Rodriguez-Rivera v. Allscripts HC Sol., Inc. ( 2022 )

United States Court of Appeals
For the First Circuit
No. 20-1936
DR. JUAN M. RODRIGUEZ-RIVERA, d/b/a "Centro Reumatologico Dr.
Juan Rodriguez",
Plaintiff, Appellant,
v.
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.; ALLSCRIPTS HEALTHCARE,
LLC,
Defendants, Appellees,
HEALTHCARE DATA SOLUTIONS, LLC, a/k/a HDSOSF, LLC; INSURANCE
COMPANIES A, B, and C; JOHN DOE; RICHARD ROE,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Daniel R. Domínguez, U.S. District Judge]
Before
Thompson, Lipez, and Gelpí,
Circuit Judges.
José Luis Ubarri-García, with whom Francisco L. Charles-
Gómez, Charles Gómez Law Office, LLC, Jorge Luis Guerrero-
Calderón, Ubarri & Román Law Office, and Melvin Rosario-Rodríguez,
were on brief, for appellant.
Salvador J. Antonetti-Stutts, with whom Mark L. Durbin, Scott
T. Peloza, Barnes & Thornburg LLP, Alfredo Ramírez-Macdonald, Aura
A. Montes-Rodríguez, Ricardo J. Casellas, and O'Neill & Borges
LLC, were on brief, for appellees.
July 19, 2022
THOMPSON, Circuit Judge. After electronic patient
records from his medical practice were destroyed, Dr. Juan M.
Rodríguez-Rivera ("Rodríguez") says he was left with substantial
damages to both himself and his practice. So he sued (among
others) Allscripts Healthcare Solutions, Inc. ("AHS") and
Allscripts Healthcare, LLC ("Allscripts") in Puerto Rico federal
court, bringing a whole host of claims. In response, AHS and
Allscripts moved to dismiss, claiming the Puerto Rico court lacked
personal jurisdiction over them, pushing for the dispute to be
arbitrated based on a supposed agreement Rodríguez made to do so,
and contending that Rodríguez's complaint failed to state a claim
on the merits. The district court agreed on all points, dismissing
the case in its entirety, with prejudice. We have a different
take on most of this. So, as we'll soon explain, we affirm (with
modification) the dismissal of AHS on personal-jurisdiction
grounds but vacate and remand for further proceedings as to
Allscripts.
I. The Backdrop
We begin by setting the stage. Rodríguez is a licensed
physician in Puerto Rico specializing in rheumatology.1 As a
physician, he has to keep medical records. Around 2009, in order
1 His practice goes by the name Centro Reumatológico de
Bayamón Dr. Juan M. Rodríguez, but we use Rodríguez to encompass
both the person and the practice.
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to comply with patient data security rules out of the Health
Insurance Portability and Accountability Act of 1996 (which we
know as HIPAA), Pub. L. No. 104-191, 110 Stat. 1936, Rodríguez
purchased the product MyWay to store, manage, and protect the
electronic medical records of his patients. That electronic
version of a patient's medical record is called an Electronic
Health Record, or "EHR" for short. Usually, those EHRs are held
on the technology provider's -- not the physician's -- electronic
servers.
Enter stage the defendants Allscripts and AHS.
Allscripts is a North Carolina limited liability company with its
principal place of business in Chicago. Allscripts is indirectly
owned by AHS, a holding company which itself is a Delaware
corporation also with its principal offices in Chicago (though AHS
itself does not manufacture, market, or sell any goods or
services). Allscripts provides, among other things, practice
management and EHR technology to healthcare providers.
Allscripts' MyWay product is an EHR- and practice-management
software designed to help physicians' practices. Allscripts'
MyWay EHRs are stored on a server owned by Allscripts.
Rodríguez was introduced to Allscripts' MyWay software
through NovatekPR, an authorized third-party reseller. After
setting things up in 2009, Rodríguez's patients' EHRs were stored
with Allscripts' MyWay service uneventfully for several years.
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That began to change in 2016. In September of that year,
Allscripts informed Rodríguez by email that it was discontinuing
support for MyWay and would soon be providing support exclusively
for its new system, Professional EHR, effective at the end of
October 2017. Not wishing to join Allscripts' new product,
Rodríguez decided to migrate his patients' EHRs to Aprima, a
competitor of Allscripts. In early February 2017, in response to
an inquiry from Aprima regarding the necessary steps to accomplish
Rodríguez's EHR data migration, Allscripts informed Aprima that it
was unable to provide Rodríguez's EHR data. Days later, Allscripts
emailed Rodríguez informing him that "Allscripts no longer has
your patient data. It was destroyed because we no longer had an
existing [Business Associates Agreement] with your practice. Your
practice was a subaccount of Novatek, a MyWay partner. . . . The
Novatek account was sent to collections in 2014 and for whom
maintenance was terminated."
Distraught over his now-missing EHRs, Rodríguez filed
the instant suit against AHS and Healthcare Data Solutions, LLC
(as well as unnamed insurance companies) alleging negligence,
gross negligence and liabilities, and mail and wire fraud.
Rodríguez amended his complaint three times, with his third amended
complaint adding Allscripts as a defendant and alleging eight
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counts: breach of contract, negligence, dolo2, fraud, mail and
wire fraud, breach of implied warranty, unjust enrichment, and
temerity.
Allscripts and AHS initially moved to dismiss for lack
of personal jurisdiction and failure to state a claim, but the
district court denied that motion without prejudice pending the
outcome of jurisdictional discovery that it ordered. The court
ordered Rodríguez to produce his contract with Novatek for the
purchase and use of MyWay, as counsel for Rodríguez had previously
indicated that the document was in counsel's possession. In
response, Rodríguez submitted an unsworn statement by Novatek's
former president, Luis Carmoega, who declared that the contract
was lost or destroyed during Hurricane Maria. The court found
that the proper remedy for the discovery-production controversy
was for AHS and Allscripts to depose Carmoega. And at deposition,
Carmoega repeated his earlier statement: He did not have any copy
of the contract.
2 A creature of Puerto Rico contract law, dolo constitutes
"deceit when by words or insidious machinations on the part of one
of the contracting parties the other is induced to execute a
contract which without them he would not have made." Feliciano-
Muñoz v. Rebarber-Ocasio, 970 F.3d 53, 62 (1st Cir. 2020) (quoting
P.R. Laws Ann. tit. 31, § 3408). Dolo is a specific type of fraud
"that affects a contracting party." Portugues-Santana v. Rekomdiv
Int'l, 657 F.3d 56, 60 (1st Cir. 2011); see also Est. of Berganzo-
Colon ex rel. Berganzo v. Ambush, 704 F.3d 33, 39 (1st Cir. 2013)
(setting forth dolo elements).
