McKinney et al v. Riverton Memorial Hospital LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF WYOMING
A.M., a minor child, by and through her
parents and guardians, TYLER
MCKINNEY and KIMBERLY
GUSTAFSON,
Plaintiffs,
vs. 	Case No. 24-CV-0016-KHR
RIVERTON MEMORIAL HOSPITAL,
LLC, d/b/a SAGEWEST HEALTH
CARE; LANDER MEDICAL CLINIC;
LIFEPOINT HEALTH, INC.; JAN K.
SIEBERSMA, M.D.; and RACINE
HEADLEY, R.N.,
Defendants.
ORDER DENYING MOTION TO DISMISS FOR LACK OF PERSONAL
JURISDICTION [44]
This matter comes before the Court on the Renewed Motion to Dismiss for Lack of
Personal Jurisdiction filed by Defendant Lifepoint Health, Inc. [ECF No. 44]. Plaintiffs
oppose this Motion. This Court, being fully advised, denies Defendant’s Motion.
B ACKGROUND
Plaintiffs Kimberly Gustafson and Tyler McKinney, by and through their minor
child A.M., sue SageWest Health Care Hospital and related entities and employees under
various theories of negligence. On December 11, 2017, Ms. Gustafson gave birth to A.M.
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at SageWest Health Care Hospital in Lander, Wyoming. Plaintiffs allege that, during the
childbirth, A.M. experienced fetal distress and suffered severe, permanent disabilities
during birth as a result of hospital staff’s failure to properly respond. In addition to the care
team’s negligence, Plaintiffs also attribute this failure to the financial and managerial
decisions made by the hospital and LifePoint Health, Inc. (“LifePoint”).
Defendant LifePoint moves to dismiss Plaintiffs’ claims on the grounds that this
Court does not have personal jurisdiction over it. LifePoint is a Delaware corporation with
its principal place of business in Tennessee. LifePoint submits the affidavit of Dan
Huffines, which attests that LifePoint does not own property in Wyoming, has no
employees in Wyoming, conducts no business in Wyoming, and has no control over the
everyday operations of SageWest, its separate subsidiary. Plaintiffs oppose the Motion and
offer various SEC filings, public statements, lease agreements, and statements from local
citizens.
R ELEVANT LAW
When a defendant files a motion to dismiss under Rule 12(b)(2), the “[p]laintiff
bears the burden of establishing personal jurisdiction over the defendant.” OMI Holdings,
Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998) (citation omitted).
For the plaintiff to defeat a Rule 12(b)(2) motion to dismiss, they need only make a “prima
facie showing by demonstrating, via affidavit or other written materials, facts that if true
would support jurisdiction over the defendant.” Id. “The allegations in the complaint must
be taken as true to the extent they are uncontroverted by the defendant’s affidavits. ... If
conflicting affidavits of the parties collide, the Court will resolve all factual disputes in the
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plaintiff’s favor.” Eleutian Tech., LLC v. Global Educ. Techs., LLC, Civ. 07–181–J, 2009
WL 10672360, *3 (D. Wyo. Jan. 23, 2009) (quoting Behagen v. Amateur Basketball Ass'n
of the U.S., 744 F.2d 731, 733 (10th Cir. 1984)). “The law of the forum state and
constitutional due process limitations govern personal jurisdiction in federal court.” Old
Republic Ins. Co. v. Cont'l Motors, Inc., 877 F.3d 895, 903 (10th Cir. 2017). Wyoming's
long-arm 	statute 	extends 	the 	jurisdictional 	reach 	of 	Wyoming 	courts 	as 	far 	as
constitutionally permissible. Wyo. Stat. § 5–1–107. Therefore, the exercise of jurisdiction
is permitted so long as it does not offend the Due Process Clause of the Fourteenth
Amendment.
R ULING OF THE C OURT
Plaintiffs 	assert 	general 	and 	specific 	jurisdiction 	over 	LifePoint, 	as 	well 	as
jurisdiction under an alter ego theory. The Court addresses each potential source of
jurisdiction.
Plaintiffs make several allegations regarding LifePoint’s contacts in Wyoming.
They allege that LifePoint leased land in Wyoming and acquired two hospitals between
1999 to 2000, that they hired employees and implemented systems in those hospitals, and
that they publicly advertise their Wyoming hospitals. Plaintiffs attach LifePoint’s SEC
filings, which, they argue, tend to show that LifePoint provided all its hospitals, including
those in Wyoming, with various management, capital, recruiting, and legal support. They
also attach lease agreements allegedly showing that LifePoint entered into agreements
regarding property in Wyoming that are set to expire in 2073.
