United States District Court, W.D. Kentucky, Louisville Division
AMERICAN HOME HEALTHCARE SYSTEM, INC. PLAINTIFF
FLOYD MEMORIAL HOSPITAL AND HEALTH SERVICES a/k/a THE HEALTH AND HOSPITAL CORPORATION OF FLOYD COUNTY and BAPTIST HEALTHCARE SYSTEM, INC. DEFENDANTS
MEMORANDUM OPINION AND ORDER
H. MCKINLEY, JR., CHIEF JUDGE
matter is before the Court on Defendant Floyd Memorial
Hospital's Motion to Dismiss or Transfer [DN 13] and
Defendant Baptist Healthcare System's Motion to Join the
Motion to Transfer [DN 14]. Fully briefed, these matters are
ripe for decision.
Floyd Memorial Hospital (hereinafter “Floyd”)
owned and operated Floyd Home Memorial Hospital Home Health
until October 2016 when Floyd sold all of its assets to
Defendant Baptist Healthcare System (hereinafter
“Baptist Healthcare”). (Compl. [DN 1] ¶ 6-
7.) Plaintiff alleges that Floyd engaged in “tortious
and anti-competitive conduct specifically intended to
monopolize home health agency referrals from Floyd” to
Floyd Home Health “and to interfere with patient's
relationships with their existing home health
providers” and that Baptist Healthcare, as the
successor-in-interest, continues to participate in these
purportedly anticompetitive practices. (Id. ¶
1.) Plaintiff asserts federal question jurisdiction,
specifically alleging that this court has personal
jurisdiction over Defendants and that venue properly lies
here under the Clayton Act, 15 U.S.C. § 22.
(Id. ¶ 12.) Floyd protests these claims and has
asked the Court to dismiss Plaintiff's Complaint, or, in
the alternative, transfer the action to the Southern District
of Indiana. (Mot. Dismiss [DN 13] at 1.) Baptist Healthcare
joins in Floyd's request for transfer. (Mot. Transfer [DN
14] at 1.)
seeks dismissal or transfer based upon the venue provision
found within the Clayton Act. Section 12 of the Clayton Act
states as follows:
Any suit, action, or proceeding under the antitrust laws
against a corporation may be brought not only in the judicial
district whereof it is an inhabitant, but also in any
district wherein it may be found or transacts
business; and all process in such cases may be served in
the district of which it is an inhabitant, or wherever it may
15 U.S.C. § 22 (emphasis added). This section of the
Clayton Act has enlarged the jurisdiction of district courts
“so as to establish the venue of such a suit not only.
. . in a district in which the corporation resides or is
‘found, ' but also in any district in which it
‘transacts business.'” Eastman Kodak Co.
of N.Y. v. S. Photo Materials Co., 273 U.S. 359, 372
(1927) (quoting 15 U.S.C. § 22.) “Under the
‘transacting business' clause of . . . the Clayton
Act, venue and personal jurisdiction are virtually
congruent.” Pac. Tobacco Corp. v. Am. Tobacco
Co., 338 F.Supp. 842, 844 (D. Or. 1972); see
Hyland, 2007 WL 1959158, at *3 (stating that proper
venue under the Clayton Act is “required in order to
confer personal jurisdiction”); Crusader
Marine Corp. v. Chrysler Corp., 281 F.Supp.
802, 805 (E.D. Mich. 1968) (finding due process not offended
because the language of the Clayton Act “clearly makes
a district a proper forum for any antitrust suit against a
corporation transacting business there”); see also
Goldlawr, Inc. v. Heiman, 369 U.S. 463, 46467 (1962).
Therefore, generally, “the concept of
‘transacting business' is more lenient than that of
‘minimum contacts' under International
Shoe.” Dunham's, Inc. v.
Nat'l Buying Syndicate of Texas, 614 F.Supp. 616,
624 (E.D. Mich. 1985) (citing Athletes Foot of Delaware,
Inc. v. Ralph Libonati Co., 445 F.Supp. 35, 45 (D.
