Functional Pathways of Tenn., LLC v. Wilson Senior Care, Inc., 3:10–cv–409.

Decision Date30 March 2012
Docket NumberNo. 3:10–cv–409.,3:10–cv–409.
Citation866 F.Supp.2d 918
PartiesFUNCTIONAL PATHWAYS OF TENN., LLC, Plaintiff, v. WILSON SENIOR CARE, INC., f/k/a the Wilson Group, Inc., and Heritage Healthcare, Inc., Defendants.
CourtU.S. District Court — Eastern District of Tennessee


John E. Winters, Kramer, Rayson LLP, Knoxville, TN, for Plaintiff.

Michael E. Robinson, Luedeka, Neely & Graham, P.C., Knoxville, TN, Steven T. Moon, Pro Hac, Vice, Rogers Townsend & Thomas, P.C., Columbia, SC, Delaine R. Smith, Ford & Harrison LLP, Memphis, TN, Thomas H. Keim, Jr., Ford & Harrison, LLP, Spartanburg, SC, for Defendants.


THOMAS W. PHILLIPS, District Judge.

I. Introduction

This matter is before the Court on Defendant Wilson Senior Care, Inc.'s Motion to Dismiss [Doc. 4] and Defendant Heritage Healthcare, Inc.'s Motion to Dismiss or, in the Alternative, to Transfer Venue [Doc. 6]. For the reasons stated herein, Defendant Wilson Senior Care, Inc.'s Motion to Dismiss is DENIED; Defendant Heritage Healthcare, Inc.'s Motion to Dismiss or, in the Alternative, to Transfer Venue is GRANTED IN PART and DENIED IN PART; and the above captioned case is TRANSFERRED to the United States District Court for the District of South Carolina.

II. Background

Plaintiff Functional Pathways of Tennessee, LLC brings this suit against Defendants Wilson Senior Care, Inc. (WSC) and Heritage Healthcare, Inc. (Heritage), alleging that WSC breached a contract with Plaintiff and that Defendant Heritage induced WSC to make the breach and unlawfully interfered with the contract. [Compl., Doc. 1–1.]

Plaintiff is a Tennessee limited liability company with its principal place of business at 614 Mabry Hood Road, Suite 301, Knoxville, Tennessee, 37932. Id. ¶ 1. Plaintiff is in the business of providing comprehensive therapy services, including physical therapy, occupational therapy, and speech therapy, at long-term care facilities, hospital skilled nursing units, and post-acute-care units. Id. ¶ 4.

Defendant WSC is a South Carolina corporation with its principal place of business at 116 Cashua Street, Darlington, South Carolina, 29532. [Dennis Lofe Aff., Doc. 5, Exhibit B, ¶ 5.] WSC operates three nursing homes, all of which are located in Darlington County, South Carolina. Id. ¶ 3. Its mission is to provide “superior senior care services to the residents of Darlington County and surrounding communities.” Id. ¶ 4. WSC claims that it does not have any employees, agents, or offices in Tennessee, owns no real property in Tennessee, has not specifically targeted Tennessee persons or businesses for sale of goods or services there, and has never derived revenues from goods or services used or consumed in Tennessee. Id. ¶¶ 7–10, 21. In addition, WSC employees have not traveled to or been in Tennessee to conduct business or transactions with any business or entity in Tennessee. Id. ¶ 11. Since at least as early as 2003, WSC has operated a website at http:// wilson seniorcare. com, which provides information about WSC's various locations and services. Id. ¶ 14. The website provides users an electronic “contact us form that allows a person to submit basic contact information and general comments to the website host. Id. ¶ 16. No goods or services are sold over the website, and no request for employment with WSC can be submitted through the website. Id. ¶¶ 17–18.

Defendant Heritage is a South Carolina corporation with its principal place of business at 536 Old Howell Road, Greenville, South Carolina, 29615. [Compl. ¶ 3.] Like Plaintiff, Heritage is in the business of providing therapy services to residents at long-term care facilities, which it achieves through contractual relationships with such facilities. Id. ¶ 9. From January 29, 2004 to November 30, 2010, Heritage provided such therapy services at Hillcrest Nursing Home in Knox County, Tennessee. Id.; [Lesa Fugate Day Aff., Doc. 25–3, ¶ 5.] During this time, Heritage had physical therapists, occupational therapists, and speech therapists working in Hillcrest facilities in Knox County. [Day Aff. ¶ 6.] In addition, Plaintiff also asserts that Heritage solicited business from Hillcrest and other potential customers in Knox County, [Compl. ¶ 9], and used the internet to solicit prospective employees in the Knoxville area to submit job applications. Id.

