Richard A. KOHRING and Kerstin Kohring, Plaintiffs-Adverse Parties, v. James C. BALLARD, M.D., and Oregon Orthopedic & Sports Medicine Clinic, LLP, Defendants-Relators.
(CC1111-14966; SC S060533)
Supreme Court of Oregon
April 24, 2014
325 P3d 717
LANDAU, J.
Argued and submitted April 30, 2013, peremptory writ of mandamus to issue ordering trial court to grant defendants’ motion to change venue April 24, 2014
Kathryn H. Clarke, Portland, argued the cause and filed the brief for plaintiffs-adverse parties. With her on the brief was Phillip C. Gilbert, Gresham.
Lindsey H. Hughes and Hillary A. Taylor of Keating Jones Hughes, P.C., Portland, filed the brief for amicus curiae Oregon Association of Defense Counsel.
Scott A. Shorr of Stoll Stoll Berne Lokting & Shlachter, P.C., Portland, filed the brief
LANDAU, J.
LANDAU, J.
The issue in this mandamus proceeding is whether the trial court correctly denied defendants’ motion to change venue.
I. BACKGROUND
The relevant facts are few and undisputed. Plaintiff Richard Kohring sustained injuries following hip replacement surgery at a medical facility in Clackamas County. Plaintiff and his wife initiated a medical malpractice action in Multnomah County for those injuries and for loss of consortium. Plaintiffs named as defendants Ballard, the surgeon who performed the hip replacement operation, and the clinic that employs him, Oregon Orthopedic & Sports Medicine Clinic, LLP (“Oregon Orthopedic” or “clinic“).
Defendants moved to change venue to Clackamas County. In support of that motion, they argued that the medical care that gave rise to the action occurred in Clackamas County; that defendant Ballard lives in Clackamas County; that both of Oregon Orthopedic‘s two clinics are located in Clackamas County; that all of the clinic‘s physicians provide medical care in Clackamas County; that neither the clinic nor Ballard reside in Multnomah County; that no authorized agent to receive service for either defendant resides in Multnomah County; that, in fact, plaintiffs served defendants in Clackamas County; and that neither the clinic nor Ballard conduct “regular sustained business activity” within the meaning of
Plaintiffs opposed the motion, arguing that defendants do conduct regular, sustained business activity in Multnomah County. In support of that assertion, they offered evidence that, among other things, approximately 600 of the clinic‘s 24,000 patients reside in Multnomah County; that Oregon Orthopedic uses “pdxortho.com” as its website; that Oregon Orthopedic refers to its clinics as being located “just outside Portland, Oregon“; that, over a two-year period, its physicians met with attorneys who practice in Multnomah County; that, over a five-year period, clinic employees have attended more than 100 educational seminars conducted in Multnomah County; that Oregon Orthopedic advertises in a newspaper and a telephone book that are distributed in Multnomah County; that the clinic refers some of its patients to imaging centers located in Multnomah County; and that defendants send chocolates to medical clinics located in Multnomah County, and have provided lunches to another Multnomah County clinic.
At the hearing on defendants’ motion to change venue, the trial court noted the lack of Oregon case law discussing the meaning of “regular, sustained business activity” under
Defendants petitioned for a writ of mandamus, challenging the trial court‘s denial of their motion to change venue. This court issued an alternative writ ordering a stay of the trial proceedings until the trial court either granted defendants’ motion to change venue or showed cause for not doing so. The trial court did not grant defendants’ motion to change venue, and the parties filed their briefs before this court.
II. ANALYSIS
“(1) The court or judge thereof may change the place of trial, on the motion of either party to an action or suit, when it appears from the affidavit of such party that the motion is not made for the purpose of delay and:
“(a) That the action or suit has not been commenced in the proper county[.]”
Notwithstanding the permissive wording of
The standard for determining the proper place of trial is set out in
“(1) All other actions shall be commenced in the county in which the defendants, or one of them, reside at the commencement of the action or in the county where the cause of action arose. ***
“(2) For purposes of this section a corporation incorporated under the laws of this state, a limited partnership or a foreign corporation authorized to do business in this state shall be deemed to be a resident of any county where the corporation or limited partnership conducts regular, sustained business activity or has an office for the transaction of business or where any agent authorized to receive process resides. A foreign corporation or foreign limited partnership not authorized to transact business in this state shall be deemed not to be a resident of any county in this state.”
