By Melanie Rose
In Kohring et. al. v. Ballard et. al. the Oregon Supreme Court recently held that for venue to be proper under ORS 14.080(2) a defendant business entity must have a regular and systematic flow of products or services within the jurisdiction. 2014 WL 1641418 (Or 2014). The court specifically held that the standard for establishing venue requires more contact than the “minimum contacts” required to establish personal jurisdiction over a defendant.
Mr. Kohring received a hip replacement from Dr. Ballard at the Oregon Orthopedic & Sports Medicine Clinic located in Clackamas County. The hip replacement resulted in Mr. Kohring sustaining injury and subsequently initiating a medical malpractice lawsuit against Ballard and the Clinic in Multnomah County which is adjacent to Clackamas County. Dr. Ballard and the Clinic moved to have venue changed to Clackamas County.
In support of their motion, Defendants argued that the medical treatment giving rise to the claim occurred in Clackamas County; Ballard lived in Clackamas County; all of the Clinic’s care to all of its patients is provided in Clackamas County; no authorized agent for either defendant lived in Multnomah County; and no “regular sustained business activity” as required by ORS 14.080(2) was conducted in Multnomah County. ORS 14.080(2) in its entirety states:
“(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.”
Plaintiffs opposed the motion to change venue citing several factors they believed amounted to regular sustained business activity. The offered evidence that 2.5% of the Clinic’s patients resided in Multnomah County; that “pdxortho.com” is the clinic’s website; that the website describes the clinic as being “just outside Portland, Oregon;” that clinic physicians met with attorneys who practice in Multnomah County; that clinic employees attended continuing education classes in Multnomah County; that the Clinic advertised in newspapers and phonebooks distributed in Multnomah County; that the Clinic sometimes used an imaging center in Multnomah County; and that defendants sent lunches and chocolates to other medical clinics in Multnomah County while courting business relationships with those clinics.
The trial court originally denied the Defendants’ motion to change venue explaining that the Defendants had “purposefully availed themselves of the court’s jurisdiction” and could be said to be conducting regular and sustained business activity within the county by virtue of marketing to Multnomah County residents. The Oregon Supreme Court accepted review of the denial under a petition for writ of mandamus. The Court reasoned that to determine if venue was proper the term “regular, sustained business activity” in ORS 14.080(2) must be interpreted.
The Court determined that “regular” must refer to the quality of a business activity and how normal or ordinary the activity is for the business. The Court also determined that “sustained” within the context of the statute refers to an activity that is “maintained at length without interruption.” Finally, the Court concluded that “business” must refer to a “commercial or industrial enterprise.” The Court also pointed out that the phrase “regular, sustained business activity” was added to ORS 14.080(2) as a replacement of the phrase “transacts business” as a way of limiting the number of venues that might be appropriate for a particular corporate defendant. Taken together, the Court concluded that the legislature did not intend for any activity to suffice to establish venue over a corporate defendant—there must be a flow of products or services within the jurisdiction.
Having established a definition of “regular, sustained business activity” the Court analyzed Plaintiff’s claim that venue in Multnomah County was proper. The Court determined that where the Clinic’s patients reside should not influence which jurisdiction holds proper venue when all services provided to those patients were provided in Clackamas County. The Court then went on to find that, while advertising and marketing may be an important factor in determining venue in some instances, in this case, advertising was incidental to the regular business activity of providing medical treatment. Finally, the Court concluded that meeting with attorneys; attending occasional continuing education classes; and courting business relationships with other clinics did not constitute “sustained” activity as contemplated by ORS 14.080.
The Oregon Supreme Court’s holding in Kohring distinguishes Oregon from Washington State and Federal Jurisdictions, each of whom uses the “minimum contacts” test for both personal jurisdiction and venue.
See link to opinion.