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In response, AHS and Allscripts produced an End User
License Agreement ("EULA")3 that provided the terms and conditions
of the use of the MyWay software. The EULA contained an
arbitration clause requiring any claim arising out of the contract
to be settled by binding arbitration held in Raleigh, North
Carolina and applying North Carolina law. Carmoega confirmed that
his initials appear on each page of the EULA, which is dated
December 2008. He testified that it was standard practice to make
sure his clients agreed to the EULA and thus Rodríguez "must have"
signed the EULA. But, Carmoega said, he did not have a copy of
Rodríguez's signed EULA from the sale in 2009.
After that revelation, AHS and Allscripts filed renewed
motions to dismiss Rodríguez's complaint for: (1) lack of personal
jurisdiction; (2) improper venue (citing the arbitration
agreement); and (3) failure to state a claim upon which relief can
be granted. The district court granted the motion, finding the
disputes should be arbitrated, that it lacked personal
jurisdiction over both Allscripts and AHS, and that Rodríguez's
3An EULA, also sometimes called a "Terms of Use" policy, is
a type of contract that has become "a standard practice for
producers of digital goods to include" with their products. Erik
Bauman, Note, The Nexus Analysis: License Enforcement in the Wake
of MDY v. Blizzard, 27 Berkeley Tech. L.J. 503, 503, 507 (2012).
Generally, EULAs "lay[] out the terms and conditions of the
license," defining certain items such as the copies a user can
make, transfer rights, restrictions on use of the software, and
other obligations of the parties (i.e., the end user and the
software's creator or owner). Id.- 7 -
complaint failed as a matter of law. Rodríguez's timely appeal
followed, and that's where our work comes in.
II. Personal Jurisdiction
We begin with the district court's conclusion that it
lacked personal jurisdiction over both Allscripts and AHS.
In reaching its jurisdictional determination, the
district court employed the prima facie method -- meaning the
district court did not hold an evidentiary hearing and instead
considered only "whether [Rodríguez] has proffered evidence which,
if credited, is sufficient to support findings of all facts
essential to personal jurisdiction." Phillips v. Prairie Eye Ctr.,
530 F.3d 22, 26 (1st Cir. 2008). Under the prima facie approach,
typically used at the early stages of litigation, "'the district
court acts not as a factfinder, but as a data collector.'" Chen
v. U.S. Sports Acad., Inc., 956 F.3d 45, 51 (1st Cir. 2020)
(internal citation omitted) (quoting Foster-Miller, Inc. v.
Babcock & Wilcox Can., 46 F.3d 138, 145 (1st Cir. 1995)). Where,
as here, a district court dismisses a case for lack of personal
jurisdiction based on the prima facie record, our review is de
novo. Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc.,
825 F.3d 28, 34 (1st Cir. 2016). In conducting this de novo
review, we draw the relevant facts "from the pleadings and whatever
supplemental filings (such as affidavits) are contained in the
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record, giving credence to the plaintiff's version of genuinely
contested facts." Id."In determining whether a non-resident defendant is
subject to its jurisdiction, a federal court exercising diversity
jurisdiction," like we do here, "'is the functional equivalent of
a state court sitting in the forum state.'" Sawtelle v. Farrell,
70 F.3d 1381, 1387 (1st Cir. 1995) (quoting Ticketmaster-N.Y.,
Inc. v. Alioto, 26 F.3d 201, 204 (1st Cir. 1994)). Therefore, to
establish personal jurisdiction over AHS and Allscripts, Rodríguez
must meet the requirements of both the Puerto Rico long-arm statute
and the Due Process clause of the Fourteenth Amendment. Negrón-
Torres v. Verizon Commc'ns, Inc., 478 F.3d 19, 24 (1st Cir. 2007).
Because Puerto Rico's long-arm statute is coextensive with the
outer limits of the Constitution, we march directly to the
constitutional inquiry. Id.Under the Due Process clause, a nonresident defendant
may be subjected to jurisdiction within a forum only if she has
"certain minimum contacts with it such that the maintenance of the
suit does not offend 'traditional notions of fair play and
substantial justice.'" Int'l Shoe Co. v. Wash. Off. Unemployment
Comp. & Placement, 326 U.S. 310, 316 (1945) (quoting Milliken v.
Meyer, 311 U.S. 457, 463 (1940)). For specific personal
jurisdiction, the constitutional analysis has three distinct
prongs: (1) relatedness; (2) purposeful availment; and (3)
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reasonableness. Daynard v. Ness, Motley, Loadholt, Richardson &
Poole, P.A., 290 F.3d 42, 60 (1st Cir. 2002).4 We take each in
turn, keeping in mind that Rodríguez bears the burden of
demonstrating that all three prongs are satisfied here. A Corp.
v. All Am. Plumbing, Inc., 812 F.3d 54, 59 (1st Cir. 2016).
1. Relatedness
To satisfy the relatedness prong, Rodríguez must show a
nexus between his claim and the defendants' forum-based
activities. Id. That means that "[t]he plaintiff's claims . . .
'must arise out of or relate to the defendant's contacts' with the
forum." Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct.
1017, 1025 (2021) (quoting Bristol-Myers Squibb Co. v. Superior
Ct., 137 S. Ct. 1773, 1780 (2017)).
AHS. First in line is the relatedness of this suit to
AHS's Puerto Rico contacts. As we flagged earlier, AHS is a
holding company and an indirect parent of Allscripts. But AHS
itself does not manufacture, market, or sell any goods or services.
Nor, we add, does AHS apparently have any contacts with Puerto
Rico. Below, one of AHS's employees declared that AHS has never
had any offices, real property, employees, officers, or bank
4 Because Rodríguez trains his appellate arguments only on
whether there was specific personal jurisdiction, we do not
consider any potential general-personal-jurisdiction arguments.
See Rodríguez v. Mun. of San Juan, 659 F.3d 168, 175 (1st Cir.
2011) (claims not made are waived).
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accounts in Puerto Rico, nor has it ever been licensed to do
business there.