(Emphasis added.) The statute thus defines where a corporation “resides” for venue purposes in terms of three possibilities: (1) where the corporation conducts “regular, sustained business activity,” (2) where the corporation “has an office for the transaction of business,” or (3) where an agent authorized to receive service of process resides. In this case, it is undisputed that defendants do not have an office for the transaction of business in Multnomah County and that defendants have no agent authorized to receive service in Multnomah County. The parties’ dispute focuses on whether defendants conduct
Defendants argue that they do not conduct “regular, sustained business activity” in Multnomah County. In their view, the statute refers to activity that is part of an entity‘s “normal,” “core,” or “typical” occupation, and, in this case, that is the provision of medical care. According to defendants, the statutory phrase does not refer to such activities as meeting with attorneys, attending training sessions, referring patients, and sending gifts to other businesses, because those activities are not part of the normal or typical occupation of a medical clinic. They contend that it also cannot include advertising and solicitation of potential clients, because that improperly shifts the focus from where a defendant resides to where potential plaintiffs might reside, which they contend is more appropriate to personal jurisdiction analysis than to venue.
Plaintiffs argue that the phrase “regular, sustained business activity” refers to any activity of a business—regardless of whether it is in some sense the “core” or “normal” occupation—so long as it is “regular” and “sustained,” that is, so long as it occurs on a regular basis over time. In this case, they contend, any number of activities related to defendants’ business has occurred on a regular basis over time in Multnomah County.
The parties’ arguments thus present us with an issue of statutory construction, which we resolve by applying the familiar principles set out in PGE v. Bureau of Labor and Industries, 317 Or 606, 859 P2d 1143 (1993), and State v. Gaines, 346 Or 160, 206 P3d 1042 (2009). In accordance with those interpretive principles, we seek the meaning of the disputed phrase that the legislature most likely intended when it adopted
A. Textual Analysis
We begin with the text.
The word “regular” can mean “formed, built, arranged, or ordered according to some established rule, law, principle, or type“; “NORMAL, STANDARD.” Webster‘s Third New Int‘l Dictionary 1913 (unabridged ed 2002).2 It also can mean “steady or uniform in course, practice, or occurrence: not subject to unexplained or irrational variation: steadily pursued.” Id. Thus, the word can be used in either of two distinct senses, one connoting a particular quality of activity and the other connoting the frequency with which an activity occurs. See, e.g., Burkhart v. Farmers Ins. Co, 144 Or App 594, 599, 927 P2d 1111 (1996) (“The words ‘regular’ and ‘regularly’ have at least two different and distinct uses. An example of the first is ‘Joe is a regular guy who behaves in a regular manner.’ An example of the second is ‘Joe is a regular consumer of American products.‘“).
We do not interpret statutes solely on the basis of dictionary definitions, however. State v. Cloutier, 351 Or 68, 96, 261 P3d 1234 (2011) (“In construing statutes, we do not simply consult dictionaries and interpret words in a vacuum.“). Instead, we examine word usage in context to determine which
In this case,
The word “sustained” is straightforward. It refers to an activity that is “maintained at length without interruption, weakening, or losing in power or quality: PROLONGED, UNFLAGGING.” Webster‘s at 2304. In the context of
The word “business” also has a wide variety of definitions, including:
“1a *** purposeful activity : activity directed toward some end *** an activity engaged in toward an immediate specific end and usu. extending over a limited period of time : TASK, CHORE, MISSION, ASSIGNMENT *** b (1) : a usu. commercial or mercantile activity customarily engaged in as a means of livelihood and typically involving some independence of judgment and power of decision ***and sometimes contrasted with the arts *** or professions *** or sport *** or other activity considered less practical, serious, respectful, or mundane ***[;] OCCUPATION, POSITION, TRADE, LINE (2) : a commercial or industrial enterprise *** (3) : a place where such an enterprise is carried on ***(4) : transactions, dealings, or intercourse of any nature *** c : serious activity that requires time and effort and usu. the avoidance of distracting influences *** d : a particular field of endeavor *** 2a : AFFAIR, MATTER *** b : a difficult or complicated matter : PROJECT.”
Webster‘s at 302. In the context of
From an analysis of the text of
B. Legislative History
Nothing in the legislative history of
1. Background: Early Venue Statutes and Case Law
Modern venue rules are predominantly statutory, but they derive from early common-law principles. See generally Robert C. Casad and Laura J. Hines, Jurisdiction and Forum Selection § 426 at 4-88 (2d ed 2012). At common law, courts distinguished between “local” actions, usually those involving real property, and “transitory” actions, usually involving disputes over goods and chattels. See generally William Wirt Blume, Place of Trial of Civil Cases: Early English and Modern Federal, 48 Mich L Rev 1, 23-25 (1949). Common-law courts required local actions to be tried where the property was located, while transitory actions could be “laid” anywhere that personal jurisdiction over the defendant could be obtained. Id.
