THE SUPREME COURT OF TEXAS
Post Office Box 12248
Austin, Texas 78711
(512)463-1312
X3URT OF APPEALS
;uurt or Appals uiswitt
August 31, 2007
Ms. Diana L. Faust Mr. David G. Cabrales
Cooper & Scully, P.C. Locke Liddell & Sapp LLP
900 Jackson Street, Suite 100 2200 Ross Avenue, Suite 2200 TYLER,TEXAS
CATHY S. LUSK, CLERK
Dallas, TX 75202 Dallas, TX 75201-6776
Mr. Mark A. Stinnett
Stinnett Thiebaud & Remington L.L.P.
1445 Ross Avenue, Ste. 2500
Dallas, TX 75202
RE: Case Number: 05-0823
Court of Appeals Number: 12-04-00259-CV
Trial Court Number: 2003-42-CCL2
Style: PHC-MINDEN, L.P. D/B/A MINDEN MEDICAL CENTER
v-
KIMBERLY-CLARK CORPORATION
Dear Counsel:
Today the Supreme Court of Texas delivered the enclosed opinion and judgment in the
above-referenced cause.
Sincerely,
E>u>*<^ a. v4oa^^
Blake A. Hawthorne, Clerk
by Claudia Jenks, Chief Deputy Clerk
Enclosures
cc: Mr. James K. Horstman
Ms. Susan Cassidy Cooley
Mr. Stephen A. Madsen
Mr. Kenneth Charles Cunningham
Ms. Cathy S. Lusk
Ms. Barbara Duncan
Mr. Roger Townsend
Mr. C. W. "Rocky" Rhodes
FILED IN COURT OF APPEALS
IN THE SUPREME COURT OF TEXAS
TYLER,TEXAS
=====
No. 05-0823
PHC-MINDEN, L.P. D/B/A MlNDEN MEDICAL CENTER,
PETITIONER,
Kimberly-Clark Corporation,
Respondent
On Petition for Review from the
Court of Appeals for the Twelfth District of Texas
Argued November 16, 2006
Chief Justice Jefferson delivered the opinion of the Court.
TheUnited States Constitution prohibits acourt from exercising jurisdiction overa party that
lacks minimum contacts with the forum. Personal jurisdiction has been described as either
specific—that is, based on contacts arising from the dispute at issue—or general, predicated on a
party's "continuous and systematic" contacts with the forum. Minimum-contacts analysis iseasily
muddled, however, as courts frequently import contacts relevant to one type of jurisdiction when
deciding the other. Additionally, courts sometimes impute contacts of related entities toeach other,
when mere relatedness is an insufficient basis on which to confer jurisdiction. Today, we must
determine whether a Louisiana hospital, either independently or through its parent corporation, has
continuous and systematic contacts with Texas. We conclude that it does not.
I
Factual and Procedural Background
While traveling through Louisiana on December 10, 2000, Texas resident Jajah Eddington
sought medical care at MHC-Minden Hospital ("Minden Hospital"), a 159-bed acute care hospital
located in Minden, Louisiana. Medical personnel treated Eddington's flu-like symptoms in the
emergency room and advised her to consult her primary care physician if her condition did not
improve. Four days later, Eddington was admitted to Good Shepherd Medical Center in Longview,
Texas, where she ultimately was diagnosed with toxic shock syndrome. That infection led to her
death on December 28, 2000.
DeWayne Eddington, individually and as next friend of Dewyn Eddington, and as
representative of Jajah Eddington's estate, sued Kimberly-Clark Corporation asserting product
liability, breach of warranty, and negligence claims. He alleged that Eddington's use of Kotex
tampons led to the infection that caused her death. On February 28, 2003, Kimberly-Clark filed a
third-party petition againstPHC-Minden, L.P. ("Minden"), whichownsMindenHospital, asserting
that Minden's negligence proximately caused Eddington's death.' Minden is a nonresident ofTexas
anda wholly ownedsubsidiary of Province Health Care("Province"). Kimberly-Clark pleaded that
Province, whose headquarters is in Tennessee, did business in Texas and that its forum-related acts
1Kimberly-Clark also filed third-party claims against Good Shepherd Medical Center; Longview Emergency
Medicine Associates; Schumacher Groupof Louisiana; Dr. Russell Riggs; Dr. Rodney Slone;Dr. DonFerguson; D.Lea,
R.N.; C Bennett, R.N.; and C Coleman, R.N.
should be imputed to Minden because: (1) Province owns Minden; (2) Province and Minden share
officers, directors, and "common departments or business"; (3) Province and Minden do not
differentiate their operations and have failed to erect "formal barriers" between themselves; and (4)
Province's officers anddirectors control Minden's policies. Minden filed a special appearance and,
subject thereto, a general denial. The parties conducted extensive discovery relating to the
jurisdictional issue. After a hearing, thetrial court concluded ithadgeneral jurisdiction overMinden
and denied the special appearance.
The court of appeals affirmed, reasoning that (1) Minden itself had "continuous and
systematic contacts with Texas"; and (2) Minden and Province operated as a single business
enterprise, and Minden, through Province, did business in Texas. 202 S.W.3d 193, 203-04. We
granted Minden's petitionfor review to decide whether Texas courtshave general jurisdiction over
Minden.2 49 Tex. Sup. Ct. J. 950 (Aug. 25, 2006).