Although Rodríguez does not dispute any of these facts,
he nonetheless fails to acknowledge any distinction between AHS
and Allscripts in his jurisdictional arguments.5 Yet, generally,
the jurisdictional contacts of a subsidiary corporation are not
imputed to its parent. De Castro v. Sanifill, Inc., 198 F.3d 282,
283-84 (1st Cir. 1999). "The mere fact that a subsidiary company
does business within a state does not confer jurisdiction over its
nonresident parent, even if the parent is the sole owner of the
subsidiary." Escude Cruz v. Ortho Pharm. Corp., 619 F.2d 902, 905
(1st Cir. 1980). To establish jurisdiction over a parent company,
under Puerto Rico law, a plaintiff "must produce 'strong and
robust' evidence of control by the parent company over the
subsidiary, rendering the latter a 'mere shell.'" De Castro, 198
F.3d at 283-84 (quoting Escude Cruz, 619 F.2d at 905); see also
Speedway Motorsports Int'l Ltd. v. Bronwen Energy Trading, Ltd.,
5 Rodríguez argues that it is "mind-boggling" to say that he
doesn't make a proper distinction and separate jurisdictional
analysis regarding each defendant, yet the defendants' counsel
referred to "Allscripts" as one single monolithic entity
(including both Allscripts and AHS) before the district court. It
is true that defendants' counsel often did this, but counsel also
made clear that they are two separate entities, and several
affidavits from AHS and Allscripts employees confirmed this.
Furthermore, Rodríguez's own complaint acknowledges that AHS and
Allscripts are two separate companies. Confronted with the fact
that AHS is a mere holding company, Rodríguez still fails to
present a separate jurisdictional argument as to AHS.
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707 S.E.2d 385, 396 (N.C. Ct. App. 2011) (holding under North
Carolina law (the law of the state where Allscripts is organized)
that the activities of corporate relatives cannot be imputed to
each other "for purposes of personal jurisdiction without proof
that [they] are part of the same whole and were not acting
independently").6 And AHS's declarant says that AHS does not
control or direct the activities of Allscripts -- and, again,
Rodríguez does not dispute that fact.7
In the end, it was Rodríguez's burden to present evidence
demonstrating that the district court could exercise personal
jurisdiction over AHS. His bundled arguments and evidence are
insufficient to show a sufficient nexus in this case between his
claims and AHS's forum contacts (or lack thereof). See United
States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 621 (1st Cir. 2001)
(noting that "there can be no requisite nexus between the contacts
and the cause of action if no contacts exist"). Rodríguez having
6 The parties do not clarify what law applies to a potential
veil-piercing theory, but we need not decide which law applies
given that Rodríguez fails to meet his burden under either law we
see as potentially applicable.
7 Rodríguez briefly points to a hearing on the motion to
dismiss in which AHS and Allscripts' counsel stated that Allscripts
is the parent of AHS. He thus says this contradiction raises a
factual issue regarding whether one or both of these companies had
his EHRs under their custody and control. Yet the documentary
evidence is clear that this was merely a slip of tongue, not the
sort of "genuinely contested facts" we give credence to the
plaintiff's view on. See Baskin-Robbins Franchising LLC, 825 F.3d
at 34.
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failed to satisfy this first prong of the due-process inquiry, and
without any evidence of control of Allscripts by AHS, the district
court properly granted the motion to dismiss for lack of personal
jurisdiction with respect to AHS. See id. at 625 (failure to show
relatedness ends the inquiry). Although the district court
dismissed the complaint with prejudice, we will modify the judgment
to state that dismissal of AHS is without prejudice. See 28 U.S.C.
§ 2106; Claudio-de León v. Sistema Universitario Ana G. Méndez,
775 F.3d 41, 50 (1st Cir. 2014). That's so because a dismissal on
jurisdictional grounds, as opposed to a merits dismissal, should
ordinarily be made without prejudice. See N. Am. Cath. Educ.
Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st Cir.
2009); see also Fed. R. Civ. P. 41(b) (noting that dismissal for
lack of jurisdiction is not an "adjudication on the merits"); Rodi
v. S. New England Sch. of L., 389 F.3d 5, 18 (1st Cir. 2004) ("A
dismissal for lack of personal jurisdiction is the paradigmatic
example of a decision not on the merits.").8
Allscripts. Next up, we ask whether Rodríguez's claim
is related to Allscripts' Puerto Rico contacts. And the answer is
8 While the district court's dismissal did reach the merits
of Rodríguez's claims, "a federal court generally may not rule on
the merits of a case without first determining that it has
jurisdiction over the category of claim in suit (subject-matter
jurisdiction) and the parties (personal jurisdiction)." Sinochem
Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 430-31
(2007) (citing Steel Co. v. Citizens for Better Env't, 523 U.S.
83, 93-102 (1998)).
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an easy yes. The relatedness test is a relatively "flexible,
relaxed standard." Pritzker v. Yari, 42 F.3d 53, 61 (1st Cir.
1994). It is simply meant to "ensure[] fundamental fairness by
protecting a defendant from being hauled into an out-of-state forum
based on a single contact with that forum that is wholly unrelated
to the suit at issue." Swiss Am. Bank, 274 F.3d at 623.
Here, Allscripts contracted with a Puerto Rico company
to sell its product and sent its employee Chad Novitski to Puerto
Rico several times to facilitate the business relationship between
Allscripts and Novatek. And with that relationship with Novatek,
Allscripts clearly intended to tap into the Puerto Rico market to
sell its product. Through its relationship, Allscripts was fully
aware that Puerto Rico residents, including Rodríguez, were using
its MyWay product to store and manage EHRs -- in fact, it approved
Rodríguez's contract and set up training for Rodríguez directly.
See Knox v. MetalForming, Inc., 914 F.3d 685, 690–91 (1st Cir.
2019) (concluding the relatedness prong was "easily met" where the
non-U.S. defendant sold its products in Massachusetts only through
a third-party distributor and the plaintiff was injured there).
And all that shows a demonstrable nexus between Allscripts'
contacts with Puerto Rico and the destruction of Rodríguez's EHRs.9
9Rodríguez attempts to further bolster his argument on the
relatedness prong by pointing to the in-forum "effects" theory
presented first in Calder v. Jones, 465 U.S. 783 (1984). In that
case, there were no physical, mail, or telephone contacts between
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2. Purposeful Availment
Next, Rodríguez must show that Allscripts purposefully
availed itself of the privilege of conducting activities within
Puerto Rico, thus invoking the benefits and protections of Puerto
Rico's laws. See Bluetarp Fin., Inc. v. Matrix Constr. Co., 709
F.3d 72, 82 (1st Cir. 2013). Purposeful availment reflects a
"rough quid pro quo," id. (quoting Carreras v. PMG Collins, LLC,
660 F.3d 549, 555 (1st Cir. 2011)) -- "[w]hen (but only when) a
company exercises the privilege of conducting activities within a
state -- thus enjoying the benefits and protection of its laws --
the State may hold the company to account for related misconduct,"
Ford Motor, 141 S. Ct. at 1025 (cleaned up) (quoting Int'l Shoe,
326 U.S. at 319). The purposeful-availment inquiry is intended
"to assure that personal jurisdiction is not premised solely upon
a defendant's 'random, isolated, or fortuitous' contacts with the
forum state." Sawtelle, 70 F.3d at 1391 (quoting Keeton v. Hustler
Mag., Inc., 465 U.S. 770, 774 (1984)). So, we focus "on the
defendant's intentions, and the cornerstones are voluntariness and
the defendants and the forum, but the Supreme Court held that the
forum could assert personal jurisdiction over the defendants based
on the "effects" of their out-of-forum conduct in the forum. Id.
at 789. But we have recognized that Calder's "effects" theory was
adopted "for determining purposeful availment in the context of
defamation cases." Noonan v. Winston Co., 135 F.3d 85, 90 (1st
Cir. 1998) (emphasis added); see Swiss Am. Bank, 274 F.3d at 623(noting that Calder's effects test "is a gauge for purposeful
availment and is to be applied only after the relatedness prong
has already been satisfied").
