Rodríguez-Rivera v. Allscripts Healthcare Solutions, Inc.

• Decision Date: 19 July 2022
• Docket Number: 20-1936
• Citation: 43 F.4th 150
• Parties: Dr. Juan M. RODRÍGUEZ-RIVERA, d/b/a "Centro Reumatologico Dr. Juan Rodriguez", Plaintiff, Appellant, v. ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. ; Allscripts Healthcare, LLC, Defendants, Appellees, Healthcare Data Solutions, LLC, a/k/a HDSOSF, LLC; Insurance Companies A, B, and C; John Doe; Richard Roe, Defendants.
• Court: U.S. Court of Appeals — First Circuit

43 F.4th 150

Dr. Juan M. RODRÍGUEZ-RIVERA, d/b/a "Centro Reumatologico Dr. Juan Rodriguez", Plaintiff, Appellant,

v. ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. ; Allscripts Healthcare, LLC, Defendants, Appellees,Healthcare Data Solutions, LLC, a/k/a HDSOSF, LLC; Insurance Companies A, B, and C; John Doe; Richard Roe, Defendants.

No. 20-1936

United States Court of Appeals, First Circuit.

July 19, 2022

José Luis Ubarri-García, with whom Francisco L. Charles-Gómez, Charles Gómez Law Office, LLC, Jorge Luis Guerrero-Calderón, Ubarri & Román Law Office, and Melvin Rosario-Rodríguez, were on brief, for appellant.

Salvador J. Antonetti-Stutts, with whom Mark L. Durbin, Scott T. Peloza, Barnes & Thornburg LLP, Alfredo Ramírez-Macdonald, Aura A. Montes-Rodríguez, Ricardo J. Casellas, and O'Neill & Borges LLC, were on brief, for appellees.

Before Thompson, Lipez, and Gelpí, Circuit Judges.

THOMPSON, Circuit Judge.

After electronic patient records from his medical practice were destroyed, Dr. Juan M. Rodríguez-Rivera ("Rodríguez") says he was left with substantial damages to both himself and his practice. So he sued (among others) Allscripts Healthcare Solutions, Inc. ("AHS") and Allscripts Healthcare, LLC ("Allscripts") in Puerto Rico federal court, bringing a whole host of claims. In response, AHS and Allscripts moved to dismiss, claiming the Puerto Rico court lacked personal jurisdiction over them, pushing for the dispute to be arbitrated based on a supposed agreement Rodríguez made to do so, and contending that Rodríguez's complaint failed to state a claim on the merits. The district court agreed on all points, dismissing the case in its entirety, with prejudice. We have a different take on most of this. So, as we'll soon explain, we affirm (with modification) the dismissal of AHS on personal-jurisdiction grounds but vacate and remand for further proceedings as to Allscripts.

I. The Backdrop

We begin by setting the stage. Rodríguez is a licensed physician in Puerto Rico specializing in rheumatology.¹ As a physician, he has to keep medical records. Around 2009, in order to comply with patient data security rules out of the Health Insurance Portability and Accountability Act of 1996 (which we know as HIPAA), Pub. L. No. 104-191, 110 Stat. 1936, Rodríguez purchased the product MyWay to store, manage, and protect the electronic medical records of his patients. That electronic version of a patient's medical record is called an Electronic Health Record, or "EHR" for short. Usually, those EHRs are held on the technology provider's -- not the physician's -- electronic servers.

Enter stage right the defendants Allscripts and AHS. Allscripts is a North Carolina limited liability company with its principal place of business in Chicago. Allscripts is indirectly owned by AHS, a holding company which itself is a Delaware corporation also with its principal offices in Chicago (though AHS itself does not manufacture, market, or sell any goods or services). Allscripts provides, among other things, practice management and EHR technology to healthcare providers. Allscripts' MyWay product is an EHR- and practice-management software designed to help physicians' practices. Allscripts' MyWay EHRs are stored on a server owned by Allscripts.

Rodríguez was introduced to Allscripts' MyWay software through NovatekPR, an authorized third-party reseller. After setting things up in 2009, Rodríguez's patients' EHRs were stored with Allscripts' MyWay service uneventfully for several years.

That began to change in 2016. In September of that year, Allscripts informed Rodríguez by email that it was discontinuing support for MyWay and would soon be providing support exclusively for its new system, Professional EHR, effective at the end of October 2017. Not wishing to join Allscripts' new product, Rodríguez decided to migrate his patients' EHRs to Aprima, a competitor of Allscripts. In early February 2017, in response to an inquiry from Aprima regarding the necessary steps to accomplish Rodríguez's EHR data migration, Allscripts informed Aprima that it was unable to provide Rodríguez's EHR data. Days later, Allscripts emailed Rodríguez informing him that "Allscripts no longer has your patient data. It was destroyed because we no longer had an existing [Business Associates Agreement] with your practice. Your practice was a subaccount of Novatek, a MyWay partner. ... The Novatek account was sent to collections in 2014 and for whom maintenance was terminated."