II
General Jurisdiction
The Texas long-arm statute governs Texas courts' exercise of jurisdiction over nonresident
defendants. See Tex. Civ. Prac. & Rem. Code §§ 17.041-.045. That statute permits Texas courts
to exercise jurisdiction over a nonresident defendant that "does business" in Texas, and the statute
identifies some activities that constitute "doing business." Id. § 17.042. The list, however, is not
exclusive. BMC Software Belg., N. V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). Wehave held
that section 17.042's language extends Texas courts' personal jurisdiction "as far as the federal
Charles W. "Rocky" Rhodes and Riata Energy, Inc. submittedamicus curiae briefs.
3
constitutional requirements ofdue process will permit." U-AnchorAdver., Inc. v. Burt, 553 S.W.2d
760,762 (Tex. 1977). Thus, we rely on precedent from the United States Supreme Court and other
federal courts, as well as our own decisions, in determining whether a nonresident defendant has
negated all bases ofjurisdiction. See BMC Software, 83 S.W.3d at 795-796. Personal jurisdiction
over nonresident defendants is constitutional when: (1) the defendant has established minimum
contacts with the forum state, and (2) the exercise ofjurisdiction comports with traditional notions
offair play and substantial justice. Int'lShoe Co. v. Washington, 326 U.S. 310, 316 (1945).
In Helicopteros Nacionales de Colombia, S.A. v. Hall, the Supreme Court adopted the terms
"specific" and "general" to describe the differing types ofpersonal jurisdiction. Helicopteros, 466
U.S. 408, 414 (1984) (citing Arthur T. von Mehren & Donald T. Trautman, Jurisdiction to
Adjudicate: ASuggestedAnalysis, 79 Harv. L. Rev. 1121,1144-1164 (1966)). The Court defined
specific jurisdiction as "arising out of or related to the defendant's contacts with the forum." Id. at
n.8. By contrast, the Court referred togeneral jurisdiction as"personal jurisdiction over a defendant
ina suit not arising out oforrelated tothe defendant's contacts with the forum."3 Id. atn.9 (citations
omitted).
In Helicopteros, the Court concluded that Texas courts did not have general jurisdiction over
a Colombian company, Helicol. One ofHelicol's helicopters had been involved ina crash in Peru,
3The use ofthe terms "specific" and "general" to connote differing types ofpersonal jurisdiction has been
criticized as contributing to the confusion among courts as to the quality and quantity ofcontacts required for each. See
Mary Twitchell, The Myth of General Jurisdiction, 101 Harv. L. Rev. 610, 612-13 (1988) (suggesting that the
''general/specific framework" has led to ambiguity and suggesting the terms "dispute-blind" and "dispute-specific"
instead). Ironically, Professors von Mehren and Trautman suggested the terms "specific" and "general" to alleviate the
confusion associated with the "in rem," "quasi in rem," and "in personam" jurisdictional terminology, von Mehren &
Trautman, Jurisdiction to Adjudicate, 79 Harv. L. Rev. at 1135-36 (noting that "some ofthe terminology conventionally
employed in Anglo-American discussions ofjurisdiction to adjudicate is not very helpful").
and the survivors and representatives of the decedents sued Helicol in state district court in Harris
County, Texas. Helicol filed a special appearance and moved to dismiss the case, but the trial court
denied the motion. The court ofappeals, however, agreed with Helicol that in personam jurisdiction
over Helicol was lacking. Helicopteros Nacionales de Colombia, S.A. v. Hall, 616 S.W.2d 247 (Tex.
App.—Houston 1981). Our Court reversed. Hall v. Helicopteros Nacionales de Colombia, S.A.,
638 S.W.2d 870 (1982).
The Supreme Court granted certiorari, and it summarized the pertinent jurisdictional facts:
Itis undisputed thatHelicol does nothave a place of business in Texas and never has
been licensed to do business in the State. Basically, Helicol's contacts with Texas
consisted ofsending its chiefexecutive officer to Houston for acontract-negotiation
session; accepting into its New York bank account checks drawn on a Houston bank;
purchasing helicopters, equipment, and training services from Bell Helicopter for
substantial sums; and sending personnel to Bell's facilities in Fort Worth for training.
Helicopteros, 466 U.S. at 416. The Court concluded that the CEO's trip to Houston could not be
described as a"continuous or systematic" contact. Id. Similarly, it held that Helicol's acceptance
ofchecks drawn on a Houston bank was of"negligible significance." Id. at 416. The Court held,
relying on a 1923 unanimous opinion written by Justice Brandeis, that "purchases and related trips,
standing alone, are not a sufficient basis for a State's assertion ofjurisdiction." Id. at 417 (citing
Rosenberg Bros. &Co. v. Curtis Brown Co., 260 U.S. 516 (1923)).