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foreseeability." Bluetarp Fin., 709 F.3d at 82 (citation omitted).
Voluntariness asks whether the defendant's contacts with the forum
state are of its own making and "not based on the unilateral
actions of another party or a third person." Nowak v. Tak How
Invs., Ltd., 94 F.3d 708, 716 (1st Cir. 1996). And foreseeability
asks whether the defendant's voluntary conduct and connection with
the forum state are "such that [the defendant] should reasonably
anticipate being haled into court there." Id. In all, the
contacts "must show that the defendant deliberately reached out
beyond its home -- by, for example, exploiting a market in the
forum State or entering a contractual relationship centered
there." Ford Motor, 141 S. Ct. at 1025 (cleaned up) (quoting
Walden v. Fiore, 571 U.S. 277, 285 (2014)).
In addition to a defendant's specific attempts to target
the forum state, see Plixer Int'l, Inc. v. Scrutinizer GmbH, 905
F.3d 1, 9 (1st Cir. 2018), a defendant's "'regular flow or regular
course of sales' in the [forum]" can demonstrate purposeful
availment, too, id. at 10. Although the mere placement of a
product into the stream of commerce with the awareness that it
could end up in a forum state, without more, is not enough to show
purposeful availment, "[a]dditional conduct of the defendant may
indicate an intent or purpose to serve the market in the forum
State." Asahi Metal Indus. Co. v. Superior Ct., 480 U.S. 102, 112
(1987) (opinion of O'Connor, J.); see Daimler AG v. Bauman, 571
- 16 -
U.S. 117, 135 n.13 (2014) (citing favorably the Asahi plurality's
conclusion that a "defendant's act of marketing a product through
a distributor who has agreed to serve as the sales agent in the
forum State may amount to purposeful availment" (cleaned up)
(quoting Asahi, 480 U.S. at 112 (opinion of O'Connor, J.))); Knox,
914 F.3d at 691-92.
Rodríguez argues that Allscripts purposefully availed
itself of the privilege of doing business in Puerto Rico by
contracting with Novatek, which Allscripts knew was going to sell
MyWay to Puerto Rico residents, and its resulting sales to Puerto
Rico residents. Rejoining, Allscripts contends that it did not
directly target Puerto Rican residents; it was Novatek that
promoted MyWay and contracted with physicians in Puerto Rico, and
it was Novatek that Rodríguez contracted with to purchase MyWay.
Of course, the exercise of specific jurisdiction must
rest on Allscripts' voluntary contact with Puerto Rico and not on
"the 'unilateral activity of another party or a third person.'"
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (quoting
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
417 (1984)). But contrary to Allscripts' view, Rodríguez's
argument for jurisdiction does not rest on Novatek's Puerto Rico
activities. Rather, jurisdiction rests on the totality of
Allscripts' voluntary activities that connect it to Puerto Rico.
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Take for starters the revenue Allscripts generated from
customers in Puerto Rico, which Allscripts plays down as "minimal."
Allscripts entered into an agreement with a "Contract Value" of
$478,800 with a Puerto Rico company to resell its MyWay product to
physicians in Puerto Rico. From 2014 through 2017, Allscripts
received $125,544 in revenue from Puerto Rico. Novatek alone had
sold about five accounts in Puerto Rico, and we know that
Allscripts had other users based in Puerto Rico aside from those
five customers. And the payments made by physicians such as
Rodríguez for the use of MyWay (which, at least for Rodríguez,
were monthly) were sent by Novatek to Allscripts in the United
States.10 That revenue is not far off from Plixer's $200,000 forum-
originated revenue that we called "not insubstantial" and led us
to conclude that the defendant there could have reasonably
anticipated being hauled into court in the forum.11 See 905 F.3d
at 4-5, 10. And it is far more than "a single isolated sale" into
Allscripts argues that there is nothing in the record to
10
support the contention that payments from Puerto Rico physicians
for the use of MyWay were sent by Novatek to Allscripts, but
Carmoega's declaration makes this clear as day.
Allscripts points out that its revenue from Puerto Rico
11
during the relevant time period made up only 0.0025% of the
company's total revenue. But we upheld the exercise of personal
jurisdiction in Plixer even though the record did not reveal what
percentage of the defendant's total revenue came from the forum,
see 905 F.3d at 4-5, 10, instead finding the "not insubstantial
income from th[e U.S.] market" showed that it could've reasonably
anticipated being haled into court there, id. at 10.
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the forum, which is insufficient to support an assertion of
jurisdiction. J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873,
888 (2011) (Breyer, J., concurring).12 But we don't have just that
(and thus need not decide whether those sales alone would be
enough) -- there's more.
We also know that Allscripts, in engaging Novatek as a
third-party reseller of its MyWay product, did much more than
merely throw its product into the stream of commerce -- it
deliberately and specifically targeted Puerto Rico. See Daimler,
571 U.S. at 136 n.13 ("[A] corporation can purposefully avail
itself of a forum by directing its agents or distributors to take
action there."); Benitez-Allende v. Alcan Aluminio Do Brasil,
S.A., 857 F.2d 26, 30 (1st Cir. 1988) (Breyer, J.) (deliberate
efforts to market in Puerto Rico can constitute purposeful
availment). Indeed, Novatek was no national distributor, compare
Nicastro, 564 U.S. at 892 (Breyer, J., concurring) (questioning
whether a defendant's use of a nationwide distributor would always
mean that it was subject to jurisdiction in any state), with Knox,
914 F.3d at 692 ("[T]he use of a nationwide distributor does not
automatically preclude the exercise of jurisdiction."), but rather
was a distributor only in the Puerto Rico market. Through its
12 "[W]e have held that the narrowest, and thus binding,
opinion from the 'fragmented Court' in [Nicastro] was Justice
Breyer's." Knox, 914 F.3d at 691 (quoting Plixer, 905 F.3d at
10).
