523 F.3d 602 (5th Cir. 2008), 07-41232, Johnston v. Multidata Systems Intern. Corp.

Docket Nº:07-41232.
Citation:523 F.3d 602
Party Name:Velkis JOHNSTON; Natasha Chandler; Minverva Chandler; Walter Chandler; Cecilia Cruz Navarro De Vergara; et al., Plaintiffs-Appellees, v. MULTIDATA SYSTEMS INTERNATIONAL CORP.; MDS Nordion, Inc.; MDS Canada, Inc.; MDS, Inc., Defendants-Appellants.
Case Date:April 07, 2008
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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523 F.3d 602 (5th Cir. 2008)

Velkis JOHNSTON; Natasha Chandler; Minverva Chandler; Walter Chandler; Cecilia Cruz Navarro De Vergara; et al., Plaintiffs-Appellees,

v.

MULTIDATA SYSTEMS INTERNATIONAL CORP.; MDS Nordion, Inc.; MDS Canada, Inc.; MDS, Inc., Defendants-Appellants.

No. 07-41232.

United States Court of Appeals, Fifth Circuit.

April 7, 2008

Page 603

[Copyrighted Material Omitted]

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Mark Christopher Sparks (argued), Joseph Jefferson Fisher, Provost Umphrey, Beaumont, TX, Francis Isadore Spagnoletti, Spagnoletti & Co., Houston, TX, for Plaintiffs-Appellees.

Alice E. Loughran (argued), Charles G. Cole, Steptoe & Johnson, Washington, DC, Clayton E. Dickey, Matthew A. Culp, Matthew S. Jensen, Rasmussen, Willis, Dickey & Moore, Kansas City, MO, for Multidata Systems Intern. Corp.

James Richard Watkins, William Powell Glenn, Jr., Royston, Rayzor, Vickery & Williams, Galveston, TX, Jeffrey Karl Suess (argued), Rynearson, Suess, Schnurbusch & Champion, St. Louis, MO, for MDS Canada, Inc., MDS, Inc. and MDS Nordion, Inc.

Appeal from the United States District Court for the Southern District of Texas.

Before KING, STEWART and PRADO, Circuit Judges.

KING, Circuit Judge:

Defendants-appellants Multidata Systems International Corp., MDS Inc., MDS (Canada) Inc., and MDS Nordion Inc. (collectively "Defendants") appeal the district court's interlocutory order refusing to dismiss this case: (1) for lack of personal jurisdiction; (2) as barred by the doctrines of res judicata and direct estoppel; and (3)

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for forum non conveniens. Because we find that Texas cannot exercise general jurisdiction over Defendants, and the plaintiffs-appellants ("Plaintiffs") do not allege that specific jurisdiction exists, we reverse the district court's order. We do not consider the remaining issues.

I.

This is the third suit that Plaintiffs have brought in the United States against Defendants, Multidata Systems International Corp. ("Multidata"), a Delaware corporation with its principal place of business in St. Louis, Missouri, and three Canadian corporations, MDS Inc. ("MDS"), MDS (Canada) Inc. ("MDS Canada"), and MDS Nordion Inc. ("MDS Nordion"), for personal injuries to themselves or their decedents. Plaintiffs or their decedents were cancer patients who received radiation therapy at the Instituto Oncologico Nacional ("ION") in Panama City, Panama, between August and December 2000. During this time, they were over-exposed to radiation, resulting in serious injuries and several deaths. Most of the plaintiffs are citizens and residents of Panama, although Plaintiffs claim that six of the surviving representatives are citizens or authorized residents of the United States. Not one of the injured plaintiffs or decedents is a Texas resident.

Plaintiffs or their decedents were treated at ION with a Theratron 780C Teletherapy Unit ("Theratron Unit") in conjunction with a Treatment Planning System ("TPS"). The Theratron Unit is a cancer-treating radiation device that delivers therapeutic Cobalt radiation to cancer patients. It was originally designed and manufactured by Theratronics International Ltd. ("Theratronics"), a Canadian corporation. The unit in use at ION was, in fact, sold by Theratronics in 1992. In 1998, however, the Canadian Development Investment Corporation sold Theratronics to MDS, which, in turn, sold Theratronics to its wholly-owned subsidiary, MDS Nordion. In 2001, MDS Nordion ceased to exist as a corporate entity when it merged with MDS Pharma Services, Inc., another wholly-owned subsidiary of MDS, to form MDS Canada.

The TPS, meanwhile, is a stand-alone computer and software system manufactured by Multidata. It is used to assist physicists in calculating radiation dosages, distribution, and treatment times for cancer patients. The TPS considers numerous factors in making its calculations, including the prescription from the doctor, the distance the patient is located from the radiation source, the depth of the tumor being treated, and the number of "shielding blocks" used in conjunction with the radiation treatment. A shielding block is a material designed to shape the radiation beam to protect a patient's healthy organs and sensitive tissue. The TPS was designed to perform calculations using up to four shielding blocks.

