DIAMOND HEALTHCARE OF OHIO, INCORPORATED, a Virginia corporation v. HUMILITY OF MARY HEALTH No. 00-1006 PARTNERS, formerly known as Saint Elizabeth…

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DIAMOND HEALTHCARE OF OHIO,
INCORPORATED, a Virginia
corporation,
Plaintiff-Appellant,
v.
HUMILITY OF MARY HEALTH
No. 00-1006
PARTNERS, formerly known as Saint
Elizabeth Health Center, d/b/a Saint
Elizabeth Health Center, an Ohio
nonprofit corporation; HM HEALTH
SERVICES, INCORPORATED, an Ohio
corporation,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
James R. Spencer, District Judge.
(CA-99-603-3)
Argued: June 5, 2000
Decided: October 5, 2000
Before NIEMEYER and LUTTIG, Circuit Judges, and
Robert R. BEEZER, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Senior Judge Beezer joined. Judge Luttig wrote a dissenting
opinion.

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COUNSEL
ARGUED: Judith Bowles Henry, CREWS & HANCOCK, P.L.C.,
Richmond, Virginia, for Appellant. Quintin F. Lindsmith, BRICKER
& ECKLER, L.L.P., Columbus, Ohio, for Appellees. ON BRIEF:
Martin A. Donlan, Jr., CREWS & HANCOCK, P.L.C., Richmond,
Virginia, for Appellant. Susan C. Armstrong, MAYS & VALEN-
TINE, L.L.P., Richmond, Virginia, for Appellees.
_________________________________________________________________
OPINION
NIEMEYER, Circuit Judge:
The question presented on appeal in this breach-of-contract action
is whether Humility of Mary Health Partners ("HMH Partners"), an
Ohio corporation with its principal place of business in Youngstown,
Ohio, is subject to the personal jurisdiction of a federal court sitting
in Virginia. Diamond Healthcare of Ohio, Inc. ("Diamond Health-
care"), a Virginia corporation which entered into a contract with
HMH Partners, contends that by reason of this contract, HMH Part-
ners subjected itself to personal jurisdiction in Virginia. The district
court disagreed and granted HMH Partners' motion, filed under Fed-
eral Rule of Civil Procedure 12(b)(2), to dismiss for lack of personal
jurisdiction. We affirm.
I
Diamond Healthcare, which has its principal place of business in
Richmond, Virginia, entered into a contract with HMH Partners,
dated December 24, 1997. Under the contract, Diamond Healthcare
agreed to provide services to HMH Partners in Boardman, Ohio, for
the operation of "Project NuStart," a partial-hospitalization program
for the elderly. In July 1999, HMH Partners terminated the contract,
and Diamond Healthcare filed this action in the district court in Vir-
ginia for breach of contract, relying on diversity of citizenship for
subject matter jurisdiction. Diamond Healthcare alleged that HMH
Partners failed to make its required monthly payments, failed to give
60 days' notice of its termination of the contract, failed to give "notice
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of a specific alleged breach," and failed to allow Diamond Healthcare
an opportunity to cure. It demanded $1,364,000 in damages.
HMH Partners filed a motion to dismiss the complaint based on
lack of personal jurisdiction. It contended that HMH Partners' con-
tacts with Virginia were constitutionally insufficient to subject it to
personal jurisdiction in a Virginia court. The parties submitted numer-
ous affidavits, which were not materially in conflict. Based on these
affidavits, the district court granted HMH Partners' motion to dismiss,
concluding that HMH Partners' contractual relationship with Dia-
mond Healthcare did not create constitutionally sufficient contacts
with Virginia to subject it to suit there. It noted that under the con-
tract, Diamond Healthcare agreed to hire staff and run an Ohio
partial-hospitalization program serving Ohio patients using Ohio per-
sonnel. Even though Diamond Healthcare was a Virginia corporation
located in Richmond and would perform its contract under the general
supervision of its corporate leadership in Richmond, the court con-
cluded that the contract called for Diamond Healthcare to perform
"predominantly in Ohio." The court acknowledged that there were
many phone calls, letters, and fax communications between Ohio and
Virginia, but concluded that "[t]he vast number of phone calls
between Ohio and Richmond appear to have taken place between
employees of the Virginia company, not between the companies
themselves." Dismissing as constitutionally insufficient the few con-
tractual contacts that HMH Partners did have with Virginia, the court
concluded:
While the parties here did enter into extended negotiations,
the Contract does not require Diamond [Healthcare] to per-
form its services from Virginia. At most, the Contract . . .
