Rounds v. Hartford, Hartford Fin. Servs., Inc., 4:20-CV-04010-KES

• Decision Date: 11 June 2020
• Docket Number: 4:20-CV-04010-KES
• Parties: TIM ROUNDS, Plaintiff, v. THE HARTFORD, HARTFORD FINANCIAL SERVICES, INC., and HARTFORD CASUALTY INS. CO., Defendants.
• Court: U.S. District Court — District of South Dakota

TIM ROUNDS, Plaintiff, v. THE HARTFORD, HARTFORD FINANCIAL SERVICES, INC., andHARTFORD CASUALTY INS. CO., Defendants.

4:20-CV-04010-KES

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA SOUTHERN DIVISION

June 11, 2020

ORDER DENYING MOTION TO DISMISS

Plaintiff, Tim Rounds, filed this action alleging common law bad faith and unfair trade practices under SDCL § 58-33-5. Docket 1. Defendant Hartford Financial Services, Inc., moves to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Docket 12. Rounds opposes the motion. Docket 16. For the following reasons, the court denies the motion to dismiss.

BACKGROUND

Construing the facts in a light most favorable to the non-moving party, Rounds, the facts are as follows:

Rounds is a resident of Pierre, South Dakota. Docket 1 ¶ 1. Hartford Financial Services Group, Inc., (HFSG) is incorporated in Delaware and has its principal place of business in Connecticut. Docket 13-2 at 1; see also Docket 1 ¶ 2. HFSG is "a financial holding company for a group of insurance and non- insurance subsidiaries . . . that provide property and casualty [insurance], group benefits and investment products to both individual and business customers in the United States[.]" Docket 13-1 at 1.

This case concerns allegations of bad faith and unfair trade practices in the handling of a workers' compensation claim. See Docket 1. In July of 2015, Rounds was working as a claims adjuster for Doss & Associates. Id. ¶ 6. On July 2, 2015, while working, Rounds lost his footing on a wet metal roof and fell several times. Id. ¶¶ 7-8. "Rounds was diagnosed with a left cerebellar stroke caused by a left vertebral artery dissection (VAD)" on July 9, 2015. Id. ¶ 10. Rounds underwent various treatments, including being in the hospital for 10 days and undergoing 2 weeks of in-patient rehabilitation. Id. ¶¶ 14-15. This treatment and care resulted in medical expenses that were compensable under South Dakota workers' compensation laws. Id. ¶ 16.

Rounds notified Doss & Associates of the accident within the time required under South Dakota law. Id. ¶ 19. Doss & Associates is insured by Hartford Casualty Insurance Company. Docket 13-3 at 1-4. HFSG is the parent company of Hartford Casualty Insurance. See Docket 13-1 at 1-2. After investigating, defendants denied Rounds' claim on November 6, 2015. Docket 1 ¶ 32. Rounds alleges that defendants "failed to conduct a reasonable investigation of the facts and the law required to determine whether compensation was due," and "avoided investigating facts or opinions that might support" compensation. Id. ¶¶ 39-40. Rounds also alleges that defendants misrepresented South Dakota law and knew that "the falls at work didn't needto be the only cause of his dissection and stroke, but only needed to be one of the major contributing causes." Id. ¶ 26. Rounds relied on defendants' misrepresentations, which "caused Rounds to delay seeking legal assistance to challenge the denial" of his claim. Id. ¶¶ 42-47.

LEGAL STANDARD

A party may move to dismiss a claim for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). The court must view the facts in a light most favorable to the party opposing the motion. Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir. 1977). To defeat a motion to dismiss for lack of personal jurisdiction, the plaintiff has the burden of making a prima facie showing that jurisdiction exists. K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591 (8th Cir. 2011). The court may consider not only the pleadings but also affidavits, exhibits, or other evidence attached in support or opposition. Id. at 592 (citing Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004)). "While the plaintiff[] bear[s] the ultimate burden of proof, jurisdiction need not be proved by a preponderance of the evidence[.]" Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 649 (8th Cir. 2003) (citing Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991)).

