Steward Health Care Sys. LLC v. Saidara

• Citation: 633 S.W.3d 120
• Decision Date: 20 August 2021
• Docket Number: No. 05-19-00274-CV,05-19-00274-CV
• Parties: STEWARD HEALTH CARE SYSTEM LLC and Southwest General Hospital, LP, Appellants v. Frank SAIDARA, Appellee
• Court: Court of Appeals of Texas

633 S.W.3d 120

STEWARD HEALTH CARE SYSTEM LLC and Southwest General Hospital, LP, Appellants
v.
Frank SAIDARA, Appellee

No. 05-19-00274-CV

Court of Appeals of Texas, Dallas.

Opinion Filed August 20, 2021

Marie Louise Carlisle, Shanisha Smith, Dennis P. Duffy, Houston, Courtney Warren, Cody Vasut, Houston, for Appellee.

Asher B. Griffin, Austin, Calli Turner, Howard L. Close, Shanisha Smith, Houston, for Appellant.

Before the Court sitting En Banc

OPINION

Opinion by Justice Myers

633 S.W.3d 123

Steward Health Care System LLC and Southwest General Hospital, LP bring an interlocutory appeal of the trial court's order granting the special appearance filed by Frank Saidara and dismissing appellants' causes of action against him. Appellants bring one issue contending the trial court erred by granting Saidara's special appearance because Saidara committed tortious acts in Texas. We affirm the trial court's order granting Saidara's special appearance.

I. FACTUAL AND PROCEDURAL BACKGROUND¹

Steward Health is a Dallas-based health care system. It owns numerous hospitals, including Southwest General, located in San Antonio, Texas.

Saidara resides in California, and he is the vice president of corporate holdings for Prospect Medical Holdings, Inc., which has its principal place of business in Los Angeles, California.

In 2018, Prospect Medical approached Steward Health about acquiring the assets of Southwest General. To facilitate Prospect Medical's due diligence, Steward Health set up a virtual data room where documents relevant to the proposed transaction were uploaded. A subset of the data was placed into a more restrictive "virtual clean room." Prospect Medical tasked Saidara as well as other officers and high-level employees with conducting negotiations and performing due diligence related to the transaction. The individuals with access to the virtual clean room (the clean team), included Saidara. The members of the clean team were required to sign a clean team agreement that limited their disclosure of information, authorized them to prepare "evaluative analyses and aggregated summaries" of the sensitive materials for their individual use in evaluating the proposed transaction, prohibited unauthorized sharing or dissemination of the materials in the virtual clean room as well as any documents created that incorporated or used that sensitive information, and restricted use of the sensitive information to the purposes permitted by a separate confidentiality agreement signed by Steward Health and Prospect Medical.²

Saidara accessed information online in the virtual data room and clean room. He also participated in electronic and telephonic communications with Steward Health and Southwest General relating to the potential transaction. On at least one

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occasion, Saidara traveled to Texas, toured the Southwest General facility with James Summerset, the interim chief executive officer of Prospect Health. Appellants alleged that while Saidara and Summerset visited Southwest General, "Summerset asked an unusual amount of questions about proprietary Southwest General data. Specifically, Summerset inquired about physician employment arrangements and compensation data." On September 15, 2018, after the visit to Southwest General, Saidara allegedly downloaded all the information from the virtual clean room.

On September 20, 2018, five days after Saidara had downloaded the data, Prospect Medical informed Steward Health that it was no longer interested in acquiring the assets of Southwest General. Appellants alleged that persons within Prospect Medical and Prospect Health later leaked information relating to the proposed transaction, which made it more difficult for Southwest General to market and sell its assets.

On November 7, 2018, appellants filed their original petition against Prospect Medical, Prospect Health, and Saidara. In their first amended petition, appellants alleged claims for: (1) common law fraud, (2) unfair competition,³ (3) misappropriation of trade secrets in violation of the Texas Uniform Trade Secrets Act, (4) violation of the Texas Harmful Access by Computer Act, and (5) conspiracy to misappropriate appellants' trade-secret information. Appellants claimed that personal jurisdiction existed as to Saidara because he had contacts with Texas with respect to the complained-of acts.

Saidara filed a special appearance arguing the trial court lacked personal jurisdiction over him because: (1) there is no basis for general jurisdiction; and (2) the trial court cannot exercise specific jurisdiction because (a) the alleged activities supporting the claims against him occurred while he was in California acting in the course of his employment with Prospect Medical, (b) all his alleged wrongful acts were in connection with his employment so he is protected by the fiduciary-shield doctrine, and (c) "[appellants] have failed to plead any purposeful (wrongful) activities by Saidara originating in Texas."