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However, the lease agreement does not mention LifePoint as a party. It is an
assignment of a lease between NAHC of Wyoming and Lander Valley Medical Center,
which is a “wholly-owned indirect subsidiary of LifePoint Hospitals, Inc.” [ECF No. 54-
10, at 1]. Therefore, the lease agreement does not support Plaintiffs’ allegation that
LifePoint leased land in Wyoming. 	The various SEC filings are similarly unsupportive,
because “LifePoint” explicitly includes LifePoint, Inc. and its subsidiaries. [ECF No. 54-
7, at 3]. It therefore fails to aid the Court in determining which jurisdictional contacts apply
to LifePoint, Inc. and which apply only to its subsidiaries, and does not support Plaintiffs’
allegations regarding LifePoint, Inc.’s in-state contacts.
Plaintiffs also submit the affidavit of Ms. Gustafson, in which Ms. Gustafson attests
that was she employed by LifePoint in 2018. According to the affidavit, she responded to
a job posting under the name “LifePoint, Inc.”, that she corresponded with LifePoint Health
regarding the position, and that her offer of employment and related details all came from
LifePoint. 	She 	participated 	in 	LifePoint’s 	401(k) 	plan. 	Defendants 	argue 	that 	Ms.
Gustafson’s affidavit is insufficient because it is not based on personal knowledge, but Ms.
Gustafson’s allegations that she was employed by LifePoint are based on her own
knowledge. Taken as true, these attestations would tend to establish minimum contacts as
to LifePoint.
Plaintiffs offer the public statements of LifePoint that they own and operate
hospitals across the country, and that they provide “resources, management expertise, and
operational support” to the hospitals it owns. These admissions are vague and do not give
any concrete information as to the structure of LifePoint’s relationship with its subsidiaries.
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Furthermore, they fall within acceptable types of conduct in a normal parent-subsidiary
relationship. See U.S. v. Bestfoods, 524 U.S. 51, 72 (1998) (discussing monitoring,
supervision of financial decisions, and articulation of general policies and procedures as
being 	“consistent 	with 	the 	parent’s 	investor 	status” 	and 	generally 	not 	conferring
jurisdiction).
The reactions of Riverton and Lander residents to the proposed merger are not well-
pled evidence of minimum contacts because jurisdictional connections must be attributable
to the entity the plaintiff seeks to hold liable. OMI Holdings, Inc. v. Royal Ins. Co. of
Canada, 149 F.3d 1086, 1091 (10th Cir. 1998). The letters expressing community
frustration at the hospital merger are hearsay insofar as they are offered for the truth of
what they say, and are therefore not part of this Court’s jurisdictional analysis.
Plaintiffs point to the in-state activities of its employees, who attended community
board meetings and engaged in communication surrounding the merger. Plaintiffs further
allege that LifePoint made, and announced, the decision to merge its two Wyoming
hospitals in 2014. Plaintiffs cite a series of exhibits to this effect, none of which seem to
support their allegations. However, these allegations are not directly contradicted by
Defendant’s affidavit, and the Court must therefore accept them as true.
In summary, the Court analyzes Plaintiffs’ prima facie showing of jurisdiction using
the following allegations: that LifePoint hired Ms. Gustafson and directed employment
opportunities at Wyoming residents, that LifePoint made the decision to merge the
hospitals, that a LifePoint employee signed a Special Warranty deed for Wyoming
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property, and that LifePoint employees engaged in community outreach surrounding the
merger of the Wyoming hospitals.
I. 	The Court does not have jurisdiction under an alter ego theory.
Plaintiffs plead jurisdiction under an alter ego theory. “Under the [alter ego doctrine]
the corporate entity is disregarded and liability fastened on an individual who uses the
corporation merely as an instrumentality to conduct his own personal business.” Quarles
v. Fuqua Indus., Inc., 504 F.2d 1358, 1362 (10th Cir, 1974). In the context of a
jurisdictional dispute, this means treating the contacts of the resident corporation as the
contacts of the foreign parent. This is appropriate where “separation of the two entities has
not been maintained and injustice would occur to third parties if the separate entity were
recognized.” Id.
Plaintiffs have alleged that LifePoint has exerted such a level of control over its
Wyoming hospitals, but these allegations are contradicted by the affidavit of Dan Huffines,
which attests that LifePoint exerts no control over the day-to-day operations of SageWest.
