CRICKET GROUP, LIMITED v. HIGHMARK, INC.
Filing
30
MEMORANDUM. Signed by Judge J. Frederick Motz on 7/29/2016. (ca2s, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
CRICKET GROUP, LIMITED t/d/b/a
PPM TRANSPARENCY GROUP,
v.
HIGHMARK, INC.
*
*
*
*
*
*
*
*
******
Civil No. JFM-15-3159
MEMORANDUM
Plaintiff Cricket Group, Limited t/d/b/a PPM Transparency Group (“Cricket”) brings this
lawsuit against defendant Highmark, Inc. (“Highmark”), seeking to recover damages from an
alleged breach of contract for consulting services. Pending is Highmark’s motion to dismiss the
amended complaint for lack of personal jurisdiction. 1 (ECF No. 18). The motion is fully
briefed, and no oral argument is necessary. See Local Rule 105.6. For the reasons stated below,
this court cannot exercise personal jurisdiction over Highmark. Pursuant to 28 U.S.C. § 1406,
the case is transferred to the Western District of Pennsylvania.
BACKGROUND
Cricket is a Nevada corporation with its principal place of business in Garrett County,
Maryland; Highmark, a national health insurance provider, is a Pennsylvania corporation with its
principal place of business in Pittsburgh. (ECF No. 1, Ex. 1, p. 1). On or about November 2013,
the parties entered into a contract under which Cricket was to provide certain consulting services
1
Highmark had previously filed a motion to dismiss the original complaint (ECF No. 9), but
filed the instant motion in response to Cricket’s amended complaint. Accordingly, this
memorandum treats Highmark’s second motion as the operative motion to dismiss, and the first
will be denied as moot.
1
to Highmark. (ECF No. 12, ¶ 13). According to Cricket, it provided these services, but
Highmark did not pay for a substantial portion of them. (Id. at ¶¶ 29-31).
Cricket filed suit in this court on October 19, 2015, seeking damages from the alleged
breach of contract. (ECF No. 1). Highmark moved to dismiss the action, claiming the
allegations in the complaint were insufficient to establish personal jurisdiction. (ECF No. 9). In
response, Cricket filed an amended complaint, seeking to clarify the basis for this court’s
personal jurisdiction over Highmark. (ECF No. 17). Highmark then filed another motion to
dismiss on the same basis. (ECF No. 18). By an Order dated February 5, 2016, this court
permitted the parties to conduct jurisdictional discovery. (ECF No. 24). Following such
discovery, Highmark reasserted its argument that it is not subject to personal jurisdiction (ECF
No. 27); Cricket continues to oppose Highmark’s motion. (ECF No. 28).
STANDARD
When a defendant files a motion to dismiss under Fed. R. Civ. P. 12(b)(2) for lack of
personal jurisdiction, the plaintiff bears the burden of proving grounds for jurisdiction by a
preponderance of the evidence. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989) (citation
omitted). The plaintiff must “produce competent evidence to sustain jurisdiction, including, for
example, sworn affidavits.” Allcarrier Worldwide Servs., Inc. v. United Network Equip. Dealer
Ass’n, 812 F. Supp. 2d 676, 680 (D. Md. 2011). If the jurisdiction issue is decided without a
hearing, the plaintiff need only make “a prima facie showing of a sufficient jurisdictional basis to
survive the jurisdictional challenge.” Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d 273,
276 (4th Cir. 2009). In considering a personal jurisdiction challenge in the absence of an
evidentiary hearing, the court “must construe all relevant pleading allegations in the light most
favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the
2
existence of jurisdiction.” Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 62 (4th Cir. 1993) (internal
quotation marks, citation, and emphasis omitted).
