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Olsen Medical, LLC v. Or Specialists, Inc.

United States District Court, W.D. Kentucky, Louisville Division

September 12, 2014

OLSEN MEDICAL, LLC, Plaintiff,
v.
OR SPECIALISTS, INC., ET AL., Defendants.

MEMORANDUM OPINION AND ORDER

JOSEPH H. McKINLEY, Jr., Chief District Judge.

This matter is before the Court on a motion by Defendants, Surgeons Preference, LLC and Collin Back, to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) [DN 1, Att. 36]. Fully briefed, this matter is ripe for decision.

I. BACKGROUND

The current litigation stems from the terminated business relationship between OR Specialists (ORS) and Olsen Medical, LLC (Olsen). For approximately 11 years, ORS contractually agreed to sell and distribute Olsen products. Every contract between Olsen and ORS contained a forum selection clause in which the parties agreed that jurisdiction exists in the Kentucky courts.

On May 19, 2012, ORS elected to terminate the contract with Olsen. The contract contains a three year non-compete provision which survived the termination of the agreement. In May 2012, Olsen filed this action against ORS claiming a breach of the covenant not to compete. At some point later, ORS ceased doing business.

In February 2013, Surgeons Preference was formed as a Maryland limited liability company. It is owned by Erin Courtney and her husband, Mark Szczawinski. Erin Courtney is the daughter of Fred Back (hereinafter "Fred"), one of the former owners of ORS. Surgeons Preference, like ORS, distributes medical devices and supplies to medical professionals, surgery centers and hospitals. Surgeons Preference does not conduct business in Kentucky. Defendant Collin Back, a Maryland resident, works for Surgeons Preference but has no ownership interest in the company.

In an Amended Complaint, the Plaintiff asserts claims against Surgeons Preference and Collin Back. Plaintiff's theory for damages against Surgeons Preference relies on the assertion that it is a mere continuation of co-defendant ORS. As such, Plaintiff claims that Surgeons Preference is bound not only by the non-compete clause, which allegedly has been violated, but, more importantly for purposes of this motion, it is bound by the forum selection clause contained in the contracts with ORS. As it relates to Collin Back, Plaintiff claims that he signed the 2008 and 2010 contracts in his personal capacity and is personally liable and subject to the forum selection clause.

II. STANDARD OF REVIEW

The party asserting personal jurisdiction has the burden of showing such jurisdiction exists. Theunissen v. Matthews , 935 F.2d 1454, 1458 (6th Cir. 1991). Dismissal "[is] only proper if all of the specific facts... alleged collectively failed to state a prima facie case for jurisdiction." Id. at 1459. Personal jurisdiction is, "[a]n essential element of the jurisdiction of a district... court" and without personal jurisdiction the court is "powerless to proceed to an adjudication." Employers Reinsurance Corp. v. Bryant , 299 U.S. 374, 382 (1937). A federal court applies a two-step inquiry to determine whether it may exercise personal jurisdiction over a non-resident defendant: "(1) whether the law of the state in which the district court sits authorizes jurisdiction, and (2) whether the exercise of jurisdiction comports with the Due Process Clause." Brunner v. Hampson , 441 F.3d 457, 463 (6th Cir. 2006). The district court's exercise of jurisdiction over an out-of-state defendant must be consistent with both the forum state's long-arm statute and the constitutional requirements of due process. Id.

If it is decided that Surgeons Preference and Back are bound by the contractual agreements between Olsen and ORS, this Court will have personal jurisdiction over the Defendants as a result of the forum selection clause located in the contracts. Where forum selection provisions have been obtained through freely negotiated agreements and are not unreasonable and unjust, their enforcement does not offend due process. Burger King Corp. v. Rudzewics , 471 U.S. 462, 472 (1985). Furthermore, the contracts made with Olsen would clearly fall within the Kentucky long-arm statute enumerated in K.R.S. ยง 454.210(2)(a). The contracts would be within the Kentucky Supreme Court's interpretation of the above cited statute. Caesars Riverboat Casino, LLC v. Beach , 336 S.W.3d 51 (Ky. 2011).

At this point in the litigation, before trial, the court has three options for deciding a 12(b)(2) motion: "(1) the court can decide the motion upon the affidavits alone; (2) the court can permit discovery to decide the motion; or (3) the court can conduct an evidentiary hearing to resolve any factual disputes." Serras v. First Tennessee Bank Nat. Assn. , 875 F.2d 1212, 1214 (6th Cir. 1989) (quoting Marine Midland Bank, N.A. v. Miller , 664 F.2d 899, 904 (2nd Cir. 1981)). When there is no evidentiary hearing, a plaintiff must only make a prima facie showing of jurisdiction and a court does not weigh the controverting assertions of the party seeking dismissal. CompuServe, Inc. v. Patterson , 89 F.3d 1257, 1261-62 (6th Cir. 1996). Furthermore, "[p]articularly where the disputed jurisdictional facts are intimately intertwined with the parties' dispute on the merits, a trial court should not require plaintiffs to mount proof which would, in effect, establish the validity of their claims and their right to the relief sought." Serras , 875 F.2d at 1215 (internal quotation omitted).

III. DISCUSSION

The Defendants, Surgeons Preference and Back, move the Court to dismiss the Plaintiff's claim for lack of personal jurisdiction. In the alternative, the Defendants ask that the Court to order limited discovery or a ...


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