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relationship with Novatek, Allscripts promoted MyWay in various
publications in Puerto Rico.13 See Asahi Metals, 480 U.S. at 112(Opinion of O'Connor, J.) (noting that "marketing the product
through a distributor" in the forum state may amount to purposeful
availment); see also Knox, 914 F.3d at 692. And, to boot, Novatek
wasn't the only distributor Allscripts had pushing MyWay down in
Puerto Rico at the time; Allscripts had another distributor in
Puerto Rico competing with Novatek.
Then we have Allscripts' efforts to continue its
relationship with Puerto Rico purchasers once they were in the
door. It wasn't just lining up distributors to land new customers
for Allscripts -- Allscripts also established and maintained
relationships with purchasers, deliberately opening channels of
communication to its Puerto Rico customers. See Knox, 914 F.3d at
693 (considering the fact that the defendant opened channels of
communication with customers in the forum); see also Asahi, 480
U.S. at 112 (opinion of O'Connor, J.) (suggesting such channels
can support finding purposeful availment). Allscripts provided
customer-service support to Rodríguez, a Puerto Rico customer,
directly. See Asahi, 480 U.S. at 112 (opinion of O'Connor, J.).
13Indeed, as part of the agreement between Novatek and
Allscripts, Allscripts agreed to "provide support" to Novatek in
order "[t]o assist [Novatek] in its sales and marketing efforts"
and provided Novatek with "appropriate sales training" concerning
the software. Allscripts also controlled what marketing materials
Novatek could use.
- 20 -
Indeed, Allscripts communicated to Novatek that Rodríguez
specifically (identifying him by his client-account number) needed
to take some initial training courses prior to beginning use of
its MyWay product, and followed up with Rodríguez directly on the
same training. And Allscripts sent a letter directly to Rodríguez
(in Puerto Rico) soliciting him to upgrade to its new software
after they discontinued MyWay, imploring Rodríguez to contact
Allscripts directly.
Moreover, even if we toss aside the fact that Allscripts
picked a specific distributor to target Puerto Rico and tried to
directly build relationships with purchasers in Puerto Rico once
its independent distributors got Puerto Rico customers in the door,
this is still not a typical stream-of-commerce case. Yet again,
we have more. As we've explained, "[c]ases including a standard
stream-of-commerce analysis usually involve entities who cannot
necessarily predict or control where downstream their products
will land; intervening actors like distributors may take the
products to unforeseeable markets." Plixer, 905 F.3d at 8. Unlike
that typical mold, Allscripts' product here went "only to the
customers that [Allscripts] accepted." Id.; see Knox, 914 F.3d at
693 (considering that the defendant "individually approved" forum-
based purchasers). All sales contracts executed between Novatek
and its Puerto Rico physician-clients for the use of MyWay had to
be authorized by Allscripts' officers in the United States. In
- 21 -
fact, after authorization, Allscripts would send the client their
signed copy of the contract. This gives us "an objectively clearer
picture" of Allscripts' intent to serve Puerto Rico, "the crux of
the purposeful availment inquiry." Plixer, 905 F.3d at 8.
So it's clear Allscripts' Puerto Rico-based revenue and
MyWay users were not a product of mere happenstance of a modern
stream of commerce -- it was the product of Allscripts' deliberate
attempts to tap the Puerto Rico market to sell its product and
reap the financial benefits. After several years of knowingly
targeting new Puerto Rico customers, serving current Puerto Rico
customers, and benefitting from not insubstantial revenue out of
Puerto Rico, Allscripts cannot claim that its contact with Puerto
Rico was involuntary or that it couldn't foresee being haled into
a Puerto Rico courtroom when things went south with those
customers.
3. Reasonableness
Last up in the personal-jurisdiction analysis is
reasonableness. To assess reasonableness, we consider the five
so-called "gestalt" factors: (1) Allscripts' burden of appearing
in Puerto Rico; (2) Puerto Rico's interest in adjudicating the
dispute; (3) Rodríguez's interest in obtaining convenient and
effective relief; (4) the judicial system's interest in obtaining
the most effective resolution of the controversy; and (5) the
common interests of all sovereigns in promoting substantive social
- 22 -
policies. Knox, 914 F.3d at 694; see Burger King, 471 U.S. at
477. These factors are intended "to aid the court in achieving
substantial justice, particularly where the minimum contacts
question is very close." Nowak, 94 F.3d at 717; see Ticketmaster,
26 F.3d at 210 ("[T]he reasonableness prong of the due process
inquiry evokes a sliding scale: the weaker the plaintiff's showing
on the first two prongs (relatedness and purposeful availment),
the less a defendant need show in terms of unreasonableness to
defeat jurisdiction."). As we've said before, "[t]he gestalt
factors rarely seem to preclude jurisdiction where relevant
minimum contacts exist." Cambridge Literary Props. v. W. Goebel
Porzellanfabrik G.m.b.H & Co. Kg., 295 F.3d 59, 66 (1st Cir. 2002).
And this is not one of those few-and-far-between cases.
We consider first the burden on Allscripts of litigating
in Puerto Rico. We have recognized that it is "almost always
inconvenient and costly for a party to litigate in a foreign
jurisdiction," but for this factor to have any significance, a
defendant "must demonstrate that 'exercise of jurisdiction in the
present circumstances is onerous in a special, unusual, or other
constitutionally significant way.'" Nowak, 94 F.3d at 718 (quoting
Pritzker, 42 F.3d at 64). Allscripts alleges nothing special or
unusual about its situation; indeed, it does not even argue that
it would be burdened by litigating in Puerto Rico. See, e.g.,
- 23 -
Pritzker, 42 F.3d at 64 (noting that traveling to Puerto Rico isn't
overly burdensome in the modern era).
On the second factor, we cannot discount Puerto Rico's
strong interest in this dispute, given that it involves the loss
of medical records belonging to Puerto Rico residents who were
receiving medical treatment in Puerto Rico by a physician licensed
under the laws of Puerto Rico. See Ticketmaster, 26 F.3d at 211("The forum state has a demonstrable interest in exercising
jurisdiction over one who causes tortious injury within its
borders."); see also Burger King, 471 U.S. at 473 ("[A] State
generally has a 'manifest interest' in providing its resident with
a convenient forum for redressing injuries inflicted by out-of-
state actors." (citation omitted)). And Allscripts again does not
dispute Puerto Rico's interest in the matter.
As to Rodríguez's convenience, a plaintiff's choice of
forum must be accorded deference, Foster-Miller, 46 F.3d at 151,
and Allscripts does not suggest that a Puerto Rico forum wouldn't
be more convenient for Rodríguez.
