Steward Health Care System LLC and Southwest General Hospital, LP v. Frank Saidara

Concurring and Dissenting and Opinion Filed August 20, 2021
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-19-00274-CV
STEWARD HEALTH CARE SYSTEM, LLC
AND SOUTHWEST GENERAL HOSPITAL, LP, Appellants
V.
FRANK SAIDARA, Appellee
On Appeal from the 193rd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-18-16862
CONCURRING AND DISSENTING OPINION
Before the Court En Banc
Concurring and Dissenting Opinion by Justice Osborne
I agree with and join section I of the majority opinion which contains the
majority’s recitation of the facts, but write separately to provide additional facts
necessary to my concurring and dissenting analyses. While I am in agreement with
the majority’s judgment to the extent it affirms the trial court’s order granting Frank
Saidara’s special appearance as to the statutory claims against him, I do not join
section III of the majority’s opinion because I disagree with the reasoning relating
to the plaintiff’s burden of proof. Further, I would conclude the trial court erred by
granting Saidara’s special appearance and dismissing the common law claims
against him. I write separately to explain my dissent to that part of section III of the
majority opinion and state why I would reverse and remand that portion of the trial
court’s order. I also include an analysis of the fiduciary shield doctrine because I
consider it necessary to the disposition of the appeal. The following is how I would
analyze the parties’ issues:
This interlocutory appeal is about whether Texas has personal jurisdiction
over a nonresident defendant who is alleged to have committed torts while in Texas.
And because Saidara ‘messed with Texas’ by traveling here where it is alleged he
committed common law torts for which he can be found personally liable, I believe
Texas has jurisdiction over those claims.
I would conclude: (1) the fiduciary-shield doctrine does not protect Saidara
from the exercise of specific jurisdiction in Texas; (2) the trial court did not err when
it granted Saidara’s special appearance as to Steward Health Care System, LLC and
Southwest General Hospital, LP’s statutory claims for misappropriation of trade
secrets under the Texas Uniform Trade Secrets Act and violation of the Texas
Harmful Access by Computer Act; and (3) the trial court erred when it granted
Saidara’s special appearance as to Steward Health and Southwest General’s common
law claims against Saidara for fraud and “unfair competition.” I would reverse in
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part and affirm in part the trial court’s order, and remand the case for further
proceedings consistent with this opinion.1
I. FACTUAL AND PROCEDURAL BACKGROUND
The factual background in this opinion is a recitation of the allegations and
evidence contained in Saidara’s special appearance and Steward Health and
Southwest General’s first amended petition and response to the special appearance.
Steward Health is a Delaware limited liability company with its principal
place of business in Dallas, Texas. It is a Dallas-based health system and owns
numerous hospitals including Southwest General, which is a Delaware limited
partnership with its principal place of business in San Antonio, Texas. Prospect
Medical Holdings, Inc. (Prospect Medical) is a Delaware corporation with its
principal place of business in Los Angeles, California. Saidara is the vice president
of corporate development for Prospect Medical. He resides and works in California.
Prospect Medical owns Prospect Health Services TX, Inc., f/k/a Nix Health Services
Corporation (Prospect Health) which is a Texas corporation with its principal place
of business in San Antonio, Texas.
In 2018, Prospect Medical approached Steward Health about acquiring the
assets of Southwest General. To facilitate Prospect Medical’s due diligence,
Steward Health set up a virtual data room where documents relevant to the proposed
1
While I do not agree with the account of the facts or the allegations contained in Parts II, III, and IV
of Justice Schenck’s concurring opinion, I decline to address or otherwise entertain them because they are
not relevant to the disposition of this appeal. See TEX. R. APP. P. 47.1.
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transaction were uploaded; a subset of the data was placed into a more restrictive
virtual clean room. Prospect Medical tasked Saidara as well as other officers and
high-level employees with conducting negotiations and performing due diligence
related to the transaction. The individuals with access to the virtual clean room (the
clean team), which included Saidara, were approved by Steward Health and required
to sign a clean team agreement that limited their disclosure of information, expressly
authorized the clean team to prepare “evaluative analyses and aggregated
summaries” of the sensitive materials for their individual use in evaluating the
proposed transaction, prohibited the unauthorized sharing or dissemination of the
materials in the virtual clean room as well as any documents created that
incorporated or used that sensitive information, and restricted their use of the
sensitive information to the purposes permitted by a separate confidentiality
agreement signed by Steward Health and Prospect Medical.
Saidara accessed information online in the virtual data room and clean room
from his work computer in California. He also participated in electronic and
telephonic communications with Steward Health and Southwest General relating to
the potential transaction. On one occasion, Saidara traveled to Texas, toured the
Southwest General facility with James Summerset, the interim chief executive
officer of Prospect Health, and attended a meeting with high-level agents of Steward
Health and Southwest General. While on the site visit, “Summerset asked an
unusual amount of questions about proprietary Southwest General data.
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Specifically, Summerset inquired about physician employment arrangements and
compensation data.” On September 15, 2018, Saidara allegedly downloaded all of
the information from the virtual clean room to his work computer in California.
On September 20, 2018, Prospect Medical informed Steward Health that it
was no longer interested in acquiring the assets of Southwest General. Steward
Health and Southwest General allege that persons within Prospect Medical and
Prospect Health later leaked information relating to the proposed transaction, which
made it more difficult for Southwest General to market and sell its assets.
Then, on November 7, 2018, Steward Health and Southwest General filed
their original petition against Prospect Medical, Prospect Health, and Saidara. In
their first amended petition, Steward Health and Southwest General alleged claims
for: (1) common law fraud and violations of the Texas Harmful Access by Computer
Act against Prospect Medical, Prospect Health, and Saidara; (2) statutory
misappropriation of trade secrets under the Texas Uniform Trade Secrets Act and
common law “unfair competition” against Prospect Medical and Saidara; and (3)
conspiracy against Prospect Medical and Prospect Health. Steward Health and
Southwest General claimed that personal jurisdiction existed as to Saidara because
he had contacts with Texas with respect to the complained-of acts.
Saidara filed a special appearance arguing the trial court lacked personal
jurisdiction over him because: (1) there is no basis for general jurisdiction; and (2)
the trial court cannot exercise specific jurisdiction because (a) the alleged activities
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supporting the claims against him occurred while Saidara was in California acting
in the course of his employment with Prospect Medical, (b) all of his alleged
wrongful acts were in connection with his employment so he is protected by the
fiduciary-shield doctrine, and (c) “[Steward Health and Southwest General] have
failed to plead any purposeful (wrongful) activities by Saidara originating in Texas.”
Attached to Saidara’s special appearance were his declaration and the clean team
agreement.
Steward Health and Southwest General responded that the trial court had
specific jurisdiction over Saidara but did not attach any evidence to support their
allegations. The trial court signed an order granting Saidara’s special appearance
and dismissing the claims against him. In that order, the trial court concluded that
“there is no record evidence that would support the exercise of general jurisdiction
over [] Saidara” and there was no specific jurisdiction.
II. SAIDARA’S SPECIAL APPEARANCE
Steward Health and Southwest General raise one issue on appeal arguing the
trial court erred when it granted Saidara’s special appearance.2 They argue the trial
court has specific jurisdiction over Saidara because: (1) the Texas long-arm statute
extends to Saidara’s contacts; (2) Saidara had sufficient minimum contacts with
Texas; (3) Saidara cannot show the exercise of specific jurisdiction would impose
2
Steward Health and Southwest General do not challenge the portion of the trial court’s order that
concludes there was no evidence to support the exercise of general jurisdiction over Saidara.
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an unreasonable burden on him; and (4) the fiduciary-shield doctrine does not
protect Saidara from specific jurisdiction.
(A) Fiduciary-Shield Doctrine
I begin with an analysis of Steward Health and Southwest General’s argument
that the trial court erred when it granted Saidara’s special appearance on the basis
that the fiduciary-shield doctrine protects Saidara from specific jurisdiction because,
if the trial court did not err, that argument would be dispositive of this appeal.
Specifically, they contend the fiduciary-shield doctrine does not protect Saidara
from their tort claims for fraud, violation of the Texas Harmful Access to Computer
Act, misappropriation of trade secrets under the Texas Uniform Trade Secrets Act,
and common law “unfair competition.” Saidara responds that Steward Health and
Southwest General have not pleaded sufficient facts to show that Saidara has actually
committed tortious or fraudulent acts for which he may be personally liable. He also
argues that the uncontroverted evidence demonstrates he did not commit any of the
alleged torts.3
(1) Applicable Law
In a special appearance, a defendant may deny that the alleged contacts apply
to him because he was acting in the course and scope of his employment. See Stull
3
In support of this contention, Saidara cites his declaration and the clean team agreement. However,
neither of these documents attempts to negate the allegations that Saidara made misrepresentations during
his visit to Texas or in his telephonic and electronic communications with individuals in Texas, and that he
received some of Southwest General’s highly confidential, proprietary, and trade-secret information—
including the identities and specialties of Southwest General’s most important physicians—while in Texas.