The point at which jurisdictional contacts reach atipping point, however, has eluded precise
formulation. Beyond stating that mere purchases and related travel are not enough, the Supreme
Court has given little guidance on the appropriate inquiry for general jurisdiction, although its
Helicopteros conclusion that general jurisdiction was improper suggests that the requisite level of
contacts is fairly substantial. 16 James Wm. Moore et al., Moore's Federal Practice §
108.41 [3] (3d ed. 2007); 4 charles Alan Wright & Arthur R. Miller, Federal Practice &
Procedure § 1067.5 (2007) (noting that the Court's rejection of each contact and its failure to
aggregate contacts "suggests very stronglythat the threshold contacts required for a constitutional
assertion ofgeneral jurisdiction over anonresident defendant are very substantial, indeed"). Perkins
v. Benguet Consolidated Mining Co., the only case in which that court has upheld a finding of
general jurisdiction, offers aninsight into thenature of thecontacts required. Perkins, 342 U.S. 437
(1952). In assessing whether the nonresident defendant's Ohio contacts were sufficient to warrant
a finding of general jurisdiction, the Court noted that the company's president, who was also the
general manager and principal shareholder, maintained an Ohio office inwhich he "did many things
on behalf of the company." Id. at 447-48. He maintained company files in Ohio, carried on
correspondence from there, drew and distributed salarychecksfrom his Ohio office, used two Ohio
bank accounts for company funds and had an Ohio bank act as transfer agent for the company's
stock, held directors' meetings in Ohio, supervised policies dealing with the rehabilitation of the
corporation's properties in the Philippines there, and dispatched funds from Ohio bank accounts to
cover purchases of machinery for such rehabilitation. Id. The Court concluded that the company
"carried on in Ohio a continuous and systematic supervision of the necessarily limited wartime
activities of thecompany," andeven though "nomining properties in Ohio were owned oroperated
by the company, many of its wartime activities were directed from Ohio and were being given the
personal attention of its president in that State at the time he was served with summons." Id. at 448.
The Court held that "under the circumstances above recited, itwould not violate federal due process
for Ohio either to take or decline jurisdiction ofthe corporation in this proceeding." Id.
Ageneral jurisdiction inquiry, therefore, is very different from aspecific jurisdiction inquiry
and involves a "more demanding minimum contacts analysis," CSR, Ltd. v. Link, 925 S.W.2d 591,
595 (Tex. 1996), with a "substantially higher" threshold, 4 Wright &Miller, Federal Practice
&PROCEDURE § 1067.5. Usually, "the defendant must be engaged in longstanding business in the
forum state, such as marketing or shipping products, or performing services or maintaining one or
more offices there; activities that are less extensive than that will not qualify for general in personam
jurisdiction." 4Wright &Miller, Federal Practice &Procedure § 1067.5; see also Hall, 638
S.W.2d at 882 (Pope, J., dissenting) (noting that "substantial and continuous activity" required for
general jurisdiction suggests that defendant "must establishsome close substantial connection with
the state approaching the relationship between the state and its own residents"); 16 MOORE'S
Federal Practice § 108.41 [3] (stating that general jurisdiction "typically requires the defendant
to have an office in the forum state"); Lea Brilmayer, AGeneral Look at General Jurisdiction, 66
Tex. L. Rev. 723, 742 (1988) (proposing that "the basic inquiry must be whether the defendant's
level of activity rises to the level of activity of an insider, so that relegating the defendant to the
political processes isfair"); Charles W. "Rocky" Rhodes, Clarifying GeneralJurisdiction, 34 Seton
Hall L. Rev. 807, 811 (2004) (suggesting that a proper general jurisdiction query should evaluate
whether the defendant engaged in activities in the forum state similar in frequency and nature to the
activities oflocal businesses); Mary Twitchell, The Myth ofGeneralJurisdiction, 101 HARV. L. REV.
610,635 (1988) (noting that "traditional indicia" ofgeneral jurisdiction are "a home base, an agent
for the service ofprocess, a local office, or the pursuance ofbusiness from a tangible locale within
the state").
General jurisdiction has been described as "dispute-blind," an exercise of the court's
jurisdiction made without regard to the nature of the claim presented. Twitchell, The Myth of
General Jurisdiction, 101 HARV. L. Rev. at 613. It involves acourt's ability to exercise jurisdiction
over a nonresident defendant based on any claim, including claims unrelated to the defendant's
contacts with the state. 16 Moore's FederalPractice §108.40. Some commentators suggest that
courts assessing general jurisdiction employ an analytical device to determine whether the
jurisdiction is, in fact, dispute-blind. Twitchell, The Myth ofGeneral Jurisdiction, at 680; Rhodes,
Clarifying General Jurisdiction, 34 SETON Hall L. Rev. at 819. They propose that the court
construct a hypothetical claim without any forum connection "to insure that any related forum
activities of the defendant are not improperly infiltrating the dispute-blind query." Clarifying
General Jurisdiction, 34 Seton Hall L. Rev. at 819. For example:
[A]re the corporate defendant's actual activities in California so pervasive and
extensive that it should be amenable to theadjudicatory jurisdiction of California for
a hypothetical employment discrimination claim filed by a New York citizen
employed at corporate headquarters in New York? Or, with respect to a foreign
corporation, dothecorporation's actual California contacts support jurisdiction even
for a hypothetical cause of action arising from its sale of a product in Germany that
injured a German citizen?
Id. at 819-20. Such an inquiry properly frames the issue, as general jurisdiction is based solely on
the defendant's "continuous and systematic" contacts with the forum. Helicopteros, 466 U.S. at416.