As to the most effective resolution of the controversy,
Rodríguez argues that this factor weighs in his favor because in
North Carolina he would be remediless, but he does not explain
why. Allscripts argues, without supporting authority, that the
FAA's and North Carolina's favoritism toward arbitration must be
- 24 -
considered.14 Without more, this factor does not appear to cut in
either direction.
And to the final factor, the "common interests of all
sovereigns in promoting substantive social policies," Rodríguez
contends that Puerto Rico has an interest in protecting its
citizens from out-of-state providers of services that cause harm,
and to provide its citizens with a forum to seek redress.
Allscripts again has no rejoinder. And we agree with Rodríguez
and note that "[t]his policy assumes added importance in our age
of advanced telecommunications, which has so facilitated the
representation of geographically distant clients." Sawtelle, 70
F.3d at 1395.
On balance, the gestalt factors demonstrate the
reasonableness of a Puerto Rico forum. Considered in combination
with Rodríguez's more than adequate showing on the first two prongs
of the constitutional test, a Puerto Rico court's exercise of
jurisdiction over Allscripts does not offend notions of fair play
and substantial justice. The district court therefore improperly
granted the motion to dismiss for lack of personal jurisdiction
with respect to Allscripts.
As we'll get to shortly, that argument puts the cart before
14
the horse, since Rodríguez disputes that any enforceable agreement
to arbitrate exists here.
- 25 -
III. Agreement to Arbitrate
Firm in our conclusion that the district court could
have exercised personal jurisdiction over Allscripts, we turn to
the next issue: whether the suit should not have been brought in
a federal court because Rodríguez and Allscripts had an agreement
to arbitrate disputes like this one.
A. Legal Landscape
Under the Federal Arbitration Act ("FAA"), "[a] written
provision in . . . a contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising
out of such contract or transaction . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract." 9 U.S.C.
§ 2. "With the [FAA], Congress set a 'liberal federal policy
favoring arbitration.'" Rivera-Colón v. AT&T Mobility P.R., Inc.,
913 F.3d 200, 207 (1st Cir. 2019) (quoting AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 346 (2011)). As part of that liberal
policy, the FAA puts arbitration agreements "on equal footing with
all other contracts," Buckeye Check Cashing, Inc. v. Cardegna, 546
U.S. 440, 443 (2006), meaning that courts must treat arbitration
as "a matter of contract" and enforce agreements to arbitrate
"according to their terms," Henry Schein, Inc. v. Archer & White
Sales, Inc., 139 S. Ct. 524, 529 (2019). Thus, when a party agrees
to arbitrate a dispute, the FAA leaves federal courts powerless to
- 26 -
address the merits of that dispute. Instead, we must send the
parties off, as they agreed, to duke out their dispute in their
arbitral forum. Rivera-Colón, 913 F.3d at 208.
But as a consequence of its contract-based philosophy,
the FAA's liberal policy favoring arbitration "is only triggered
when the parties actually agreed to arbitrate." Id. at 207. So
first, to trigger the FAA's protective reach, the existence of a
valid and enforceable agreement to arbitrate between the parties
must be identified. Nat'l Fed'n of the Blind v. The Container
Store, Inc., 904 F.3d 70, 80 (1st Cir. 2018). And the party
seeking to compel arbitration (here, that's Allscripts) bears the
burden of demonstrating that a valid agreement to arbitrate exists.
Soto-Fonalledas v. Ritz-Carlton San Juan Hotel Spa & Casino, 640
F.3d 471, 474 (1st Cir. 2011).
Below, Allscripts styled the portion of its motion to
dismiss invoking the arbitration clause as an argument for improper
venue. Following that improper-venue lead, the district court
granted Allscripts' motion applying the standard under Federal
Rule of Civil Procedure 12(b)(3). But we "treat a motion to
dismiss based on an arbitration clause as a request to compel
arbitration when the facts of the case make it clear that the party
intended to invoke arbitration." Soto v. State Indus. Prods.,
Inc., 642 F.3d 67, 70 n.1 (1st Cir. 2011); see also Air-Con, Inc.
v. Daikin Applied Latin Am., LLC, 21 F.4th 168, 172 n.5 (1st Cir.
- 27 -
2021). And that's clearly what Allscripts did here, since its
motion papers below cited the FAA and FAA caselaw.
The FAA (and specifically section 4) instructs courts
determining whether to compel arbitration to "hear the parties,"
which "appears to contemplate the submission and consideration of
evidentiary materials -- including materials beyond those attached
to the pleadings -- in support of and opposition to a motion to
compel arbitration under the FAA." Air-Con, 21 F.4th at 175; see
9 U.S.C. § 4. As we recently held (though after the district court
issued its ruling here), section 4 thus commands that district
courts ordinarily apply the summary-judgment standard -- not the
motion-to-dismiss standard -- to evaluate motions to compel
arbitration.15 Air-Con, 21 F.4th at 175. As we explained, the
summary-judgment standard, which evaluates the evidentiary
supportability of claims, better aligns with the FAA's command to
evaluate whether the moving party has met its burden of
demonstrating that an agreement to arbitrate is not "in issue"
than Federal Rule of Civil Procedure 12's plausibility standard,
15To be sure, we carved out the possibility in Air-Con that
there could be exceptional cases where the parties have foregone
the submission of record materials and have relied solely on the
pleadings to support or oppose the motion. 21 F.4th at 177 n.10.
In those circumstances, the district court should evaluate the
motion to compel arbitration under the Rule 12(b)(6) standard.
Id.
- 28 -
which is limited to a facial analysis of the pleadings. See id.
at 174.16
Under the summary-judgment standard, the record must be
construed in the light most favorable to the non-moving party,
with all reasonable inferences drawn in its favor. Id. at 175;
Taite v. Bridgewater State Univ., Bd. of Trs., 999 F.3d 86, 92
(1st Cir. 2021). If the party opposing arbitration "puts forward
materials that create a genuine issue of fact about a dispute's
arbitrability, the district court 'shall proceed summarily' to
trial to resolve that question." Air-Con, 21 F.4th at 175
(footnote omitted) (quoting 9 U.S.C. § 4). Because the district
court should evaluate a motion to compel arbitration under the
summary-judgment standard, we review its ruling de novo, see id.
at 176; see also Taite, 999 F.3d at 92, as we would its ruling
under a Rule 12(b)(6) standard, see Air-Con, 21 F.4th at 177 n.10;
Zenon v. Guzman, 924 F.3d 611, 616 (1st Cir. 2019).17
16 Allscripts contends that Rodríguez waived any ability to
argue for a summary-judgment standard by failing to ask for it.