Oregon‘s first venue statute was patterned after that tradition. Actions for the recovery of property were to be tried “in the county in which the subject of the action or some part thereof is situated.” General Laws of Oregon, Civ Code, ch I, title IV, § 41, p 147-48 (Deady 1845-1864). In other, transitory, cases, the action was to be tried where the defendant resided or could otherwise be found:
“In all other cases, the action shall be commenced and tried in the county in which the defendants or either of them reside, or may be found, at the commencement of the action; or if none of the parties reside in this state, the same may be tried in any county which the plaintiff may designate in his complaint.”
Depending on the nature of the business at issue, such activities as solicitation can nevertheless be relevant, as when the orders solicited are actually filled or completed at the place where the solicitation occurred. See, e.g., Canter v. American Honda Motor Corp., 426 Pa 38, 231 A2d 140 (1967) (newspaper and radio advertising followed by personal appearances to demonstrate vehicles constitutes “regularly conduct[ing] business” for venue purposes); Verd, 31 Wash 2d at 629, 198 P2d at 665 (“‘Solicitation in regular course of business, together with acceptance and performance of the contract *** will give ample ground for the conclusion of corporate presence.‘” (citation omitted)).
Id. § 43, p 148. The early venue statute made no mention of corporations; it simply referred to “defendants” generally.
In 1876, the legislature added a provision concerning the method of service of process on corporate entities. Under the new provisions, corporations could be served by delivering a copy of the complaint on the managing agent or other corporate officers where they reside, “or in case none of the officers of the corporation above named shall reside or have an office in the county when the cause of action arose,” then by leaving a copy at “the residence or usual place of abode of such
The Oregon Supreme Court first addressed how those statutes applied to corporate entities in Holgate v. O.P.R.R. Co., 16 Or 123, 17 P 859 (1888), overruled in part on other grounds by Mutzig v. Hope, 176 Or 368, 158 P2d 110 (1945). In that case, the court concluded that, under the venue provision, “[t]he residence of the corporation, if an artificial person can be said to have a residence, must be deemed to be *** where it has its principal office and place of business, and where it is required to pay its taxes.” Id. at 125. But, in addition, the court held that the 1876 service-of-process amendments implicitly assumed that venue also is proper in the county in which the action arose. Id. at 125-26.
In 1909, the legislature essentially codified the court‘s holding in Holgate, at least as to tort actions. The amendment was part of a legislative package that the legislature found necessary to respond to the fact that “irresponsible and dishonest persons have instituted or are about to institute actions in counties many miles distant from the place of residence of the defendants thereto on mere pretexts for the sole purpose of annoying said defendants and putting them to unjust and unnecessary expense.” Or Laws 1909, ch 43, § 2. The new legislation modified the venue statute to read:
“In all other cases [than local actions] the action shall be commenced and tried in the county in which the defendants or either of them reside or may be found at the commencement of the action; provided that in any action founded on
an alleged tort, unless the same is instituted in the county where the cause of action arose or where the defendants or one of them resides, then, either such action shall at any time before trial thereof be transferred, upon motion of defendants, to a county where at least one of the defendants thereto resides; or the plaintiff in such action shall file a good and sufficient bond securing to defendants the payment of any judgment that may be rendered therein in favor of said defendants and against plaintiff[.]”
Id. § 1 (emphasis in original).
In 1929, the legislature eliminated supplying a bond as an alternative to transferring venue in tort actions. Or Laws 1929, ch 239, § 1. From that point until 1983, an action against a corporation could lie either where the corporation resides—that is, the county of its principal place of business—or where the cause of action arose. See, e.g., Hope, 176 Or at 388 (referring to “the firmly established doctrine of this state to the effect that a domestic corporation can be sued only in the county where its principal place of business is located, or where the cause of action arose“); State ex rel. v. Updegraff, 172 Or 246, 256, 141 P2d 252 (1943) (“In our opinion, the only proper venue of transitory actions against foreign corporations is either the county where they maintain their principal place of business or that in which the cause of action arose.“).
