
recipient could request that the sender not send any future fax and that the
failure to comply with such a request within 30 days would be unlawful.
(Doc. 1, ¶ 36). The Complaint does not make specific allegations about any of the
McKesson Defendants; instead it lumps all McKesson Defendants together and accuses
them jointly of sending the fax or having it sent on their behalf.
The McKesson Defendants now move to transfer this case to the Northern District
of California or, alternatively, dismiss the Complaint. In support of transfer, the McKesson
Defendants explained that there was a 2013 lawsuit filed in the Northern District of
California accusing McKesson Corporation and McKesson Technologies, Inc. (“MTI”) of
violating the TCPA by sending unsolicited faxes advertising Medisoft and other McKesson
Corporation products. The McKesson Defendants argue that Plaintiff here, as well as his
proposed class, is either subsumed by the class in the previously filed case or is
substantially similar enough to merit transfer under the first-to-file rule or pursuant to 28
U.S.C. section 1404(a).
As the parties’ filings show, the proposed class in the Northern District of California
case was:
All persons or entities who received faxes from “McKesson” from
September 2, 2009, to May 11, 2010, offering “Medisoft,” “Lytec,” or
“Revenue Management Advanced” software or “BillFlash Patient Statement
Service,” where the faxes do not inform the recipient of the right to “opt out”
of future faxes.

3

(Doc. 32–2). The Honorable Judge Haywood Gilliam, Jr. denied class certification on
August 22, 2016 (Docs. 25–4 and 32–1), a decision which has been appealed to the Ninth
Circuit Court of Appeals.
DISCUSSION
A. Motion to Transfer
The McKesson Defendants provide two bases for the Court to transfer this case.
First, the McKesson Defendants argue that the application of the first-filed or first-to-file
rule compels transfer given the substantial overlap between this case and the Northern
District of California case. Second, the McKesson Defendants argue that transfer under
section 1404(a) is appropriate because transferring would further the interests of
convenience and justice. As explained below, the Court concludes transfer is inappropriate
because there is no substantial overlap between the cases and because transferring would
not further the interests of convenience or justice.
1. There is no substantial overlap warranting application of the first-filed rule.
“Where two actions involving overlapping issues and parties are pending in two
federal courts, there is a strong presumption across the federal circuits that favors the forum
of the first-filed suit under the first-filed rule.” Manuel v. Convergys Corp., 430 F.3d 1132,
1135 (11th Cir. 2005). “The first-filed rule not only determines which court may decide
the merits of substantially similar cases, but also generally establishes which court may
decide whether the second filed suit must be dismissed, stayed, or transferred and
consolidated.” Collegiate Licensing Co. v. Am. Cas. Co. of Reading, Pa., 713 F.3d 71, 78
(11th Cir. 2013). If a party shows the two cases substantially overlap, then the party

4

objecting to jurisdiction in the first-filed forum must prove compelling circumstances to
warrant an exception to the rule. Manuel, 430 F.3d at 1135; Schwartz v. Frito-Lay N. Am.,
No. C-12-02740 EDL, 2012 WL 8147135, at *3 (N.D. Cal. Sept. 12, 2012).
To determine whether there is substantial overlap warranting application of the firstfiled rule, the Court must consider the following factors: “(1) the chronology of the two
actions; (2) the similarity of the parties, and (3) the similarity of the issues.” Rudolph &
Me, Inc. v. Ornament Cent., LLC., No. 8:11-CV-670-T-33EAJ, 2011 WL 3919711, at *2
(M.D. Fla. Sept. 7, 2011). This Court has also previously explained that “[t]he applicability
of the first-filed rule is not limited to mirror image cases where the parties and the issues
perfectly align. Rather, the principles underlying the rule support its application where the
subject matter of the later filed case substantially overlaps with that of the earlier one.”
Benjamin Franklin Franchising, LLC v. On Time Plumbers, Inc., No. 8:14-CV-1209-T30AEP, 2014 WL 4683271, at *5 (M.D. Fla. Sept. 19, 2014).
In considering the second and third factors, 3 the Court concludes there is no
substantial overlap between the cases. While the parties overlap to an extent—two of the
McKesson Defendants are also defendants in the Northern District of California case—the
overlap is not substantial. Even if the Ninth Circuit overturns Judge Gilliam’s ruling
denying class certification, Plaintiff would not be a qualifying member of the proposed
class since the class was limited to persons who received a fax on or before May 11, 2010,
and Plaintiff did not receive the subject fax until October 4, 2012. The proposed class in

3

The parties agree the Northern District of California case was filed first. (Doc. 32, p. 6).