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v. LaPlant, 411 S.W.3d 129, 135 (Tex. App.—Dallas 2013, no pet.). The fiduciary-
shield doctrine protects a nonresident corporate officer or employee from the
exercise of jurisdiction when all of his contacts with Texas were made on behalf of
his employer. Tabacinic v. Frazier, 372 S.W.3d 658, 668 (Tex. App.—Dallas 2012,
no pet.); Nichols v. Tseng Hsiang Lin, 282 S.W.3d 743, 750 (Tex. App.—Dallas
2009, no pet.). However, a corporate agent is not shielded from the exercise of
specific jurisdiction as to torts for which the employee may be held individually
liable.4 Jani-King Franchising, Inc. v. Falco Franchising, S.A., No. 05-15-00335-
CV, 2016 WL 2609314, at *2 (Tex. App.—Dallas May 5, 2016, no pet.) (mem. op.);
Stull, 411 S.W.3d at 137. Further, the fiduciary-shield doctrine does not protect an
employee from the exercise of specific jurisdiction if he engaged in tortious or
fraudulent conduct directed at the forum state for which he may be held personally
liable—even if all of the employee’s contacts with Texas were performed in a
4
I note that the law in Texas is not well settled as to whether the fiduciary-shield doctrine applies to
the exercise of specific jurisdiction. However, this Court has rejected the view that the fiduciary-shield
doctrine applies only to general-jurisdiction cases. Stull, 411 S.W.3d at 136–39. Stull distinguished prior
cases that seemed to say the opposite. Id. at 136–37 n.4 (citing, e.g., Tabacinic, 372 S.W.3d at 668, and
Crithfield v. Boothe, 343 S.W.3d 274, 287 (Tex. App.—Dallas 2011, no pet.)). But see Yew Yuen Chow v.
Rodriguez San Pedro, No. 14-18-00429-CV, 2019 WL 4021908, at *7 (Tex. App.—Houston [14th Dist.]
Aug. 27, 2019, pet. denied) (mem. op.) (noting most Texas courts applying the fiduciary-shield doctrine
have limited its application to attempts to exercise general—not specific—jurisdiction over a nonresident
defendant); Lucas v. Ryan, No. 02-18-00053-CV, 2019 WL 2635561, at *9 (Tex. App.—Fort Worth June
27, 2019, no pet.) (mem. op.) (noting some courts, including the Fort Worth Court of Appeals, have
restricted the application of fiduciary-shield doctrine to attempts to exercise general jurisdiction);
Steamboat Capital Mgmt., LLC v. Lowry, No. 01-16-00956-CV, 2017 WL 5623414, at *11 (Tex. App.—
Houston [1st Dist.] Nov. 21, 2017, no pet.) (mem. op.) (declining to apply fiduciary-shield doctrine to
invocation of specific jurisdiction, even if doctrine had been raised in trial court, noting doctrine is limited
to application of general jurisdiction). Nevertheless, it should also be noted that the Stull court applied the
fiduciary-shield doctrine in a breach-of-contract case premised on specific jurisdiction, not a tort case. 411
S.W.3d at 138. And often an individual defendant acting in a corporate role will not be individually liable
for the breach of a corporate contract.
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corporate capacity. Spurgeon v. Empire Petroleum Partners, LLC, No. 05-18-
00783-CV, 2019 WL 2521722, at *3–4 (Tex. App.—Dallas June 19, 2019, no pet.)
(mem. op.); Nev. Nat’l Advert., Inc. v. Silverleaf Resorts, Inc., No. 05-16-00694-CV,
2017 WL 655949, at *11 (Tex. App.—Dallas Feb. 17, 2017, no pet.) (mem. op.);
see also Madison Dev. Grp. LLC v. Mattress Firm, Inc., 608 S.W.3d 376, 399 (Tex.
App.—Houston [1st Dist.] Aug. 6, 2020, no pet.); Yew Yuen Chow, 2019 WL
4021908, at *7 (rejecting argument that defendants are entitled to protection from
specific jurisdiction on plaintiff’s tort claims simply because their alleged torts of
fraud, breach of fiduciary duty, and negligent misrepresentation were allegedly
committed in a corporate capacity).
(2) Application of the Law to the Facts
In their first amended petition, Steward Health and Southwest General alleged
claims against Saidara for fraud, violation of the Texas Harmful Access to Computer
Act, misappropriation of trade secrets under the Texas Uniform Trade Secrets Act,
and common law “unfair competition.” All of these are tort claims.5 Saidara makes
no argument that he cannot be held liable individually on these claims, and I see no
reason he cannot.
5
See generally Agar Corp., Inc. v. Electro Circuits Int’l, L.L.C., 580 S.W.3d 136, 146 (Tex. 2019)
(generally referring to unfair competition as a tort); Hunter v. Marshall, No. 01-16-00636-CV, 2018 WL
6684840, at *7 (Tex. App.—Houston [1st Dist.] Dec. 20, 2018, no pet.) (mem. op.) (generally referring to
violations of the Texas Harmful Access by Computer Acts as a tort); Alanis v. US Bank Nat’l Ass’n, 489
S.W.3d 485, 507 (Tex. App.—Houston [1st Dist.] 2015, pet. denied) (fraud is common law tort).
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The contacts with Texas giving rise to Steward Health and Southwest
General’s tort claims against Saidara are deemed to have been made by Saidara in
his individual capacity. See Jani-King, 2016 WL 2609314, at *2; Stull, 411 S.W.3d
at 137. The fiduciary-shield doctrine does not shield Saidara from the exercise of
specific jurisdiction in this case if jurisdiction is otherwise proper. See Jani-King,
2016 WL 2609314, at *2; Stull, 411 S.W.3d at 137.
Accordingly, I would conclude the trial court erred to the extent it concluded
the fiduciary-shield doctrine protects Saidara from the exercise of specific
jurisdiction for Steward Health and Southwest General’s tort claims.
(B) Specific Jurisdiction Over Saidara
Steward Health and Southwest General argue that the trial court has specific
jurisdiction over Saidara because: (1) the Texas long-arm statute extends to
Saidara’s contacts; (2) Saidara had sufficient minimum contacts with Texas; and (3)
Saidara cannot show the exercise of specific jurisdiction would impose an
unreasonable burden on him. Saidara responds that the trial court properly
concluded it lacked personal jurisdiction over him because his contacts with Texas
were insufficient to confer specific jurisdiction. And, even if he had sufficient
minimum contacts with Texas, the exercise of personal jurisdiction over him does
not comport with traditional notions of fair play and substantial justice.
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(1) Standard of Review
Section II(a) of the majority opinion correctly states the applicable standard
of review. I would add, however, that specific jurisdiction requires courts to analyze
jurisdictional contacts on a claim-by-claim basis. M&F Worldwide Corp. v. Pepsi-
Cola Metro. Bottling Co., 512 S.W.3d 878, 886 (Tex. 2017); Moncrief Oil Int'l Inc.
v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013); see also Kelly v. Gen. Interior
Constr., Inc., 301 S.W.3d 653, 660 (Tex. 2010) (separately analyzing the sufficiency
of jurisdictional allegations of plaintiff’s claims). When a plaintiff brings multiple
claims that arise out of a nonresident defendant’s different forum contacts, the
plaintiff must establish specific jurisdiction for each claim because the Due Process
Clause prohibits the exercise of jurisdiction over any claim that does not arise out of
or result from the defendant’s forum contacts. E.g., Moncrief, 414 S.W.3d at 150.
However, a court need not assess contacts on a claim-by-claim basis if all claims
arise from the same forum contacts. Id. at 150–51.