appears merely to document the unremarkable notion that a
corporation's home office may instruct that corporation's
operatives in the field, but this alone does not invest the
Court with personal jurisdiction over [HMH Partners]. Nor
is it at all clear from its course of dealing with Diamond
[Healthcare] that [HMH Partners] could reasonably expect
to be haled into court in Virginia, given that the utmost
extent of [HMH Partners'] post-negotiation contacts with
[Diamond Healthcare's] corporate office appears to be the
occasional payment mailed to Richmond. The defendant
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here did not seek out the forum corporation, it did not antici-
pate that the forum corporation would provide its services
predominantly from the forum, it did not agree to a contract
governed by forum law, and its course of performance under
the Contract demonstrates that it could not expect to be
haled into Court in Virginia.
From the district court's opinion dismissing its action, Diamond
Healthcare noticed this appeal.
II
Under Federal Rule of Civil Procedure 4(k)(1)(A), a federal court
may exercise personal jurisdiction over a defendant in the manner
provided by state law. See ESAB Group, Inc. v. Centricut, Inc., 126
F.3d 617, 622 (4th Cir. 1997). And a Virginia court may exercise per-
sonal jurisdiction "over a person . . . as to a cause of action arising
from the person's . . . [t]ransacting any business" in Virginia. Va.
Code Ann. § 8.01-328.1(A). This statute has been construed to extend
personal jurisdiction to the full extent permitted by the Due Process
Clause. See English & Smith v. Metzger, 901 F.2d 36, 38 (4th Cir.
1990); Danville Plywood Corp. v. Plain & Fancy Kitchens, Inc., 238
S.E.2d 800, 802 (Va. 1977). Accordingly, we recognize that, in deter-
mining the reach of the state's long-arm statute, the statutory and con-
stitutional inquiries coalesce into the question of whether HMH
Partners had sufficient minimum contacts with Virginia to satisfy due
process requirements. See Stover v. O'Connell Assocs., Inc., 84 F.3d
132, 135-36 (4th Cir. 1996). At bottom, however, the question is a
matter of Rule 4 interpretation and not of constitutional magnitude
because Congress has authority constitutionally to permit service in
federal court beyond any state's boundaries.* See Fed. R. Civ. P.
4(k)(1); ESAB Group, 126 F.3d at 622.
Applying the constitutional limitations on state service of process
incorporated in Rule 4(k)(1)(A), we understand that when a defen-
dant's contacts with the forum state are continuous and systematic,
_________________________________________________________________
*Of course, a state's exercise of long-arm jurisdiction remains limited
by the extent of its sovereignty and the protection of the Due Process
Clause of the Fourteenth Amendment. See Stover , 84 F.3d at 136.
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irrespective of whether the transaction in question had sufficient con-
tacts with the state, a court may exercise general personal jurisdiction
over the defendant. See ESAB Group, 126 F.3d at 623-24. In the
absence of continuous and systematic contacts, a court may still exer-
cise specific personal jurisdiction when the contacts relate to the cause
of action and create a substantial connection with the forum state. See
id. at 625.
In this case, HMH Partners filed affidavits, which have remained
uncontroverted, averring that it has not conducted any business in
Virginia; that it owns no property in Virginia; that it has not solicited
any business in Virginia; that its employees have not visited Virginia
on its behalf to conduct its business; and that it has no Virginia
patients. Because HMH Partners' contacts with Virginia have accord-
ingly not been continuous and systematic, the district court could not
exercise general personal jurisdiction over HMH Partners. See ESAB
Group, 126 F.3d at 623-24. The only potential basis for personal
jurisdiction therefore is the contractual relationship between Diamond
Healthcare and HMH Partners. The resulting inquiry probes whether,
in connection with this contract, HMH Partners had a substantial con-
nection with Virginia such that it "engaged in some activity purpose-
fully directed toward [Virginia]." Id . at 625 (quotation marks and
citations omitted). And HMH Partners' actions must have been
directed at Virginia "in more than a random, fortuitous, or attenuated
way." Id. It is on these criteria that we base our analysis.