A
Minden's Contacts
With this inmind, we turn to an analysis ofMinden's Texas contacts, as the court ofappeals
concluded that Minden had "continuous and systematic contacts with Texas" sufficient to support
general jurisdiction. 202 S.W.3d at 204. We first determine the appropriate time period for
assessing contacts for purposes of general jurisdiction, an issue on which our courts of appeals are
in conflict. Some examine the defendant's forum-related activities up to the timeof theoccurrence
that prompted thesuit. See MedCost, LLC v. Loiseau, 166 S.W.3d 421,434(Tex. App.—Austin
2005, no pet.); Schott Glas v. Adame, 178 S.W.3d 307, 313-14 (Tex. App.—Houston [14th Dist.]
2005, pet. denied); AmQuip Corp. v. Cloud, 73 S.W.3d 380, 388 (Tex. App.—Houston [1st Dist.]
2002, nopet.). Others focus on contacts upto thetime of filing suit. See, e.g., Equitable Prod. Co.
v. Canales-Trevino, 136 S.W.3d 235, 237-38, 245 (Tex. App.—San Antonio 2004, pet. denied)
(considering corporate defendant's relocation from Texas, which occurred after the cause of action
accrued but before suit was filed, for purposes of determining jurisdiction); see also Tuscano v.
Osterberg, 82 S.W.3d 457, 467 (Tex. App.—El Paso 2002, no pet.) (holding that jurisdictional
contacts were "too attenuated in time," because such activities occurred more than "three years
before service of this suit was effected"). Another—the court of appeals in this case—noted the
conflict and assessed contacts under both timetables.4 202 S.W.3d at 203 ("A relevant continuous
contact inthis analysis includes those contacts overa period up to the date of injury ... or upto and
including the date suit commenced ... .").
4This conflict gives us jurisdiction over this interlocutory appeal. Tex. Gov't Code §22.225(c).
9
We conclude that the relevant period ends atthe time suit is filed. As noted above, general
jurisdiction is dispute-blind; accordingly, and in contrast to specific jurisdiction, the incident made
the basis of the suit should not be the focus in assessing continuous and systematic
contacts—contacts on which jurisdiction over any claim may be based. See Charles W. "Rocky"
Rhodes, The Predictability Principle in Personal Jurisdiction Doctrine: ACase Study ofthe Effects
ofa "Generally" Too Broad, But "Specifically" Too Narrow Approach to Minimum Contacts, 57
Baylor L. Rev. 135, 238 (2005) (noting that "analyzing the contacts at the time of accrual is not
appropriate under the proper explanation ofgeneral jurisdiction asdispute-blind general adjudicative
authority"); see also 4 Wright &Miller, Federal Practice &Procedure § 1067.5 (noting that
"a court should consider all of a defendant's contacts with the forum state prior to the filing of the
lawsuit"). We also agree that "amere one-time snapshot ofthe defendant's in-state activities" may
not be sufficient, see Rhodes, Predictability Principle, 57 Baylor L. Rev. at 239, and contacts
should be assessed over a reasonable number of years, up to the date suit is filed, see Access
Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 717 (5th Cir. 1999). This includes contacts
at the time the cause of action arose, and it comports with the Supreme Court's guidance on the
issue, as well as our prior caselaw. See Helicopteros, 466 U.S. at 409-11 (evaluating contacts over
the seven-year periodbeforesuit was filed); American Type Culture Collection, Inc. v. Coleman, 83
S.W.3d 801, 807-08 (Tex. 2002) (assessing contacts over the twenty-year period preceding suit).
We nowturnto Minden'scontacts up to thetime of suit. A general jurisdiction inquiry can
be tedious, as it "demands . . . that all contacts be carefully investigated, compiled, sorted, and
analyzed for proofof a pattern of continuing and systematic activity." Schlobohm v. Schapiro, 784
10
S.W.2d 355, 359 (Tex. 1990). In conducting this dispute-blind inquiry, Jajah's Eddington's status
as a Texas resident, her treatment in Minden Hospital's emergency room, and her family's choice
not to sue Minden are irrelevant. Instead, we focus solely on Minden's contacts with Texas. Minden
is a nonresident limited partnership that owns a hospital licensed by the state ofLouisiana. Minden's
only facility is in Minden, Louisiana, and ninety percent of its patients reside within a twenty-five
mile radius ofMinden Hospital. Minden does notadvertise inTexas. ItownsnoTexas property and
has no Texas office or bankaccounts, nor does it maintain a registered agent for service of process
here. Thecourtof appealsreliedon threecategories of contacts in determining that Minden'sTexas
contacts were continuous and systematic: (1) Minden employees' attendance at seminars in Texas;
(2) Minden's purchases from vendors with Texas addresses; and (3) three contracts with Texas
entities. We examine each in turn.
