Judge: Gail Killefer, Case: 24STCV22054, Date: 2025-03-06 Tentative Ruling
Case Number: 24STCV22054 Hearing Date: March 6, 2025 Dept: 37
HEARING DATE: Thursday March 6, 2025
CASE NUMBER: 24STCV22054
CASE NAME: R&R Surgical Institute v. Luminare Health Benefits, Inc., et al.
MOVING PARTY: Special Appearing Defendant
Luminare Health Benefits, Inc.
OPPOSING PARTY: Plaintiff R&R Surgical
Institute
TRIAL DATE: Not set.
PROOF OF SERVICE: OK
PROCEEDING: Motion to Quash Summons
Due to Lack of Personal Jurisdiction
OPPOSITION: 21 February 2025
REPLY: 27
February 2025
TENTATIVE: The court continues the hearing on Defendant’s
Motion to Quash Summons and grants Plaintiff’s request to conduct
jurisdictional discovery.
Background
On August 28, 2024, R&R
Surgical Institute (“Plaintiff”) filed a Complaint against Luminare Health
Benefits, Inc. (“Luminare”); Plasma Technology Incorporated (“PTI”)
(collectively “Defendants”); and Does 1 to 100.
The First Amended Complaint
(“FAC”), filed January 14, 2025, alleges four causes of action: (1) Account Stated, (2) Unfair Competition
(Violation of Health & Safety Code § 1371 and Claims Settlement Practices
Under 28 C.C.R § 1300.71); (3) Violation of Penal Code §§ 484, 487, and 496;
and (4) Breach of Warranty.
Defendant Luminare now moves to
quash the service of summons due to lack of personal jurisdiction. Plaintiff
opposed the Motion. The matter is now before the court.
I. Legal Standard
CCP § 418.10(a) states: “A defendant, on or before the last
day of his or her time to plead or within any further time that the court may
for good cause allow, may serve or file a motion…[t]o quash service of summon
on the ground of lack of jurisdiction of the court over him or her.”¿¿¿¿¿¿
¿¿
When a defendant moves to quash service of process on
jurisdictional grounds, the plaintiff has the initial burden of demonstrating
facts justifying the exercise of jurisdiction.¿(State of Oregon v. Superior
Court (1994) 24 Cal.App.4th 1550, 1557.)¿If the plaintiff meets his or her
burden, the burden shifts to the defendant to demonstrate that the exercise of
jurisdiction would be unreasonable. (Buchanan v. Soto (2015) 241
Cal.App.4th 1353, 1362. [“When a motion to quash is properly brought, the
burden of proof is placed upon the plaintiff to establish the facts of
jurisdiction by a preponderance of the evidence.”].) This burden must be met by
competent evidence in affidavits and authenticated documentary evidence. (Jewish
Defense Org. v. Superior Court¿(1999) 72 Cal.App.4th 1045, 1055.) To
comport with the constitutional requirements of due process, a California court
may assert jurisdiction over a nonresident defendant (who has not consented to
suit in the forum) only if the defendant's minimum contacts with the
forum state are ‘such that the maintenance of the suit ‘does not offend the
traditional notions of fair play and substantial justice.” ‘ [Citation.]” (Rivelli
v. Hemm (2021) 67 Cal.App.5th 380, 391 [internal citation and quotations
omitted] [italics original].) “Personal jurisdiction under the minimum contacts
framework may be either all-purpose (also called ‘general’ ) or case-linked
(also called ‘specific’ ).” (Id. at p. 392 [internal citations and
quotations omitted].)
II. Discussion
A. Factual Summary
The FAC alleges that Defendants “by
words or conduct, agreed to pay the amount of $235,306.22” for medical services
pursuant to an Evidence of Payment (“EOP”). (FAC, ¶¶ 1, 14.) “Defendants paid
$4,100.70 only and still owe the difference of $231,205.52.” (Id. ¶ 16.)
