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Pharmerica Corp. v. Advanced Healthcare Solutions

April 5, 2010

PHARMERICA CORP., PHARMERICA LONG TERM CARE, INC., PHARMERICA MOUNTAIN, INC., AND THE PHARMACY CORPORATION OF AMERICA, PLAINTIFFS,
v.
ADVANCED HEALTHCARE SOLUTIONS, LLC., ANDREW S. LENICK, MEDWISE GPO, INC., AND C. SCOTT RUSSELL, DEFENDANTS.



The opinion of the court was delivered by: Virginia M. Kendall United States District Court Judge Northern District of Illinois

Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiffs PharMerica Corporation, PharMerica Long Term Care, Inc., PharMerica Mountain, Inc., and the Pharmacy Corporation of America (collectively "PharMerica") filed suit against Defendants Advanced Healthcare Solutions, LLC ("AHS"), Andrew S. Lenick ("Lenick"), Medwise GPO, Inc. ("Medwise"), and C. Scott Russell ("Russell") (collectively "Defendants"). PharMerica alleges that the Defendants tortiously interfered with its contractual relationships with certain healthcare facilities. Defendants have moved to dismiss PharMerica's Complaint for lack of personal jurisdiction and failure to state a claim upon which relief may be granted, or alternatively to transfer this action to the United States District Court for the District of Arizona pursuant to 28 U.S.C. § 1404(a). Andrew S. Lenick and Advanced Healthcare Solutions were not initially served, but now move to join the other Defendants in the present Motion. The Court grants the Motion to Join in the Motion to Dismiss; however, for the reasons stated below, Defendants' Motion to Dismiss or Transfer Venue is denied.

STATEMENT OF FACTS

The following facts are taken from PharMerica's Complaint and are assumed to be true for purposes of this Motion to Dismiss. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). The Plaintiffs are Delaware and California corporations is in the business of supplying institutional healthcare facilities with pharmaceuticals and pharmacy and consulting services, with their principal place of business in Louisville, Kentucky. (Compl. ¶ 2.) Defendants AHS and Medwise are Arizona corporations that provide consulting and billing services for long-term care facilities. (Compl. ¶¶ 4, 6.) Lenick is the President of AHS. (Compl. ¶ 5.) Russell is the sole director and principal shareholder of Medwise and a former PharMerica General Manager. (Compl. ¶ 7.)

This suit arises from two contracts (the "Agreements") between PharMerica and certain of its customers, which provided for the supply of prescription drugs, pharmacy supplies and consulting services. Compl. ¶ 15.) On December 14, 2007, CRSA Management, LLC ("CRSA") entered into an agreement with PharMerica for the provision of supplies and services to a facility in Bartlett, Illinois (Compl. ¶¶ 3, 13.) On October 10, 2005, the Village of Germantown, Inc., a Tennessee healthcare facility managed by CRSA, entered into an agreement with PharMerica relating to the Germantown facility. (Compl. ¶¶ 3, 14.) Subsequently, both CRSA and the Village of Germantown issued notices to terminate the Agreements. (Compl. ¶¶ 16-18.) The terminations did not comply with contractual provisions, resulting in a breach of the terms and conditions of the Agreements. (Compl. ¶ 22.)

PharMerica alleges that the Defendants knowingly induced CRSA to terminate and breach the Agreements by offering CRSA reductions in the price of goods and services, and that CSRA acted in reliance on these statements. (Compl. ¶ 19.) PharMerica also alleges that the Defendants interfered with other agreements, advising certain of PharMerica's other customers to breach their agreements, although those customers did not breach their contracts with PharMerica. (Compl. ¶ 26.) Finally, PharMerica alleges that the Defendants convinced other PharMerica customers, located in California and Arizona, not to continue their agreements, although the contracts with those customers were not breached. (Compl. ¶ 27.) PharMerica alleges that it suffered damages due to loss of payments on services provided and for services that would have come due. (Compl. ¶ 33.)

DISCUSSION

I. Defendants' Motion to Dismiss for Lack of Personal Jurisdiction

In reviewing a motion to dismiss for lack of personal jurisdiction, the Court accepts all well-pleaded factual allegations in the Complaint as true unless controverted by affidavits outside the pleadings, which the Court may consider. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003); Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). Factual disputes are construed in the plaintiff's favor. See Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996). When a defendant challenges the court's exercise of personal jurisdiction, the plaintiff bears the burden of demonstrating that personal jurisdiction exists. See Jennings v. AC Hydraulic A/S,383 F.3d 546, 548 (7th Cir. 2004). Where, as here, the Court decides a motion challenging jurisdiction on the basis of written submissions, the plaintiff "need only make out a prima facie case of personal jurisdiction." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002).

A federal court sitting in diversity jurisdiction, as is the case here, has personal jurisdiction only if a court in the state in which it sits would have jurisdiction. See RAR, Inc. v. Turner Diesel, Ltd.,107 F.3d 1272, 1275 (7th Cir. 1997). "[A] federal court borrowing a state jurisdictional statute may acquire personal jurisdiction only to the extent that the state law authorizes service of process." Hyatt Int'l.,302 F.3d at 713. The Illinois long arm statute that governs here permits the exercise of jurisdiction "on any basis permitted by the Illinois and United States constitutions." See 735 ILCS 5/2-209(c). Although the due process provisions of the Illinois and United States Constitutions are not identical, "there is no operative difference between the limits imposed by the Illinois Constitution and the federal limitations on personal jurisdiction." Hyatt Int'l., 302 F.3d at 715.

Personal jurisdiction is proper, therefore, only if the defendant has "minimum contacts" with the forum state "such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington,326 U.S. 310, 316 (1945). Personal jurisdiction may be either general or specific. See Helicopteros Nationales de Columbia v. Hall, 466 U.S. 408, 414 (1984). In this case, PharMerica argues that the Court has specific jurisdiction over the Defendants.

Specific jurisdiction allows the Court to exercise jurisdiction over a defendant whose contacts with the forum state are limited, as long as those contacts are of a nature and quality as to give the defendant fair warning that he could be required to defend a suit there. See Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985); Central States, Se. & Sw. Areas Pension Fund. v. Reimar Express World Corp.,230 F.3d 934, 943 (7th Cir. 2000). In determining whether specific jurisdiction exists over an out-of-state defendant, the Court must determine whether the minimum contacts between the defendant and the forum state demonstrate that the defendant "purposefully availed itself of the privilege of conducting activities" in the forum state such that it "should reasonably anticipate being haled into court" there. RAR, 107 F.3d at 1277. The Court focuses on "the relationship among the defendant, the forum, and the litigation." Heritage House Rests., Inc. v. Cont'l Funding Group, Inc.,906 F.2d 276, 283 (7th Cir. 1990). The main factor in the minimum contacts analysis is not physical presence in the forum state but rather "foreseeability." Id.

In this case, PharMerica alleges that the Defendants, when they induced CRSA to breach their agreement for the Illinois Clare Oaks facility, should have reasonably anticipated being haled into court in Illinois to answer for the effects of their conduct. The "effects doctrine" allows courts to exercise personal jurisdiction over a nonresident defendant when the defendant's intentional tortious actions aimed at the forum state cause harm to plaintiff in the forum state, on the grounds that the defendant's actions with respect to the forum state constitute fair warning of potential liability in the courts of that state. See Calder v. Jones, 465 U.S. 783, 788-90 (1984). The doctrine permits the state in which the injury ...


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