1. Texas Trips
Theevidence showedthat,since 1999, Minden employees attended two Province-sponsored
meetings in Dallas. These isolated trips fall short of the "continuous and systematic contact" the
Supreme Courtrequires. In Helicopteros, the Supreme Court rejectedthe notion that multiple trips
to Fort Worth supported generaljurisdiction, noting that the trips did not "in any way enhance[] the
company's contacts with Texas." 466 U.S. at 418; see also Kulko v. California Superior Court, 436
U.S. 84,93 (1978) (basing Californiajurisdiction on 3-dayand 1-daystopovers in that State"would
make a mockery of due process limitations on assertion of personal jurisdiction); Nat 7Indus. Sand
Ass 'n v. Gibson, 897 S.W.2d 769, 774 (Tex. 1995) (concluding that attending a meeting in Texas,
as well as periodic mailings to Texas members, "presented no evidence of general jurisdiction").
We agree with that analysis.
2. Payments to Texas Vendors
Since October 1,1999, Minden paid $1,508,467.20 to 136 entities with Texas addresses. The
largest payment, $515,650.15, was to Alcon Laboratories in Dallas, Texas, and the second largest,
$209,997.36, to Centerpoint Energy in Houston, Texas. Most ofthe remaining payments are for less
than $10,000.00 each. In Helicopteros, 466 U.S. at 418, the Supreme Court held that "mere
purchases, even if occurring at regular intervals, are not enough to warrant a State's assertion ofin
personam jurisdiction over a nonresident corporation in a cause of action not related to those
purchase transactions." And we have recognized that "purchases from Texas vendors will not alone
support the exercise ofgeneral jurisdiction." American Type Culture Collection, 83 S.W.3d at808.
We conclude that the payments to Texas vendors do not support general jurisdiction over Minden
in Texas.
3. Contracts with Texas Entities
The court ofappeals also identified three contracts with aTexas connection: (1) aSeptember
23, 2003 contract with Cox Business Services, a Tyler, Texas-based company, for internet service
(at a charge of $59.95 per month) and a cable modem; (2) a July 2002 contract with Lone Star
Research, located in The Woodlands, Texas, pursuant to which Lone Star Research would conduct
a one-time marketing survey of200 adult residents in Minden Hospital's service area; and (3) an
April 2001 professional services agreement with Horizon Radiology, P.A., a Texas company,
12
whereby Horizon would provide specialty coverage (via teleradiology equipment) to Minden
Hospital, in exchange for $1600 per month.
We agree with the court of appeals that the 2003 Cox contract, entered into after suit was
filed, is irrelevant to the jurisdictional inquiry here. 202 S.W.3d at 203. The 2002 Lone Star
contract pursuant to which a Texas company conducted a marketing study of residents in Minden
Hospital's service area—presumably Louisiana, as ninety percent of the hospital's patients live
within twenty-five miles of the hospital—does not establish a continuous and systematic Texas
contact. Lone Star agreed to conduct 200 telephone interviews and analyze the data within a week
of the survey's completion, in exchange for $5,200. This type of sporadic Texas contact is not
substantial enough for general jurisdiction.
Of the three contracts, the Horizonagreement has the most substantial connection to Texas.
The agreement, signed in 2001 and renewed twice thereafter, required that Louisiana-licensed
physicians (located in Texas) provide teleradiology services, for which Minden supplied the
necessary equipment, in exchange for $1600 per month. Even this agreement, however, does not
support general jurisdiction. Hiring a contractor to perform such limited services in the forum state
does not equate to "continuous and systematic contacts."
Even when amassed, Minden's Texas contacts simply are not "continuous and systematic
general business contacts" sufficient to support general jurisdiction, particularly when compared to
the substantial, regular business activities conducted by the nonresident defendant in Perkins.
Helicopteros, 466 U.S. at 416; Perkins, 342 U.S. at 447-48. Instead, the facts here are more like
13
those described in Helicopteros:the nonresident defendant had limited contacts with Texas but none
sufficient to support general jurisdiction. Accordingly, the court of appeals erred in holding
otherwise.
B
Jurisdictional Veil-Piercing
As its second basis for general jurisdiction, the court of appeals imputed Province's Texas
contacts to Minden, concluding the two entities operated as a single business enterprise and that
Minden, through Province, did business in Texas. In 1925, the Supreme Court of the United States
considered whether a North Carolina court had jurisdiction over a nonresident parent corporation
whose subsidiary did business in North Carolina. Cannon Mfg. Co. v. Cudahy Packing Co., 267
U.S. 333, 335 (1925). In affirming the district court's dismissal for lack of jurisdiction, the Court
held:
Through ownership ofthe entire capital stock and otherwise, the defendant dominates
[its subsidiary], immediately and completely; and exerts its control both
commercially and financially in substantiallythe same way, and mainly through the
same individuals, as it does over those selling branches or departments ofits business
not separately incorporated which are established to market the [defendant's]
products in other states. The existence of the [subsidiary] as a distinct corporate
entity is, however, in all respects observed. Its books are kept separate. All
transactions between the two corporations are represented by appropriate entries in
their respective books in the same way as if the two were wholly independent
corporations.
Id. The Court concluded that "the corporate separation, though perhaps merely formal, was real. It
was not pure fiction." Id. at 337.