Plaintiff filed this action to recover payment and prejudgment interest.
Defendant Luminare moves to quash
the service of summons on the basis that the court lacks personal jurisdiction.
B. Plaintiff’s Burden to Prove
Personal Jurisdiction¿
In opposition to a motion to quash
based upon lack of personal jurisdiction, complainants have the initial burden
of filing evidence to show minimum contacts. (See Muckle v. Superior Court (2002)
102 Cal.App.4th 218, 228.) “It is plaintiff's burden to prove facts of
jurisdiction by a preponderance of evidence.” (Cornelison v. Chaney
(1976) 16 Cal.3d 143, 155.) “This burden must be met by competent evidence in
affidavits and authenticated documentary evidence. An unverified complaint may
not be considered as an affidavit supplying necessary facts.” (Ziller
Electronics Lab GmbH v. Superior Court¿(1988) 206 Cal.App.3d 1222, 1233.)¿¿
i. No Evidence of General Jurisdiction
General jurisdiction over a
corporation exists when that corporation might be “fairly regarded as at home”
in that state. (Brue v. Shabaab
(2020) 54 Cal.App.5th 578, 590.)
Traditionally, a corporation is “at home” in its place of incorporation
and its principal place of business. (Id.) “But in an exceptional case, a corporation's
operations in a forum other than its formal place of incorporation or principal
place of business may be so substantial and of such a nature as to render the
corporation at home in that state.”¿(Id.) To test that possibility, courts look to a
variety of factors, including “maintenance of offices, the presence of
employees, use of bank accounts and¿marketing or selling products¿in the forum
state, to analyze whether a corporation's contacts render it effectively at
home in that state.” (Id. at
590-591.)
Plaintiff fails to present
evidence Luminare, a Delaware Corporation, is incorporated in California or has
a principal place of business in California. Plaintiff’s only evidence that
Luminare is “at home” in California is that Luminare was served via its
appointed California agent for service of process. (Wentland Decl., ¶ 5, Ex. 4).
Plaintiff also presents evidence that Luminaire registered to do business with
the California Secretary of State under its former name “CoreSource, Inc.” in
1993. (Id. ¶ 6, Ex. 5.) The Statement of Information Corporation filed
with the California Secretary of shows that it maintains a California Office at
“5901 W. CENTURY BLVD., #750 C/O CORPORATE CREATIONS LOS ANGELES, CA 90045” but
the mailing address and principal address is in Lake Forest, Illinois. (Ibid.)
The fact that Luminare has an
agent for service of process in California and is registered to do business in
California is insufficient to show that Luminare is “at home” in California.
(See Gray Line Tours v. Reynolds Electrical & Engineering Co. (1987)
193 Cal.App.3d 190, 193-195
[holding that designation of an
agent for service of process and qualification to do business
in California alone did not constitute grounds for general
jurisdiction]; see also DVI, Inc. v. Superior Court (2002) 104
Cal.App.4th 1080, 1095 [holding that personal jurisdiction did not exist even
though the defendant company registered to do business in California, had a
California agent for service of process, and had two officers residing in
California].)
Without more, the fact that
Luminare maintains one corporate office in California is insufficient to show
that Luminare is at home in California. Plaintiff also fails to provide any
evidence that Luminare and PTI are in an agency relationship or that Luminare
controls PTI such that it is proper for the court to exercise jurisdiction over
Luminare. (See Sonora Diamond Corp. v. Superior Court (2000) 83
Cal.App.4th 523, 540.) Therefore, the fact that PTI is based in California and
has employees in California is insufficient to show that Luminare had “substantial,
continuous, and systematic” contacts in California. (BBA Aviation PLC v.
Superior Court (2010) 190 Cal.App.4th 421, 435.)
