Ammend v. Bioport, Inc.

Citation322 F.Supp.2d 848
Decision Date31 March 2004
Docket NumberNo. 5:03-CV-031.,5:03-CV-031.
PartiesAMMEND, et al., Plaintiffs, v. BIOPORT, INC., et al., Defendants.
CourtU.S. District Court — Western District of Michigan

Alan C. Milstein, Derek T. Braslow, Sherman, Silverstein, Kohl, Rose & Podolsky, Pennsauken, NJ, for Plaintiffs.

Gerald Zingone, Thelen, Reid & Priest LLP, Washington, DC, J. Terrance Dillon, Myers, Nelson, Dillon & Shierk, PLLC, Grand Rapids, MI, for Defendant.

OPINION

QUIST, District Judge.

                Table of Contents
                I. Background ............................................................... 852
                 II. Standard of Review ....................................................... 853
                III. Discussion ............................................................... 854
                     A. Defendants Michigan Department of Public Health and Michigan
                Biologic Products Institute: Eleventh Amendment Sovereign
                Immunity ............................................................ 855
                       (1) Source of Funds to Pay Judgment Against MDPH-MBPI .................. 856
                       (2) Nature of MDPH-MBPI Under State Law ................................ 857
                       (3) Degree of State Control Over MDPH-MBPI ............................. 858
                       (4) Performance of Government Functions ................................ 860
                       (5) Source of Funding; Destination of Revenues ......................... 861
                    B. Defendant Dr. Myers .................................................... 862
                       (1) Official Capacity — Eleventh Amendment Sovereign Immunity .......... 862
                       (2) Individual Capacity ................................................ 863
                           (a) Federal Law Claims ............................................. 863
                           (b) State Law Claims ............................................... 863
                    C. Defendant BioPort — Successor Liability; Supplemental Testing .......... 864
                       (1) Successor Liability — Continuity of Enterprise Theory .............. 865
                           (a) Second Turner Prong ............................................ 866
                           (b) Fourth Turner Prong ............................................ 868
                       (2) Assumption and Retention of Liabilities — Asset Purchase
                Agreement ........................................................ 868
                       (3) Supplemental Testing Program ....................................... 870
                    D. Other Claims ........................................................... 870
                       (1) Federal Law Claims ................................................. 870
                           (a) Bodily Integrity ............................................... 870
                           (b) Human Dignity .................................................. 872
                       (2) Fraud Claims ....................................................... 873
                    E. Other Defenses ......................................................... 873
                
                (1) BioPort — Inheriting the State's Sovereign Immunity ................ 873
                       (2) Michigan Drug Manufacturers Products Liability Immunity
                Statute .......................................................... 873
                           (a) Choice of Law .................................................. 874
                           (b) Application of Statute ......................................... 876
                       (3) Feres Doctrine ..................................................... 877
                       (4) Government Contractor Defense ...................................... 877
                           (a) Prong 1: Government Approval of Reasonably Precise
                Specifications ............................................... 877
                           (b) Prong 2: Product's Conformity to Government Specifications ..... 878
                           (c) Prong 3: Contractor Warning Government About Known
                Dangers ...................................................... 879
                 IV. Conclusion ............................................................... 879
                

Plaintiffs in this matter are current or former military members, government contract employees, and spouses who allege harms caused by anthrax vaccine administered under the Department of Defense ("DOD") immunization program. Defendants are the Michigan Department of Public Health ("MDPH"), the Michigan Biologic Products Institute ("MBPI") (together, "MDPH-MBPI"), BioPort, Inc. ("BioPort"), and Dr. Robert C. Myers ("Dr. Myers"). Each Defendant was associated with manufacturing anthrax vaccine. Plaintiffs set forth claims of negligence, breach of warranties, breach of the right to be treated with essential human dignity, strict products liability, fraud, deprivation of civil rights pursuant to 42 U.S.C. § 1983, and loss of consortium. Now before the Court are Defendants' motions to dismiss. For the reasons stated below, the Court will dismiss all claims against MDPH-MBPI, grant in part and deny in part BioPort's motion to dismiss, and grant in part and deny in part Dr. Myers' motion to dismiss.