14
The Court has never disavowed Cannon, despite an opportunity to do so. Instead, it
essentially echoed the Cannon rule in Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13
(1984). See William A. Voxman, Comment, Jurisdiction over a Parent Corporation in Its
Subsidiary's State ofIncorporation, 141 U.Pa. L. Rev. 327,339(1992) (noting thatKeeton footnote
implicitly recognized Cannon's continuing validity). In that case, then-Justice Rehnquist, writing
for the Court, noted that "jurisdiction over a parent corporation [does not] automatically establish
jurisdiction over a wholly owned subsidiary. . . . Each defendant's contacts with the forum State
must be assessed individually." Keeton, 465 U.S. at 781 n. 13;see also Voxman, 141 U.Pa. L. Rev.
at 338 (noting that "[t]heclear implication of Rehnquist's assertion is thatthe nature of the parent-
subsidiary relationship may wellbe a factor in determining whether jurisdiction comports with due
process, but the existence of the relationship will not, in andof itself, be dispositive of the issue").
The Fifth Circuit Court of Appeals followed Cannon in Hargrave v. Fibreboard Corp.:
Cannon . . . stands for the proposition that so long as a parent and subsidiary
maintain separate and distinct corporate entities, the presence ofone in a forum state
may not be attributed to the other. Cases in this circuit appear to have followed the
Cannon rule in applying the Texas long-arm statute, although sometimes without
explicitcitation. We have notedoftenthat 100% stockownership and commonality
ofofficers and directors are notalone sufficient to establish analter ego relationship
between two corporations. Generally, our cases demand proof of control by the
parent over the internal business operations and affairs of the subsidiary in order to
fuse the two for jurisdictional purposes. The degree of control exercised by the
parent must be greater than that normally associated with common ownership and
directorship. All the relevant facts andcircumstances surrounding the operations of
the parent and subsidiary must beexamined to determine whether two separate and
distinct corporate entities exist.
15
Hargrove, 710 F.2d 1154, 1160 (5th Cir. 1983)(citations omitted). The court held that the two
corporations at issue "maintained a degree ofcorporate separation that was more than superficial"
and "[t]he policy making authority held and exercised by [the parent] was no more than that
appropriate for a sole shareholder of a corporation" and not enough to warrant the extraterritorial
exercise ofjurisdiction over that shareholder. Id. at 1161. The court concluded: "The Lone Star of
Texas may shine brightly throughout the world, but its long arm is not judicially all encompassing."
Id.
We recently followed Hargrave (and, by implication, Cannon) in explaining when the
contacts of a related corporate entity may be considered for purposes of determining general
jurisdiction. BMC Software Belg, N.V. v. Marchand, 83 S.W.3d 789, 795-796 (Tex. 2002). We
held that "[personal jurisdiction may exist over anonresident defendant ifthe relationship between
the foreign corporation and its parentcorporation thatdoesbusiness in Texas is onethatwould allow
the court to impute the parent corporation's 'doing business' to the subsidiary." Id. at 798 (citing
Hargrave, 710 F.2d at 1159 and Walker v. Newgent, 583 F.2d 163, 167 (5th Cir. 1978)). The
rationale for exercising jurisdiction is that "the parent corporation exerts such domination and
control over its subsidiary 'that they do not in reality constitute separate and distinct corporate
entities but are one and the same corporation for purposes ofjurisdiction.'" Id. (quoting Hargrave,
710 F.2d at 1159 (citations omitted)). We required that the party seeking to ascribe one
corporation's actions to another by disregarding their distinct corporate entities prove this allegation,
because Texas law presumes that two separate corporations are distinct entities. Id.; accord 4A
Wright & Miller, Federal Practice & Procedure § 1069.4 (noting a "reluctance to exercise
1O
personal jurisdiction overa subsidiary merely because itsparent corporation is doing business inthe
forum state"). We concluded that there was no evidence to support the trial court's finding of
general jurisdiction over a Belgian subsidiary based on allegations it was the alter ego of its
American parent. BMCSoftware, 83 S.W.3d at 801.
1. Single Business Enterprise
Here, the court of appeals held that Province and Minden operated as a single business
enterprise—a theory we have never endorsed—and, therefore, Province's Texas contacts could be
imputed to Minden.5 202 S.W.3d at 202; see Southern Union Co. v. City ofEdinburg, 129 S.W.3d
74, 86-87 (Tex. 2003) (noting that this Court "has never considered the 'single business enterprise'
concept in any detail" and declining to decide "whether a theory of'single business enterprise' isa
necessary addition to Texas law regarding the theory of alter ego for disregarding corporate
structure"). In doing so, the court of appeals examined eight factors as theyrelated to Minden and
Province: (1) common employees, (2) common offices, (3) centralized accounting, (4) payment of
wages by one corporation to another corporation's employees, (5) common business name, (6)
services rendered by the employees of one corporation on behalf of another corporation, (7)
undocumented transfers of funds between corporations, and (8) unclear allocation of profits and
losses between corporations. 202 S.W.3d at 201-02. The court's analysis failed to recognize,
5The record contains no evidence regarding the structure ofProvince's ownership ofTexas hospitals. That is,
there is no evidence regarding whether those hospitals are owned directly by Province or instead by a wholly owned
subsidiary like Minden. The parties assume that Province (rather than its subsidiaries) does business in Texas; for
purposes of our analysis, we make the same assumption.
17
however, that veil-piercing for purposes of liability ("substantive veil-piercing") is distinct from
imputing one entity's contacts to another for jurisdictional purposes ("jurisdictional veil-piercing").