But, just as in Air-Con, the errors the district court committed
here hold true under either the motion-to-dismiss or summary-
judgment standard. See 21 F.4th at 173 n.6. And, we also note,
Rodríguez told the district court to apply the summary-judgment
standard, since Allscripts had submitted a host of documents and
testimony in support of its motion. It was instead Allscripts
that insisted a Rule 12(b) standard should apply.
17 Allscripts posits that clear-error review applies to the
district court's factual findings, citing a footnote of ours in
Rivera-Colón. 913 F.3d at 206 n.6. But Rivera-Colón doesn't say
that a district court's resolution of factual issues in deciding
a motion to compel arbitration on the motion papers and supporting
- 29 -
B. Analysis
Against this backdrop, the parties argue primarily over
the existence of an agreement to arbitrate, and the district court
trained its analysis on this question, too.
According to Allscripts, Rodríguez agreed to the EULA
when using the MyWay product, and that EULA contained a binding
arbitration clause. As a reminder, though, the EULA containing an
arbitration clause that was allegedly signed by Rodríguez was not
produced. Allscripts did, however, produce an EULA containing an
arbitration clause that was signed by Carmoega (the president of
Novatek, which sold MyWay to Rodríguez) and suggested in its briefs
that the EULA would have been the same. And Allscripts pointed to
Carmoega's deposition testimony that Rodríguez "must have" signed
such an EULA. Relying on Carmoega's testimony, the district court
rejected Rodríguez's contention that there is no existing EULA
exhibits -- and applying a Rule 12(b) standard, as the district
court did here -- is reviewed for clear error. Rather, Rivera-
Colón cites to a case discussing the standard of review after an
evidentiary hearing -- not, as here, a ruling on a motion to
dismiss. Id. (citing Quint v. A.E. Staley Mfg. Co., 246 F.3d 11,
14 (1st Cir. 2001)); see Quint, 246 F.3d at 13; compare Air-Con,
21 F.4th at 177 n.10 (Rule 12(b)(6) standard requires resolving
factual disputes in the non-movant's favor). Below, Allscripts
said the court should apply a Rule 12(b)(3) standard, citing to
Seventh Circuit law. And, even assuming we would adopt our sister
circuit's reasoning, Seventh Circuit law makes clear that courts
applying that standard must resolve factual disputes in the non-
movant's favor, too. See Jackson v. Payday Fin., LLC, 764 F.3d
765, 773 & n.19 (7th Cir. 2014) (and collecting cases); see also
5B Charles Alan Wright & Arthur B. Miller, Federal Practice &
Procedure § 1352 (3d ed.).
- 30 -
signed by him that compels arbitration and found that Rodríguez
did in fact agree to arbitrate this matter by (presumably) signing
the EULA that Allscripts proffered. That EULA was signed by
Carmoega (not Rodríguez) in December 2008 (about seven months
before Rodríguez purchased the MyWay service).
In so ruling, we agree with Rodríguez that the district
court erred -- and we highlight three errors we see.
First, the district court's conclusion that Rodríguez
failed to rebut Carmoega's testimony that Rodríguez signed an EULA
was based on a false premise of its own making. Rodríguez did, in
fact, submit evidence rebutting that testimony: He filed an
affidavit in conjunction with his opposition to the motion to
dismiss stating (among other things) that he never agreed to an
arbitration process. But, clearing the way for Allscripts, the
district court struck the entire affidavit. The court reasoned
that Rodríguez's affidavit failed the requirements of Rule
56(c)(4)18 because it was a "combination of statements of which Dr.
Rodríguez has no personal knowledge, hearsay statements, and
conclusory statements without supporting evidence."
Federal Rule of Civil Procedure 56(c)(4) provides that
18
"[a]n affidavit or declaration used to support or oppose a motion
must be made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant or declarant is
competent to testify on the matters stated."
- 31 -
In our view, the district court abused its discretion in
striking this affidavit. See Livick v. The Gillette Co., 524 F.3d
24, 28 (1st Cir. 2008) (abuse-of-discretion review applies). As
we've explained before, district courts must apply Rule 56(c)(4)
"to each segment of an affidavit, not to the affidavit as a whole,"
and approach the declaration with "a scalpel, not a butcher's
knife," disregarding only those portions that are inadmissible and
crediting the remaining statements. Perez v. Volvo Car Corp., 247
F.3d 303, 315 (1st Cir. 2001). Ignoring that warning and wielding
a butcher's knife, the district court struck the entire affidavit
but offered no reasoning on why certain aspects of the affidavit
failed the rule's criteria. Indeed, Rodríguez's statement that he
"never consented or agreed to submit [him]self to an arbitration
process" is, quite clearly, made with his personal knowledge (and
we don't see how it's hearsay or conclusory).19 And once we plug
that lone statement back in, Rodríguez certainly did submit
evidence rebutting Allscripts' evidence that he signed the EULA
they presented and thus agreed to arbitrate -- evidence that the
Below, Allscripts contended that this statement should be
19
stricken because "the record demonstrates [that it is] plainly
wrong," citing to Carmoega's deposition testimony to the contrary.
And Allscripts strikes a similar tone on appeal, arguing that the
district court properly found that Rodríguez "did not present any
credible evidence." But Allscripts did not then, nor does it now,
offer any legal support for the proposition that an affidavit may
be stricken because it is "plainly wrong" and conflicts with
another party's testimony.
- 32 -
district court had to read in the light most favorable to
Rodríguez, whether under the motion-to-dismiss or summary-judgment
standard. See Air-Con, 21 F.4th at 175, 177 & n.10.
Second, even if we were to accept the district court's
view that the evidence was undisputed that Rodríguez signed an
EULA, the district court erred in not holding Allscripts to its
burden of demonstrating that Rodríguez agreed to arbitrate when he
signed such an EULA. Again, the party seeking to compel
arbitration bears the burden of demonstrating that the opposing
party agreed to arbitrate the dispute. See Air-Con, 21 F.4th at
176; Rivera-Colón, 913 F.3d at 207. And although secondary
evidence or business-routine evidence may sometimes be used to
prove the agreement when the original is missing, see Paul Revere
Variable Annuity Ins. Co. v. Zang, 248 F.3d 1, 9 (1st Cir. 2001);
see also Fed. R. Evid. 406; id. R. 1004, Allscripts submitted no
evidence that the EULA that Rodríguez may have signed was at all
similar to the EULA it presented to the district court.