(2) Burdens of the Parties in a Special Appearance
The plaintiff bears the initial burden of pleading sufficient allegations to bring
a nonresident defendant within the provisions of the Texas long-arm statute. E.g.,
Luciano v. SprayFoamPolymers.com, LLC, No. 18-0350, 2021 WL 2603840, at *3
(Tex. June 25, 2021); Old Republic Nat’l Title Ins. Co. v. Bell, 549 S.W.3d 550, 559
(Tex. 2018); Moncrief, 414 S.W.3d at 149. In order to meet its burden, a plaintiff
must show the act on which jurisdiction is predicated, not a prima facie
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demonstration of the existence of a cause of action. Bruno’s Inc. v. Arty Imports,
Inc., 119 S.W.3d 893, 896–97 (Tex. App.—Dallas 2003, no pet.); Clark v. Noyes,
871 S.W.2d 508, 511 (Tex. App.—Dallas 1994, no pet.) (although Texas courts use
federal due process standard for analyzing minimum contacts, they do not use
federal procedural rules, which would incorrectly place burden to show sufficient
minimum contacts on the party seeking to invoke jurisdiction). This minimal
pleading requirement is satisfied by an allegation that the nonresident defendant is
doing business in Texas or committed tortious acts in Texas. Jani-King, 2016 WL
2609314, at *4; Assurances Générales Banque Nationale v. Dhalla, 282 S.W.3d
688, 695 (Tex. App.—Dallas 2009, no pet.).
To determine whether a plaintiff has met its initial burden to plead sufficient
allegations to invoke jurisdiction over a nonresident defendant under the Texas long-
arm statute, an appellate court looks at the jurisdictional facts pleaded in the
plaintiff’s petition, as well as the jurisdictional facts alleged in the plaintiff’s
response to the nonresident defendant’s special appearance. TEX. R. CIV. P. 120a(3);
B.G.C. v. M.Y.R., No. 05-20-00318-CV, 2020 WL 5987913, at *2 (Tex. App.—
Dallas Oct. 9, 2020, pet. denied) (mem. op.); Jani-King, 2016 WL 2609314, at *4.6
6
See also Invasix, Inc. v. James, No. 05-19-00494-CV, 2020 WL 897243, at *4 (Tex. App.—Dallas
Feb. 25, 2020, no pet.) (mem. op.); Golden Peanut Co. v. Give & Go Prepared Foods Corp., No. 05-18-
00626-CV, 2019 WL 2098473, at *4 (Tex. App.—Dallas May 14, 2019, no pet.) (mem. op.); Cooper Gay
Martinez del Rio y Asociados Intermediarios de Reaseguro S.A. de C.V. v. Elamex, S.A. de C.V., No. 05-
16-01436-CV, 2017 WL 3599690, at *5 (Tex. App.—Dallas Aug. 22, 2017, no pet.) (mem. op.); Seguros
Afirme, S.A. de C.V. v. Elamex, S.A. de C.V., No. 05-16-01465-CV, 2017 WL 3599693, at *5 (Tex. App.—
Dallas Aug. 22, 2017, no pet.) (mem. op.); N. Frac Proppants, II, LLC v. 2011 NF Holdings, LLC, No. 05-
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Once the plaintiff has met this burden, the nonresident defendant has the
burden to negate all bases of personal jurisdiction alleged in the plaintiff’s petition.
E.g., Luciano, 2021 WL 2603840, at *3; Old Republic, 549 S.W.3d at 559; Moncrief,
414 S.W.3d at 149. The nonresident defendant can negate jurisdiction on either a
factual or legal basis. Kelly, 301 S.W.3d at 659. Factually, the nonresident
defendant can present evidence it has no contacts with Texas, effectively disproving
the plaintiff’s allegations. Old Republic, 549 S.W.3d at 559; Kelly, 301 S.W.3d at
659. Legally, the nonresident defendant can show that, even if the plaintiff’s alleged
facts are true, the evidence is legally insufficient to establish jurisdiction; the
defendant’s contacts with Texas fall short of purposeful availment; for specific
jurisdiction, that the claims do not arise from the contacts; or that traditional notions
of fair play and substantial justice are offended by the exercise of jurisdiction. Old
Republic, 549 S.W.3d at 559; Kelly, 301 S.W.3d at 659.
16-00319-CV, 2017 WL 3275896, at *2, 5 (Tex. App.—Dallas July 27, 2017, no pet.) (mem. op.); Nat’l
Fire Ins. Co of Hartford v. CE Design, Ltd., 429 S.W.3d 806, 811 & n.6 (Tex. App.—Dallas 2014, no pet.)
(noting Court unpersuaded by appellees’ assertion that appellants failed to plead jurisdictional facts and
stating that, in addition to facts alleged in their original petition for declaratory relief, appellants set out
their factual allegations in support of jurisdiction in their opposition and supplemental opposition to
appellees’ special appearance and motion to dismiss); Stull, 411 S.W.3d at 134; NexBank, SSB v.
Countrywide Fin. Corp., No. 05-12-00567-CV, 2013 WL 2244830, at *2 (Tex. App.—Dallas May 22,
2013, no pet.) (mem. op.); Camac v. Dontos, 390 S.W.3d 398, 405 (Tex. App.—Dallas 2012, no pet.);
Crithfield, 343 S.W.3d at 282; All. Royalties, LLC v. Boothe, 329 S.W.3d 117, 120–21 (Tex. App.—Dallas
2010, no pet.); Wikert v. Year One, Inc., 320 S.W.3d 522, 524 (Tex. App.—Dallas 2010, no pet.); Alencar
v. Shaw, 323 S.W.3d 548, 552 (Tex. App.—Dallas 2010, no pet.); Ahrens & DeAngeli, P.L.L.C. v. Flinn,
318 S.W.3d 474, 478 (Tex. App.—Dallas 2010, pet. denied); Proctor v. Buell, 293 S.W.3d 924, 930–31
(Tex. App.—Dallas 2009, no pet.); Flanagan v. Royal Body Care, Inc., 232 S.W.3d 369, 374 (Tex. App.—
Dallas 2007, pet. denied).
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However, if the plaintiff does not plead any jurisdictional facts, the defendant
still has the burden of proof, but he can carry his burden merely by proving that he
is not a resident of Texas. Kelly, 301 S.W.3d at 658–59 (holding plaintiff had failed
to plead any jurisdictional facts, and therefore, defendants were entitled to dismissal
by proving nonresidency); Bruno’s, Inc., 119 S.W.3d at 897; Temperature Sys., Inc.
v. Bill Pepper, Inc., 854 S.W.2d 669, 673 (Tex. App.—Dallas, 1993, writ dism’d by
agr.); see also Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 438 (Tex.
1982) (proof of nonresidency sufficient to carry burden of proof where plaintiff
alleged no acts by defendants in Texas or any acts by defendants having foreseeable
effects in Texas). Otherwise, the defendant must negate the pleaded jurisdictional
facts. Bruno’s Inc., 119 S.W.3d at 897.
If the nonresident defendant produces evidence negating personal jurisdiction,
the burden returns to the plaintiff who can then respond with its own evidence that
affirms its allegations to show that the court has personal jurisdiction over the
nonresident defendant. Kelly, 301 S.W.3d at 659 & n.6; Assurances Générales, 282
S.W.3d at 695.
(3) Personal Jurisdiction
The nature of the evidence a party must adduce to meet its burden of proof is
defined by the Constitution, the Texas Legislature, statutes, and case law.
Assurances Générales, 282 S.W.3d at 695–96; accord Ford Motor Co. v. Mont.
Eighth Judicial Dist. Ct., 141 S. Ct. 1017, 1024 (2021) (long established that
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Fourteenth Amendment limits personal jurisdiction of state courts); see also Searcy
v. Parex Res., Inc., 496 S.W.3d 58, 66 (Tex. 2016) (personal jurisdiction turns on
both federal and state law). Texas courts may assert personal jurisdiction over a
nonresident defendant if: (1) the Texas long-arm statute authorizes the exercise of
jurisdiction and (2) the exercise of jurisdiction is consistent with federal and state
constitutional due process guarantees. Luciano, 2021 WL 2603840, at *3; Old
Republic, 549 S.W.3d at 558; Moncrief, 414 S.W.3d at 149.
(a) Texas Long–Arm Statute
The Texas long-arm statute governs Texas courts’ exercise of jurisdiction
over nonresident defendants. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 17.041–
17.045; PHC–Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 166 (Tex.
2007). The Texas long-arm statute is satisfied by a nonresident defendant who
“commits a tort in whole or in part in this state.” CIV. PRAC. & REM. § 17.042(2);
Luciano, 2021 WL 2603840, at *3; Old Republic, 549 S.W.3d at 558–59.
The broad language of § 17.042 extends Texas courts’ personal jurisdiction
as far as the federal constitutional requirements of due process will permit. PHC–
Minden, 235 S.W.3d at 166; Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569,
575 (Tex. 2007). However, allegations that a tort was committed in Texas do not
necessarily satisfy the United States Constitution. Old Republic, 549 S.W.3d at 559;
Moncrief, 414 S.W.3d at 149.