In or around August 2000, one of the radiation oncologists at ION requested a treatment plan that used five shielding blocks. Although the TPS was not designed to calculate the proper level of radiation dosages under such circumstances, ION doctors and physicists determined that they could manipulate the data entry procedure by making it appear that five shielding blocks were actually one shielding block. Unfortunately, when the data was entered into the TPS using this new method, the dose calculation was incorrect. As a result, an over-dosage of radiation was prescribed, sometimes in excess of twice the amount of radiation that should have been administered.

Once the effects of the over-radiation surfaced, the government of Panama requested separate investigations by the International

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Atomic Energy Association ("IAEA") and a group of physicians and physicists from M.D. Anderson Cancer Center ("M.D. Anderson") in Houston, Texas. Both the IAEA and the M.D. Anderson doctors published reports explaining their understanding of the events leading to the over-radiation. Both reports concluded that the patients received excess radiation because the TPS was erroneously re-configured to calculate the amount of radiation necessary when using five shielding blocks. In addition, the ION doctors and physicists were faulted for failing to: (1) manually verify the TPS's calculations; or (2) simulate treatment plans by irradiating a water phantom and measuring the dosage. Moreover, ION staff were faulted for failing to compare the newly calculated dosage levels to similar prior treatments and failing to detect early symptoms of excessive radiation exposure in the patients being over-exposed to radiation by the new treatment plan.

Ultimately, as a result of these and other investigations, the ION doctors and physicists that caused Plaintiffs' over-radiation were sanctioned or prosecuted to varying degrees by the Panamanian government. An ION radiation oncologist and three physicists lost their licenses to practice medicine in Panama. In addition, two of the three physicists were criminally convicted in Panama of negligent homicide.

On October 17, 2001, Plaintiffs filed a lawsuit in the Circuit Court of the County of St. Louis, Missouri, against Defendants. Plaintiffs alleged that they suffered from the effects of excess radiation because the Theratron Unit and TPS were defective. They sought damages for wrongful death and negligence. Defendants immediately moved for dismissal on forum non conveniens grounds, arguing that the case should be heard in Panama where most of Plaintiffs lived, where the Plaintiffs or their decedents were injured, and where most of the witnesses and evidence were located. Plaintiffs responded that Missouri was a convenient forum because Multidata was located there. Moreover, Plaintiffs argued that Panama was not an available alternative forum because: (1) Panama's judicial system was corrupt; and (2) Panama would not accept jurisdiction over a case previously dismissed from a foreign jurisdiction. After permitting discovery, the state trial court held a three day evidentiary hearing to determine whether the action should be dismissed. Both Plaintiffs and Defendants presented expert testimony concerning the availability of Panama as an alternative forum.

Before the Missouri trial court reached a decision, however, one of the Plaintiffs filed a petition in the San Miguelito Judicial District Court of Panama against Defendants. Before Defendants were served with the petition or otherwise notified of the filing, the Panamanian court dismissed the case for want of jurisdiction. Plaintiffs notified the Missouri trial court of this outcome and sought to rely on the dismissal from the Panamanian court to prove that Panama was not an available alternative forum. Defendants objected to the consideration of the ruling, claiming that the case was filed in the wrong venue and that they were never given the opportunity to waive jurisdictional defects.

On January 8, 2004, the Missouri trial court granted Defendants' motion to dismiss without prejudice in a brief order on forum non conveniens grounds. The state trial court explicitly ruled that Plaintiffs could re-file in Missouri if Panama refused jurisdiction, stating:

[r]econsideration may be given to the refiling of this cause in this jurisdiction if a determination is made by a Panamanian court of competent jurisdiction and venue for this cause that jurisdiction

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does not exist in Panama and the Defendants were given the opportunity to submit to the jurisdiction of the Panamanian court or were given notice of such filing so as to be able to present their position to the court on the issue of jurisdiction.

Chandler v. Multidata Sys. Int'l Corp., No. 01CC-3634, slip op. at 2 (Mo. Cir. Ct. Jan. 8, 2004) (emphasis added).

Plaintiffs appealed the state trial court's decision to the Missouri Court of Appeals for the Eastern District of Missouri. On May 10, 2005, the Missouri Court of Appeals affirmed the decision in a published opinion. Chandler v. Multidata Sys. Int'l Corp., 163 S.W.3d 537 (Mo. Ct. App. 2005). Amongst other holdings, the Missouri Court of Appeals upheld the trial court's finding that Panama was an available alternative forum because Defendants proved that a dismissal from a foreign jurisdiction would not prohibit re-filing in Panama. Id. at 546-49. The Missouri Court of Appeals...

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