Plaintiff American Home Health Services is an Indiana
corporation with its principle place of business in Indiana.
(Compl. [DN 1] ¶ 4.) Floyd operated as an Indiana
corporation with its principle place of business in Indiana
until October 2016. (Id. ¶¶ 5-6.) During
this time, Floyd owned and operated Floyd Home Health.
(Id. ¶ 6.) On or about October 1, 2016, Floyd
sold its assets, including Floyd Home Health, to Baptist
Healthcare. (Id. ¶¶ 6-7.) Baptist
Healthcare is a Kentucky corporation with its principle place
of business in Kentucky. (Id. ¶ 8.) Floyd
claims that it did not transact business in Kentucky
sufficient enough to establish the Western District of
Kentucky as proper venue under the Clayton Act.
the issue for the Court to decide is whether Floyd
sufficiently “transacts business” in Kentucky
under the Clayton Act to give rise to proper venue. The term
“transacts business” has been defined to mean the
practical everyday business or commercial concept of doing or
carrying on business of any substantial character.
United States v. Scophony Corporation, 333 U.S. 795,
807-08 (1948) (emphasis added). And, “[w]hile the
phrase ‘transacts business' in the venue provision
of the statute (15 U.S.C.A. § 22) has been held to have
the broadest connotation of all the antitrust statutes for
venue purposes, still it embraces elements of substantiality
of business done, with continuity in character, regularity,
contemporaneousness with time of service, and not looking
toward cessation of business. Commonwealth Edison Co. v.
Federal Pacific Electric Co., 208 F.Supp. 936, 940 (N.D.
Ill.1962) (citing Scophony, 333 U.S. at 816).
However, “[t]he Court should look for ‘tangible
manifestations of doing business' in the District, such
as the presence of officers, employees, agents, offices,
ownership of property, maintenance of corporate records or
bank accounts.” Id. (quoting Caribe
Trailer Sys., Inc. v. Puerto Rico Mar. Shipping Auth.,
475 F.Supp. 711, 716 (D.D.C. 1979), aff'd, No.
79-1658, 1980 WL 130478 (D.C. Cir. July 3, 1980)). None of
these traditional markers of transacting business are present
in this case. Instead, Plaintiff alleges that proper venue
lies here because Floyd sold all of its assets to a Kentucky
corporation, Floyd treated Kentucky patients, Floyd employed
Kentucky physicians, and Floyd purchased goods and services
Plaintiff argues that by selling all of its assets to Baptist
Healthcare, a Kentucky corporation, Floyd transacted business
of a substantial quality and character in Kentucky. Floyd
argues that winding up a business is insufficient under the
Clayton Act; and, even if it were, one isolated transaction
is not enough. The Court agrees. First, the Court rejects the
premise that the purchase of assets of an Indiana corporation
by a Kentucky corporation constitutes the doing of business
in Kentucky by the Indiana corporation. Second, Floyd's
sale of assets was an action in an attempt to wind up
Floyd's business. In order for the entity at issue to
transact business, it cannot do so with an eye “toward
cessation of business.” Commonwealth Edison,
208 F.Supp. at 940; see Scophony, 333 U.S. at 816;
C. C. P. Corp. v. Wynn Oil Co., 354 F.Supp. 1275,
1278 (N.D. Ill. 1973). The parties do not dispute that Floyd
wound up its business in October 2016 and was dissolved as of
that date, leaving Baptist Healthcare as the
successor-in-interest. Therefore, Floyd's actions in
winding up its business were not “transacting
business” under the Clayton Act, as Floyd specifically
executed this sale in order to dissolve as a business entity
and cease business affairs. Cf. Ind. Code §
23-18-9-3 (stating that a dissolved corporation can only
carry on business designed to wind up affairs and liquidate
assets); KRS 271B.14-050 (same).
this contact with Kentucky was a single, isolated incident.
