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Simpson v. Wright Medical Group Inc.

United States District Court, E.D. Arkansas, Pine Bluff Division

March 30, 2018

JOHNNY C. SIMPSON, et al. PLAINTIFFS
v.
WRIGHT MEDICAL GROUP, INC., et al. DEFENDANTS

          ORDER

          KRISTINE G. BAKER UNITED STATES DISTRICT JUDGE

         Before the Court is separate defendant Wright Medical Group, Inc.'s (“WMG”) motion to dismiss for lack of personal jurisdiction (Dkt. No. 3). Plaintiffs Johnny C. Simpson and Elizabeth Simpson filed a timely response (Dkt. No. 8-9), and WMG replied (Dkt. No. 15). Also before the Court is WMG and Wright Medical Technology, Inc.'s (“WMT”) motion to dismiss, requesting partial dismissal of the complaint and specifically requesting dismissal of the following claims: Count III for strict liability manufacturing defect, Count V for negligent misrepresentation, Count VI for fraudulent misrepresentation, and Count VIII for punitive damages (Dkt. No. 4). The Simpsons timely responded (Dkt. No. 7), and defendants replied (Dkt. No. 16). For the reasons set forth below, the Court grants WMG's motion to dismiss for lack of personal jurisdiction (Dkt. No. 3). The Court grants in part and denies in part defendants' motion to dismiss for failure to state a claim (Dkt. No. 4).

         I. Factual Background

         The Simpsons allege the following facts in their complaint. WMG and WMT are designers and manufacturers of prosthetic orthopedic products. WMG and WMT are both Delaware corporations with their principal places of business in Tennessee. WMG is the parent corporation of WMT. Cremascoli patented the “Profemur® Modular neck” by 1986 (Id., ¶ 28). In December 1999, WMG acquired Cremascoli and the line of Profemur hip products (Id., ¶ 29). WMG then redesigned the Profemur line of hip products, including the modular “necks” and “stems.” (Id., ¶ 30). WMG rebranded the product as the “Wright Medical Profemur® Total Hip System.” (Id., ¶ 31). After August 25, 2009, WMG began to offer for distribution and sale in the United States Profemur modular necks made of a cobalt-chromium alloy rather than out of titanium, as had been the practice in the past (Id., ¶ 33). The Simpsons further allege that WMG “has been a plaintiff in a civil action filed in this United States District Court, Case No. 3:10-cv-00033, filed on February 18, 2010, and represented to this District Court in the Complaint filed in that civil action” that WMG “does business as” WMT (Id., ¶ 34).

         In late 2012, Mr. Simpson had multiple Wright hip components installed in his left hip, including the “Profemur® TL Femoral Stem” and the “Profemur® Plus CoCr Modular Neck” (Id., ¶¶ 10, 18). Mr. Simpson alleges that his orthopedic surgeon implanted the Wright artificial hip in Mr. Simpson (Id., ¶ 11). Mr. Simpson claims that, “[b]ased upon the patient population that Wright intended its Profemur® artificial hip devices to be implanted in, at the time of implantation with his Wright Profemur® hip devices, ” Mr. Simpson “was an appropriate patient to be implanted with the Wright Profemur® hip devices he received.” (Id., ¶ 14). Mr. Simpson also claims that his orthopedic surgeon “recommended the Wright Profemur® hip device” to him and “indicated that the Wright Profemur® hip device was appropriate for him.” (Id., ¶ 15). Mr. Simpson claims that he reasonably relied upon his orthopedic surgeon in deciding to proceed with hip replacement surgery “and have Wright Profemur® hip device implanted in him.” (Id., ¶ 16). He further alleges that he and his orthopedic surgeon justifiably relied upon defendants' alleged false representations of material fact in deciding to utilize the device (Id., ¶¶ 134, 135).