DISCUSSION

Federal courts may assume personal jurisdiction over out-of-state defendants in a diversity case " 'only to the extent permitted by the long-arm statute of the forum state and by the Due Process Clause.' " K-V Pharm. Co., 648 F.3d at 592 (quoting Dever, 380 F.3d at 1073). Because South Dakota'slong-arm statute confers jurisdiction to the fullest extent allowed by the Due Process Clause, the evaluation requires only a determination of whether the assertion of personal jurisdiction comports with due process under the Fourteenth Amendment. See SDCL § 15-7-2(14); see also Larson Mfg. Co. of S.D. v. Conn. Greenstar, Inc., 929 F. Supp. 2d 924, 926 (D.S.D. 2013) (citing Dakota Indus., Inc. v. Ever Best Ltd., 28 F.3d 910, 915 (8th Cir. 1994)). The Supreme Court has established that a court may only exercise personal jurisdiction over an out-of-state defendant in cases where the defendant has "minimum contacts with [the State] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011) (alteration in original) (internal quotation omitted).

The sufficiency of a defendant's contacts are analyzed under five factors: "(1) the nature and quality of contacts with the forum state; (2) the quantity of such contacts; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties." Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996). "The first three factors are primary factors, and the remaining two factors are secondary factors." Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010). When considering minimum contacts, a court should focus on " 'the relationship among the defendant, the forum, and the litigation.' " Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). A plaintiff's assertion of personaljurisdiction over a defendant in a particular forum must fall into one of two categories: general or specific. See Daimler AG v. Bauman, 571 U.S. 117, 126-27 (2014).

I. General Jurisdiction

General jurisdiction permits a court to hear "any and all" claims against a party in a particular forum. Goodyear, 564 U.S. at 919. General jurisdiction allows personal jurisdiction over defendants where their contacts with the forum state are not necessarily related to the issue at stake in the lawsuit. Arden, 614 F.3d at 794. General jurisdiction over a corporation exists where the corporation's affiliations with the forum are sufficiently "continuous and systematic . . . as to render [it] essentially at home in the forum State[.] " Viasystems, Inc. v. EMB-Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 595 (8th Cir. 2011) (internal quotations omitted).

Here, HFSG's contacts with South Dakota do not rise to a level that is sufficient to confer general personal jurisdiction over it. No facts show HFSG is "at home" in South Dakota. HFSG is not incorporated in South Dakota and does not have its principal place of business in the state. See Docket 13-2 at 1. HFSG's contacts with South Dakota do not meet the "high[] due-process threshold" required to assert general jurisdiction. Viasystems, Inc., 646 F.3d at 595. And any contacts of HFSG's subsidiary, Hartford Casualty Insurance Company, cannot be imputed to HFSG for purposes of general jurisdiction. See Daimler, 571 U.S. at 136-37. Thus, if personal jurisdiction exists over HFSG, it must be based on specific jurisdiction related to this cause of action.

II. Specific Jurisdiction

Specific jurisdiction permits a court to assert authority over an out-of-state defendant when the cause of action arises from or relates to the defendant's actions within that forum state. Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 820 (8th Cir. 2014) (citing Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, 1091 (8th Cir. 2008)). Courts may assert specific jurisdiction when the defendant is shown to have purposefully availed itself of the benefits and protections of the forum state, such that the defendant could "reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The defendant may not be haled into a forum based on " 'random, fortuitous, or attenuated' contacts," or contacts arising from the unilateral actions of a third party. Walden v. Fiore, 571 U.S. 277, 286 (2014) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). The defendant's intentional conduct must form the contacts to the forum; the plaintiff cannot be the only link between the two. Id.

Courts generally do not presume that a parent corporation is liable for the actions of its wholly owned subsidiary. United States v. Bestfoods, 524 U.S. 51, 61 (1998). There is an exception to this presumption, however " 'where one corporation is so organized and controlled and its affairs are so conducted that it is, in fact, a mere instrumentality or adjunct of [the parent] corporation.' " Epps, 327 F.3d at 649 (quoting Lakota Girl Scout Council, Inc. v. Havey Fund-Raising Mgmt., Inc., 519 F.2d 634, 637 (8th Cir. 1975)). The Eighth Circuit has stated that "piercing the corporate veil, if only to establish jurisdiction over theparent corporation, is a drastic approach authorized only in the most extreme situations[.]" Lakota Girl Scout Council, Inc., 519 F.2d at 637.

Apart from veil-piercing, third-party entities administering insurance claims, along with the entity issuing the policy, can be held responsible for common law bad faith and breaching the duty of good faith and fair dealing. See Tovares v. Gallagher Bassett Servs., Inc., 379 F. Supp. 3d 791, 807 (D.S.D. 2019) (noting "the South Dakota Supreme Court would conclude a third party administrator . . . has a duty of...