Electrostim Med. Servs., Inc. v. Blue Cross Blue Shield of Louisiana

ELECTROSTIM MEDICAL SERVICES, INC. v. BLUE CROSS BLUE SHIELD OF LOUISIANA

CIVIL ACTION No. 13-5071

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA SECTION I

Dated: October 29, 2013

ORDER AND REASONS

Before the Court is a motion¹ to dismiss for improper venue pursuant to Rule 12(b)(3) or, in the alternative, to transfer venue to the Middle District of Louisiana or, in the further alternative, to dismiss the case and compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq., and if necessary, for an extension of time to answer, filed by defendant, Louisiana Health Service & Indemnity Company, d/b/a Blue Cross and Blue Shield of Louisiana ("BCBS"). Plaintiff, Electrostim Medical Services, Inc. ("EMSI"), opposes² the motion, and BCBS filed a reply³ to plaintiff's opposition. For the following reasons, the motion is DENIED IN PART and GRANTED IN PART.

BACKGROUND

"EMSI is a health care company providing electrostimulating products . . . in medical settings to patients to alleviate various medical ailments."⁴ EMSI provided its products to BCBS's insureds and submitted claims to BCBS on their behalf.⁵ The two companies didbusiness from May 2010 until the end of 2011, when BCBS terminated the Allied Health Provider Agreement ("Agreement") that governed their relationship.⁶

EMSI alleges that it is owed "in excess of $600,000.00" due to unpaid claims which EMSI properly submitted to BCBS on behalf of its insureds.⁷ EMSI's complaint includes a breach of contract claim,⁸ claims for violations of the Louisiana insurance code,⁹ ERISA claims,¹⁰ unjust enrichment claims,¹¹ a breach of implied contract claim,¹² a third-party beneficiary claim,¹³ a quantum meruit claim,¹⁴ and a request for injunctive relief, including a request for a temporary restraining order.¹⁵ The request for a temporary restraining order was denied by U.S. District Judge Susie Morgan on July 15, 2013.¹⁶

In lieu of an answer, BCBS filed the instant motion on August 8, 2013, which makes a number of requests.¹⁷ First, BCBS states, "Plaintiff's claims should be dismissed for improper venue under Rule 12(b)(3) of the Federal Rules of Civil Procedure."¹⁸ In the alternative, BCBS asks the Court to "exercise its discretion to transfer this case under 28 U.S.C. § 1404(a)."¹⁹ Next, BCBS requests that the Court enforce the Agreement, "compel Plaintiff to submit to arbitration all claims alleged in the Complaint, dismiss the Complaint, and stay all further proceedings."²⁰Finally, BCBS "further requests that the Court extend the time to answer Plaintiff's Complaint (if necessary) until twenty days following the Court's ruling."²¹ BCBS attached a number of exhibits to its motion,²² including a copy of the Agreement.²³

In its opposition,²⁴ EMSI argues that it should be entitled to deference as to its choice of forum²⁵ and that BCBS "failed to show 'good cause' why the case should be transferred."²⁶ EMSI argues that BCBS has waived its right to arbitration and that, pursuant to § 9.1 of the Agreement, BCBS "has acquiesced to EMSI's demands as a result of its failure to participate in arbitration proceedings"²⁷ which it initiated on April 23, 2012.²⁸ EMSI also attached a number of exhibits to its opposition.²⁹

BCBS filed a reply memorandum on September 10, 2013.³⁰ BCBS reiterated that EMSI has not satisfied the prerequisites to arbitration required by the agreement, and it contested EMSI's assertion that it ever agreed to arbitration.³¹ BCBS also reiterated its arguments related to the venue issue.³² BCBS attached two more exhibits to its reply memorandum.³³

LAW AND ANALYSIS

I. Motion to Dismiss for Improper Venue

A. Standard of Law

Rule 12(b)(3) of the Federal Rules of Civil Procedure authorizes a defendant to move for dismissal due to improper venue. When resolving a Rule 12(b)(3) motion without an evidentiary hearing, a court accepts a plaintiff's well-pleaded factual allegations as true and draws all reasonable inferences in plaintiff's favor. See Langton v. Cbeyond Commc'n, L.L.C., 282 F. Supp. 2d 504, 508 (E.D. Tex. Sept. 18, 2003); McCaskey v. Continental Airlines, Inc., 133 F. Supp. 2d 514, 523 (S.D. Tex. Mar. 9, 2001). Furthermore, the Court resolves any conflicts in plaintiff's favor. McCaskey, 133 F. Supp. 2d at 523. Courts have provided the plaintiff with the benefit of the doubt when determining the governing facts. Id. Unlike a Rule 12(b)(6) motion, however, a court may consider extrinsic materials, including affidavits and other materials, in determining whether venue is proper. See Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004); Tinsley v. Comm'r, No. 96-1769, 1998 WL 59481, at *2 (N.D. Tex. Feb. 9, 1998) ("[M]otions to dismiss for improper venue under 12(b)(3) are generally resolved through submission of affidavits and declarations and discovery materials").

