Arnold v. Alphatec Spine, Inc., Case No. 1:13-cv-714

CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
Writing for the CourtTimothy S. Black
PartiesGEORGE ARNOLD, et al., Plaintiffs, v. ALPHATEC SPINE, INC., et al., Defendants.
Docket NumberCase No. 1:13-cv-714
Decision Date26 June 2014

GEORGE ARNOLD, et al., Plaintiffs,
v.
ALPHATEC SPINE, INC., et al., Defendants.

Case No. 1:13-cv-714

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

Date: June 26, 2014


Judge Timothy S. Black

ORDER: (1) GRANTING DEFENDANTS' MOTIONS TO DISMISS
THE FIRST AMENDED COMPLAINT (Docs. 15, 19, 24, 25, 26, 44);
(2) DENYING PLAINTIFFS' MOTION FOR LEAVE
TO FILE A SECOND AMENDED COMPLAINT (Doc. 38); AND
(3) TERMINATING THIS CASE FROM THE DOCKET OF THE COURT

This civil action is before the Court on Defendants' motions to dismiss (Docs. 15, 19, 24, 25, 26, 44), Plaintiffs' motion for leave to file an amended complaint (Doc. 38), and the parties' responsive memoranda (Docs. 45, 47-54, 56-65, 67-68). The motions are now ripe for decision.

Plaintiffs' first amended complaint (the "FAC") asserts fourteen claims for relief arising under the federal Racketeer Influenced and Corrupt Organizations Act ("RICO") (18 U.S.C. §§ 1961, et seq.), the Ohio RICO statutes (Ohio Rev. Code §§ 2923.31, et seq.), the Ohio Products Liability Act (the "OPLA") (Ohio Rev. Code §§ 2307.71-2307.80), and Ohio common law. (Doc. 3). In substance, however, Plaintiffs are seeking recovery for state law tort claims, improperly repackaged as alleged federal claims.

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However, as Plaintiffs' counsel is now fully aware, repackaging personal injury claims under the federal anti-racketeering statutes is not permitted.1

I. BACKGROUND

This case was initially filed in the Hamilton County Court of Common Pleas on August 28, 2013. (Doc. 2). On September 19, 2013, Plaintiffs amended the complaint as a matter of right pursuant to Fed. R. Civ. P. 15(a)(1), adding nine additional plaintiffs. (Doc. 3). On October 3, 2012, the case was removed to this Court based on the federal RICO claim. (Doc. 1). Defendants began filing their motions to dismiss shortly thereafter. (Docs. 15, 19, 24, 25, 26, 44). On November 12, 2013, Plaintiffs filed a motion for leave to amend the FAC. (Doc. 38).

The FAC alleges that from 2011 to 2013, Plaintiffs each underwent surgery involving the use of a tissue allograft product called PureGen. (Doc. 3 at ¶ 6(a)-(d), 69-

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89).2 At the time of the surgeries, however, PureGen was allegedly not appropriately registered with nor approved by the FDA. (Id. at ¶¶ 4(h), 6(b)). Plaintiffs allege that the manufacture, distribution, and use of PureGen constituted a fraudulent scheme, perpetrated collectively by all named defendants, to test and market PureGen without properly complying with the appropriate federal regulations. (Id. at ¶¶ 1-2). The scheme is described in the FAC as follows:

Defendants reaped significant profits by 1) using patients as research subjects without their knowledge, 2) charging the patients and their insurers for implants that were not used in compliance with the FDA approval process and which uses were not disclosed to the patients as necessary to obtain informed consent, 3) knowingly concealing the charges for the implants, not reporting to the patient or insurer that the devices were not approved for such use, not obtaining precertification for such use, not obtaining informed consent for experimental use, and 4) knowingly performing medically unnecessary surgeries while representing them as medically necessary.

(Id. at ¶ 1).

In total, the FAC is 59 pages long and consists of 228 numbered paragraphs, not including a vast number of unnumbered subparagraphs. (Doc. 3). Plaintiffs' proposed Second Amended Complaint (the "SAC") is twice as long, and seeks to add new parties. (Doc. 38-3). Similar to the FAC, the 116-page, 1048 paragraph proposed SAC suffers from both extraordinary disorganization and absolute deficiency. (Id.)

