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Pikeville Appalachian Regional Healthcare, Inc. v. U.S. Nursing Corporation

United States District Court, Eastern District of Kentucky, Southern Division, Pikeville

March 12, 2015



Amul R. Thapar, United States District Judge.

In a prior Order, the Court dismissed Appalachian Regional Healthcare’s (“ARH”) complaint for lack of jurisdiction. See R. 30. Because ARH did not suffer an actual or threatened injury that can be both traced to the defendant’s actions and remedied by the Court, it has not presented a live case or controversy for judicial resolution. As a result, the Court lacks jurisdiction to hear the case under Article III of the Constitution. Id. at 1. ARH disagreed and filed a motion alter or amend the judgment under Federal Rule of Civil Procedure 59. R. 31. But Rule 59 “is not an opportunity to re-argue a case.” Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998). Rather, “[m]otions under Rule 59(e) must either clearly establish a manifest error of law or must present newly discovered evidence.” Id. Because ARH merely seeks to re-argue its case and still fails to allege an injury that the Court can remedy, the Court will deny the motion.


The Court outlined the facts of this case in its prior order. R. 30 at 1–3. A short summary suffices here. ARH and USN entered a Staffing Agreement (“the Agreement”) wherein USN provided nurses to staff an ARH facility. R. 1 ¶ 7. One of the USN-provided nurses, Nurse Foote, allegedly injured an ARH patient. Id. ¶ 6. The patient then sued the nurse, ARH, and USN in state court (“the Proffitt litigation”). Id. ¶¶ 5, 6. In state court, USN moved for summary judgment on the grounds that Kentucky’s borrowed-servant doctrine absolved USN of liability. Id. ¶¶ 17–18. USN argued that because it loaned Foote to ARH, it is ARH and not USN that is responsible for Foote’s torts. Id. The state court denied USN’s motion, R. 27-1 at 12–13 (September 5, 2014, hearing Transcript at 44–45), but USN reserved the right to raise the defense at trial. R. 1-4 at 2. ARH brought a suit in federal court, alleging that USN is breaching the Agreement by raising the borrowed-servant defense. The Court dismissed the action for lack of jurisdiction, R. 30, and ARH now seeks reconsideration of the dismissal, R. 31.


ARH brought this action for breach of contract and an injunction. Under its breach-of-contract claim, ARH seeks (1) a declaration that asserting the borrowed-servant defense is a breach of the Agreement, (2) a declaration of USN’s duties under the Agreement, and (3) a determination of whether USN’s insurance policy meets the insurance requirements under the Agreement. R. 1 ¶ 30. Because ARH considers the borrowed-servant defense a breach of the Agreement, ARH also seeks an injunction to bar USN from using the defense in the Proffitt litigation. Id. ¶¶ 30, 42. According to ARH, USN’s use of the borrowed-servant defense violates paragraph D.15 of the Agreement, which provides that USN “shall indemnify, defend, save, and hold harmless ARH . . . from any and all liability or damage that arises from . . . the negligence or intentional act or omission of” any nurses USN assigned to ARH under the staffing agreement. R. 1-1 at 14–15.

I. There is no case or controversy for the Court to resolve.

Article III of the Constitution limits federal court jurisdiction to actual “cases” and “controversies.” Michigan v. Meese, 853 F.2d 395, 397 (6th Cir. 1988). To satisfy the “case-or-controversy” requirement, a plaintiff must show that it (1) faces an actual or threatened concrete injury, (2) a fairly traceable connection between the injury and the defendant’s conduct, and (3) a likelihood that the injury can be redressed by the court. Id. at 398; Courtney v. Smith, 297 F.3d 455, 459 (6th Cir. 2002).

ARH identifies four injuries that it has suffered or will suffer on account of USN’s actions: (1) ARH suffers reputational harm by remaining in the Proffitt litigation; (2) ARH is subject to “potential damages through a jury award arising” from the Proffitt litigation; (3) ARH “may be forced to provide a defense and other benefits to Foote as presently asserted by USN’s insurer and her”; and (4) ARH must spend money to defend itself in the Proffitt litigation in state court-but for USN’s use of the borrowed-servant defense, ARH would be dismissed from the action. See R. 31 at 3.

ARH did not raise the first alleged injury-reputational harm stemming from simply remaining a party in the Proffitt litigation-in either its complaint or its response to USN’s motion to dismiss. ARH cannot raise it for the first time in a Rule 59 motion. Engler, 146 F.3d at 374 (“[P]arties should not use [Rule 59 motions] to raise arguments which could, and should, have been made before judgment issued.”). ARH alleged a reputational injury stemming from a potential “adverse verdict” in the state trial-not from the simple fact that it remains a named party in litigation. R. 1 ¶ 37; R. 24 at 8. The Court already considered and rejected any verdict-related reputational claim. R. 30 at 3–4. ARH does not challenge the Court’s adjudication of that claim.

The same goes for ARH’s third and fourth alleged injuries. See R. 31 at 3 (noting that ARH will experience harm from having to provide a defense to Nurse Foote and by remaining a party in the litigation). ARH did not previously argue that it would suffer from having to expend funds to defend Nurse Foote and pay for its own defense in the state court litigation. See R. 24 at 9 (noting that the harms from remaining in the litigation include “a potential liability verdict recorded against ARH” and “multiple non-monetary damages arising from a potential adverse jury verdict”). So the Court will not reconsider its decision based on these new argument that ARH “could, and should” have raised earlier in response to USN’s motion to dismiss. Engler, 146 F.3d at 374.

ARH’s remaining alleged injury-a potential damage award from an adverse jury verdict-falters on the first step of the case-or-controversy test. ARH argues that it will be injured if the jury in Proffitt renders a verdict adverse to ARH and if USN fails to indemnify ARH. ARH acknowledges that USN has promised to honor its indemnification obligations regardless of the outcome of the borrowed-servant defense, but believes USN’s assurances are “meaningless.” See R. 31 at 4–5. As the Court explained in its prior order, a speculative injury is not the sort of actual or threatened injury required to create a case or controversy. This is particularly true for injuries that are framed in an “if-then” subjunctive and dependent on the actions of independent third parties. R. 30 at 4 (citing N. Am. Natural Res., Inc. v. Strand, 252 F.3d 808, 812–13 (6th Cir. 2001)). Moreover, USN promised to honor its indemnification obligations-ARH’s skepticism is not an injury that the Court can remedy.

ARH fails to identify any reason to alter the Court’s decision on USN’s motion to dismiss. ARH does not point to an actual or threatened concrete injury that is traceable to USN’s conduct and remediable by the Court. Nor can ARH now prevail on arguments that it failed to raise in response ...

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