Throughout that time, the court emphasized “the general rule that statutes relating to the right to change the venue of actions filed in the wrong place are to be liberally construed so as to attain the objectives of such statutes.” Etling, 255 Or at 400 (footnote omitted). In reference to those objectives, the court cited cases from other jurisdictions, noting that the purpose of venue statutes has always been to ensure fairness to defendants by preventing them from being haled into court in counties where they have little or no connection. Id. at n 6.
2. Enactment History of ORS 14.080(2)
That was the state of the law as of 1983, when the Oregon legislature adopted the venue statute that is now
The bill passed out of the Senate with little debate and was referred to the House Judiciary Committee. When the bill was taken up by that committee, another representative of the Bar, Diana Godwin, similarly explained that it was intended to “clean[] up and partly expand[]”
At that point, however, the bill ran into opposition from representatives of the business community who complained that the bill defined corporate residence too broadly. During the hearing before the House Judiciary Committee, committee counsel Kirk Hall said that a member of the banking industry had spoken with him about amending SB 198 “to get at the problem of allowing venue anywhere the corporation does business.” Minutes, House Committee on Judiciary, SB 198, April 18, 1983, 3.
The matter was referred to a subcommittee of the House Judiciary Committee. In that subcommittee, an amendment was proposed to change the definition of corporate residence from wherever it “transacts business” to wherever it engages in “regular, sustained business activity.” At a hearing before the subcommittee, Hall explained that
“there was some concern that the phrase ‘transact business’ could mean that *** a business entity that maybe did some business in a particular county of the state *** on an irregular basis, didn‘t have an office there *** might still be subject to venue in some county that otherwise it had virtually no contacts with other than occasional business transactions. So the suggested change—instead of transact business—is ‘conducts regular, sustained business activity’ simply to raise the threshold a little bit, and this is acceptable to Professor Merrill and his group.”
Tape Recording, House Committee on Judiciary Subcommittee 2, May 3, 1983, Tape 288, Side A (statement of Kirk Hall). As Hall noted, the change was intended to “raise the threshold a little bit” for the benefit of defendants. Id. Those amendments were adopted without objections, and the bill as amended was passed by the legislature without further discussion of that issue.
The legislative history thus makes clear that, while SB 198 was intended to “partly expand” the definition of corporate residence for venue purposes, the legislature rejected wording that would have defined corporate residence in terms of any place that the corporation or limited partnership does business. Instead, it adopted wording that was intended “to raise the threshold” and exclude activities that amount to doing only “some business” on an “irregular basis” where the corporation or limited partnership had “virtually no contacts” other than “occasional business transactions.” Id.
To be sure, the foregoing legislative history consists principally of statements of nonlegislators, which sometimes provides limited assistance in determining the legislature‘s intent. See, e.g., State v. Guzek, 322 Or 245, 260, 906 P2d 272 (1995), rev‘d on other grounds, State v. Moore, 324 Or 396, 927 P2d 1073 (1996) (noting that the testimony of a single nonlegislator says little “about the intent of the Oregon Legislative Assembly as a whole“). In some cases, however, it is appropriate to give greater weight to such legislative history, as when the nonlegislators
In short, the legislative history confirms what the text of
C. Application
With the foregoing in mind, we turn to the trial court‘s denial of defendants’ motion to change venue. As we have noted, the trial court, finding no controlling Oregon case law, relied on the Washington Supreme Court‘s decision in Verd in concluding that the determination of corporate residence for venue purposes is essentially the same as the evaluation of the sufficiency of business contacts for personal jurisdiction purposes. Based on a personal jurisdiction analysis, the trial court then concluded that defendants’ solicitation and advertising activities constituted “purposely avail[ing]” themselves of the court‘s jurisdiction in Multnomah County, and that such purposeful availment sufficed to establish their residency for venue purposes.
In so doing, the trial court erred. First, personal jurisdiction and venue are not the same thing. Jurisdiction refers to the authority of the court to hale a defendant into court, while venue concerns the particular location where it is appropriate for the court to exercise that authority. See generally Casad & Hines, Jurisdiction and Forum Selection § 426 at 4-87 (“A defendant who has the requisite contacts to a state may be subject to personal jurisdiction in every court of that state, but the venue rules will designate one or more counties or districts as the place where the action should be brought.” (Emphasis in original.)).