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II. STANDARDS OF REVIEW

A. Motion to Dismiss

A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) operates to test the sufficiency of the complaint and permits dismissal for "failure to state a claim upon which relief can be granted." To show grounds for relief, Fed. R. Civ. P. 8(a) requires that the complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief." While Rule 8 "does not require 'detailed factual allegations,' ... it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

However, where the complaint contains allegations of fraud, the plaintiff must also meet the heightened pleading standard set forth under Fed. R. Civ. P. 9(b). Heinrich v. Waiting Angels Adoption Servs., Inc., 668 F.3d 393, 403 (6th Cir. 2012). Under Rule 9(b), "a party must state with particularity the circumstances constituting fraud or mistake." To meet Rule 9(b)'s heightened particularity requirement, the plaintiff "at a minimum, must 'allege the time, place, and content of the alleged misrepresentation ... the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.'" Heinrich, 668 F.3d at 403 (quoting United States ex rel. Bledsoe v. Cmty Health Sys., 342 F.3d 634, 643 (6th Cir. 2003)).

For purposes of a motion to dismiss pursuant to Rule 12(b)(6), the Court must view the complaint in the light most favorable to the plaintiff and take all well-pleaded factual allegations as true. Tackett v. M & G Polymers, 561 F.3d 478, 488 (6th Cir.

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2009). However, pleadings offering mere "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). In fact, in determining a motion to dismiss, "courts 'are not bound to accept as true a legal conclusion couched as a factual allegation[.]'" Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). Further, "[f]actual allegations must be enough to raise a right to relief above the speculative level[.]" Id.

Accordingly, "[t]o 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.'" Iqbal, 556 U.S. at 678. A claim is plausible where "plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Plausibility "is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief,'" and the Complaint shall be dismissed. Id. (citing Fed. R. Civ. P. 8(a)(2)).

B. Motion to Amend

Federal Rule of Civil Procedure 15(a) governs amendments to the pleadings. A complaint may be amended once as a matter of course within twenty-one days of service of responsive pleadings. Fed. R. Civ. P. 15(a)(1)(B). Thereafter, a plaintiff may amend the complaint either with consent of the opposing party or leave of the court. Fed. R. Civ. P. 15(a)(2). Pursuant to Rule 15(a)(2), "[t]he court should freely give leave [for a

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party to amend the pleadings] when justice so requires." The rule is to be liberally construed in favor of allowing amendments, and reinforces the principle that cases "should be tried on their merits." See, e.g., Moore v. Paducah, 790 F.2d 557, 559 (6th Cir. 1986). However, the court may find denial appropriate "where there is 'undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.'" Morse v. McWhorter, 290 F.3d 795, 800 (6th Cir. 2002) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). A proposed amendment is futile if, even after amendment, the complaint could not withstand a Rule 12(b)(6) motion to dismiss. Riverview Health Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505, 512 (6th Cir. 2010). However, in the absence of such factors, leave is generally granted. Moore, 790 F.2d at 562.

III. ANALYSIS

A. Defendants' Motions to Dismiss

Collectively, Defendants' motions and memoranda thoroughly address the arguments in support of dismissing the FAC.3 (Docs. 15, 19, 24, 25, 26, 44). First, dismissal is appropriate because the FAC fails to comply with Rule 8. Second, Plaintiffs claims are preempted under federal law. Third, Counts I and II should be dismissed because Plaintiffs fail to assert a valid state or federal RICO claim.

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1. The FAC Violates Federal Rule of Civil Procedure 8

Dismissal of the FAC under Rule 8 is appropriate because: (1) the FAC does not provide a "short and plain statement of the claim[s]" supported by sufficient factual allegations; (2) the FAC does not give Defendants fair notice of the claims against them; and (3) Plaintiffs fail to edit and organize the FAC into a coherent pleading.

A complaint must provide "a short and plain statement of the...

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