I. Background

This matter consists of three consolidated cases, each brought by different groups of Plaintiffs but asserting similar claims against the same Defendants. Allaire, et al. v. BioPort, et al. ("Allaire") originally filed in the United States District Court for the District of Columbia. Judge Kollar-Kotelly granted Defendants' motion to transfer Allaire to this District due to insufficient contacts to establish personal jurisdiction under the District of Columbia's long-arm statute. Fleming, et al. v. BioPort, et al. ("Fleming") was originally filed in the United States District Court for the Western District of Louisiana. Judge James granted Defendants' motion to transfer Fleming to this District for lack of personal jurisdiction over all Defendants. Allaire and Fleming have been combined with this case, Ammend, et al. v. BioPort, et al., which was originally filed in this District.

Anthrax is a lethal disease caused by bacteria that can be delivered by biological weapon systems. In 1965, researchers at the U.S. Army Biological Laboratories in Fort Detrick, Maryland designed and patented the process for producing a vaccine known as Anthrax Vaccine Adsorbed ("AVA") (hereafter referred to as "anthrax vaccine" or "vaccine"). In 1970, the federal government issued a license to manufacture anthrax vaccine to MDPH. Since that time, MDPH and its successors were the only licensed anthrax vaccine producers in the U.S. Beginning in 1988, the Department of Defense ("DOD") awarded MDPH a series of contracts for the production and sale of anthrax vaccine.

The DOD began considering a mass anthrax vaccination program in the early 1990s. In 1997, the DOD announced plans to vaccinate U.S. military personnel under the Anthrax Vaccine Immunization Program ("AVIP") in order to protect the force from biological attacks. The program required that all military personnel would receive a six-shot series of anthrax vaccine. Inoculations were mandatory, and any servicemember who refused the shots was disciplined.

Dr. Myers first became an employee of MDPH in 1978. In 1990, he became Chief of the Biologics Division of MDPH. The Biologic Products Division of MDPH was transferred to MBPI in 1996, at which time Dr. Myers became MBPI's Director. In 1998, the U.S. Food and Drug Administration ("FDA") inspected and shut down MBPI's production facility after finding problems in the anthrax vaccine manufacturing, production, storage, and testing processes. On July 8, 1998, BioPort entered into an agreement with the State of Michigan for the purchase of substantially all of MBPI's assets. The transaction closed on September 4, 1998. A novation agreement transferred MBPI's anthrax vaccine production contract with the federal government to BioPort, and BioPort later was awarded additional contracts. Dr. Myers began working for BioPort following the asset sale. Anthrax vaccine at BioPort later underwent supplemental testing and the production line eventually reopened.

The primary Plaintiffs in this case received mandatory anthrax inoculations while on military duty. They or their representatives claim that the vaccine caused physical ailments and in some cases death. Alleged symptoms include nausea, fatigue, joint pain, memory loss, cognitive impairment, abdominal pain, migraines, seizures, tremors, insomnia, shooting pains, difficulty hearing, earaches, poor balance, vision problems, digestive problems, numbness, and hypersensitivity to smells, chemicals, and light. Plaintiffs argue that the anthrax vaccine with which they were injected was an unreasonably dangerous, defective, and experimental drug. They contend that Defendants produced and manufactured the vaccine in violation of numerous federal regulations and standards, and also misrepresented and withheld information about the vaccine's risks. Based on these allegations, the Complaint sets forth the aforementioned series of claims against the various Defendants and seeks damages.

II. Standard of Review

An action may be dismissed if the complaint fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). The moving party has the burden of proving that no claim exists. Although a complaint is to be liberally construed, it is still necessary that the complaint contain more than bare assertions of legal conclusions. Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1240 (6th Cir.1993) (citing Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988)). All factual allegations in the complaint must be presumed to be true, and reasonable inferences must be made in favor of the non-moving party. 2 Moore's Federal Practice, § 12.34[1][b] (Matthew Bender 3d ed.2003). The Court need not, however, accept unwarranted factual inferences. Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987). Dismissal is proper "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81...

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