ANALYSIS
For a district court to exercise personal jurisdiction over a nonresident defendant like
Highmark, two conditions must be satisfied: the state’s applicable long-arm statute must confer
jurisdiction, and the assertion of jurisdiction must comport with constitutional due process under
the Fourteenth Amendment. Christian Sci. Bd. of Dirs. of the First Church of Christ v. Nolan,
259 F.3d 209, 215 (4th Cir. 2001). Maryland courts have consistently held that Maryland’s longarm statute “is coextensive with the limits of personal jurisdiction set by the due process clause
of the Federal Constitution,” and so the statutory inquiry necessarily “merges with [the]
constitutional examination.” Perdue Foods LLC v. BRF S.A., 814 F.3d 185, 188 (4th Cir. 2016)
(quoting Beyond Sys., Inc. v. Realtime Gaming Holding Co., LLC, 878 A.2d 567 (Md. 2005)).
Under this due process analysis, jurisdiction can be either specific or general; Cricket
asserts that the court has both. For a court to have specific jurisdiction over a defendant, the
defendant must have “purposefully established minimum contacts in the forum State” such that it
“should reasonably anticipate being haled into court there.” Burger King Corp. v. Rudzewicz,
471 U.S. 462, 474 (1985) (internal quotation marks and citations omitted). The level of contacts
required for the exercise of general jurisdiction is markedly higher: the defendant’s activities
within a forum state must have been “continuous and systemic.” Perdue, 814 F.3d at 188.
Here, although Cricket alleges several contacts between Highmark and Maryland, they do
not present a sufficient jurisdictional basis for this court to adjudicate Cricket’s claims. I will
address the specific jurisdiction issue first.
3
A.
Specific Jurisdiction
In order to determine whether a defendant can be held subject to specific jurisdiction in
Maryland, this court considers: (1) whether the defendant “purposely directed its activities
toward residents of Maryland or purposely availed itself of the privilege of conducting activities
in the state;” (2) whether its claims “arise[] out of or result[] from” those activities; and (3)
whether the exercise of personal jurisdiction would be constitutionally “reasonable.” Cole–Tuve,
Inc. v. Am. Mach. Tools Corp., 342 F. Supp.2d 362, 366 (D. Md. 2004) (internal quotation marks
and citation omitted). The plaintiff must prevail on each prong in order for the court to assert
specific jurisdiction over the defendant. Only if the court finds that the plaintiff has satisfied the
first prong of this test does it then consider prongs two and three. Consulting Eng’rs, 561 F.3d at
278. For the following reasons, Cricket falters on the first prong.
The Supreme Court has made clear that an out-of-state party’s contract with a forumbased party cannot “automatically establish sufficient minimum contacts” in the forum, even
where the dispute arises from that agreement. Burger King, 471 U.S. at 478. Instead, the court
must perform an “individualized and pragmatic inquiry” into the facts surrounding the contract
to determine whether it “had a ‘substantial connection’ to the forum state,” such that “the
defendant purposefully established minimum contacts within the forum.” Johansson Corp. v.
Bowness Const. Co., 304 F. Supp. 2d 701, 705 (D. Md. 2004) (quoting Burger King, 471 U.S. at
479); see also Diamond Healthcare of Ohio, Inc. v. Humility of Mary Health Partners, 229 F.3d
448, 451 (4th Cir. 2000) (a court may exercise specific jurisdiction “when the contacts relate to
the cause of action and create a substantial connection with the forum state.”)
In making this determination, courts consider a variety of nonexclusive factors,
including: (1) whether the defendant “maintains offices or agents in the forum state,” (2) “owns
4
property in the forum state,” (3) “deliberately engaged in significant or long-term business
activities in the forum state,” (4) “reached into the forum state to solicit or initiate business,” or
(5) “made in-person contact with the resident of the forum in the forum state regarding the
business relationship.” Consulting Eng’rs, 561 F.3d at 278. Courts also consider (6) “whether
the parties contractually agreed that the law of the forum state would govern disputes,” (7) “the
nature, quality and extent of the parties’ communications about the business being transacted,”
and (8) “whether the performance of contractual duties was to occur within the forum.” Id.