As we have noted, the current federal definition of corporate residence for venue purposes does equate venue and personal jurisdiction. Many states, however, define venue to require more than just the minimum contacts necessary to establish personal jurisdiction. See generally Swain, Place Where Corporation is Doing Business for Purposes of State Venue Statute, 42 ALR 5th at 237-38. And nothing in the wording of
Second, on its own terms, Verd is distinguishable. In that case, the Washington Supreme Court recognized that, even for personal jurisdiction purposes, the “mere solicitation” of orders does not suffice. 31 Wash 2d at 629, 198 P2d at 665. The court explained that only “if the solicitation by the corporation‘s agents was regular and systematic and had resulted in a continuous flow of its products into this state,” or if “there were additional activities by the corporation‘s agents“—in particular, “acceptance and performance of the contract within the state“—would solicitation be sufficient to establish jurisdiction. Id.
In this case, there is no such “regular and systematic flow” of products or services into Multnomah County. Nor did defendants’ solicitation and advertising activities result in acceptance and performance in Multnomah County. To the contrary, it is undisputed that all of defendants’ medical services were rendered in Clackamas County only.
The question remains whether, using a proper analysis under
We begin with evidence that 600 of Oregon Orthopedic‘s patients reside in Portland. At the outset, it is debatable that such a relatively small portion of defendants’ clientele—2.5 percent—is sufficient to satisfy the statute‘s requirement of “regular, sustained business activities.” See, e.g., Hernandez v. East Coast Barge and Boat Co., 85 Va Cir 103, 103 (2012) (finding a lack of substantial business activity for venue purposes for revenue or expenditures below 10 percent). We need not decide that, however, because where defendants’ patients happen to reside is not a “business activity” that is “conducted” by defendants. If, for instance, one of defendants’ patients traveled from her residence in Uruguay to receive medical services in Clackamas County, defendants would not have conducted any business activities in Uruguay. The focus of
We turn to defendants’ advertising and solicitation activities. The record shows that Oregon Orthopedic advertised in three ways. First, it maintained a web page in which it referred to its location as being near Portland and listed its site as “pdxortho.com.” Second, it posted seven job openings in the Oregonian newspaper in 2007. Third, over a period of five years, it advertised in the local yellow pages telephone directory that is distributed in, among other places, Multnomah County.
We begin by noting that the fact that defendants’ advertising refers to “Portland” or “pdx” hardly establishes that they conduct regular, sustained business activity in Multnomah County. The City of Portland, after all, is located in three different counties—Multnomah, Clackamas, and Washington. We also conclude that seven job postings in 2007—even assuming for the sake of argument that they constitute “regular” business activities—do not amount to the sort of “sustained” business activity that
Aside from that, defendants’ advertising in the yellow pages directory and its posting of occasional job openings is not a “regular” part of defendants’ business in this case. That is not to say that advertising and solicitation are never relevant. Their relevance will depend on the nature of the business at issue and where products and services are actually provided. In this case, defendants’ advertising and solicitation are incidental to their regular business activity.
That only makes sense. If where a business advertises determines its corporate residence for venue purposes, then advertising (particularly with the advent of the Internet) would subject it to legal action anywhere that personal jurisdiction could be established. As we have noted, nothing in the text or legislative history of
Plaintiffs also rely on the fact that some of the physicians who work at Oregon Orthopedic conferred with attorneys who practice in Multnomah County for the purpose of providing information in relation to patients’ workers’ compensation claims. It is debatable whether such meetings are “regular” business activities of defendants. See, e.g., Westmoreland Coal Co., 399 SE2d at 906 (hiring attorney is incidental and does not constitute “doing business” for venue purposes). Nor is it beyond dispute that such activities were “sustained” within the meaning of the statute. But we need not resolve those uncertainties, because the record establishes that only one of those meetings actually took place in Multnomah County.7
Plaintiffs also rely on evidence that Oregon Orthopedic has referred patients to medical imaging centers located in Multnomah County. That defendants may refer some of its patients to other medical service providers located in Multnomah County, however, does not constitute a business activity of defendants conducted there. Moreover, the record is silent on the number of such referrals. It is therefore impossible to determine whether they constitute the sort of “sustained” business activities required by
Finally, plaintiffs contend that defendants “cultivate[] relationships with Multnomah County clinics, sending Christmas gifts and on occasion providing lunches.” What the record reveals, however, is that Oregon Orthopedic sends Christmas chocolates to two clinics, and provided a single lunch in 2009. Even assuming for the sake of argument that those are the sort of “regular *** business activities” that
In short, none of the activities on which plaintiffs rely satisfies the statutory requirement of “regular, sustained business activities” within the meaning of
Peremptory writ of mandamus to issue ordering trial court to grant defendants’ motion to change venue.
