Chang v. Healthcare

• Decision Date: 26 March 2010
• Docket Number: No. 09-3020,No. 09-2280,09-2280,09-3020
• Parties: Yao-Wen CHANG, et al., PlaintiffsAppellants, v. BAXTER HEALTHCARE CORPORATION, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

599 F.3d 728

Yao-Wen CHANG, et al., PlaintiffsAppellants, v. BAXTER HEALTHCARE CORPORATION, et al., Defendants-Appellees.

No. 09-2280

No. 09-3020

United States Court of Appeals Seventh Circuit.

Submitted: Feb. 12, 2010.

Decided: March 26, 2010.

Rehearing and Rehearing En Banc Denied April 26, 2010.

COPYRIGHT MATERIAL OMITTED

Michael L. Baum, Baum, Hedlund, Aristei, Guilford & Downey, Los Angeles, CA for Plaintiffs-Appellants.

Richard D. Walk, Jr., Dechert, Philadelphia, PA, Kaspar J. Stoffelmayr, Bartlit Beck, Herman, Palenchar & Scott, Denver CO, for Defendants-Appellees.

Before POSNER, EVANS, and TINDER, Circuit Judges.

POSNER, Circuit Judge.

This is a parallel case to Abad v. Bayer Corp., 563 F.3d 663 (7th Cir.2009), decided by this panel last year. The case was dismissed by the district court, and the plaintiffs have appealed. Ordinarily when all parties to an appeal are represented by counsel, the court directs oral argument unless the parties waive argument and weaccept the waiver. But when, as in this case, an appeal is closely related to an earlier appeal, or is successive to it, we are more likely to deny oral argument on the ground that "the facts and legal arguments are adequately presented in the briefs and record, and the decisional process would not be significantly aided by oral argument." Fed. R.App. P. 34(a)(2)(C). We have decided to do that in this case.

Abad was a diversity (technically an "alienage, " 28 U.S.C. § 1332(d)(2)(B)) class action on behalf of several hundred Argentines, consolidating a number of suits that had been filed in various U.S. states and transferred by the multidistrict panel to the federal district court in Chicago, pursuant to 28 U.S.C. § 1407, for inclusion in In re Factor VIII or IX Concentrate Blood Products Litigation. That is the name that has been given to the pretrial proceedings in a large number of productsliability suits by hemophiliacs who had been infected with HIV (the virus that causes AIDS) that had gotten into the clotting factor that persons afflicted with hemophilia inject into their bloodstreams in order to control bleeding. The plaintiffs charged that the defendants—the manufacturers of the clotting factors—had failed to eliminate HIV from the blood of donors from which the clotting factors had been made, as they could and should have done by applying heat in the manufacturing process.

The class members in Abaci had acquired and injected and become infected by the contaminated clotting factors in Argentina, and the district court granted the defendant's motion to dismiss the action on the ground of forum non conveniens—the doctrine that allows a court to dismiss a suit if there are strong reasons for believing that it should be litigated in the courts of another, normally a foreign, jurisdiction in Abad the courts of Argentina. We affirmed.

The district court had deferred ruling on the defendant's motion until completion of the plaintiffs' pretrial discovery. The defendant's discovery would have to be conducted in Argentina because that was where the members of the class lived. So while depositions and other documents obtained in the plaintiffs' discovery would have to be translated into Spanish if the suit was litigated in Argentina, documents obtained in the defendant's discovery in Argentina would have to be translated into English if the case was tried in Chicago.

The plaintiffs argued that under Argentine choice of law rules, the substantive law that would be applied if the case were litigated in an Argentine court would be American rather than Argentine law. If true, this would, we said, have been a powerful argument for leaving the case in Chicago. But as near as we were able to determine, it was false. Argentine law would apply wherever the case was tried and especially because of the dearth of relevant Argentine precedents or other sources of law, the Argentine court would probably do a better (more authentic, legitimate, authoritative) job of applying (if necessary creating) Argentine law than an American court. And we noted that the presumption in favor of a plaintiff's choice of the court in which to litigate (a presumption based in part on the costs and delay involved in restarting a case in another court) is weakened when the plaintiffs are foreign and could litigate the case in their home court. Thus on balance Argentina was the more convenient, the more suitable, forum for the litigation.