III
The contract between Diamond Healthcare and HMH Partners was
initiated by Diamond Healthcare, which approached HMH Partners in
Ohio to solicit HMH Partners' purchase of Diamond Healthcare's
capacity for managing a partial-hospitalization program. During nego-
tiations, representatives of the parties met in Ohio on several occa-
sions, but never in Virginia. They did, however, exchange telephone
calls, letters, and faxes between their offices in Ohio and Virginia.
Following negotiations, HMH Partners signed the agreement in Ohio
and sent it to Richmond, where Diamond Healthcare signed it.
Formed in these circumstances, the contract represents the product of
HMH Partners' favorable response to Diamond Healthcare's unsolic-
ited invitation for performance of a project in Ohio, which the parties
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agreed would be regulated under Ohio law, even though some aspects
of the contract could be performed in Virginia. See Chung v. NANA
Dev. Corp., 783 F.2d 1124, 1128 (4th Cir. 1986) (Alaska defendant
lacked minimum contacts with Virginia, even though the contract's
"essential terms were negotiated by telephone between Alaska and
Virginia," when "those communications were initiated by" the Vir-
ginia plaintiff).
Not only did Diamond Healthcare initiate the contractual relation-
ship in Ohio, but the resulting agreement contemplated the bulk of the
contract's performance at Project NuStart in Boardman, Ohio. Under
the contract, Diamond Healthcare was responsible for employing
directors "to provide overall management and services" at Project
NuStart, for furnishing "sufficient staff at all times to operate a qual-
ity program," for developing "job descriptions for the personnel to be
employed by" Diamond Healthcare at Project NuStart, for
"[r]ecruiting, orienting, training and supervising the personnel to be
employed by" Diamond Healthcare at Project NuStart, and for recruit-
ing psychiatrists "to become members of the Medical Staff of" Project
NuStart. In addition to running Project NuStart in Ohio, Diamond
Healthcare did agree that it would "provide consultation from its cor-
porate office [in Richmond] as reasonably necessary in the areas of
finance, program development and operations, personnel and labor
relations, professional staff relations, recruiting, licensure, and survey
compliance."
While the principal part of Diamond Healthcare's performance was
required in Boardman, Ohio, virtually all of HMH Partners' perfor-
mance was required there. It agreed to provide the"services necessary
for the operation" of Project NuStart, including the provision of
equipment, supplies, and hospital support personnel. HMH Partners
was obliged also to review and approve staff provided by Diamond
Healthcare at the facility, to obtain necessary licenses and accredita-
tion, and to regulate the admission of patients. As part of the financial
arrangements between the parties, HMH Partners was required to mail
to Diamond Healthcare in Richmond certain financial information
about Project NuStart and its monthly management fees.
The fact that the contract called for the obligations of both parties
to be performed mainly in Ohio and to be governed by Ohio law is
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inconsistent with Diamond Healthcare's assertion that HMH Partners
invoked the "benefits and protections" of Virginia law, Hanson v.
Denckla, 357 U.S. 235, 253 (1958), and with its contention that HMH
Partners could "reasonably anticipate being haled into court" in Vir-
ginia, World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 297
(1980); see also Burger King Corp. v. Rudzewicz , 471 U.S. 462, 481
(1985) ("[T]he Court of Appeals gave insufficient weight to provi-
sions in the various [contract] documents providing that all disputes
would be governed by [the forum state's] law"). These factors under-
cut Diamond Healthcare's argument that HMH Partners deliberately
exercised the privilege of undertaking contractual activity in Virginia.
See Hanson, 357 U.S. at 252; cf. Burger King, 471 U.S. at 482 (noting
that foreign defendant "purposefully availed himself of the benefits
and protections of [the forum state's] laws by entering into contracts
expressly providing that those laws would govern franchise disputes"
(quotation marks omitted)).
While some acts required of and performed by HMH Partners
necessitated its contact with Virginia -- HMH Partners had to keep
Diamond Healthcare advised of legal or regulatory action taken
against Project NuStart and any denial of payment from a payer
source, and it also had to send monthly payments to Richmond --
these requirements were incidental to HMH Partners' role under the
contract. With Diamond Healthcare's assistance, HMH Partners
agreed to provide partial-hospitalization services in Boardman, Ohio;
ancillary and isolated notifications and mailings to Richmond
amounted only to "attenuated contact" with Virginia. Chung, 783 F.2d
at 1128; see also Stover, 84 F.3d at 136.