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(b) Due Process
In addition to the long-arm statute, the exercise of personal jurisdiction over
a nonresident defendant must satisfy federal due process requirements. See PHC–
Minden, 235 S.W.3d at 166; accord Asahi Metal Indus. Co., Ltd. v. Superior Ct. of
Cal., Solano Cty., 480 U.S. 102, 108 (1987) (plurality op.); Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945). Under the Due Process Clause of the
Fourteenth Amendment, personal jurisdiction over a nonresident defendant is
constitutional when: (1) the nonresident defendant has established minimum
contacts with the forum state; and (2) the exercise of jurisdiction comports with
traditional notions of fair play and substantial justice. Luciano, 2021 WL 2603840,
at *3; Old Republic, 549 S.W.3d at 559; accord Burger King Corp. v. Rudzewicz,
471 U.S. 462, 476 (1985).
(i) Minimum Contacts
The purpose of the minimum contacts analysis is to protect a nonresident
defendant from being haled into court when his relationship with the forum state is
too attenuated to support jurisdiction. Am. Type Culture Collection v. Coleman, 83
S.W.3d 801, 806 (Tex. 2002). The focus of the minimum contacts analysis is on the
nonresident defendant’s activities and expectations. Michiana Easy Livin’ Country,
Inc. v. Holten, 168 S.W.3d 777, 790 (Tex. 2005). A nonresident defendant’s
contacts with a forum state can give rise to: (1) general jurisdiction (sometimes
called “all-purpose”); or (2) specific jurisdiction (sometimes called “case-linked”).
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Luciano, 2021 WL 2603840, at *3; Moncrief, 414 S.W.3d at 150; accord Ford, 2021
WL 1132515, at *4.
Specific jurisdiction refers to personal jurisdiction over a nonresident
defendant in a lawsuit that arises out of or is related to the nonresident defendant’s
contacts with the forum state. Moki Mac, 221 S.W.3d at 576; accord Bristol-Myers
Squibb Co. v. Superior Ct. of Cal., 137 S. Ct. 1773, 1780 (2017). When specific
jurisdiction is asserted, the minimum contacts analysis focuses on the relationship
between the nonresident defendant, the forum state, and the litigation. Moki Mac,
221 S.W.3d at 575–76; accord Bristol-Myers Squibb, 137 S. Ct. at 1780. For a court
to exercise specific jurisdiction over a nonresident defendant, two requirements must
be met: (1) the nonresident defendant’s contacts with the forum state must be
purposeful and (2) the cause of action must arise from or relate to those contacts.
Moki Mac, 221 S.W.3d at 579; accord Burger King, 471 U.S. at 474–75.
[a] Purposeful Availment
Purposeful availment is the touchstone of the jurisdictional due process
analysis. Luciano, 2021 WL 2603840, at *3; Michiana, 168 S.W.3d at 784. A
nonresident defendant’s activities must be purposefully directed toward the forum
state so that the nonresident defendant could foresee being haled into court there.
Burger King, 471 U.S. at 474. There are three parts to a purposeful availment
inquiry: (1) only the nonresident defendant’s contacts with the forum are relevant,
not the unilateral activity of another party or a third person; (2) the contacts relied
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on must be purposeful rather than random, fortuitous, or attenuated; and (3) the
nonresident defendant must seek some benefit, advantage, or profit by availing
himself of the jurisdiction. Moki Mac, 221 S.W.3d at 575; accord Walden v. Fiore,
571 U.S. 277, 284–86 (2014); Burger King, 471 U.S. at 474–75.
[b] Alleged Liability Arises From or Relates to Contacts
Specific jurisdiction is established when the nonresident defendant’s alleged
liability arises from or is related to activity conducted within the forum. Moki Mac,
221 S.W.3d at 576; accord Bristol-Myers Squibb, 137 S. Ct. at 1780. The “arises
from or relates to” requirement lies at the heart of specific jurisdiction by defining
the required nexus between the nonresident defendant, the litigation, and the forum
state. Moki Mac, 221 S.W.3d at 579. In order for a nonresident defendant’s contacts
in a forum state to support an exercise of specific jurisdiction, there must be a
substantial connection between those contacts and the operative facts of the
litigation. Moki Mac, 221 S.W.3d at 585; accord Walden, 571 U.S. at 284. The
operative facts of the litigation are those facts the trial court will focus on to prove
the nonresident defendant’s liability. See Jani-King, 2016 WL 2609314, at *5.
(ii) Traditional Notions of Fair Play and Substantial Justice
In addition to minimum contacts, the exercise of personal jurisdiction over a
nonresident defendant must comport with traditional notions of fair play and
substantial justice. Luciano, 2021 WL 2603840, at *12; BMC Software Belgium,
N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). Courts evaluate those contacts
–18–
in light of the following five factors to determine whether the assertion of
jurisdiction comports with traditional notions of fair play and substantial justice: (1)
the nonresident defendant’s burden; (2) the forum state’s interest in adjudicating the
dispute; (3) the plaintiff’s interest in obtaining convenient and effective relief; (4)
the interstate judicial system’s interest in obtaining an efficient resolution to
disputes; and (5) the states’ common interest in furthering fundamental, substantive
social policies. Luciano, 2021 WL 2603840, at *12; accord Burger King, 471 U.S.
at 477.
However, when a nonresident defendant has purposefully established
minimum contacts with the forum state, it will be only a rare case when the exercise
of jurisdiction does not comport with traditional notions of fair play and substantial
justice. Luciano, 2021 WL 2603840, at *12; TV Azteca v. Ruiz, 490 S.W.3d 29, 55
(Tex. 2016).
(C) Application of the Law to the Facts
(1) Adequacy of the Pleadings
As an initial matter, I address Saidara’s contention that the trial court did not
err because Steward Health and Southwest General “failed to meet their burden of
pleading sufficient facts to establish a substantial connection between Saidara’s
alleged contacts with Texas and their claims for relief.” Saidara relies on federal
case law for the proposition that Steward Health and Southwest General were
required to present a prima facie case with some evidence to make that showing.
–19–
However, under Texas law, Steward Health and Southwest General bore the
initial burden of pleading sufficient allegations to bring Saidara within the provisions
of the Texas long-arm statute. See Old Republic, 549 S.W.3d at 559; Moncrief, 414
S.W.3d at 149. They were not required, as Saidara contends, to provide a prima
facie demonstration of the existence of their causes of action. See Bruno’s Inc., 119
S.W.3d at 896–97. Once Steward Health and Southwest General pleaded sufficient
allegations to bring Saidara within the reach of Texas’s long-arm statute, Saidara
had the burden to negate all bases of personal jurisdiction alleged in their first
amended petition. See, e.g., Old Republic, 549 S.W.3d at 559. If we required
Steward Health and Southwest General to provide a prima facie demonstration of
the existence of their causes of action, we would be incorrectly transferring Saidara’s
burden to them. See Clark, 871 S.W.2d at 511.
Nevertheless, I would liberally construe Saidara’s contention to be that
Steward Health and Southwest General failed to meet their minimal pleading
requirement so the burden to negate jurisdiction never shifted to him. Steward
Health and Southwest General maintain that the allegations in their first amended
petition are uncontroverted and demonstrate specific jurisdiction.
In Steward Health and Southwest General’s first amended petition, they
claimed “[p]ersonal jurisdiction exists as to Saidara because he had contacts with
Texas with respect to the acts complained of herein, including travel to Texas
specifically directed at the transaction forming the basis of this lawsuit.” In the
–20–
“Background” section of their amended petition, they also stated that “Saidara
visited Texas in connection with the sale of Southwest General’s assets and
participated in numerous communications (both electronically and telephonically)
with counterparties in Dallas during which he misrepresented Prospect [Medical’s]
intention to purchase Southwest General. Saidara’s communications were
intentional and were directed to Steward [Health] in Texas.” They further stated that
“[d]uring one of Saidara’s visits to Texas, he participated in a site visit at the
Southwest General [f]acility.”
In their response to Saidara’s special appearance, Steward Health and
Southwest General argued the trial court had specific jurisdiction over Saidara. First,
they claimed the Texas long-arm statute was satisfied because Saidara committed
fraud when during a visit to Texas he made material misrepresentations as to
Prospect Medical’s intent to purchase Southwest General’s assets. Second, they
maintained that the exercise of personal jurisdiction over Saidara was consistent with
state and federal due process requirements. In summary, they argued that Saidara
had sufficient minimum contacts with Texas because he purposefully availed
himself of the forum when:
(1) he planned in advance and traveled to Texas to visit Southwest
General, receiving a comprehensive tour of the facility and
attending an hours-long meeting with high[-]level agents of
Steward Health, Southwest General, and their investment banker
to discuss the acquisition;
–21–
(2) he engaged in numerous telephonic and electronic
communications with Steward Health’s and Southwest General’s
agents in Texas; and
(3) while in Texas, he made misrepresentations and received some
of Southwest General’s highly confidential, proprietary, and
trade-secret information, including the identities and specialties
of Southwest General’s most important physicians.