Throughout the litigation, Allscripts has simply taken
Carmoega's testimony to mean that because Rodríguez must have
signed an EULA, he must have signed this EULA. Yet Carmoega never
testified that the terms of the EULA he reviewed at his deposition
were identical to those in the EULA he believes he showed
Rodríguez. Instead, he said only that the document titled "End
User License Agreement" "is the End User License Agreement." But
- 33 -
that doesn't tell us that he reviewed all the terms of the multi-
page document and thought they were all the same -- the record
contains no evidence that anyone asked Carmoega anything about
whether the EULA he saw at deposition contained the same terms as
the one he would've shown Rodríguez in 2009. Indeed, Carmoega
testified at other points that he could not recall the details of
the various agreements he would have had Rodríguez sign. And
Rodríguez disputed that the EULA produced by Allscripts in this
litigation was the same he would have been shown by Carmoega. The
district court failed to hold Allscripts to its burden when it
leapfrogged over the fact that Allscripts failed to present any
record evidence to meet its burden of showing that the EULA that
Rodríguez "must have" signed contained any arbitration agreement.
There was no testimony, nor any documentary evidence, that
Allscripts used the same EULA in 2009 (when Rodríguez allegedly
would have signed it) as it did in 2008 (when the version presented
to the district court was signed).
And third, for similar reasons, the district court's
use-is-consent conclusion was off-base. The district court
thought that even if Rodríguez didn't sign the EULA, the evidence
nonetheless showed that he would still be bound by its arbitration
clause because the face of the EULA states that use of the MyWay
software constitutes agreement to its terms. And to be sure, a
party may be bound under Puerto Rico law by a contract they
- 34 -
nonetheless did not sign on a dotted line for. See Rivera-Colón,
913 F.3d at 209–14. But again, the district court had no evidence
that the EULA Rodríguez was allegedly shown included any language
letting him know that use of MyWay constituted acceptance of the
EULA, or, again, any arbitration clause.
So, without the district court's misallocation of the
burden of proof and alteration of the record against Rodríguez,
there is no basis for concluding that Rodríguez agreed to an EULA
that contained an agreement to arbitrate. Whether a contract
containing an arbitration clause and signed by Rodríguez exists
was a disputed factual matter and the district court thus should
have "proceeded summarily to trial to resolve th[e] question."
Air-Con, 21 F.4th at 175.20 The district court improperly dismissed
this case to send the parties to an arbitral forum, so we will
vacate and remand for further proceedings.
IV. Failure to State a Claim
We now turn to the final issue: the district court's
conclusion that Rodríguez's complaint failed to state a claim
against Allscripts. Now, the district court, as we noted,
20Rodríguez also avers that the arbitration clause is
unenforceable as a matter of law. But he did not make this argument
below, meaning it is forfeited and reviewed at most only for plain
error, Zampierollo-Rheinfeldt v. Ingersoll-Rand de P.R., Inc., 999
F.3d 37, 47 (1st Cir. 2021) -- a demanding standard that Rodríguez
does not attempt to meet, meaning he waived it, see Covidien LP v.
Esch, 993 F.3d 45, 56 (1st Cir. 2021).
- 35 -
concluded that the parties agreed to arbitrate all those claims.
But it nonetheless took up Allscripts' invitation to rule on the
merits of the claims and dismiss Rodríguez's suit with prejudice.
We appreciate the district court's tendency to be
thorough and cover all the bases. Nonetheless, we have made clear
repeatedly that federal courts "compelling arbitration should
decide only such issues as are essential to defining the nature of
the forum in which a dispute will be decided." Cortés-Ramos v.
Sony Corp. of Am., 836 F.3d 128, 129-30 (1st Cir. 2016) (quoting
Thompson v. Irwin Home Equity Corp., 300 F.3d 88, 91 (1st Cir.
2002)) (a similar case where the district court also ruled on the
merits after concluding the dispute was arbitrable); see Local
201, Int'l Union of Elec. v. Gen. Elec. Co., 262 F.2d 265, 268
(1st Cir. 1959) ("[W]e have tried to make clear that once the court
has decided that the parties have agreed to leave the particular
issue to arbitration, it should not stay its hand in order to
examine whether the correct determination of the issue, on its
merits, is clear under the terms of the agreement."). Our judicial
superiors have made the same clear, too; as they've put it: "A
court has 'no business weighing the merits of the grievance'
because the 'agreement is to submit all grievances to arbitration,
not merely those which the court will deem meritorious.'" Henry
Schein, Inc., 139 S. Ct. at 529 (quoting AT&T Techs., Inc. v.
Commc'ns Workers, 475 U.S. 643, 650 (1986)). And our sister
- 36 -
circuits have echoed a similar refrain. E.g., Kilgore v. KeyBank,
Nat'l Ass'n, 718 F.3d 1052, 1057 (9th Cir. 2013) (en banc) ("Under
the Federal Arbitration Act, if Defendants are correct [that
arbitration should have been compelled], the district court should
never have reached the merits of Plaintiffs' claims."); City of
Meridian v. Algernon Blair, Inc., 721 F.2d 525, 528 (5th Cir. 1983)
("The court's sole function [under the FAA] is to determine whether
the claim is referable to arbitration. Once that determination is
made, the court may not delve further into the dispute.").
So, after concluding that the parties were bound to
arbitrate their dispute, the district court should not have
commented on the merits. And since there remains an open question
on the arbitration issue, we'll hold back any premature analysis
of the merits, too. Instead, we will vacate the district court's
ruling on the merits of Rodríguez's complaint. If the court or a
jury ultimately concludes that Rodríguez did not agree to arbitrate
his claims, then the district court can revisit the merits of
Allscripts' Rule 12(b)(6) motion anew.
We will, however, add two notes before we close out.
First, in the event the district court has the opportunity to
revisit a Rule 12(b)(6) motion, we implore it to give more than a
cursory analysis of the seven claims in the complaint. And we
similarly suggest that the parties crystallize the claims and
theories they are pursuing. Second, we have some doubt about
- 37 -
Allscripts' argument that the complaint's failure to specify
between the two defendants should necessarily result in dismissal.
Certain information, such as the structure and responsibility of
each distinct entity, may often be unavailable to the plaintiff at
this early stage of litigation. So we think the district court
may "take to heart the Supreme Court's call to 'draw on our
judicial experience and common sense' as we make a contextual
judgment about the sufficiency of the pleadings." Ocasio-
Hernandez v. Fortuño-Burset, 640 F.3d 1, 16 (1st Cir. 2011)
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)); see also
Zond, Inc. v. Fujitsu Semiconductor Ltd., 990 F. Supp. 2d 50, 53–
54 (D. Mass. 2014).
V. Closing Out
For all the foregoing reasons, we affirm (with
modification) the dismissal of AHS for lack of personal
jurisdiction but reverse the dismissal of Allscripts for lack of
personal jurisdiction. We vacate the judgment in all other
respects and remand for further proceedings consistent with this
opinion. The parties shall bear their own costs.
- 38 -