Diamond Healthcare places heavy emphasis on the nature and
extent of its own activities in Virginia, arguing that these activities
should be imputed to HMH Partners by reason of the contractual rela-
tionship between the parties. But development of this argument can
only lead to the conclusion that Diamond Healthcare directed its
activities under the contract toward Ohio, not that HMH Partners
directed its activities toward Virginia. See Hanson, 357 U.S. at 251-
52; Stover, 84 F.3d at 136; cf. Burger King, 471 U.S. at 480 (jurisdic-
tion existed in Florida where Michigan defendant entered "a carefully
structured 20-year relationship that envisioned continuing and wide-
reaching contacts with [the plaintiff] in Florida," including "long-term
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and exacting regulation of [the defendant's] business from [the plain-
tiff's] Miami headquarters").
Finally, Diamond Healthcare emphasizes the frequent communica-
tions and management activities between its Virginia office and Proj-
ect NuStart in Boardman, Ohio. But these communications and
management activities were principally between Diamond Health-
care's employees in Richmond and its own employees at Project
NuStart, for Project NuStart was developed, managed, and staffed by
Diamond Healthcare, and Project NuStart personnel were responsible
for virtually every aspect of its day-to-day operation. Diamond
Healthcare provides no authority for the proposition that interactions
between its headquarters and its own employees in the field, across
state lines, may form a "sufficiently substantial" connection with an
out-of-state entity with which those employees are contractually affil-
iated. Chung, 783 F.2d at 1126. Such contact represents unilateral
activity by Diamond Healthcare that does not create personal jurisdic-
tion over HMH Partners. See Helicopteros Nacionales de Colombia
v. Hall, 466 U.S. 408, 417 (1984); Hanson , 357 U.S. at 253 ("The
unilateral activity of those who claim some relationship with a non-
resident defendant cannot satisfy the requirement of contact with the
forum State"); Cancun Adventure Tours, Inc. v. Underwater Designer
Co., 862 F.2d 1044, 1046-47 (4th Cir. 1988).
Accordingly, we affirm the judgment of the district court.
AFFIRMED
LUTTIG, Circuit Judge, dissenting:
I believe that the Supreme Court's decision in Burger King v.
Rudzewicz, 471 U.S. 462 (1985), is both legally and factually indistin-
guishable in any material respect from the instant case and dictates a
finding that jurisdiction over this dispute between HMH Partners and
Diamond Healthcare unmistakably lies in the federal courts of Vir-
ginia, even if jurisdiction would also lie in the federal courts of Ohio.
Not only does the majority's holding directly conflict with the
Supreme Court's decision in Burger King, it also directly conflicts
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with our own precedent in English & Smith v. Metzger, 901 F.2d 36
(4th Cir. 1990). There, in a case involving contacts no more signifi-
cant than those present in the instant case, we flatly rejected on the
authority of Burger King the defendant's claim, which mirrored the
claim made by HMH Partners here, that Virginia lacked jurisdiction
because "he conducted his business [with plaintiff] solely by phone
and through the mails, and because he had no expectation that [plain-
tiff] would do the work in Virginia." 901 F.2d at 39. Our holding, of
course, was wholly unsurprising. For, as has always been the case, the
"relevant question is not where the contacts predominate, but only
whether enough minimum contacts exist that the district court's
assumption of specific jurisdiction satisfie[s] due process." Id.
(emphasis added).
Here, HMH Partners, an Ohio corporation, purposely availed itself
of the privilege of doing business in the forum state of Virginia by
virtue of its deliberate, reciprocal, continuing contract obligations to
Diamond Healthcare, a Virginia corporation, and the connections
between that contract and Virginia. Under Burger King and English
& Smith, such a relationship between the parties and the forum easily
constitutes sufficient minimum contact to make it"presumptively not
unreasonable to require [the out-of-state corporation] to submit to the
burdens of litigation" in the forum state. Burger King, 471 U.S. at
476. As the Court explained in Burger King, where a defendant pur-
posely avails itself "by some act . . . of the privilege of conducting
activities within the forum state, thus invoking the benefits and pro-
tections of its laws," it should "reasonably anticipate out-of-state liti-
gation." Id. at 475 (citing Hanson v. Denckla, 357 U.S. 235, 253
(1953)). Due process requires no more.