Further, Steward Health and Southwest General argued that the exercise of personal
jurisdiction over Saidara comported with traditional notions of fair play and
substantial justice because:
(1) the distance between Texas and California is reasonable,
(2) Texas has a clear interest in resolving the dispute because Saidara
is alleged to have committed a tort in Texas,
(3) Steward Health’s and Southwest General’s principal places of
business are in Texas,
(4) the subject of the transaction at issue was a Texas hospital, and
(5) judicial economy is promoted by the adjudication of the claims
against Saidara with the claims against Prospect Medical and
Prospect Health.
Finally, they claimed that Saidara could not hide behind the corporate form to avoid
jurisdiction.
Looking at the jurisdictional facts pleaded in Steward Health and Southwest
General’s first amended petition, as well as the jurisdictional facts alleged in their
response to Saidara’s special appearance, I would conclude that they met their initial
burden of pleading allegations sufficient to confer jurisdiction over Saidara because
they alleged he committed tortious acts in Texas. See Jani-King, 2016 WL 2609314,
–22–
at *4 (appellate court looks at jurisdictional facts pleaded in petition, as well as
jurisdictional facts alleged in response to nonresident defendant’s special
appearance); Petrie v. Widby, 194 S.W.3d 168, 175 (Tex. App.—Dallas 2006, no
pet.) (nonresident who travels to Texas and makes statements alleged to be
fraudulent is subject to specific jurisdiction in Texas).7
The majority concludes that the Texas Supreme Court’s statement in Kelly
that “the defendant’s corresponding burden to negate jurisdiction is tied to the
allegations in the plaintiff’s pleading” requires courts to look only to the
jurisdictional allegations alleged in the plaintiff’s petition. See Kelly, 301 S.W.3d at
658 (emphasis added). And, as a result, any jurisdictional facts alleged for the first
time in a response to a special appearance may not be considered. I disagree with
the majority’s conclusion for three reasons: (1) case law does not support the
majority’s interpretation; (2) the majority’s strict, technical approach is not in line
with other case law and procedural directives; and (3) the majority’s conclusion
changes the law in a way the parties could not have anticipated.
First, the majority acknowledges that several cases from this Court as well as
most of the other intermediate courts of appeals support my position that we should
look to the jurisdictional facts pleaded in the plaintiff’s petition, as well as the
7
I note that in connection with his special appearance, Saidara filed evidence that included his
declaration. To the extent that evidence negated Steward Health and Southwest General’s allegations, the
burden shifted back to Steward Health and Southwest General to show that the evidence was legally or
factually insufficient to negate personal jurisdiction. I further note that Steward Health and Southwest
General did not attach any evidence to their response to Saidara’s special appearance.
–23–
jurisdictional facts alleged in the plaintiff’s response to the nonresident defendant’s
special appearance. However, the majority states that the Texas Supreme Court has
not approved of this practice and has overruled our opinions to the contrary. I agree
with the majority that the Texas Supreme Court has not expressly approved of this
practice, but I disagree that it has rejected it.
This Court recently examined this practice in B.G.C. v. M.Y.R, No. 05-20-
00318-CV, 2020 WL 5987913, at *2 (Tex. App.—Dallas Oct. 9, 2020, pet. denied)
(mem. op.) and the Texas Supreme Court denied the defendant’s petition for review
on February 26, 2021. I acknowledge that the denial of a petition for review
indicates that “Texas Supreme Court is not satisfied that the opinion of the court of
appeals has correctly declared the law in all respects but determines that the petition
presents no error that requires reversal or that is of such importance to the
jurisprudence of the State as to require correction.” TEXAS RULES OF FORM: THE
GREENBOOK app. D (Tex. L. Rev. Ass’n ed., 14th ed. 2018). But this Court’s holding
that the plaintiff’s “original pleading as well as its response to the defendant’s special
appearance can be considered in determining whether the plaintiff satisfied its
burden” was at the very heart of B.G.C.’s petition for review and, as a result, the
Texas Supreme Court’s denial of the petition for review implies that it approves of
this well-established practice among the courts of appeals.
In Alliance Royalties, LLC v. Boothe, this Court specifically addressed Kelly
and concluded that Kelly “did not overrule or discuss [the] cases permitting
–24–
jurisdictional allegations to be included in a response to a special appearance.” 329
S.W.3d at 120–21.
Further, this Court would not be the first court of appeals sitting en banc to
reach a conclusion similar to the one I would reach. In Washington DC Party
Shuttle, LLC v. IGuide Tours, 406 S.W.3d 723, 738 (Tex. App.—Houston [14th
Dist.] 2013, pet. denied) (en banc), the Fourteenth District Court of Appeals noted
that the plaintiffs provided a basis for jurisdiction in their response to the special
appearance that was not in their petition and reiterated its prior holding that the trial
court may consider the plaintiffs’ response to the special appearance as well as its
pleadings when determining whether the plaintiff satisfied its initial burden.
Second, I agree that Kelly suggests we limit our review of the special
appearance issue to only the pleadings. However, I question the majority’s reliance
on Kelly as support for a strict, technical pleading requirement in light of the
subsequent Texas Supreme Court opinions in St. John Missionary Baptist Church v.
Flakes, 595 S.W.3d 211, 212 (Tex. 2020) and Horton v. Stovall, 591 S.W.3d 567(Tex. 2019). Both St. John and Horton rejected the appellate courts’ treatment of
cases and issues based on “technicalities.”
The majority reads Kelly to limit the source of the plaintiff’s jurisdictional
allegations to the plaintiff’s petition and appears to endorse a practice that could
require multiple amendments to the petition. While I agree that the plaintiff may
–25–
amend his petition to include additional, necessary jurisdictional allegations, Kelly
is distinguishable because in that case, the third-party plaintiff had failed to plead
any jurisdictional facts, and therefore the defendants were entitled to dismissal by
proving nonresidency. I disagree that additional arguments in the plaintiff’s
response to the special appearance are rendered meaningless because they were not
in the petition. The majority’s hyper technical holding does not serve judicial
economy and defies the principles enunciated in Texas Rule of Civil Procedure 1,
which requires us to obtain a just, fair, and impartial adjudication of the rights of the
litigants with expediency and the least expense possible as well as to give the rules
a liberal construction, and Rule 45, which requires all pleadings to be construed so
as to do substantial justice. See TEX. R. CIV. P. 1, 45. Such a requirement places
form over substance and allows a harmless procedural defect to defeat personal
jurisdiction.
In St. John, the Texas Supreme Court considered whether the courts of appeals
have the authority to order supplemental briefing. St. John, 595 S.W.3d at 212. In
the underlying opinion, this Court concluded that it did not have the authority to
order supplemental briefing because the Texas Rules of Appellate Procedure did not
allow the court to “sua sponte identify an issue not raised by a party and request
additional briefing or reformulate an appellant's argument into one not originally
asserted.” Id. at 213. The Texas Supreme Court disagreed with our premise that the
–26–
appellants had not raised the ecclesiastical-abstention doctrine in their brief and
reversed this Court's judgment. Id. at 214.
In Horton, the Texas Supreme Court noted that this Court held the appellant
did not demonstrate summary judgment was improper and, in fact, had “‘not
presented anything for [the Court] to review’ because the documents she cited as
raising a fact issue were not part of the summary-judgment record.” Horton, 591
S.W.3d at 568. This Court “primarily faulted [the appellant] for citing [ ] documents
in the appendix of her appellate brief instead of providing citations to the clerk’s
record.” Id “But rather than allowing [the appellant] an opportunity to rectify that
briefing defect, [this Court] treated [the appellant’s] citations to her appendix as
citations to the portion of the appellate record indicated on each appendix
document.” Id. This proved to be a problem for the appellant because, although the
appellant “correctly identified the documents she was relying on to support her
appellate issues and those documents were actually offered in opposition to [the
appellee’s] summary-judgment motions, [ ] the appendix [ ] cited [ ] those same
documents where they were attached to [the appellant’s] motion for continuance and
motion for new trial.” Id. The Texas Supreme Court reversed this Court and noted
the appellant cited the right documents, but she had the wrong record citations, and
the Texas Supreme Court concluded that this briefing inadequacy was easily
correctable. Id.
