Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00978/USCOURTS-azd-2_10-cv-00978-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Citizenship

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Catherine Dougherty, et al., 

Plaintiffs, 

vs.

Lincare, Inc., a foreign corporation, et al.,

Defendants. _________________________________

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No. CV10-0978 PHX DGC

ORDER

Defendant Lincare Holdings, Inc. (“LHI”) has filed a motion to dismiss for lack of

personal jurisdiction. Doc. 10. For reasons stated below, the Court will grant the motion.

I. Background.

LHI is a Delaware-incorporated holding company that owns 100% of the stock of

Lincare, Inc. (“Lincare”), a Delaware corporation that provides respiratory therapy services

and medical equipment to patients in Arizona and 47 other states. Doc. 1 at 2; Doc. 14 at 3.

Plaintiffs Richard and Catherine Dougherty filed this lawsuit against both LHI and Lincare,

alleging they were injured by the negligent acts or omissions of an employee of Lincare and

asserting claims of negligence, negligent supervision, negligent infliction of emotional

distress, and loss of consortium. Doc. 1-1.

II. Legal Standard.

Plaintiffs bear the burden of establishing personal jurisdiction. See Ziegler v. Indian

River County, 64 F.3d 470, 473 (9th Cir. 1995). Because the Court is resolving the motion

to dismiss before discovery has been conducted and without an evidentiary hearing, plaintiffs

Case 2:10-cv-00978-DGC Document 23 Filed 08/13/10 Page 1 of 5
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“need make only a prima facie showing of jurisdictional facts to withstand the motion.”

Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). That is, plaintiffs “need only

demonstrate facts that if true would support jurisdiction[.]” Id.; see Bancroft & Masters, Inc.

v. Augusta Nat’l Inc., 223 F.3d 1082, 1087 (9th Cir. 2000) (“[T]he prima facie jurisdictional

analysis requires us to accept the plaintiff’s allegations as true.”).

Because no applicable federal statute governing personal jurisdiction exists, Arizona’s

long-arm statute applies to this case. See Terracom v. Valley Nat’l Bank, 49 F.3d 555, 559

(9th Cir. 1995); Ariz. R. Civ. P. 4.2(a). Absent traditional bases for personal jurisdiction

(i.e., physical presence, domicile, and consent) the Due Process Clause requires that

nonresident defendants have certain “minimum contacts” with the forum state such that the

exercise of personal jurisdiction does not offend traditional notions of fair play and

substantial justice. See Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

A court may exercise either “general” or “specific” jurisdiction over a defendant. See

Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414-15 nn.8-9 (1984); Ziegler,

64 F.3d at 473. A court may assert general jurisdiction if the defendant’s activities in the

forum state are substantial or continuous and systematic, even if the cause of action is

unrelated to those activities. Haisten v. Grass Valley Med. Reimbursement Fund, Ltd.,

784 F.2d 1392, 1396 (9th Cir. 1986)). A court may assert specific jurisdiction if (1) the

defendant purposefully availed himself of the privileges of conducting activities in the forum,

thereby invoking the benefits and protections of its laws, or purposely directs conduct at the

forum that has effects in the forum; (2) the claim arises out of the defendant’s forum-related

activities; and (3) the exercise of jurisdiction comports with fair play and substantial justice,

i.e., it is reasonable. See, e.g., Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082,

1086 (9th Cir. 2000) (citing Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 417 (9th Cir.

1997)); Burger King, 471 U.S. at 472-76.

A corporate defendant can be subject to personal jurisdiction due to its own contacts

with the forum state. If a corporation owns a subsidiary, it can also be subject to personal

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jurisdiction based on actions of its subsidiary if certain requirements are met. Under Ninth

Circuit law, a parent-subsidiary relationship, standing alone, is insufficient to establish

personal jurisdiction over the parent company. Doe v. Unocal Corp., 248 F.3d 915, 925 (9th

Cir. 2001). However, “a subsidiary’s contacts may be imputed to the parent company where

the subsidiary is the parent’s alter ego, or where the subsidiary acts as the general agent of

the parent.” Harris Rutsky & Co. Ins. Services, Inc. v. Bell & Clements, Ltd., 328 F.3d 1122,

1134 (9th Cir. 2003); Doe, 248 F.3d at 926. 

III. Analysis.

Plaintiffs do not dispute that LHI has no contacts with Arizona other than through its

subsidiary Lincare. Doc. 14. As a result, the question before the Court is whether LHI, as

the parent of Lincare, is subject to personal jurisdiction based on Lincare’s acts. Plaintiffs

must show either that Lincare is LHI’s alter ego or that Lincare is the general agent of LHI.

Harris Rutsky, 328 F.3d at 1134; Unocal, 248 F.3d at 926. Plaintiffs have failed to make

either showing.