5

this case also does not overlap given the different time periods involved. As such, the
overlap between the parties is not substantial.
The Court is also not convinced that the McKesson Defendants have shown there is
substantial overlap of the issues in the two cases. Certainly both cases involve allegations
of TCPA violation for junk faxes advertising Medisoft. But the Northern District of
California case involves faxes sent from McKesson Corporation and MTI, whereas the
faxes here were sent by JB Medical. That distinction is important because McKesson
Corporation and MTI defeated class certification in the Northern District of California case
by arguing that the factual issues involving preexisting relationships between McKesson
Corporation and MTI employees and the fax recipients trumped any common issues across
the proposed class. (Docs. 25–4 and 32–1). This case does not appear to have those same
issues since the McKesson Defendants are not accused of transmitting the faxes. Thus, the
McKesson Defendants have not shown the issue substantially overlap.
2. Transferring does not further convenience or justice
Section 1404(a) allows a court to transfer a case to another district where the case
could have been filed 4 “for the convenience of parties and witnesses” and “in the interest
of justice.” The following factors are relevant to determining whether to transfer:
(1) the convenience of the witnesses; (2) the location of relevant documents
and the relative ease of access to sources of proof; (3) the convenience of the
parties; (4) the locus of operative facts; (5) the availability of process to
compel the attendance of unwilling witnesses; (6) the relative means of the
parties; (7) a forum's familiarity with the governing law; (8) the weight

4

Plaintiff does not argue the case could not have been filed in the Northern District of California.

6

accorded a plaintiff's choice of forum; and (9) trial efficiency and the
interests of justice, based on the totality of the circumstances.
Manuel, 430 F.3d at 1135 n.1. The movant has the burden of proving these factors weigh
in favor of transfer, and a plaintiff’s choice of forum is to be afforded considerable
deference. In re Ricoh Corp., 870 F.2d 570, 573 (11th Cir. 1989). But a plaintiff’s forum
choice is not given the same deference when the plaintiff is a class representative.
Moghaddam v. Dunkin Donuts, Inc., No. 02-60045-CIV-ZLOCH, 2002 WL 1940724, at
*3 (S.D. Fla. Aug. 13, 2002) (citing Koster v. Lumbermens Mutual Casualty Co., 330 U.S.
518, 524, 67 S.Ct. 828, 91 L.Ed. 1067 (1947)).
Having considered the above factors, the Court concludes the McKesson
Defendants have not shown that transfer would be more convenient. Neither party has
identified specific witnesses, so convenience of witnesses does not weigh in favor of
transfer. Nat'l Trust Ins. Co. v. Pennsylvania Nat'l Mut. Cas. Ins. Co., No. 3:16-CV-695-J34PDB, 2016 WL 7197397, at *4 (M.D. Fla. Dec. 9, 2016). And after resolution of the
motion to dismiss (discussed below), there will be one party in California and one in
Florida, making California no more convenient for the parties than the current venue. 5
Mason v. Smithkline Beecham Clinical Labs., 146 F. Supp. 2d 1355, 1361 (S.D. Fla. 2001)
(“[w]here a transfer ‘merely shifts the inconvenience from one party to another, Plaintiff's
choice of forum should remain.’ ” (quoting Eye Care Int'l, Inc. v. Underhill, 119
F.Supp.2d 1313, 1319 (M.D.Fla.2000)). The McKesson Defendants concede the

5

JB Medical, although apparently headquartered in California, has not appeared in this case, so its
location does not weigh into the Court’s consideration of this factor. The Court reminds Plaintiff that it is
permitted to seek a default pursuant to Federal Rule of Civil Procedure 55, if appropriate.

7

availability of compulsory process for non-party witnesses does not weigh in favor of
transfer. (Doc. 25, p. 15). And finally, because Plaintiff’s Florida common law conversion
claim should not be dismissed (also discussed below), public interest considerations favor
keeping the case in this district. 6 See Cellularvision Tech. & Telecommunications, L.P. v.
Alltel Corp., 508 F. Supp. 2d 1186, 1192 (S.D. Fla. 2007) (noting a public interest
in “having localized controversies decided at home.”); see also Gulf Oil Corp. v.
Gilbert, 330 U.S. 501, 508–9, 67 S.Ct. 839, 91 L.Ed. 1055 (1947); and Ford v. Brown, 319
F.3d 1302, 1307 (11th Cir. 2003).
The McKesson Defendants also have not shown that transfer would further the
interests of justice. The gist of their arguments on this issue hinge on the premise that this
case overlaps with the Northern District of California case. As explained above, though,
the McKesson Defendants have not convinced the Court that the cases substantially
overlap. So the McKesson Defendants’ argument that transfer would further the interests
of justice is rejected.
3. Conclusion on Motion to Transfer
The McKesson Defendants have not met their burdens. They have not shown that
this case substantially overlaps with the first-filed case because both the parties and issues
are different. And they have not shown that transferring the case would be more convenient
or further the interests of justice. Accordingly, the motion to transfer is denied.

6

The McKesson Defendants do not address the remaining factors in their motion, so the Court
assumes the McKesson Defendants concede those factors do not weigh in favor of transfer.