Consequently, Plaintiff fails to
show that the court has general jurisdiction over Luminare.
ii. No Evidence of Specific Jurisdiction
“In order for a court to exercise
specific jurisdiction over a claim, there must be an ‘affiliation between the
forum and the underlying controversy, principally, [an] activity or an
occurrence that takes place in the forum State.’ ” (Bristol-Myers Squibb Co.
v. Superior Court (2017) 582 U.S. 255, 264, quoting Goodyear Dunlop
Tires Operations, S.A. v. Brown (2011) 564 U.S. 915, 919, 131.) “Generally,
three requirements must be satisfied for a California court to exercise
specific jurisdiction over a nonresident defendant: (1) the defendant must
purposefully avail themselves of forum benefits; (2) the controversy must be
related to or arise out of the defendant's forum contacts; and (3) the
assertion of personal jurisdiction must comport with fair play and substantial
justice.” (ParaFi Digital Opportunities LP v. Egorov (2025) 108
Cal.App.5th 124, 134.) For specific jurisdiction, “courts consider the
relationship among the defendant, the forum and the litigation.” (Snowey v.
Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062.)
a. Purposeful Availment
“‘The purposeful availment inquiry
... focuses on the defendant's intentionality. [Citation.] This prong is only
satisfied when the defendant purposefully and voluntarily directs his [or her]
activities toward the forum so that he [or she] should expect, by virtue of the
benefit he [or she] receives, to be subject to the court's jurisdiction based
on’ his [or her] contacts with the forum. [Citation.] Thus, the ‘“purposeful
availment” requirement ensures that a defendant will not be haled into a
jurisdiction solely as a result of “random,” “fortuitous,” or “attenuated”
contacts [citations], or of the “unilateral activity of another party or a
third person.” ’ ” (Pavlovich v. Superior Court (2002) 29 Cal.4th 262,
269.)
Plaintiff relies two cases where courts
have found that purposeful availment exists where a health plan has agreed to
insure out-of-state patients. In Hirsch v. Blue Cross, Blue Shield of Kansas
City (9th Cir.1986) 800 F.2d 1474, the Ninth Circuit found there was
specific jurisdiction because “Blue Cross entered into an agreement to provide
health care coverage to all Southwest employees that did not contain a
geographical exclusion, nor did it restrict participation to employees as of
the Agreement's execution date.” (Id. at p. 1476.) Accordingly, when a
Southwest employee located in California sued Blue Cross for breach of contract
and bad faith, the Ninth Circuit found that there was specific jurisdiction
because “Blue Cross freely negotiated the Enrollment Agreement with Southwest,
to cover all of its employees, knowing that Southwest employed people
nationwide.” (Id. at p. 1480.)
“[W]hen Southwest hired Terrance Hirsch, he
filled out a membership application, which became part of the Southwest-Blue
Cross contract. He sent the application from California, using a California
address, and received a Blue Cross card at his residence in the forum state. (Hirsch,
supra, 8000 F.2d at p. 1480.) “Blue Cross, through its own actions
in agreeing to provide coverage to Southwest and its California employee,
Terrance Hirsch, created a continuing obligation to them, and a substantial
connection with California.” (Ibid. [italics original].) “Blue Cross, by
voluntarily and knowingly obligating itself to provide health care coverage to
Southwest's California employees, in exchange for premiums partly derived from
premiums paid by California residents, purposefully availed itself of the
benefits and protections of that forum.” (Ibid.)
Unlike Blue Cross in Hirsch,
Luminare is not an insurer but a “claims processor for employer-sponsored
health plans across the country.” (Ocampo Decl., ¶ 4.) Luminare’s client is not
Plaintiff but PTI. (Id. ¶ 5.) PTI “sponsors and funds the Plasma
Technology Incorporated Employee Benefit Plan for its employees and their
dependents (the ‘Plan’).” (Id. ¶ 5, Ex. 1 [Plan Document and Summary
Plan Description].) Accordingly, Luminare is also the claims processor for the Plan
but “does not sponsor or fund the Plan” and “pays benefits claims using the
Plan funds.” (Id. ¶ 6.) Plaintiff fails to show that Plaintiff and
Luminare have a contractual relationship like the parties in Hirsch such
that Luminare created a continuing obligation to Plaintiff and that
Luminare had “a substantial connection with California” to enable the court to
find that purposeful availment exists. (Hirsch, supra, 800 F.2d at
p. 1480.) Plaintiff also fails to show that it paid Luminaire for its services
or that the claims processing occurred in California.