Distraught over his now-missing EHRs, Rodríguez filed the instant suit against AHS and Healthcare Data Solutions, LLC (as well as unnamed insurance companies) alleging negligence, gross negligence and liabilities, and mail and wire fraud. Rodríguez amended his complaint three times, with his third amended complaint adding Allscripts as a defendant and alleging eight counts: breach of contract, negligence, dolo² , fraud, mail and wire fraud, breach of implied warranty, unjust enrichment, and temerity.

Allscripts and AHS initially moved to dismiss for lack of personal jurisdiction and failure to state a claim, but the district court denied that motion without prejudice pending the outcome of jurisdictional discovery that it ordered. The court ordered Rodríguez to produce his contract with Novatek for the purchase and use of MyWay, as counsel for Rodríguez had previously indicated that the document was in counsel's possession. In response, Rodríguez submitted an unsworn statement by Novatek's former president, Luis Carmoega, who declared that the contract was lost or destroyed during Hurricane Maria. The court found that the proper remedy for the discovery-production controversy was for AHS and Allscripts to depose Carmoega. And at deposition, Carmoega repeated his earlier statement: He did not have any copy of the contract.

In response, AHS and Allscripts produced an End User License Agreement ("EULA")³ that provided the terms and conditions of the use of the MyWay software. The EULA contained an arbitration clause requiring any claim arising out of the contract to be settled by binding arbitration held in Raleigh, North Carolina and applying North Carolina law. Carmoega confirmed that his initials appear on each page of the EULA, which is dated December 2008. He testified that it was standard practice to make sure his clients agreed to the EULA and thus Rodríguez "must have" signed the EULA. But, Carmoega said, he did not have a copy of Rodríguez's signed EULA from the sale in 2009.

After that revelation, AHS and Allscripts filed renewed motions to dismiss Rodríguez's complaint for: (1) lack of personal jurisdiction; (2) improper venue (citing the arbitration agreement); and (3) failure to state a claim upon which relief can be granted. The district court granted the motion, finding the disputes should be arbitrated, that it lacked personal jurisdiction over both Allscripts and AHS, and that Rodríguez's complaint failed as a matter of law. Rodríguez's timely appeal followed, and that's where our work comes in.

II. Personal Jurisdiction

We begin with the district court's conclusion that it lacked personal jurisdiction over both Allscripts and AHS.

In reaching its jurisdictional determination, the district court employed the prima facie method -- meaning the district court did not hold an evidentiary hearing and instead considered only "whether [Rodríguez] has proffered evidence which, if credited, is sufficient to support findings of all facts essential to personal jurisdiction." Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008). Under the prima facie approach, typically used at the early stages of litigation, " ‘the district court acts not as a factfinder, but as a data collector.’ " Chen v. U.S. Sports Acad., Inc., 956 F.3d 45, 51 (1st Cir. 2020) (internal citation omitted) (quoting Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145 (1st Cir. 1995) ). Where, as here, a district court dismisses a case for lack of personal jurisdiction based on the prima facie record, our review is de novo. Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 34 (1st Cir. 2016). In conducting this de novo review, we draw the relevant facts "from the pleadings and whatever supplemental filings (such as affidavits) are contained in the record, giving credence to the plaintiff's version of genuinely contested facts." Id.

"In determining whether a non-resident defendant is subject to its jurisdiction, a federal court exercising diversity jurisdiction," like we do here, " ‘is the functional equivalent of a state court sitting in the forum state.’ " Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir. 1995) (quoting Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201, 204 (1st Cir. 1994) ). Therefore, to establish personal jurisdiction over AHS and Allscripts, Rodríguez must meet the requirements of both the Puerto Rico long-arm statute and the Due Process clause of the Fourteenth Amendment. Negrón-Torres v. Verizon Commc'ns, Inc., 478 F.3d 19, 24 (1st Cir. 2007). Because Puerto Rico's long-arm statute is coextensive with the outer limits of the Constitution, we march directly to the constitutional inquiry. Id.

Under the Due Process clause, a nonresident defendant may be subjected to jurisdiction within a forum only if she has "certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ " Int'l Shoe Co. v. Wash. Off. Unemployment Comp. & Placement, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940) ). For specific personal jurisdiction, the constitutional analysis has three distinct prongs: (1) relatedness; (2) purposeful availment; and (3) reasonableness. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 60 (1st Cir. 2002).⁴ We take each in turn, keeping in mind that Rodríguez bears the burden of demonstrating that...