Saidara attached his declaration to his special appearance. He stated in the declaration that he is a citizen of California and resides in Los Angeles. All his actions in relation to the proposed transaction between Prospect and appellants were in his capacity as Prospect's vice president of corporate development. In the confidentiality agreement, he was designated a member of the clean team with access to the information in the virtual clean room. He made one trip to Texas visiting San Antonio in connection with the proposed transaction.

633 S.W.3d 125

He was in California at the time appellants alleged he inappropriately downloaded confidential information or trade secrets. He accessed the information in the clean room for legitimate purposes related to Prospect's due diligence in the proposed transaction.

Appellants responded that the trial court had specific jurisdiction over Saidara but did not attach any evidence to support their allegations.⁴ The trial court signed an order granting Saidara's special appearance and dismissing the claims against him. In that order, the trial court concluded that "there is no record evidence that would support the exercise of general jurisdiction over" Saidara and there was no specific jurisdiction.⁵ This interlocutory appeal followed.

II. SAIDARA'S SPECIAL APPEARANCE

Appellants raise one issue on appeal contending the trial court erred when it granted Saidara's special appearance.⁶ They argue the trial court has specific jurisdiction over Saidara because: (1) the Texas long-arm statute extends to Saidara's contacts; (2) Saidara had sufficient minimum contacts with Texas; (3) Saidara cannot show the exercise of specific jurisdiction would impose an unreasonable burden on him; and (4) the fiduciary-shield doctrine does not protect Saidara from specific jurisdiction. Saidara responds that the trial court properly concluded it lacked personal jurisdiction over him because his contacts with Texas were insufficient to confer specific jurisdiction; and, even if he had sufficient minimum contacts with Texas, the exercise of personal jurisdiction over him does not comport with traditional notions of fair play and substantial justice.⁷

A. Standard of Review

Whether a trial court has personal jurisdiction over a nonresident defendant is a question of law that appellate courts review de novo. E.g., Old Republic Nat'l Title Ins. Co. v. Bell , 549 S.W.3d 550, 558 (Tex. 2018). When a trial court does not issue findings of fact and conclusions of law with its special appearance ruling, all facts necessary to support the judgment and supported by the evidence are implied. Id. When the appellate record includes the reporter's and clerk's records, these implied findings are not conclusive and may be challenged for legal and factual sufficiency

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in the appropriate appellate court. BMC Software Belg., N.V. v. Marchand , 83 S.W.3d 789, 795 (Tex. 2002). When the relevant facts in a case are undisputed, an appellate court need not consider any implied findings of fact and considers only the legal question of whether the undisputed facts establish Texas jurisdiction. Old Republic , 549 S.W.3d at 558.

B. Burdens of the Parties in a Special Appearance

The plaintiff bears the initial burden of pleading sufficient allegations to bring a nonresident defendant within the provisions of the Texas long-arm statute. E.g., Old Republic , 549 S.W.3d at 559 ; Moncrief , 414 S.W.3d at 149. In order to meet its burden, a plaintiff must show the act on which jurisdiction is predicated, not a prima facie demonstration of the existence of a cause of action. Bruno's Inc. v. Arty Imports, Inc. , 119 S.W.3d 893, 896–97 (Tex. App.—Dallas 2003, no pet.) ; Clark v. Noyes , 871 S.W.2d 508, 511 (Tex. App.—Dallas 1994, no pet.) (although Texas courts use federal due process standard for analyzing minimum contacts, they do not use federal procedural rules, which would incorrectly place burden to show sufficient minimum contacts on the party seeking to invoke jurisdiction). This minimal pleading requirement is satisfied by an allegation that the nonresident defendant is doing business in Texas or committed tortious acts in Texas. Alencar v. Shaw , 323 S.W.3d 548, 553 (Tex. App.—Dallas 2010, no pet.). If the plaintiff does not meet this burden, the defendant need only prove that it does not reside in Texas to negate jurisdiction. See Siskind v. Villa Found. for Educ., Inc. , 642 S.W.2d 434, 438 (Tex. 1982) ; Jani-King Franchising, Inc. v. Falco Franchising, S.A. , No. 05-15-00335-CV, 2016 WL 2609314, at *4, (Tex. App.—Dallas May 5, 2016, no pet.) (mem. op.).

Specific jurisdiction is established when the nonresident defendant's alleged liability arises from or is related to activity conducted within the forum. Moki Mac River Expeditions v. Drugg , 221 S.W.3d 569, 576 (Tex. 2007) ; accord Bristol-Myers Squibb Co. v. Superior Court of Cal. , ––– U.S. ––––, 137 S. Ct. 1773, 1780, 198 L.Ed.2d 395 (2017). The "arises from or relates to"...