This court cannot conclude, based on the facts surrounding the contract at issue, that
Highmark had a “substantial connection” with Maryland. First, it is undisputed that Highmark
has never established a physical presence in Maryland: Highmark has no offices in Maryland,
owns no property in Maryland, has no employees or registered agents in Maryland, and is not
registered to do business in Maryland. (ECF No. 9, Ex. 1, ¶¶ 4-5). Moreover, every in-person
meeting between Cricket and Highmark took place in Pennsylvania, not Maryland. (Id. ¶ 9).
And although many contacts between the two parties occurred via email, telephone, or instant
messaging, such communications do not provide sufficient contacts to justify exercising personal
jurisdiction over Highmark. See Johansson, 304 F. Supp. 2d at 706 (“the negotiations that
occurred via mail or telephone contacts from North Carolina into Maryland cannot provide
sufficient minimum contacts for the exercise of personal jurisdiction.”); see also Stover v.
O’Connell Associates, Inc., 84 F.3d 132, 137 (4th Cir. 1996) (recognizing that “the use of a
telephone to facilitate transactions between remote locations serves as an alternative to
presence,” and that “[t]o conclude that such activity establishes presence in a state would upset
generally held expectations.”) (emphasis omitted). Lastly, it is telling that the parties chose
Pennsylvania law, and not Maryland law, to govern their contract: the contract’s choice-of-law
5
provision states that the agreement “shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.” (ECF No. 1, Ex. 1, p. 23); see Mun. Mortgage &
Equity v. Southfork Apartments Ltd. P’ship, 93 F. Supp. 2d 622, 629 n.6 (D. Md. 2000) (“[A]
choice of law provision which opts away from the forum state, when combined with other factors
disfavoring the exercise of personal jurisdiction, raises the negative implication that personal
jurisdiction in the forum state was not contemplated.”). Accordingly, all of these facts are
manifestly inconsistent with Cricket’s claim that Highmark deliberately undertook contractual
activity in Maryland and thereby invoked the “benefits and protections” of Maryland law.
Hanson v. Denckla, 357 U.S. 235, 253 (1958).
That Highmark allegedly initiated contact with Cricket would not justify the exercise of
personal jurisdiction in this case. Although an important factor in determining purposeful
availment is “whether the defendant initiated the business relationship in some way,” it is unclear
whether Cricket or Highmark did so. Giannaris v. Cheng, 219 F. Supp.2d 687, 692 (D. Md.
2002) (internal quotation marks and citation omitted). Cricket cites evidence that Highmark’s
contractor “had mentioned the Cricket Group as a potential solution” to its ongoing issues and so
the contractor “had conversations with [Cricket] to talk about what it was [Highmark was]
doing”—after which Cricket “provided some e-mails to [Highmark’s contractor] saying this is
the solution that they would offer.” (ECF No. 28, Ex. 1, p. 10-11). But the fact that Highmark
“may have initiated communications [with Cricket in] Maryland does not suffice to show that
they initiated the relationship with [Cricket].” Fyfe Co., LLC v. Structural Grp., LLC, No. CCB13-176, 2013 WL 2370497, at *4 (D. Md. May 30, 2013) (emphasis in original). Moreover,
even if Highmark had initiated the business relationship with Cricket, that fact would not
overcome the foregoing suite of factors weighing against purposeful availment. See Consulting
6
Eng’rs, 561 F.3d at 280 (noting that even though the plaintiff “reached out [to the defendant],”
that fact, “even when coupled with [other] communications, is not enough to overcome the
[other] factors.”).