Courts have acknowledged that jurisdictional veil-piercing and substantive veil-piercing
involve different elements ofproof. See, e.g., Wells Fargo &Co. v. Wells Fargo Express Co., 556
F.2d 406, 425 (9th Cir. 1977) (noting that undercapitalization, "which is important to deciding
whether to pierce the veil raised by asubsidiary corporation in order to hold the parent corporation
liable for failure ofthe subsidiary to meet its debts, may not be relevant to a showing that the two
corporations are in fact one so as to establish that the out-of-state corporation—be it parent or
subsidiary—is present within the forum forjurisdictional purposes"; instead, "the operative question
is whether the two corporations are in fact mere 'divisions' or 'branches' of a larger whole");
Daimler-Benz Aktiengesellschaft v. Olson, 21 S.W.3d 707, 721 n.5 (Tex. App.—Austin 2000, pet.
dism'd w.o.j.) ("Although many of the factors relevant to [determining whether subsidiaries'
contacts should be imputed to parent] may also be relevant in determining whether a parent
corporation should be liable for the actions ofits subsidiary, the determination whether two corporate
entities are one and the same for jurisdictional purposes is distinct."), cert, denied, 535 U.S. 1077
(2002); see also 2-32 William V. Dorsaneo, Texas Litigation Guide § 32.06 (2005). This
makes sense in light of the fact that personal jurisdiction involves due process considerations that
may not be overriden by statutes or the common law. Cf City ofMonroe Employees Ret. Sys. v.
Bridgestone Corp., 399 F.3d 651,667-668 (6th Cir. 2005) (refusing, in case involving jurisdictional
allegations based on alleged "control person" under the securities laws, to "substitute our analysis
ofthe securities laws' substantive bases for liability for the required, due-process based personal
18
jurisdiction analysis"); AT&TCo. v. Compagnie Bruxelles Lambert, 94F.3d 586,591 (9thCir. 1996)
(concluding that "liability is not to be conflated with amenability to suit in a particular forum.
Personal jurisdiction has constitutional dimensions, and regardless ofpolicy goals, Congress cannot
override the due process clause, the source ofprotection for non-resident defendants."); In re Baan
Co. Sec. Litig., 245 F. Supp. 2d 117,129 (D.D.C. 2003) (noting thatliability under theSecurities Act
"cannot on its own support personal jurisdiction," as such an approach "impermissibly conflates
statutory liability with the Constitution's command that the exercise ofpersonal jurisdiction must be
fundamentally fair"); Michiana EasyLivin' Country, Inc. v. Holten, 168 S.W.3d 777, 790-91 (Tex.
2005) (rejecting theory that where defendant "directed a tort" was relevant inquiry for specific
jurisdiction, as such a rule improperly "equat[ed] the jurisdictional inquiry with the underlying
merits"); Natl Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995) (observing that
"[conspiracy as an independent basis for jurisdiction has been criticized as distracting from the
ultimate due process inquiry: whether the out-of-statedefendant's contact with the forum was such
that it should reasonably anticipate being haled into a court in the forum state" and declining to
recognize personal jurisdiction based on conspiracy allegation); John A. Swain &Edwin E. Aguilar,
Piercing the Veil to Assert Personal Jurisdiction Over Corporate Affiliates: An Empirical Study of
the Cannon Doctrine, 84 B.U.L. Rev. 445,453 (2004) (noting that "the principle oflimited liability
is statutory and does not speak to judicial jurisdiction").
For this reason, fraud—which is vital to piercing the corporate veil under section 21.223 of
the Business Organizations Code—has no place inassessing contacts to determine jurisdiction. See
Tex. Bus. ORGS. Code § 21.223. Similarly, some of the factors courts look to in determining
19
whether an entity may be held liable as a "single business enterprise" are irrelevant to an analysis
ofjurisdictional contacts. Forexample, thecourtofappeals examined whetherProvince andMinden
shared acommon name and concluded that "[Minden's] partnership name and initials, PHC-Minden,
L.P. can be construed as a reference to Province Healthcare Company." 202 S.W.3d 201. Whether
two related entities share a common name, however, does not affect whether each has sufficient
contacts with the forum for jurisdictional purposes.
2. Factors
Instead, we recently outlined the relevant factors for jurisdictional veil-piercing:
To "fuse" the parent company and its subsidiary for jurisdictional purposes, the
plaintiffs must prove the parentcontrols the internal business operations and affairs
ofthesubsidiary. Butthedegree ofcontrol theparent exercises must be greater than
that normally associated with common ownership and directorship; the evidence
must show that the two entities cease to be separate so that the corporate fiction
should be disregarded to prevent fraud or injustice.
BMC Software, 83 S.W.3d at 799(citations omitted). We also relied on ourprior precedent, which
held that"[a] subsidiary corporation will notbe regarded asthealter egoofitsparent merely because
of stock ownership, a duplication of some or all of the directors or officers, or an exercise of the
control that stock ownership gives to stockholders." Gentry v. Credit Plan Corp. ofHouston, 528
S.W.2d 571, 573 (Tex. 1975). A leading treatise suggests that in determining whether a subsidiary
corporation is subject to thejurisdiction of a forum state because its parent corporation is present or
doing business there, courts should determine whether the subsidiary is "separate anddistinct from
its parent corporation for personal jurisdiction purposes," taking into account the amount of the
20
subsidiary's stock owned by the parent corporation, the existence of separate headquarters, the
observance of corporate formalities, and the degree of the parent's control over the general policy
and administration ofthe subsidiary. 4A Wright &Miller, Federal Practice &Procedure §
1069.4.