28 U.S.C. § 1406 states, "The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." Whether or not this Court is a proper venue is determined pursuant to 28 U.S.C. § 1391.³⁴ Section 1391(b) provides:

A civil action may be brought in . . . (1) a judicial district in which any defendant resides, . . . (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, . . . or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.

Generally, the residency of a corporate³⁵ defendant is deemed to be "any judicial district in which such defendant is subject to the court's personal jurisdiction with respect to the civil action in question." Id. § 1391(c)(2). However, in states with multiple judicial districts, a corporate defendant "shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State." Id. § 1391(d).

This Court is a proper venue with respect to BCBS if it "resides" in the Eastern District of Louisiana. See id. § 1391(b)(1). BCBS "resides" in this district if it has sufficient minimum contacts with the district pursuant to a personal jurisdiction analysis.³⁶ See id. § 1391(d). Accordingly, the Court must determine whether EMSI has carried its "burden of establishing that a defendant has the requisite minimum contacts with the forum state to justify the court's jurisdiction." Herman v. Cataphora, Inc., No. 12-30966, --- F.3d ---, 2013 WL 5223101, at *3 (5th Cir. Sept. 17, 2013) (citing Guidry v. U.S. Tobacco Co., 188 F.3d 619, 625 (5th Cir. 1999)).

Where, as here, the Court rules without conducting an evidentiary hearing, the plaintiff bears the burden of establishing a prima facie case that the Court has jurisdiction over adefendant. Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008).³⁷ The Court "must accept as true the uncontroverted allegations in the complaint and resolve in favor of the plaintiff any factual conflicts posed by the affidavits." Latshaw v. Johnson, 167 F.3d 208, 211 (5th Cir. 1999). "However, the prima-facie-case requirement does not require a court to credit a plaintiff's conclusory allegations that lack foundational support or require the court to draw tortured inferences." Hills v. Brinks, Inc., No. 07-4207, 2008 WL 243944, at *2 (E.D. La. Jan. 25, 2008) (Vance, J.) (citing Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 868-69 (5th Cir. 2001)).

If the defendant disputes the factual basis for jurisdiction, "the court may receive interrogatories, depositions, or any combination of the recognized methods of discovery to help it resolve the jurisdictional issue." Walk Haydel, 517 F.3d at 241 (citations and quotations omitted). The Court may also "judicially notice a fact that is not subject to reasonable dispute because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b); see also In re Chinese Manufactured Drywall Prods. Liab. Litig., 894 F. Supp. 2d 819, 858 n.5 (E.D. La. 2012) (Fallon, J.) (citing Enriquez-Gutierrez v. Holder, 612 F.3d 400, 410-11 (5th Cir. 2010)). The court should not, however, act as a fact finder, and it must construe all disputed facts in the plaintiff's favor. Walk Haydel, 517 F.3d at 241.

A federal court may only exercise personal jurisdiction over a nonresident defendant if (1) the forum state's long-arm statute confers personal jurisdiction over that defendant; and (2)the exercise of personal jurisdiction comports with the Due Process Clause of the Fourteenth Amendment. Moncrief Oil Int'l v. OAO Gazprom, 481 F.3d 309, 311 & n.1 (5th Cir. 2007). Because the limits of the Louisiana long-arm statute are coextensive with constitutional due process limits, the Court need only consider the second step of the inquiry. Walk Haydel, 517 F.3d at 242-43 (citing A & L Energy, Inc. v. Pegasus Grp., 791 So. 2d 1266, 1270 (La. 2001)).

"As interpreted by the Supreme Court, the Fourteenth Amendment Due Process clause requires satisfaction of a two-prong test in order for a federal court to properly exercise jurisdiction: (1) the nonresident must have minimum contacts with the forum state, and (2) subjecting the nonresident to jurisdiction must be consistent with 'traditional notions of fair play and substantial justice.'" Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 343 (5th Cir. 2004) (citing Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784 (5th Cir. 1990) and Int'l Shoe Co. v. Washington, 326 U.S. 310 (1945)).

The "minimum contacts" prong is satisfied when a defendant "purposefully avails...