Cricket’s remaining arguments may be briefly disposed of. It asserts that various
subsidiaries of Highmark are “active in Maryland” and are licensed by the Maryland Insurance
Administration—facts which, according to Cricket, demonstrate Highmark’s purposeful
availment. (ECF No. 23, p. 6-7). It is well-established, however, that “the contacts of a
corporate subsidiary cannot impute jurisdiction to its parent entity.” Saudi v. Northrop
Grumman Corp., 427 F.3d 271, 276 (4th Cir. 2005). And Cricket has proffered “no evidence of
the nature of the relationship between [Highmark] and its [subsidiaries] that would justify an
exception to this general rule.” Id. at 276-77. Cricket also argues that Highmark has contacts
with Maryland because it provides health insurance to residents in several Maryland counties.
But such ties “have no connection with the instant contractual dispute,” and so cannot be
considered as contacts in the court’s purposeful availment analysis. Perdue Holdings, Inc. v.
BRF S.A., 45 F. Supp. 3d 514, 518 (D. Md. 2014); see Diamond Healthcare, 229 F.3d at 450
(explaining that a court may exercise specific jurisdiction “when the contacts relate to the cause
of action and create a substantial connection with the forum state.”) (emphasis added).
This court is furthermore not persuaded that it should consider Cricket’s services for
Highmark to constitute transacting business in Maryland. There is no dispute that the remote
consulting services Cricket provided could have been performed anywhere. And there is no
evidence that Highmark, in contracting with Cricket to perform such services, either “sought to
endorse Maryland businesses,” or sought a relationship with a business “with Maryland
contacts.” Zavian v. Foudy, 747 A.2d 764, 770 (Md. Ct. Spec. App. 2000). At most, the
7
services Cricket provided could be considered “business from Maryland . . . rather than business
within Maryland.” Id. at 770-71 (emphasis in original) (declining to consider services rendered
in Maryland as contacts because the services “could have been conducted from anywhere,” and
there was no evidence that the recipient sought to contract with an entity because of its Maryland
contacts). For these reasons, the nature and location of the services Cricket provided to
Highmark do not counsel in favor of exercising specific jurisdiction over the defendant in
Maryland. 2
In sum, this court cannot conclude that the contract between Cricket and Highmark had a
“substantial connection” to Maryland such that Highmark purposefully availed itself of the
privilege of conducting business in the state. Accordingly, Cricket has not established a basis for
the court to exercise specific personal jurisdiction in this forum.
B.
General Jurisdiction
Cricket’s general personal jurisdiction argument also fails. The threshold level of
contacts required for the exercise of general jurisdiction is “significantly higher” than that for
specific jurisdiction. ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 623 (4th Cir. 1997); see
4 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1067, at 295-98
2
Finally, I note that Cricket’s reliance on two cases in which a court found purposeful
availment—Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553 (4th Cir. 2014) and Dev.
Design Grp., Inc. v. Deller, CCB-10-53, 2012 WL 1098603 (D. Md. Mar. 30, 2012)—is
misplaced. In both cases, the defendant’s contacts with the forum state were significantly more
robust than they are here. In Universal Leather, the foreign plaintiff “traveled to [the
defendant’s] offices in North Carolina on several occasions,” conducted “at least six business
meetings” with the defendant in the forum, and “corresponded by e-mail with [the defendant] on
a weekly basis over the course of two years.” 773 F.3d at 562 (internal quotation marks
omitted). Likewise, in Development Design, the foreign defendants were “involved in nearly a
decade of communications and transactions” with the forum-based plaintiff “culminating in the
contract at issue,” and visited the forum in connection with the transaction at issue; moreover,
the contract between the parties included a provision selecting the law of the forum state as
governing. 2012 WL 1098603, at *15-19.
8
(1987) (“threshold contacts required for general jurisdiction are very substantial, indeed”). A
corporation’s “place of incorporation and principal place of business are paradig[m] . . . bases for
general jurisdiction.” Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014) (internal quotation
marks and citation omitted). A court may assert general jurisdiction over a defendant only if its
activities in the forum “are so ‘continuous and systematic’ as to render [the defendant]
essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564
U.S. 915, 919 (2011); see also International Shoe v. State of Washington, 326 U.S. 310, 318
(1945) (the defendants contacts with the forum must be “so substantial and of such a nature as to
justify suit against it on causes of action arising from dealings entirely distinct from those
activities.”).