         The Simpsons allege that defendants made false representations of material fact as to the safety and efficacy of the Wright Medical Profemur cobalt-chromium Neck when coupled with the titanium modular neck in the Wright Medical Profemur Total Hip System (Id., ¶¶ 47, 49, 53, 131). The Simpsons contend that, when the representations were made, defendants knew the representations were false (Id., ¶¶ 68, 72, 73, 132). The Simpsons also allege that defendants intended to induce reliance (Id., ¶ 133). Finally, the Simpsons maintain that Mr. Simpson was damaged as a result (Id., ¶¶ 22, 25, 82, 83).

         They maintain that, by about February 2, 2016, Mr. Simpson reported to his doctor, and his doctor recommended a revision surgery because Mr. Simpson presented with elevated cobalt ion levels, pain, and a weak abductor function (Id., ¶ 22). This revision surgery was necessary because of corrosion between the cobalt-chromium modular neck and titanium stem designed and manufactured by WMG and WMT (Id., ¶ 23).

         The Simpsons assert that, at the time of Mr. Simpson's initial surgery, defendants had product complaint data indicating that combining cobalt-chromium Profemur hip components with titanium Profemur hip components would lead to increased adverse events for patients (Id., ¶¶ 72-74). The Simpsons claim that, while defendants were aware of these risks, defendants made multiple false representations about the cobalt-chromium Profemur hip components, including that such components did not pose an increased risk of adverse events, that such components were structurally reliable, and that the components did not pose an increased risk of fretting or galvanic corrosion (Id., ¶ 131). They further assert that the design of the Profemur hip components is inherently dangerous and defective (Id., ¶ 75). They also claim that the Profemur hip components installed in Mr. Simpson did not comply with defendants' design specifications (Id., ¶ 76). Finally, they claim that defendants failed to warn patients and the medical community about the risks of using the Profemur hip components (Id., ¶¶ 79-81).

         The Simpsons' complaint alleges that both WMG and WMT violated Arkansas state law due to their activities related to the Profemur hip device and related components. The Simpsons allege state-law claims of: (I) negligent design and failure to warn or instruct, (II) strict liability design defect, (III) strict liability manufacturing defect, (IV) strict liability failure to warn, (V) negligent misrepresentation, (VI) fraudulent misrepresentation, (VII) loss of consortium, and (VIII) punitive damages (Dkt. No. 1).

         II. Federal Rule of Civil Procedure 12(b)(6) Standard of Review

         Defendants move to dismiss the Simpsons' claims pursuant to Federal Rule of Civil Procedure 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “While a complaint attacked by a [Federal] Rule [of Civil Procedure] 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (alteration in original) (citations omitted). “When ruling on a motion to dismiss, the district court must accept the allegations contained in the complaint as true and all reasonable inferences from the complaint must be drawn in favor of the nonmoving party.” Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001). A complaint should be dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) if “it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle [her] to relief.” In re K-tel Int'l Sec. Litig., 300 F.3d 881, 904 (8th Cir. 2002) (citations omitted).

         III. Discussion

         WMG moves to dismiss the claims against it on the grounds that it is not subject to personal jurisdiction in Arkansas (Dkt. No. 3). The Simpsons assert that WMG is subject to specific personal jurisdiction in Arkansas because WMG has had sufficient contacts with Arkansas related to the cobalt-chromium Profemur hip devices. Furthermore, they assert that WMT's contacts with Arkansas should be held against WMG, as WMT is an alter-ego of WMG. WMG and WMT also move to dismiss certain claims against them (Dkt. No. 4). Finally, in their responses to WMG and WMT's motions to dismiss, the Simpsons seek the Court's leave to amend their complaint (Dkt. Nos. 7-1, at 11; 8-9, at 14).