In Santa Barbara Cottage
Hospital v. Global Excel Management, Inc. (C.D. Cal., Jan. 28, 2020, No.
2:19-CV-08546-RGK-SS) 2020 WL 2510684, the District Court found purposeful availment because “Global Excel has
purposefully availed itself of the privilege of doing business in California by
establishing business relationships with hospital networks in California,
directing its insureds to those hospitals, and managing the claims that result
from the patients’ treatment there.” (Id. at *3.) Here, Plaintiff offers
no evidence that Luminare manages the health plan at issue, established business
relationships with California businesses to provide services, directed its insured
to seek services in California, and managed the insurance claims from patients who
sought treatment in California.
In Elkman v. National States
Ins. Co. (2009) 173 Cal.App.4th 1305, the appellate court found that “a
nonresident insurer does not subject itself to personal jurisdiction in a forum
state merely by accepting premium payments sent from the forum state and by
processing and paying claims submitted by its insureds for treatment rendered
in the forum state.” (Id. at p. 318.) Luminare also cites Healthcare
Ally Management of California, LLC v. Blue Cross Blue Shield of Minnesota
(9th Cir. 2019) 787 Fed.Appx. 417 for the proposition that plan administrators
who are not insurers have “merely ‘attenuated’ connections” with the forum
state and “are insufficient evidence of purposeful availment.” (Id. at
p. 418.) Defendants also assert that it did not purposefully avail itself of
business in California because as the claims processor for PTI it “lack[s] of
control over who becomes a member of the Plan and where those members seek
services” such that “[t]he Court cannot base jurisdiction on the unilateral
activity of another who decides to seek services in California.” (Beverly
Hills Regional Surgery Center, L.P. v. Group Hospitalization and Medical
Services, Inc. (C.D. Cal., June 3, 2022, No. CV2201217RSWLMRWX) 2022 WL
1909550, at *5.)
While Defendant asserts that the
“Plan Document” is subject to California law under the Knox-Keene Act, Luminare
points out that the Plan is a self-funded ERISA Plan not subject to the
Knox-Keene Act. (Ocampo Decl., ¶ 5, Ex. 1 at p. 4.) “We hold that ERISA
preempts California's Knox-Keene Act to the extent that Knox-Keene seeks to
regulate ERISA-covered employee benefit plans.” (Hewlett-Packard Co. v.
Barnes (9th Cir. 1978) 571 F.2d 502, 505; Drummond v. McDonald Corp.
(1985) 167 Cal.App.3d 428, 432 [accord].) Hence, Plaintiff fails to show that
California law applies.
The court finds that Plaintiff
fails to show that Luminare purposefully targeted Plaintiff and other
California residents when it agreed to be the claims processor for Plaintiff’s
insurance plan. Thus, there is no evidence of purposeful availment.
b. Arising Out of Forum-Related Activities
“To assert specific jurisdiction
in California over a nonresident company it is necessary that the controversy
relate to or arise out of the company's contacts with California.” (West
Corp. v. Superior Court (2004) 116 Cal.App.4th 1167, 1177.)
Plaintiff fails to show that
Luminare contracted with Plaintiff. Moreover, PTI and Luminare are separate
corporate entities. Plaintiff cannot rely on PTI’s conduct to assert that this
action arose out of Luminare’s contacts with the forum state. The fact Luminare
contracted with PTI to process its claims is not sufficient to show that this
action arose from Luminare’s contacts with California. Plaintiff also fails to
cite case law holding that a defendant’s contacts with a third party are
sufficient for the forum state to exercise specific jurisdiction.