Although the majority perfunctorily acknowledges that the control-
ling question is whether sufficient minimum contacts with Virginia
exist to satisfy due process, see ante at 4-5, I believe that it is ulti-
mately the majority's failure first, to appreciate, and then, for pur-
poses of its analysis, actually to draw, the distinction between
"minimum" and "predominant" contacts, that leads it to conclude in
error that jurisdiction over this dispute can lie only in Ohio. An under-
standing of this distinction is critical if one is not to confuse the due
process inquiry of specific jurisdiction with a conflict of laws inquiry
of the kind that the majority essentially undertakes. As if "predomi-
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nance" of contacts were the relevant inquiry, throughout its opinion
the majority repeatedly emphasizes, for example, that the parties per-
formed "mainly" in Ohio, ante at 6; that the contract was "predomi-
nantly" performed there, id. at 3; and that it was contemplated that the
"bulk of the contract's performance" would occur in that state, id. at
6. And, tellingly, without so much as a suggestion of any difference
between its holding and that of the district court, the majority summa-
rizes the judgment that it affirms as follows: "Even though Diamond
Healthcare was a Virginia corporation located in Richmond and
would perform its contract under the general supervision of its corpo-
rate leadership in Richmond, the [district] court concluded that the
contract called for Diamond Healthcare to perform`predominantly in
Ohio.'" Ante at 3; see also id. at 4 (quoting district court opinion that
"the defendant did not anticipate that the forum corporation would
provide its services predominantly from the forum"). The only other
possible source of the majority's error that I can conceive is a belief
that jurisdiction can lie in but one jurisdiction. This belief, however,
is no less foreclosed by Supreme Court caselaw than that on which
I suspect the majority has in error ultimately proceeded.
Accordingly, on the strength of the Supreme Court's decision in
Burger King alone -- an authority barely even cited by the majority,
see ante at 7, and never discussed at all -- but certainly on the com-
bined strength of that decision and our own Circuit's decision in
English & Smith, I would hold that a federal court may exercise juris-
diction in Virginia over HMH Partners with respect to an action aris-
ing from its contract with Diamond Healthcare.
Turning to Burger King, at issue in that case was whether there
were sufficient minimum contacts with the state of Florida to support
jurisdiction over a contract dispute between Burger King, a Florida
corporation, as franchisor, and Rudzewicz, a Michigan resident with
no physical ties to Florida, as franchisee. Rudzewicz's franchise oper-
ated solely in Michigan and sold food products only to Michigan resi-
dents, and the franchise agreement contemplated the bulk of
performance in Michigan. Notwithstanding, the Court held that, based
on the contract and the parties' contract performance, Rudzewicz had
both "established a substantial and continuing relationship with Bur-
ger King's Miami headquarters" and "received fair notice from the
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contract documents and the course of dealing that he might be subject
to suit in Florida." Burger King, 471 U.S. at 487.
A comparison of Rudzewicz's contacts with Florida, which the
Supreme Court held in Burger King were more than sufficient to sup-
port federal jurisdiction in that state, and HMH Partners' contacts
with Virginia, confirms beyond any question that jurisdiction in this
case lies in the federal courts of the Commonwealth.
First, in Burger King, Rudzewicz "[e]schew[ed] the option of oper-
ating an independent local enterprise, [and] deliberately `[reached]
out beyond' Michigan and negotiated with a Florida corporation." 471
U.S. at 480. As the Court observed, focusing on the fact of purposeful
affiliation rather than on which party initiated the contract,
"Rudzewicz most certainly knew that he was affiliating himself with
an enterprise based primarily in Florida." Id . at 481.
As, in Burger King, Rudzewicz deliberately affiliated with a for-
eign corporation in the forum state (Florida), so also in this case did
HMH Partners deliberately affiliate with a foreign corporation in the
forum state (Virginia). Regardless of who initiated the contact
between the two parties, it is undisputed that HMH Partners was well
aware that Diamond Healthcare was a Virginia corporation. HMH
Partners requested an acquisition proposal from Diamond Health-
care's Virginia Headquarters, conducted extensive negotiations
between Ohio and Virginia over an eleven-month period, and mailed
the contract at issue into Virginia for Diamond Healthcare's signature.
J.A. 54, 88, 94.