[ECF No. 28-1, at 2]. Plaintiffs do not direct the Court to any evidence that such a disregard
of corporate form existed. The Court, exercising its own judgment, similarly does not see
the requisite level of control. As discussed above, the SEC forms are unhelpful in
establishing personal jurisdiction because they do not distinguish between the activities of
LifePoint and the activities of its subsidiaries. Accordingly, this Court holds that the alter
ego doctrine does not apply.
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II. 	The Court does not have general jurisdiction over LifePoint.
The paradigm fora for general jurisdiction over a corporation are its place of
incorporation and principal place of business. Daimler AG v. Bauman, 571 U.S. 117, 137
(2014). These are not exhaustive, but a court can assert jurisdiction over a foreign
defendant only when “their affiliations with the State are so ‘continuous and systematic’
as to render them essentially at home in the forum State.” Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (quoting Int’l Shoe Co. v. Washington,
326 U.S. 310, 317 (1945)). Plaintiffs have not met this standard. They allege relatively
sparse contacts that mostly surround the merger, which does not meet the requirement that
contacts be continuous and systematic. Plaintiffs fail to adequately plead that LifePoint
owns 	property 	or 	conducts 	any 	constant 	business 	in 	Wyoming. 	See 	Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 412 (1984) (finding no general
jurisdiction where defendant was not headquartered or incorporated in the forum state and
did not own property or maintain an office there). They have not properly alleged contacts
such that LifePoint could be considered essentially at home in Wyoming.
III. 	The Court has specific jurisdiction over LifePoint.
Because general jurisdiction is unavailable, Plaintiffs must show that this Court has
specific jurisdiction over LifePoint. In order to have specific jurisdiction, “the exercise of
jurisdiction” must “comport with due process.” GCIU-Emp’r Ret. Fund v. Coleridge Fine
Arts, 700 Fed.Appex. 865, 868 (10th Cir. 2017). The requires finding that the defendant
had minimum contacts with the forum state, and that the lawsuit arises out of those
contacts. Id.
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The Court finds that Plaintiffs’ allegations are sufficient to meet the minimum
contacts requirement. Here, LifePoint has “purposefully directed his activities at resident
of the forum, and the litigation results from alleged injuries that arise out of or relate to
those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). The required
nexus is present because the alleged injuries are related to the merger of the hospitals.
Plaintiffs claim that budgeting decisions were made as a direct result of the merger, and
that those decisions affected the quality of care at the hospitals.
Further, Plaintiffs have adequately pled that finding jurisdiction would not violate
“fair play and substantial justice.” Asahi Metal Industry Co., Ltd., v. Superior Court of
California, 480 U.S. 102, 113 (1987). Courts consider “1) the burden on the defendant, 2)
the forum state’s interest in resolving the dispute, 3) the plaintiff’s interest in receiving
convenient and effective relief, 4) the interstate judicial system’s interest in obtaining the
most efficient resolution of controversies, and 5) the shared interest of the several states in
furthering fundamental substantive social policies.” OMI Holdings, 149 F.3d at 1095.
There is a factual dispute as to the extent of LifePoint’s business practices in Wyoming,
which has a significant effect on the reasonableness inquiry. If LifePoint did in fact solicit
employees in Wyoming and send out of state employees to engage in community outreach
in Wyoming, it is not unreasonable that they might be sued in Wyoming courts.
Defendants cite Ortiz v. Riverton Memorial Hospital et al., a Wyoming state district
court decision which held that the mere existence of a parent-subsidiary relationship was
not enough to confer jurisdiction over LifePoint. [ECF No. 28-2, at 4]. However, as the
court there noted, the plaintiff adduced no evidence that LifePoint had contacts with
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Wyoming, other than a conclusory allegation that LifePoint “likely” had management
control over the hospital. This is easily distinguishable, because here Plaintiffs have
submitted evidence that LifePoint had minimum contacts with Wyoming, and that
Plaintiffs injury arose from those contacts.
Defendants cite a myriad of cases to the effect that certain actions of a parent are
insufficient to attribute to it the contacts of the subsidiary. However, this Court finds that
it is because of LifePoint’s own alleged contacts, not the contacts of its subsidiaries, that
there is a factual dispute as to whether there is jurisdiction over it.
C ONCLUSION
For the forgoing reasons, the Court finds that Plaintiffs allege sufficient minimum
contacts to 	confer 	specific jurisdiction 	over LifePoint. The 	Court therefore 	denies
Defendant’s Motion to Dismiss for Lack of Personal Jurisdiction.
NOW, THEREFORE, IT IS ORDERED Defendant’s Motion to Dismiss for Lack
of Personal Jurisdiction is DENIED.
Dated this 16th day of September, 2024.
Kelly H. Rankin
United States District Judge
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