–27–
The Texas Supreme Court’s subsequent opinions in St. John and Horton
suggest that our review should not be restrained by such a strict, technical application
as suggested by the majority. In the context of defining the parties’ burdens in a
special appearance, I can see no meaningful distinction between the petition and the
response to the special appearance. Neither filing must be verified. Furthermore,
both the petition and response to the special appearance are submitted under the
signature of counsel—subject to Chapter 10 of the Civil Practices and Remedies
Code, Texas Rule of Civil Procedure 13, and the Texas Rules of Disciplinary
Procedure. See generally CIV. PRAC. & REM. §§ 10.001–.006; TEX. R. CIV. P. 13;
TEX. R. DISCIPLINARY P. 1.01–17.10. Many Texas lawyers and judges may well
question whether Horton and St. John overrule similar, overly technical applications
of the Texas Rules of Civil Procedure—especially when, as here, the key difference
is merely the title of the document. Such a restrictive reading would not be
consistent with Rule 45’s directive that “all pleadings shall be construed so as to do
substantial justice.” TEX. R. CIV. P. 45. As a result, I disagree with the majority’s
decision to overrule our prior opinions holding that we may look at the jurisdictional
facts pleaded in the plaintiff’s petition, as well as the jurisdictional facts alleged in
the plaintiff’s response to the nonresident defendant’s special appearance when
determining whether the plaintiff has met his burden to plead sufficient allegations
to invoke jurisdiction over a nonresident defendant under the Texas long-arm statute.
–28–
Third, I cannot agree with the majority’s conclusion because as I noted in
fn. 6, we have consistently held that an appellate court looks at the jurisdictional
facts pleaded in the plaintiff’s petition, as well as the jurisdictional facts alleged in
the plaintiff’s response to the nonresident defendant’s special appearance. The
posture of this case is unique because, although the majority changes the law in a
way the parties could not have anticipated, the majority affirms the trial court’s order
based on the new rule it adopts today. The case should be remanded in the interests
of justice to allow the parties an opportunity to plead in a manner consistent with the
majority’s new rule. See generally, Brown v. Ogbolu, 331 S.W.3d 530, 537 (Tex.
App.—Dallas 2011, no pet.) (appellate court has broad discretion to remand in
interest of justice and, as long as there is probability case has not been fully
developed, appellate court has discretion to remand rather than render decision);
Kondos v. Lincoln Prop. Co., 110 S.W.3d 716, 724 (Tex. App.—Dallas 2003, no
pet.).
(2) Application of the Texas Long-Arm Statute to Saidara
Second, I address Steward Health and Southwest General’s contention that
the trial court erred when it concluded that the Texas long-arm statute did not extend
to Saidara’s fraudulent contacts with Texas. They allege Saidara knowingly
misrepresented Prospect Medical’s intentions about the proposed transaction while
he was visiting Texas and claim that “the brunt of [their] injuries . . . were felt in
Texas.”
–29–
The long-arm statute extends Texas courts’ personal jurisdiction as far as the
federal constitutional requirements of due process will permit. See, e.g., PHC–
Minden, 235 S.W.3d at 166; Moki Mac, 221 S.W.3d at 575. Further, in addition to
fraud, Steward Health and Southwest General alleged claims against Saidara for
violation of the Texas Harmful Access to Computer Act, misappropriation of trade
secrets under the Texas Uniform Trade Secrets Act, and “unfair competition.” As
previously noted in the discussion of the fiduciary-shield doctrine, all of these are
tort claims. Accordingly, I would conclude the Texas long-arm statute extends
jurisdiction over Saidara because Steward Health and Southwest General alleged he
committed these torts in whole or in part in Texas. CIV. PRAC. & REM. § 17.042(2).
(3) Application of Minimum-Contacts Analysis to Saidara
Third, I address Steward Health and Southwest General’s argument that the
trial court erred when it concluded that it did not have specific jurisdiction over
Saidara because he had sufficient minimum contacts with Texas. They claim that
Saidara purposefully availed himself of the forum. However, they do not address
the “arises from or relates to” requirement that lies at the heart of specific jurisdiction
by defining the required nexus between the nonresident defendant, the litigation, and
the forum state. See Moki Mac, 221 S.W.3d at 579.
Steward Health and Southwest General generally argue that “Saidara had
substantial contacts with the State of Texas in connection with the transaction at the
root of this lawsuit,”—establishing jurisdiction over all of their claims—rather than
–30–
contending that specific jurisdiction exists as to Saidara’s jurisdictional contacts on
a claim-by-claim basis. In support of their argument, they cite this Court’s opinion
in Tabasso v. BearCom Group, Inc., 407 S.W.3d 822, 830 n.1 (Tex. App.—Dallas
2013, no pet.), for the proposition that “[i]f the court finds specific jurisdiction over
a defendant based on one cause of action, the court need not address jurisdiction as
to any other causes of action.” However, the Tabasso opinion was issued on June
26, 2013, and on August 31, 2013, the Texas Supreme Court impliedly disapproved
of that proposition in Moncrief when it held that specific jurisdiction requires courts
to analyze jurisdictional contacts on a claim-by-claim basis. See 414 S.W.3d at 150–
51.
Based on my review of Steward Health and Southwest General’s first
amended petition, I would conclude that their claims against Saidara arose from
different forum contacts, requiring us to analyze Saidara’s contacts on a claim-by-
claim basis.8 E.g., Moncrief, 414 S.W.3d at 150 (holding when multiple claims arise
out of nonresident defendant’s different forum contacts, plaintiff must establish
specific jurisdiction for each claim). Accordingly, for purposes of the minimum
8
In his dissenting opinion, Justice Carlyle states that Moncrief “did not hold that courts must always
analyze minimum contacts on a claim-by-claim basis.” I agree that such an analysis is required only when
the claims arise from different contacts. However, our agreement diverges with respect to his position that
“The plaintiff’s claims here[,] [including their statutory claims for misappropriation of trade secrets under
the under the Texas Uniform Trade Secrets Act and violation of the Texas Harmful Access by Computer
Act,] arise from or are related to the same forum contacts.” Footnote 11 provides a more detailed discussion
as to our differences of opinion.
–31–
contacts analysis, I group Steward Health and Southwest General’s claims according
to the forum contacts alleged.9
(a) Alleged Statutory Claims—Misappropriation of Trade Secrets
Under the Texas Uniform Trade Secrets Act and
Violations of the Texas Harmful Access by Computer Act
Steward Health and Southwest General alleged statutory claims against
Saidara for misappropriation of trade secrets under the Texas Uniform Trade Secrets
Act and violation of the Texas Harmful Access by Computer Act. 10 The operative
facts underlying those claims were that Saidara accessed and downloaded their
confidential and trade-secret information, which was contained in the virtual clean
room, for a purpose other than evaluating the proposed transaction.
In his declaration, which was attached to his special appearance, Saidara
testified that:
At the time [Steward Health and Southwest General] allege[d]
[Saidara] inappropriately downloaded confidential information or trade
secrets (September l4, 2018), [he] was located in Los Angeles,
California. [He] accessed information from the clean room for
legitimate purposes related to Prospect [Medical’s] due diligence of the
[p]roposed [t]ransaction, and solely in [his] capacity as a Clean Team
Member for Prospect [Medical] as its VP of Corporate Development.
9
The only issue before this Court is the trial court’s order granting Saidara’s special appearance.
10
Chapter 143 of the Texas Civil Practices & Remedies Code creates a civil cause of action when a
person or his property has been injured as a result of a violation of Chapter 33 of the Texas Penal Code if
the conduct constituting the violation was committed knowingly or intentionally. CIV. PRAC. & REM.
§ 143.001(a). Section 33.02 of the Texas Penal Code provides that a person commits an offense if the
person knowingly accesses a computer, computer network, or computer system without the effective
consent of the owner. TEX. PENAL CODE ANN. § 33.02(a).
–32–
Saidara does not contest that he downloaded information from the virtual clean room
and, on appeal, advises that it is “undisputed that [he] accessed documents related to
the [p]roposed [t]ransaction . . . from his computer in . . . California.” Rather, he
contends that his actions were legitimate and not inappropriate, and that the
download occurred in California.
In their response to the special appearance, Steward Health and Southwest
General did not attach any evidence to dispute Saidara’s statement that the allegedly
unauthorized download of information from the virtual clean room occurred in
California. Although Steward Health and Southwest General also alleged that, while
in Texas, Saidara received some of Southwest General’s highly confidential,
proprietary, and trade-secret information, including the identities and specialties of
Southwest General’s most important physicians, they do not argue or otherwise
connect that trade-secret information to the trade secrets contained in the virtual
clean room.