Here, the courtof appeals cited the following as evidence that Province and Minden were a
single business enterprise:
the record shows that Province and [Minden] have at least one common employee
and that Province pays certain [Minden] employees, although the salaries are
intercompany payables. The names ofthe two companies are similar, and Province
employees provide various services to assist [Minden] in its operations. Province
exercises control over [Minden]'s revenues and expenditures and oversees [Minden]'s
operations, financial performance, and completion of strategic initiatives. Further,
Province audits [Minden]'s financial goals to determine if [Minden] will be able to
meet these goals. Considering the totality of this evidence, we conclude that
Province and[Minden] haveintegrated theirresources to achieve a common business
purpose.
202 S.W.3d at 202.
Upon closer examination, however, it is clear that Province does not exercise the sort of
control over Minden that is required to fuse them for jurisdictional purposes. BMC Software, 83
S.W.3d at799. Much oftheevidence cited points toparental involvement—involvement consistent
with its investor status—not atypical control. See 16 Moore's Federal Practice §108.42[3][b].
"Appropriate parental involvement includes monitoring the subsidiary's performance, supervision
of the subsidiary's finance and capital budget decisions, and articulation ofgeneral policies." Id.
What is lacking here is the "plus" factor, "something beyond the subsidiary's mere presence within
21
the bosom ofthe corporate family." Dickson Marine, Inc. v. Panalpina, Inc., 179 F.3d 331,338 (5th
Cir. 1999); see also Central States, Southeast &Southwest Areas Pension Fund v. Reimer Express
World Corp., 230 F.3d 934, 943 (7th Cir. 2000) (holding that "constitutional due process requires
that personal jurisdiction cannot be premised on corporate affiliation orstock ownership alone where
corporate formalities are substantially observed and the parent does not exercise an unusually high
degree of control over the subsidiary"); De Castro v. Sanifill, Inc., 198 F.3d 282, 283-84 (1st Cir.
1999) (requiring "strong and robust" evidence of parental control over subsidiary, such that
subsidiary is"mere shell," before subsidiary's contacts could beimputed to parent). The two entities
maintain separate headquarters, Minden in Louisiana and Province in Tennessee. Minden's Board
of Governors approves Minden's budget and oversees day-to-day operations, and Minden alone
establishes its policies andprocedures forproviding health careto patients. Province is notinvolved
in Minden's physician recruitment, and the two entities share no directors. While Minden's chief
executive officer, chief nursing officer, and chieffinancial officer receive their paychecks from
Province, their salaries are intercompany payables; that is, the monies come from Minden's
revenues. Similarly, while Province provides Minden's general liability insurance and a group health
insurance policy for its employees, the policies are funded from Minden's revenues. There is no
indication that Minden and Province have disregarded corporate formalities. The court of appeals
cited evidence that two Minden employees received Province stock options, but we have said that
"a parent company'soffering a stockoptionplanto a subsidiary's employees is acceptable under IRS
regulations andis notevidence ofabnormal control overthesubsidiary." BMC Software, 83 S.W.3d
22
at 800. Put simply, we find no evidence ofcontrol other than that consistent with Province's investor
status, and the court of appeals erred in imputing Province's Texas contacts to Minden.
Ill
Conclusion
Minden does not have continuous and systematic contacts with Texas, nor is there any basis
for imputing Province's Texas contacts to Minden. We reverse the court ofappeals' judgment and
render judgment dismissing the claims against Minden for want ofjurisdiction. Tex. R. App. P.
60.2(c).
Wallace B. Jefferson
Chief Justice
OPINION DELIVERED: August 31, 2007
23
IN THE SUPREME COURT OF TEXAS
TYLER, TEXAS
NO. 05-0823 CATHY sT Lbs^. clerk
PHC-MINDEN, L.P. D/B/A MlNDEN MEDICAL CENTER,
PETITIONER,
Kimberly-Clark Corporation,
respondent
On Petition for Review from the
Court of Appeals for the Twelfth District of Texas
Judgment
THE SUPREME COURT OF TEXAS, having heard this cause on petition for review from
the Court of Appeals for the Twelfth District, and having considered the appellate record, counsels'
briefs, and counsels' argument, concludes that the court of appeals' judgment should be reversed.
IT IS THEREFORE ORDERED, in accordance with the Court's opinion, that:
1) The court of appeals' judgment is reversed;
2) Judgment is rendered dismissing the claims against
PHC-Minden, L.P. d/b/a Minden Medical Center for
want ofjurisdiction; and
3) PHC-Minden, L.P. d/b/a Minden Medical Center,
shall recover, and Kimberly-Clark Corporation shall
pay, the costs incurred in this Court and in the court of
appeals.
Copies of this judgment and the Court's opinion are certified to the Court of Appeals for the
Twelfth District and to the County Court of Gregg County, Texas, for observance.
Opinion of the Court delivered by Chief Justice Jefferson.
August 31, 2007