The facts relevant to Plaintiff's claims are as follows. In 2004, WSC and Plaintiff contracted for Plaintiff to provide physical therapy services at WSC's facilities. Pursuant to this contract, known as the Therapy Services Agreement (“TSA”), therapists who were trained in Knoxville, Tennessee and employed by Plaintiff worked at and provided therapy services at WSC's senior care facilities in Darlington County, South Carolina between March of 2004 and June of 2009. During this time, WSC mailed payments, made telephone calls, and sent emails to Plaintiff's principal place of business in Knoxville, Tennessee. Id. ¶ 5. WSC also developed a relationship with Tennessee Insurance Service, a brokerage firm in Knoxville, to which WSC mailed checks, exchanged communication, and transmitted claim information related to Plaintiff's provision of services under the TSA contract.

In 2009, WSC decided to terminate the TSA and perform its therapy services in house. It wished to hire several of Plaintiff's employees who had performed therapy services at WSC's facilities; however, the TSA contained a provision precluding WSC from hiring such employees for a period of one year after the termination of the TSA. Accordingly, on or about June 1, 2009, WSC and Plaintiff entered into the agreement in dispute in this case (“RFR”). Pursuant to the RFR, Plaintiff was obligated not to prevent WSC from hiring Plaintiff's employees or former employees at WSC's South Carolina facilities, and WSC was obligated to provide Plaintiff with a right of first refusal if WSC chose to again pursue outside therapy services in its South Carolina facilities within a three-year period following termination of the TSA. The RFR also contained a choice-of-law provision providing that the RFR “shall be governed and construed in accordance with the laws of the State of Tennessee.” [Compl. ¶ 8.] The parties did not include a jurisdictional provision in the RFR. The contract drafted by Plaintiff, emailed to WSC in South Carolina, signed by a duly authorized representative of WSC, and emailed back to Plaintiff in Tennessee. Id. ¶ 19.

Plaintiff alleges that WSC breached the RFR in 2010 by outsourcing therapy services to another therapy services provider, Heritage, without first offering Plaintiff the right to first refusal with respect to the same. Id. ¶¶ 16–18. Further, Plaintiff claims that Heritage interfered with and induced WSC to breach the RFR by “offering to provide therapy services cheaper than WSC believed it could obtain the therapy services from” Plaintiff. Id. ¶¶ 22–24.

Plaintiff claims that the Court has personal jurisdiction over WSC because WSC (1) conducted business and corresponded with Plaintiff via mail, facsimile, email, and telephone, including sending one or more checks to Plaintiff through the mail; (2) entered into an agreement with Plaintiff, which was to be construed in accordance with the laws of Tennessee; and (3) advertised its goods and services by way of a website. Id. ¶¶ 5–9. Plaintiff claims that the Court has personal jurisdiction over Heritage because Heritage has (1) provided therapy services in Tennessee; (2) solicited business from potential consumers in Tennessee; (3) taken “other steps to conduct business or engage in commercial activity within the State of Tennessee; and (4) used the internet to solicit prospective employees in Tennessee. Id. ¶ 9.

Defendants have filed motions to dismiss Plaintiff's Complaint for lack of personal jurisdiction. In the alternative, Defendant Heritage requests that this case be transferred to the United States District Court for the District of South Carolina. In addition, both parties request an award in the amount of attorneys' fees and costs and expenses, plus any further and additional relief deemed appropriate by the Court.

III. AnalysisA. Defendant Wilson Senior Care, Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction

Plaintiff bears the burden of establishing that personal jurisdiction exists. Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 449–50 (6th Cir.2012) (citing Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir.1991)). [I]n the face of a properly supported motion for dismissal, the plaintiff may not stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction.” Id. (citing Theunissen, 935 F.2d at 1458). A district court may address a motion to dismiss on the parties' submissions or it may permit limited discovery and hold an evidentiary hearing, Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir.2007). When, as here, a court “does not conduct an evidentiary hearing and relies solely on written submissions and affidavits to resolve the Rule 12(b)(2) motion, ‘the plaintiff need only make a prima facie showing of jurisdiction.’ Encore Med., L.P. v. Kennedy, No. 1:11–cv–187, 861 F.Supp.2d 886, 890, 2012 WL 966431, *3 (E.D.Tenn. Mar. 21, 2012) (citing Indah v. S.E.C., 661 F.3d 914, 920 (6th Cir.2011)).

“In order for a federal district court sitting in diversity to exercise personal jurisdiction over a defendant, the law of the forum state must authorize jurisdiction, and that exercise of jurisdiction must comport with the Due Process Clause.” Harris v. Lloyds TSP Bank, PLC, 281 Fed.Appx. 489, 492 (6th Cir.2008) (citing Brunner v. Hampson, 441 F.3d 457, 463 (6th Cir.2006)). Tennessee's long-arm statute provides for personal jurisdiction over nonresidents on [a]ny basis not inconsistent with the constitution of this state or of the United States.” Tenn.Code. Ann. § 20–2–214(a)(6). This statute “has been interpreted to be ...

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