Highmark’s contacts with Maryland are insufficient to establish general personal
jurisdiction. Cricket first argues that general jurisdiction is proper because Highmark holds a
license with the Maryland Insurance Administration. (See ECF No. 17, ¶ 7). Cricket later
backtracks from this allegation, however, and concedes that it is not Highmark, but rather
Highmark’s subsidiary, that holds such a license. (See ECF No. 23, pp. 6-7, 9-10). According to
Cricket, even this conceded fact supports general jurisdiction. Not so. As discussed above, it is
axiomatic that “the contacts of a corporate subsidiary cannot impute jurisdiction to its parent
entity,” Saudi, 427 F.3d at 276; a court may do so “only if the parent exerts considerable control
over the activities of the subsidiary.” Mylan, 2 F.3d at 61. In order to make such a
determination, a court considers “whether significant decisions of the subsidiary must be
approved by the parent,” as well as whether the parent and subsidiary “maintain separate books
and records, employ separate accounting procedures, and hold separate directors’ meetings.” Id.
Cricket makes no argument to that effect.
9
Further, as to Cricket’s assertion that Highmark advertises in Maryland and insures
residents in a number of Maryland counties, advertising and doing some business in the forum
are insufficient for a court to exercise general jurisdiction. In Daimler, the Supreme Court held
that a California district court did not have general jurisdiction over the defendant even though
its subsidiary (whose contacts were attributed to the defendant) operated several facilities in the
state and generated 2.4 percent of its parent corporation’s worldwide sales there. 134 S. Ct. at
760-62; see also Crussiah v. Inova Health Sys., TDC-14-4017, 2015 WL 7294368, at *3 (D. Md.
Nov. 19, 2015) (declining to exercise general jurisdiction where the defendant’s contacts with
Maryland “consist[ed] of advertising to Maryland customers[,] providing some medical services
in Maryland[,] . . . and employing a physician’s group in Maryland.”). For all of these reasons,
this court will not exercise general jurisdiction over Highmark.
*
*
*
On these facts, Highmark’s contacts with Maryland are simply too attenuated to justify
this court’s exercise of personal jurisdiction. Rather than dismiss the case entirely, however, this
court will exercise its discretion to transfer the case to the United States District Court for the
Western District of Pennsylvania, as Highmark requests. See 28 U.S.C. § 1406(a) (providing
that if a plaintiff files suit in the wrong venue, the district “shall dismiss, or if it be in the interest
of justice, transfer such case to any district . . . in which it could have been brought.”). A case
may be transferred based on lack of personal jurisdiction to another district where the defendant
is subject to personal jurisdiction. Porter v. Groat, 840 F.2d 255, 258 (4th Cir. 1988).
The defendant argues (and Cricket does not dispute) that jurisdiction is proper in the
Western District of Pennsylvania—indeed, Highmark is a Pennsylvania corporation and has its
principal place of business in Pittsburgh. Although Maryland “generally has a manifest interest
10
in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state
actors,” Burger King, 471 U.S. at 473 (internal quotation omitted), that interest is diminished
here because the court would be required to apply Pennsylvania law. Finally, Cricket has not
shown any countervailing concerns regarding transfer of the case to the Western District of
Pennsylvania. I conclude that is in the interest of justice to transfer this case to the Western
District of Pennsylvania, rather than dismissing it for lack of personal jurisdiction and requiring
Cricket to re-file in that district.
CONCLUSION
For the foregoing reasons, the court will not exercise personal jurisdiction over
Highmark. The case will be transferred to the United States District Court for the Western
District of Pennsylvania, and Highmark’s motion to dismiss is denied. A separate order follows.
7/29/2016
Date
/s/
J. Frederick Motz
United States District Judge
11
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?