         A. Motion To Dismiss WMG For Lack Of Personal Jurisdiction

         WMG argues that it should be dismissed as a defendant for lack of personal jurisdiction because it “is a holding company with no employees, business operations, or contacts with the State of Arkansas.” (Dkt. No. 3, at 1). In support, WMG presents the affidavit of Amy Reeves, the Senior Director and Controller at WMT (Dkt. No. 3-2, ¶ 2). Ms. Reeves avers that WMG “is not registered to do business in Arkansas, does not transact business in Arkansas, maintains no office or place of business in Arkansas, owns no real property in Arkansas, and has no clients or employees in Arkansas.” (Id., ¶ 15). Furthermore, Ms. Reeves represents that WMG “does not advertise, market, or offer services for sale in Arkansas.” (Id., ¶ 16). Ms. Reeves claims that WMT, not WMG, “manufacture[d], market[ed], and [sold] the PROFEMUR® hip implant components at issue in Plaintiff's Complaint.” (Id., ¶ 18). According to Ms. Reeves, WMG played no role in the labels or warnings related to the Profemur hip implant components at issue in this case (Id., ¶ 16). Ms. Reeves further declares that WMG and WMT “are separate corporate entities” with “separate accounting and banking records . . . .” (Id., ¶¶ 13-14). Ms. Reeves does concede that WMG is WMT's “parent company, ” and that WMG is WMT's “sole shareholder.” (Id., ¶ 9).

         The Simpsons argue that WMG is subject to specific personal jurisdiction in Arkansas. The Simpsons argue that: (1) WMG purposefully availed itself of Arkansas' laws when it sold and installed the Profemur hip implants in Arkansas; (2) WMG has consented to specific jurisdiction in Arkansas because it has previously filed cases in Arkansas courts; (3) WMG, through its SEC filings, admits that it, not WMT, designed, manufactured, and marketed the Profemur hip implants; and (4) WMG is the alter ego of WMT. After careful review of the pleadings, the Court finds that the Simpsons have failed to allege facts sufficient to establish specific personal jurisdiction over WMG in Arkansas.

         1. Personal Jurisdiction Standard

         “To survive a motion to dismiss for lack of personal jurisdiction, the plaintiff need only make a prima facie showing of personal jurisdiction over the defendant.” Digi-Tel Holdings v. Protec Telecoms., 89 F.3d 519, 522 (8th Cir. 1996) (internal citations omitted). Such a prima facie showing “must be tested, not by the pleadings alone, but by the affidavits and exhibits presented with the motions and opposition thereto.” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004) (quoting Block Indus. v. DHS Indus., Inc., 495 F.2d 256, 260 (8th Cir. 1974)). This Court may consider supporting affidavits to determine the question of personal jurisdiction without converting this motion to dismiss to a motion for summary judgment. See, e.g., Romak USA, Inc., v. Rich, 384 F.3d 979, 983 (8th Cir. 2004).

         The party seeking to establish personal jurisdiction carries the burden of proof, and the burden does not shift to the party challenging jurisdiction. See Laseraim Tools, Inc. v. SDA Mfg., LLC, 624 F.Supp.2d 1027, 1029 (E.D. Ark. 2008) (internal citation omitted). Although the plaintiff bears the ultimate burden of proof, personal jurisdiction over the defendant need not be proved by a preponderance of the evidence until trial or until the Court holds an evidentiary hearing. See Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991) (citing Cutco Ind. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986)). “If the district court does not hold a hearing and instead relies on pleadings and affidavits . . . the court must look at the facts in the light most favorable to the nonmoving party, and resolve all factual conflicts in favor of that party.” Dakota Indus. Inc., 946 F.2d at 1387 (internal citations omitted).

         “A federal court in a diversity action may assume jurisdiction over nonresident defendants only to the extent permitted by the long-arm statute of the forum state and by the Due Process Clause.” Morris v. Barkbuster, Inc., 923 F.2d 1277, 1280 (8th Cir. 1991) (citation omitted). Arkansas' long-arm statute confers jurisdiction to the maximum allowed under the Constitution. Davis v. St. John's Health Sys., Inc., 71 S.W.3d 55, 58 (Ark. 2002). Therefore, the Court must determine if exercising personal jurisdiction over WMG comports with due process.

         Due process requires that the defendant “have certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend the traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citations omitted). Courts must consider the “quality and nature” of the defendant's activities. Id. at 319. Personal jurisdiction does not exist when the forum state “has no contacts, ties, or relations” to the defendant. Id. (citation omitted). The Supreme Court has held that “it is essential in each case that there be some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253 (1958) (citation omitted); see Burger King Corp. v. Rudzewicz, 471 ...


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