Second, in Burger King, Rudzewicz not only chose to do business
with a corporation located outside of Michigan, but he also negotiated
with the Florida corporation for "a long-term franchise and the mani-
fold benefits that would derive from affiliation with a nationwide
organization," 471 U.S. at 480-81, evidencing the antithesis of ran-
dom, fortuitous, or attenuated contacts that have historically given
rise to due process concerns. Id. at 475.
As, in Burger King, Rudzewicz reached out for a franchise agree-
ment with a national franchisor located outside his home state, so also
here did HMH Partners reach out for a four-year contract with an out-
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of-state corporation, Diamond Healthcare, "one of the larger behav-
ioral health management companies in the country." J.A. 87.
This conduct by HMH Partners in not only reaching out to a for-
eign corporation, but reaching out for the express purpose of entering
into and engaging in a long-term business relationship, is anything but
"unilateral activity" of another party or a third person, ante at 8 -- at
least as that phrase has heretofore been understood by either the
Supreme Court or our court. And it is far removed from the "unilat-
eral activity of those who claim some relationship with a nonresident
defendant," which the Court in Burger King described as insufficient
to establish the minimum contact necessary to support specific juris-
diction against constitutional attack. See Burger King, 471 U.S. at 476
n.17.
Third, in Burger King, Rudzewicz contractually bound his fran-
chise to "exacting regulation of virtually every conceivable aspect of
[his] operations" by Burger King's Miami, Florida, headquarters. 471
U.S. at 465 & n.4.
As, in Burger King, Rudzewicz contracted for exacting regulation
by personnel in Florida, so also here, HMH Partners consented to
extensive regulation of its business by Diamond Healthcare's person-
nel in Virginia. The contract between HMH Partners and Diamond
Healthcare provided that Diamond Healthcare was to develop, imple-
ment, and maintain policies and procedures to govern virtually every
conceivable aspect of HMH Partners' NuStart Program. J.A. 58-60.
It specifically provided that Diamond Healthcare would "provide con-
sultation . . . as reasonably necessary in the areas of finance, program
development and operations, personnel and labor relations, profes-
sional staff relations, recruiting, licensure, and survey compliance."
J.A. 61. And it required HMH Partners to provide Diamond Health-
care with monthly financial information, and to notify Diamond
Healthcare ". . . of [any and all] legal or governmental action." J.A.
62-63, 67, 69.
Fourth, in Burger King, although, under Burger King's two-tiered
administrative structure, day-to-day monitoring of Rudzewicz's
Michigan franchise took place from Burger King's Michigan district
office, policy was set in Miami, district offices reported to Miami, and
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"the parties' course of dealing repeatedly confirmed that decision-
making authority was vested in the Miami headquarters." 471 U.S. at
481.
As, in Burger King, issues raised at the district office in Michigan
were forwarded to, and resolved in Florida, so also here were issues
raised in Diamond Healthcare's Ohio offices forwarded to, and
resolved in, Virginia. Under Diamond Healthcare's like two-tier
administrative structure, although day-to-day monitoring and opera-
tion of the partial hospitalization program was undertaken by the local
program staff in Ohio, "it was a key term of the contract that local
program staff [in Ohio] be managed by Diamond Healthcare's senior
managers in Virginia." J.A. 55 (testimony of HMH Partners' Chief
Operating Officer). Indeed, by contract, Diamond Healthcare actually
"was to provide management consultation to the[NuStart] partial hos-
pitalization program from its [Richmond] corporate office." J.A. 54,
61; see also id. at 61 (providing, by contract, that Diamond Health-
care would "provide consultation from its corporate offices [in Rich-
mond] as reasonably necessary in the areas of finance, program
development and operations, personnel and labor relations, profes-
sional staff relations, recruiting, licensure, and survey compliance").
And, from negotiation through performance, HMH Partners acted
in conformance with this understanding that decisions would be made
in, and management would emanate from, the Commonwealth. In the
course of contract negotiations, HMH Partners communicated by mail
and telephone with Diamond Healthcare's Virginia headquarters. J.A.
54-55, 88, 92. These communications continued over the course of
contract performance. HMH Partners even terminated the Manage-
ment Agreement with Diamond Healthcare by letter sent to Virginia,
and the parties' negotiations relating to this dispute took place via
telephone and correspondence between Ohio and Virginia. J.A. 92.
Fifth, in Burger King, the franchise contract between Rudzewicz
and Burger King called for "payment of all required fees and forward-
ing of all relevant notices to the Miami headquarters." 471 U.S. at
466, 480.