To support an exercise of jurisdiction, there must be a substantial connection
between Saidara’s contacts with Texas and the operative facts of the litigation. See
Old Republic, 549 S.W.3d at 560. The operative facts of the litigation that form the
basis of the statutory claims for misappropriation of trade secrets under the Texas
Uniform Trade Secrets Act and violation of the Texas Harmful Access by Computer
Act occurred in California where those trade secrets were allegedly downloaded
from the virtual clean room and where the allegedly unauthorized exercise of
–33–
dominion and control over those trade secrets occurred.11 The alleged contacts that
form the basis of these claims did not occur in Texas but outside the forum in
California. See Info. Servs. Grp., Inc. v. Rawlinson, 302 S.W.3d 392, 402, 404 (Tex.
App.—Houston [14th Dist.] 2009, pet. denied) (“Even if we assume that Rawlinson
ultimately obtained confidential information from the Texas-based servers and gave
it to EquaTerra in breach of the various restrictive covenants with the appellants,
there is no allegation or evidence that he did so in Texas. . . . On the facts before us,
the majority of the focus of any trial would be directed to Rawlinson’s alleged
wrongdoing in the U.K., not Texas.”).
The operative facts of Steward Health and Southwest General’s statutory
claims for misappropriation of trade secrets under the Texas Uniform Trade Secrets
Act and violation of the Texas Harmful Access by Computer Act do not involve any
Texas contacts by Saidara. Nor do the Texas contacts form the bases of those causes
of action. Accordingly, I would conclude the trial court did not err when it granted
Saidara’s special appearance as to Steward Health and Southwest General’s statutory
11
On this issue, I part company with Justice Carlyle’s dissent. Under his analysis, the relevant
jurisdictional contacts are those surrounding the improper means used to acquire the access to trade secrets.
And further under Justice Carlyle’s analysis, a person who knew of the improper means, but not that the
improper means were connected to Texas, could nonetheless be haled into a Texas court based on the
unilateral activity of a third party, not his own purposeful availment of the forum. I would conclude instead,
based on Texas Uniform Trade Secrets Act’s definition of “misappropriation” that the contacts surrounding
“acquisition, disclosure, or use” of trade secret information—turning on what the person “knew or had
reason to know” at the time—are dispositive. See CIV. PRAC. & REM. § 134A.002(3) (defining
“misappropriation”). My analysis, in contrast to Justice Carlyle’s, focuses on the nonresident’s acts by
which he acquired, disclosed, or used trade secret information, and the connection of those acts to Texas.
Here, because Saidara downloaded the trade secrets from the clean room on his computer in California, the
relevant acquisition, disclosure, or use of the information occurred in California, not Texas.
–34–
claims for misappropriation of trade secrets under the Texas Uniform Trade Secrets
Act and violation of the Texas Harmful Access by Computer Act. I agree with
Justice Carlyle that, at times, the legal system trails behind technological
advancement. However, we are duty bound to leave changes in statutory law to the
legislature. As an intermediate appellate court we must follow existing law and
respect the separation of powers established by our state, trusting the legislature to
amend or revise laws as necessary to address technological advancements even if
that process is slower than we would like. To that end, I encourage our legislature
to reevaluate the Texas Uniform Trade Secrets Act in light of current technological
advancements so that our future application of that law does not result in bizarre
outcomes.
(b) Alleged Common Law Claims—Fraud and “Unfair Competition”
Steward Health and Southwest General alleged common law claims against
Saidara for fraud12 and “unfair competition.”13 The operative facts for those claims
were that, during a visit to Texas, Saidara made intentional, material
12
To prevail on a common law fraud claim, a plaintiff must prove:
(1) the defendant made a false, material representation;
(2) the defendant knew the representation was false or made it recklessly as a positive
assertion without any knowledge of its truth;
(3) the defendant intended to induce the plaintiff to act upon the representation; and
(4) the plaintiff justifiably relied on the representation, which caused the plaintiff injury.
Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 496 (Tex. 2019).
13
Steward Health and Southwest General do not plead anything different from their fraud claim in
their unfair competition allegation.
–35–
misrepresentations as to Prospect Medical’s intent to purchase Southwest General’s
assets and, by misleading them, he received some of Southwest General’s highly
confidential, proprietary, and trade-secret information, including the identities and
specialties of Southwest General’s most important physicians (Proprietary
Information).14 Then, after Prospect Medical informed Steward Health that it was
no longer interested in acquiring the assets of Southwest General, Saidara used that
trade-secret information to make it more difficult for Southwest General to market
and sell its assets.
The contact that Steward Health and Southwest General alleged established
specific jurisdiction was Saidara’s trip to Texas to visit Southwest General. During
that visit, Saidara received a comprehensive tour of the facility and attended an
hours-long meeting with high-level agents of Steward Health, Southwest General,
and their investment banker to discuss the acquisition. They also alleged Saidara
made numerous telephonic and electronic communications relating to the proposed
transaction with Steward Health’s and Southwest General’s agents in Texas, and
while in Texas he received some of Southwest General’s Proprietary Information.
In his declaration, which was attached to his special appearance, Saidara
testified he made one trip to San Antonio, Texas, in connection with Prospect
14
Although they argue that Saidara “received” trade secrets while in Texas, Steward Health and
Southwest General specifically alleged that Saidara toured the Southwest General facility with Summerset
and it was Summerset who asked an unusual amount of questions about proprietary Southwest General data
and inquired about physician employment arrangements and compensation data.
–36–
Medical’s due diligence for the proposed transaction. He also stated that he engaged
in “conversations [and] activities related to the [p]otential [t]ransaction, in [his]
capacity as [the] [v]ice [p]resident of [d]evelopment for Prospect [Medical].” In his
special appearance, Saidara argued these conversations occurred while he was
outside Texas and, on appeal, he advises that “[i]t is undisputed that [he] . . . sent
e-mails from his work computer in . . . California.”
I look to Saidara’s actual business contacts, rather than what he thought, said,
or intended. See Michiana, 168 S.W.3d at 791. Although, as Saidara points out,
Steward Health and Southwest General do not specify the alleged content of
Saidara’s misrepresentations, they did specify that Saidara misrepresented Prospect
Medical’s intent to purchase Southwest General and that he made the
misrepresentations while in Texas as well as in telephonic and electronic
communications to individuals located in Texas. I would conclude this pleading is
sufficient. Cf. Urban v. Barker, No. 14-06-00387-CV, 2007 WL 665118, at *5 (Tex.
App.—Houston [14th Dist.] Mar. 6, 2007, no pet.) (mem. op.) (torts were not alleged
with sufficient specificity to warrant exercise of specific jurisdiction when record
fails to show where secret actions took place, where various shareholder agreements
were created, and what personal benefit the defendant received from the alleged
misrepresentations).
–37–
Saidara’s contacts with Texas were neither unilateral activities by Steward
Health and Southwest General, nor random and fortuitous.15 In furtherance of the
proposed acquisition of Southwest General’s assets by Prospect Medical, Saidara
traveled to Texas to tour the Southwest General facility and attended a meeting with
high-level agents of Steward Health, Southwest General, and their investment
banker to discuss the proposed transaction. See Moncrief, 414 S.W.3d at 153
(personal jurisdiction exists when nonresident agreed to attend business meetings in
Texas for purpose of obtaining benefits from those meetings). And it was during
this visit that he allegedly made misrepresentations and received some of Steward
Health and Southwest General’s alleged Proprietary Information. See Jani-King,
2016 WL 2609314, at *5 (nonresident who travels to Texas and either makes
statements alleged to be fraudulent or fails to disclose material information that he
is under a duty to disclose is subject to specific jurisdiction in Texas in a subsequent
action arising from statement or non-disclosure); Petrie, 194 S.W.3d at 175(nonresident who travels to Texas and makes statements alleged to be fraudulent is
subject to specific jurisdiction in Texas); Stein v. Deason, 165 S.W.3d 406, 415 (Tex.
15
I note that Saidara cites Information Services Group in support of his proposition that (a) his
contacts with Texas were the unilateral activity of Prospect Medical because he visited Texas for the sole
benefit of his employer and (b) he did not seek any personal benefit, advantage, or profit from his contacts
with Texas, and Steward Health and Southwest General allege only that he misrepresented Prospect
Medical’s intentions and misappropriated trade secrets for Prospect Medical’s use. See 302 S.W.3d at 401.
However, the cited proposition appears within a paragraph discussing whether the employee’s trips to Texas
related in any way to the breach-of-contract claims against him and appears to reference the fiduciary-shield
doctrine. 302 S.W.3d at 401. These arguments go to whether the fiduciary-shield doctrine operates to
prevent the exercise of personal jurisdiction over Saidara, and I already stated that I would conclude it does
not.
–38–
App.—Dallas 2005, no pet.) (nonresident defendant should have understood that his
having made representations in Texas could reasonably lead to being haled into court
in Texas). Saidara purposefully availed himself of the laws of Texas through his
purposeful contacts with Texas. He should have realized the consequences of
allegedly making representations and receiving some of Southwest General’s
Proprietary Information in Texas could include being haled into court in Texas.