Accordingly, Plaintiff fails to
show that this action arouse out of Luminare’s activities with California.
c. Fair Play and Substantial Justice
“Courts may evaluate the burden on
the defendant of appearing in the forum, the forum state's interest in
adjudicating the claim, the plaintiff's interest in convenient and effective
relief within the forum, judicial economy, and ‘the shared interest of the
several States in furthering fundamental substantive social policies.’” (Vons
Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 446 quoting (Burger
King Corp. v. Rudzewicz (1985) 471 U.S. 462, 476.) “An otherwise valid
exercise of personal jurisdiction ‘is presumed to be reasonable.’¿[Citation.]
Therefore, defendant ‘must present a compelling case that the presence of some
other considerations would render jurisdiction unreasonable. Most such considerations
usually may be accommodated through means short of finding jurisdiction
unconstitutional.’” (Integral Development Corp. v. Weissenbach (2002) 99
Cal.App.4th 576, 591 quoting Burger King Corp., at p. 477.)¿¿
“‘Minimum contacts exist where the
defendant's conduct in the forum state is such that he should reasonably
anticipate being subject to suit there, and it is reasonable and fair to force
him to do so.’” (Rivelli, supra, 67 Cal.App.5th at p. 391.) “Even
if minimum contacts are present, an assertion of jurisdiction by California
over a nonresident company is improper if it would not comport with fair play
and substantial justice.” (West Corp., supra, 116 Cal.App.4th at
p. 1178.) As Plaintiff has failed to establish minimum contacts, the court finds
it would offend traditional notions of fair play and substantial justice to require
Luminare to defend this action in California.
Therefore, the court in inclined
to grant Luminare’s motion to quash the service of summons.
C. Jurisdictional Discovery
Plaintiff requests leave to
conduct jurisdictional discovery to “establish the nature and extent of the
defendant's ‘contacts’ in California” via health plans and providers such as “Aetna
Health, Aetna Dental, Sutter Health, CVS/Caremark, and likely others.” (Opp. at
pp. 8-9.) Plaintiff also wanted to discover if Luminare consented to
jurisdiction via its agreement with PTI to process its claims.
“In order to prevail on a motion
for a continuance for jurisdictional discovery, the plaintiff should
demonstrate that discovery is likely to lead to the production of evidence of
facts establishing jurisdiction.” (In re Automobile Antitrust Cases I &
II (2005) 135 Cal.App.4th 100, 127.) Even if Plaintiff shows that Luminare
contracted with various California health plans as their claims processor, Plaintiff
fails to show this connection is sufficient to show purposeful availment and
that this action arose out of Luminare’s activities with California.
Luminare also asserts that even if
there is forum selection clause in Luminare and PTI’s agreement that disputes
would be litigated in California, the clause would only apply to disputes
between PTI and Luminare. Plaintiff fails to cite case law holding that a forum
selection clause between two parties can be interpreted as consent to
jurisdiction in a specific forum when the dispute involves said one of the
parties and a third party. Here, no breach of contract claim is raised, nor
does Plaintiff assert it is a third-party beneficiary with standing to enforce
the agreement between Luminare and PTI.
“A ruling on a motion to continue in order to
allow additional time to discover jurisdictional facts lies in the trial
court's discretion.” (In re
Automobile Antitrust Cases I & II, supra, 135 Cal.App.4th at p. 100.) In
the interest of justice, the court will allow Plaintiff to conduct written
discovery on the issue of jurisdiction and will permit the Plaintiff to file a
supplemental brief stating what facts and evidence exist that would permit the
court to exercise specific jurisdiction over the Luminare.
The hearing is continued.
Conclusion
The court continues the hearing on
Defendant’s Motion to Quash Summons and grants Plaintiff’s request to conduct
jurisdictional discovery.