8

B. Motion to Dismiss
1. Motion to Dismiss Standard
Federal Rule of Civil Procedure 12(b)(6) allows a complaint to be dismissed for
failure to state a claim on which relief can be granted. When reviewing a motion to dismiss,
courts must limit their consideration to the well-pleaded allegations, documents central to
or referred to in the complaint, and matters judicially noticed. See La Grasta v. First Union
Securities, Inc., 358 F.3d 840, 845 (11th Cir. 2004). Furthermore, they must accept all
factual allegations contained in the complaint as true, and view the facts in a light most
favorable to the plaintiff. See Erickson, 551 U.S. at 93–94.
Legal conclusions, however, “are not entitled to the assumption of truth.” Ashcroft
v. Iqbal, 556 U.S. 662, 664 (2009). In fact, “conclusory allegations, unwarranted factual
deductions or legal conclusions masquerading as facts will not prevent dismissal.” Davila
v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003). To survive a motion to
dismiss, a complaint must instead contain sufficient factual matter, accepted as true, to
“state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (internal
quotation marks and citations omitted). This plausibility standard is met when the plaintiff
pleads enough factual content to allow the court “to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. (internal citations omitted).Words here.
2. Complaint fails to state cause of action against McKesson Defendants
because it does not identify their participation or involvement
The McKesson Defendants argue the Complaint should be dismissed for two
reasons. First, they argue the Complaint fails to state a cause of action because Plaintiff

9

lumps the five McKesson Defendants together without differentiating what each of the
Defendants did. Second, they argue that the conversion count should be dismissed because
the loss is de minimis. The Court agrees with both arguments, but only the first has merit.
Although the Complaint properly pleads a claim for a TCPA violation, it lacks the
factual specificity for each of the McKesson Defendants to know what they are accused of
doing that makes them liable for sending the fax. This sort of lumping together of
defendants without specifying the acts or omissions each committed is prohibited. See
Weiland v. Palm Beach Cty. Sheriff's Office, 792 F.3d 1313, 1323 (11th Cir. 2015)
(admonishing as a shotgun pleading a complaint that commits “the relatively rare sin of
asserting multiple claims against multiple defendants without specifying which of the
defendants are responsible for which acts or omissions”). Of course, Plaintiff may not yet
know exactly which entity played what role (after all, McKesson Corporation has more
than 600 subsidiaries and has apparently reorganized its corporate structure since the fax
was sent). So the Court finds it fair to dismiss the Complaint as to all McKesson Defendants
except McKesson Corporation and allow Plaintiff to conduct discovery so it can determine
what other entities may be proper defendants to this action. The statutes of limitations will
also be tolled to give Plaintiff time to conduct discovery.
As to the McKesson Defendants’ second argument, the Court is bound to reject it.
As the Eleventh Circuit explained when reversing a district court that dismissed a
conversion claim involving a junk fax as de minimis under nearly identical circumstances,
“Although the value of such an interruption is undoubtedly minimal, that does not warrant
the dismissal of the claim.” Palm Beach Golf Ctr.-Boca, Inc. v. John G. Sarris, D.D.S.,

10

P.A., 781 F.3d 1245, 1259 (11th Cir. 2015). Though this Court finds Judge Hinkle’s dissent
more compelling, id. at 1261–62, the Court must apply the binding law nonetheless.
That said, the Court is not only concerned with the damages to which Plaintiff might
be entitled in the conversion count, but also with the damages class members might be
entitled to for the alleged TCPA violation. While damages are immaterial to resolution of
the current motion, it will be an important consideration the parties should address when
Plaintiff seeks to certify the class. See Dickens v. GC Servs. Ltd. P'ship, No. 8:16-CV-803T-30TGW, 2016 WL 6681468, at *5–9 (M.D. Fla. Nov. 14, 2016).
Accordingly, it is ORDERED AND ADJUDGED that:
1.

The McKesson Defendants’ Corrected Motion to Transfer or Dismiss (Doc. 25) is
GRANTED in part, as follows:
a. The McKesson Defendants’ motion to transfer is DENIED.
b. The McKesson Defendants’ motion to dismiss is GRANTED.
c. The Complaint is DISMISSED without prejudice as to McKesson Business
Performance Services, McKesson Technology Solutions, McKesson
Provider Technologies, and McKesson Technologies, Inc.

2.

The statutes of limitations for both the TCPA and conversion claims are hereby
tolled until June 9, 2017, so Plaintiff can conduct discovery to determine whether
any other McKesson Defendants are proper defendants to this action, at which time
the Court will consider any appropriate motion from Plaintiff.

11

3.

The McKesson Defendants’ Motion for Leave to File Reply Memorandum (Doc.
38) is DENIED as moot.
DONE and ORDERED in Tampa, Florida, this 9th day of January, 2017.

Copies furnished to:
Counsel/Parties of Record

12