One isolated act in the forum state ordinarily will not
support jurisdiction on a “transaction of
business” theory unless the activity was related to the
plaintiff's cause of action. Pac. Tobacco, 338
F.Supp. at 845; see also Daniel v. Am. Bd. of Emergency
Med., 988 F.Supp. 127, 260 (W.D. N.Y. 1997);
Athletes Foot of Delaware, Inc. v. Ralph Libonati
Co., 445 F.Supp. 35, 44 (D. Del. 1977); Stern Fish
Co. v. Century Seafoods, Inc., 254 F.Supp. 151, 153
(E.D. Pa. 1966). The injury here resulted from the allegedly
anti-competitive nature of Floyd's referral system and
interference with its patients' relationships with their
existing home health providers. (Compl. [DN 1] ¶ 1.)
Plaintiff's claim is entirely unrelated to the sale of
Floyd's assests. As such, because the sale was a move
toward cessation of business and an isolated transaction with
the forum, Kentucky, this transaction does little to weigh in
favor of Floyd transacting business within the meaning of the
Plaintiff asserts that Floyd transacted business in Kentucky
because it treated Kentucky patients, employed Kentucky
physicians, and purchased goods and services from Kentucky.
The Court is not convinced that these assertions are
sufficient. First, Floyd treated patients only in Indiana.
Floyd may have treated patients who personally resided in
Kentucky, but Floyd did not treat those patients in Kentucky.
Because Floyd did not treat patients within the confines of
the Commonwealth of Kentucky, it did not “transact
business” in Kentucky for the purposes of Section 12 of
the Clayton Act. Daniel v. Am. Bd. of Emergency
Med., 988 F.Supp. 127, 269-71 (W.D.N.Y. 1997) (finding
venue did not lie in New York as to numerous non-resident
hospitals were under the Clayton Act partly because they did
not treat patients in New York). Additionally, while Floyd
employed some Kentucky residents to work in Indiana, this
does not mean that Floyd transacted business in Kentucky.
Plaintiff has not alleged that these Kentucky physicians
conducted Floyd's business in Kentucky by, for example,
soliciting business, advertising, contracting, or
representing Floyd in any manner inside of Kentucky.
See Commonwealth Edison, 208 F.Supp. at 940
(discussing sales activities); Stern Fish Co., 254
F.Supp. at 153 (discussing advertising). The fact that some
of Floyd's employees resided in Kentucky, without a
showing that they transacted any business in Kentucky, is not
enough to satisfy the standard for Section 12 of the Clayton
Act. See Daniel, 988 F.Supp. at 223, 269-71 (listing
as a factor against finding jurisdiction the non-resident
hospitals lack of employees working in the forum state, and
finding that the fact that out-of-state hospitals had several
physicians, residents, and medical staff from New York did
not establish that hospitals were “doing
business” in New York). Therefore, the Court is
unpersuaded by the Plaintiff's first two rationales.
also relies on the fact that Floyd transacted “business
for goods and services originating in Kentucky and this
Judicial District.” (Compl. [DN 1] ¶ 10.)
Plaintiff neither offers proof of this assertion nor any
details regarding the nature of these sales transactions.
Generally, “[t]he test to be applied is: Does the
defendant transact business of a ‘substantial'
character in this District? The words ‘transact
business' are used in the practical, everyday business or
commercial sense.” United States v. Burlington
Indus., Inc., 247 F.Supp. 185, 187 (S.D.N.Y. 1965)
(citing Scophony, 333 U.S. at 807). With that,
“the amount of the business transacted must be judged
from the “standpoint of the average businessman”
rather than from the perspective of a large
corporation.” Dunham's, Inc., 614 F.Supp.
at 624 (citing In Re Chicken Antitrust Litigation,
407 F.Supp. 1285, 1291 (N.D.Ga. 1975)). These transactions
need not be related to the cause of action asserted unless
the transaction was isolated, in which case it should be
related to the plaintiff's cause of ...