A. Alter Ego.

 For a subsidiary to be considered its parent’s alter ego, “ the plaintiff must make out

a prima facie case ‘(1) that there is such unity of interest and ownership that the separate

personalities of the two entities no longer exist and (2) that failure to disregard their separate

identities would result in fraud or injustice.’” Unocal, 248 F.3d at 926 (quoting AT&T Co.

v. Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th Cir. 1996)). “Underlying both of

these factors is a general presumption in favor of respecting the corporate entity.” Calvert

v. Huckins, 875 F. Supp. 674, 678 (E.D. Cal. 1995).

Plaintiffs argue that because LHI owns 100% of Lincare’s stock and Lincare functions

as LHI’s representative nationwide, there is such a unity of interest and ownership that

separate entities do not exist. Doc. 14 at 7. Plaintiffs argue further that LHI wrongfully uses

Lincare “as a marketing conduit in order to shield itself from liability [for Lincare’s]

activities” and that the separation of the two corporations “is only a device to divert attention

away from the holding company and solely to the subsidiary, which does not control the

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 The only case cited by Plaintiffs is Bellomo v. Pennsylvania Life Co., 488 F. Supp.

744 (S.D.N.Y. 1980). Bellomo merely stands for the proposition that a holding company

which is a mere corporate shell could be subject to personal jurisdiction based on its

subsidiary’s actions. There is no evidence that LHI is a mere corporate shell.

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financial purse strings.” Id. Plaintiffs add the following facts: Lincare and LHI have identical

officers and directors; Lincare and LHI have held themselves out to the public as one

company; LHI has referred to itself as “Lincare” and represented its services as those of

Lincare in correspondence with the Centers for Medicare & Medicaid Services; LHI’s Board

of Directors oversees the risk management process; there are cross-references to LHI on

Lincare’s website, such as direction for correspondence sent to Lincare to be addressed to

LHI; LHI’s corporate office is responsible for Lincare’s executive functions, human

resources, accounting, information systems, marketing and business development, and

acquisitions; and LHI and its subsidiaries report their assets and liabilities as jointly held in

statements filed with the Securities and Exchange Commission. Doc. 14 at 10-12. 

Plaintiffs fail to cite any Ninth Circuit authority showing that these facts, standing

alone or taken together, are sufficient to show a unity of ownership such that regarding LHI

and Lincare as separate entities would result in a fraud or injustice.1

 Id. at 8. Several of

these have been held insufficient by courts in the Ninth Circuit. See, e.g., Harris Rutsky, 328

F.3d at 1135 (“100% control through stock ownership does not by itself make a subsidiary

the alter ego of the parent,” nor does the fact that the companies are run by the same directors

or share an office and staff); Unocal, 248 F.3d at 926, 928 (“references in the parent’s annual

reports to subsidiaries . . . do not establish the existence of an alter ego”; “appropriate

parental involvement includes monitoring of the subsidiary’s performance, supervision of the

subsidiary’s finance and capital budget decisions, and articulation of general policies and

procedures”; “[i]t is entirely appropriate for directors of a parent corporation to serve as

directors of its subsidiary”). Other courts have rejected Plaintiffs’ additional facts, including

the sharing of human resource services and information systems, see Action Manufacturing

Co. v. Simon Wrecking Co., 375 F.Supp.2d 411, 425 (E.D. Pa. 2005) (holding that the

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sharing of services does not show unity between the parent and subsidiary when other

corporate formalities are respected), and the failure to distinguish between a parent and

subsidiary on web pages, see J.L.B. Equities, Inc. v. Ocwen Financial Corp., 131 F.Supp.2d

544, 550 (S.D.N.Y. 2001). Moreover, Plaintiffs have failed to provide any evidence that a

failure to treat LHI and Lincare as a single company would sanction a fraud or promote

injustice. 

B. Agency.

To satisfy the agency exception, the plaintiff must make out a prima facie case that

the subsidiary represents the parent corporation by performing services sufficiently important

to the parent corporation that if it did not have a representative to perform them, the parent

corporation would undertake to perform substantially similar services. Harris Rutsky, 328

F.3d at 1135 (citing Chan v. Society Expeditions, Inc., 39 F.3d 1398, 1405 (9th Cir. 1994)).

Plaintiffs argue that “[t]hrough Lincare, LHI promotes activities in Arizona,” “files reports

jointly with Lincare, and would have to individually act but for the presence of Lincare.”

Doc. 14 at 9-10. But Plaintiffs cite no evidence to support these assertions. Moreover, even

if the Court accepted Plaintiffs’ alleged facts as true, they do not show that Lincare performs

services sufficiently important to LHI that LHI would undertake to perform substantially

similar services if Lincare did not exist. See Harris Rutsky, 328 F.3d at 1135.

IT IS ORDERED that Defendant LHI’s motion to dismiss (Doc. 10) is granted.

DATED this 13th day of August, 2010.

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