To support an exercise of jurisdiction, there must be a substantial connection
between Saidara’s contacts and the operative facts of Steward Health and Southwest
General’s claims in the litigation. See Old Republic, 549 S.W.3d at 560. The
operative facts of the litigation are those facts the trial court will focus on to prove
Saidara’s liability. See Jani-King, 2016 WL 2609314, at *5. Saidara’s alleged
misrepresentations relating to the proposed transaction and acquisition of some of
Southwest General’s Proprietary Information while in Texas are at the core of
Steward Health and Southwest General’s fraud and “unfair competition” claims. As
a result, the contacts showing purposeful availment are operative facts of the
litigation for those claims.
I would conclude that with respect to Steward Health and Southwest General’s
common law claims for fraud and “unfair competition,” Saidara had minimum
contacts with Texas sufficient to support the exercise of specific jurisdiction.16
16
I express no opinion as to the merits of the claims against Saidara.
–39–
(4) Application of Fair Play and Substantial Justice
Fourth, because I would have concluded that minimum contacts with Texas
exist as to Steward Health and Southwest General’s common law claims for fraud
and “unfair competition,” I must determine whether the exercise of jurisdiction as to
those claims comports with traditional notions of fair play and substantial justice.
Steward Health and Southwest General argue the distance between Saidara’s
residence in California and Texas is reasonable, Texas has the clearest interest in
providing a forum for the resolution of this dispute, Saidara committed a tort in
whole or in part in Texas, their principal places of business are in Texas, the subject
of the proposed transaction was a Texas hospital, and judicial economy is promoted
because the claims against Prospect Medical and Prospect Health will be tried in
Texas. Saidara responds that the exercise of jurisdiction would offend traditional
notions of fair play and substantial justice because his minimal contacts with Texas
were not for his own benefit but for the benefit of his employer. Again, Saidara’s
argument goes to the applicability of the fiduciary-shield doctrine, which does not
apply in this case.
It was Saidara’s burden to present a compelling case that jurisdiction was
unreasonable. See Jani-King, 2016 WL 2609314, at *8. Despite his burden, Saidara
presented no argument or evidence to support the trial court’s conclusion “that the
exercise of personal jurisdiction over [] Saidara would not comport with traditional
notions of fair play and substantial justice.” Specifically, in his special appearance,
–40–
Saidara made no argument with respect to the requirement that the exercise of
personal jurisdiction over a nonresident defendant must comport with traditional
notions of fair play and substantial justice, although he did make a single reference
to that requirement in his recitation of the case law. Further, in his declaration,
Saidara did not address any of the five factors used to determine whether the
assertion of jurisdiction comports with traditional notions of fair play and substantial
justice. At most, he stated that he resides and works in California and he does not
regularly visit Texas.
Nevertheless, I will evaluate Saidara’s contacts in light of the five factors to
determine if the assertion of jurisdiction comports with traditional notions of fair
play and substantial justice. First, I evaluate Saidara’s burden. The record shows
that Saidara lives and works in California. While subjecting Saidara to suit in Texas
certainly imposes a burden on him, the same can be said of all nonresident
defendants. See id. at *6. And distance alone cannot defeat jurisdiction. See id.Further, Saidara, a corporate officer of Prospect Medical, has already shown his
willingness to travel to Texas by traveling to San Antonio to conduct due diligence
with respect to the proposed transaction. See id. I cannot conclude that further travel
to Texas will be an unreasonable burden to Saidara.
Second, I evaluate Texas’s interest in adjudicating the dispute. Steward
Health and Southwest General have alleged that Saidara committed torts while in
Texas. This implicates a serious state interest in adjudicating the dispute. See id.–41–
Finally, I evaluate Steward Health and Southwest General’s interest in
obtaining convenient and effective relief, the interstate judicial system’s interest in
obtaining an efficient resolution to disputes, and Texas’s common interest in
furthering fundamental, substantive social policies. The interests of Steward Health
and Southwest General in obtaining convenient and effective relief clearly weigh in
favor of Texas as they both have their principal place of business in Texas. See id.Further, judicial economy is promoted by adjudicating Steward Health and
Southwest General’s claims against Saidara in Texas because their claims against
Prospect Medical and Prospect Health, which are based on the same operative facts,
will also be adjudicated in Texas.17
I would conclude the trial court erred when it concluded that “the exercise of
personal jurisdiction over [] Saidara would not comport with traditional notions of
17
Saidara states in his appellee’s brief that the Massachusetts choice-of-law and mandatory forum
provisions contained in the confidentiality agreement are “not dispositive” but argues they are “relevant
and reinforce the conclusion that Texas courts lack jurisdiction over [him].” Although Saidara includes the
confidentiality agreement in the appendix to his brief, that document is attached to Prospect Medical’s
answer and Prospect Medical was not a party to the special appearance proceedings. While I am aware that
the trial court’s order generally states that it is “[b]ased on the parties’ pleadings,” common sense dictates
the trial court was referring to the parties to—Steward Health, Southwest General, and Saidara—and
pleadings filed in the special appearance proceeding, not all the parties to and pleadings filed in the
underlying lawsuit. See generally De Prins v. Van Damme, 953 S.W.2d 7, 18–19 (Tex. App.—Tyler 1997,
pet. denied) (special appearance hearing is separate and distinct from any hearing on merits of underlying
lawsuit). Accordingly, Saidara cannot now rely on the confidentiality agreement’s provisions to support
the trial court’s order. Cf. Ugwa v. Ugwa, No. 05-17-00633-CV, 2018 WL 2715437, at *2 (Tex. App.—
Dallas June 6, 2018, no pet.) (mem. op.) (documents attached to pleadings are not evidence unless offered
and admitted by the trial court). For these reasons, I cannot agree with Part I of Justice Schenck’s
concurring opinion, which concludes that the choice-of-law and forum selection provisions contained in
the confidentially agreement attached to Prospect Medical’s answer demonstrate the parties did not expect
any litigation between them to take place in Texas and therefore, the exercise of personal jurisdiction over
Saidara does not comport with traditional notions of fair play and substantial justice.
–42–
fair play and substantial justice” with respect to Steward Health and Southwest
General’s common law claims against Saidara for fraud and “unfair competition.”18
III. CONCLUSION
I would reverse in part and affirm in part the trial court’s order granting
Saidara’s special appearance, and remand the case for further proceedings consistent
with my concurring and dissenting opinion.
Finally, I note that the majority’s opinion in this en banc interlocutory appeal
creates the precise situation we sought to remedy in Chakrabarty v. Ganguly, 573
S.W.3d 413, 416–17 (Tex. App.—Dallas 2019, no pet.) (en banc). In Chakrabarty,
this Court sitting en banc overruled its prior authority in order to bring it within the
“long and unbroken line of authority to the contrary.” Id. at 417. In contrast, in this
interlocutory appeal, the majority acknowledges that several of this Court’s
opinions, as well as opinions from most of the other courts of appeals, state that
courts may consider facts alleged in a response to a special appearance as well as the
plaintiff’s petition to determine if the plaintiff pleaded sufficient allegations to
invoke jurisdiction under the Texas long-arm statute. Nevertheless, the majority
18
The fundamental concern raised by the reasoning in Part I of Justice Schenck’s concurring opinion
is that the analysis is self-contradicting and addresses the issues in this appeal with too broad of a brush.
On the one hand, he concludes that consideration of jurisdictional allegations in a response filed by a party
to the special-appearance proceeding is inappropriate—based on a very narrow interpretation of Rule
120a(3) that excludes a party’s response to a special appearance from the definition of “pleading” and, thus,
limits the response’s purpose solely to the introduction of evidence. Yet, on the other hand, Justice Schenck
concludes the exercise of personal jurisdiction over Saidara does not comport with traditional notions of
fair play and substantial justice—based on a very broad interpretation of “pleadings” that allows courts to
consider attachments to the pleadings of parties to the litigation who are not parties to the special-
appearance proceedings.
–43–
overrules this Court’s precedent to that effect. I believe that where the courts of
appeals have long agreed and the Texas Supreme Court has repeatedly denied the
petitions for review in such cases it is not for one court of appeals to break with that
precedent and create a conflict in the law where one did not previously exist. In
these types of situations, changes to widely accepted precedent among the courts of
appeals should be made by the Texas Supreme Court.
/Leslie Osborne//
190274f.p05 LESLIE OSBORNE
JUSTICE
Pedersen, J., joins.
Molberg, J., joins with respect to sections I and II(A), (B), (C)(1)–(2), (3)(b), and (4)
only. He does not join as to section II(C)(3)(a).
–44–