As, in Burger King, all payments were to be forwarded to the
forum state of Florida, so also here, during the term of contract per-
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formance, HMH Partners was required to, and did, mail all manage-
ment fees to Diamond Healthcare in Virginia. J.A. 91.
Sixth, in Burger King, "Rudzewicz's refusal to make contractually
required payments in Miami . . . caused foreseeable injuries to the
corporation in Florida." 471 U.S. at 480.
As, in Burger King, foreseeable injuries occurred in the forum state
of Florida, so also here did HMH Partners' alleged failure to make
contractually required payments in Virginia, and termination of its
contract with Diamond without proper notice, cause foreseeable
injury to Diamond Healthcare in Virginia.
Finally, in Burger King, although there was a choice-of-law provi-
sion in the contract between the franchisor and the franchisee, there
was an absence of a contractually-designated dispute resolution
forum, which, as the Court noted, by negative implication places the
parties on notice that suit could be filed in the jurisdiction of either
party to the contract. 471 U.S. at 482 n.24.
And as, in Burger King, there was no forum selection provision in
the parties' contract, so also here, although HMH Partners and Dia-
mond Healthcare contracted for a choice of law, there was no forum
selection provision included in their contract. Significantly, in fact,
HMH Partners' own Chief Operating Officer even recognized the sig-
nificance of such an intentional omission:
It was my understanding that termination of the Manage-
ment Agreement might lead to litigation with Diamond
Healthcare that Diamond Healthcare might bring in Virginia
because, while we had negotiated a choice of law clause
under the Management Agreement, we had not negotiated a
choice of forum clause limiting litigation to courts in Ohio.
J.A. 56 (affidavit of Norman F. Gruber).
Given the almost uncanny parallels between the contacts between
Rudzewicz and the forum state of Florida, which the Supreme Court
held in Burger King gave rise to jurisdiction in Florida, and the con-
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tacts between HMH Partners and the forum state of Virginia in this
case, I have no question at all that a federal court sitting in Virginia
may, consistent with the minimum requirements of due process, exer-
cise jurisdiction over HMH Partners in this dispute related to its long-
term contract with Diamond Healthcare. If Burger King instructs us
as to anything, it is that a defendant who seeks and enters into an
interstate contract with a national corporation that is to be performed
by the plaintiff in substantial part from out of state; who, by contract,
is regulated and directed by the plaintiff from out of state; and, who,
pursuant to contract, directs communications, payments, and other
information to the plaintiff's headquarters out of state, cannot then
contest an assertion of jurisdiction by the out-of-state forum on the
ground that that forum lacks, as a matter of constitutional due process,
the very minimum of contacts necessary to support personal jurisdic-
tion.
If I had any doubt as to this conclusion -- and, frankly, I have none
-- I would think this conclusion inescapable upon consideration of
the further factors of Virginia's manifest interest"in providing its res-
idents with a convenient forum for redressing injuries inflicted by out-
of-town actors"; the interest in keeping due process from transforming
itself into "a territorial shield to avoid interstate obligations that have
been voluntarily assumed"; and, the lesser burdens imposed by out-
of-state suits, given the realities of modern transportation and commu-
nications. Burger King, 471 U.S. at 473-74 (citations omitted).
As the Supreme Court observed in Burger King with respect to an
interstate contract, a party that creates "`continuing relationships and
obligations with citizens of another state'" is conducting activities
within the forum state; as a consequence, the party is "subject to regu-
lation and sanctions in the other State for the consequences of [its]
activities." Burger King, 471 U.S. at 473 (citing Travelers Health
Assn. v. Virginia, 339 U.S. 643, 647 (1950)). See also McGee v.
International Insurance Co., 355 U.S. 220, 222-23 (1957). Under
such circumstances a defendant "manifestly has availed [itself] of the
privilege of conducting business [in the forum state], and because [its]
activities are shielded by the `benefits and protections' of the forum's
laws," it is not unreasonable, let alone unconstitutional, to subject it
to suit there as well. Burger King, 471 U.S. at 476.
15

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Because I believe that the district court erred in dismissing Dia-
mond Healthcare's suit against HMH Partners for lack of minimum
contacts with the forum state of Virginia, I respectfully dissent from
this court's affirmance of the district court's judgment.
16

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