The present case, filed originally in California by residents of Taiwan but transferred by the multidistrict panel to the district court in Chicago with the other clotting-factor suits for pretrial proceedings, is similar to Abad, although it adds a breach of contract claim to the tort claims.

(Like Abad, it is actually a series of cases that have been consolidated for purposes of pretrial proceedings.) The main tort claim is that the defendants acquired blood from high-risk donors, processed it improperly in California where they manufactured clotting factors, and after discovering that the factors were contaminated by HIV nevertheless continued to distribute the product in foreign countries while withdrawing them from distribution in the United States. Thus, like the plaintiffs and class members in the Abad case, the plaintiffs in this case, or the decedents whom they represent, reside, and obtained and injected the clotting factor, in a foreign country. The plaintiffs also charge that the defendants fraudulently induced them to enter into a settlement agreement that released the defendants from liability in exchange for paying $60,000 to each plaintiff. The breach of contract claim alleges violation of a term of the settlement.

The district judge dismissed some of the plaintiffs' claims as untimely and the others on the ground of forum nan conveniens. Although a dismissal on the latter ground is without prejudice, it is appealable, illustrating that the "rule" that dismissals without prejudice are nonfinal and therefore nonappealable under 28 U.S.C. § 1291 is a Swiss cheese. See ScheringPlough Healthcare Products, Inc. v. Schwarz Pharma, Inc., 586 F.3d 500, 506 (7th Cir.2009); Taylor-Holmes v. Office of Cook County Public Guardian, 503 F.3d 607, 609-10 (7th Cir.2007). In Manez v. Bridgestone Firestone North American Tire, LLC, 533 F.3d 578, 584 (7th Cir. 2008), we compared dismissal on grounds of forum nan conveniens to "a dismissal for lack of personal or federal subjectmatter jurisdiction, which, while foreclosing future litigation of the matter in the court issuing the order, does not preclude a plaintiff from refiling and litigating in a proper forum." And such dismissals, though without prejudice, are of course appealable.

The critical issue so far as the dismissals on the merits are concerned is choice of law. When a diversity case is transferred by the multidistrict litigation panel, the law applied is that of the jurisdiction from which the case was transferred, in this case California. In re Air Disaster at Ramstein Air Base, Germany, on 8/29/90, 81 F.3d 570, 576 (5th Cir.1996); Johnson v. Continental Airlines Corp., 964 F.2d 1059, 1063 n. 5 (10th Cir.1992); see also Ferens v. John Deere Co., 494 U.S. 516, 521-31, 110 S.Ct. 1274, 108 L.Ed.2d 443 (1990); Van Dusen v. Barrack, 376 U.S. 612, 633-39, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964); International Marketing, Ltd. v. Archer-Daniels-Midland Co., 192 F.3d 724, 729 (7th Cir. 1999); Larry Kramer, "Choice of Law in Complex Litigation, " 71 N.Y.U. L.Rev. 547, 552 (1996). The plaintiffs' claims that the district judge dismissed on the merits he dismissed as untimely under California law.

California statutes of limitations don't begin to run until the plaintiff discovers, or should in the exercise of reasonable diligence have discovered, that he has a claim against the defendant. Norgart v. Upjohn Co., 21 Cal.4th 383, 87 Cal.Rptr.2d 453, 981 P.2d 79, 88-89 n. 3 (1999); Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 245 Cal. Rptr. 658, 751 P.2d 923, 927-28 (1988); K.J. v. Arcadia Unified School District, 172 Cal.App.4th 1229, 92 Cal.Rptr.3d 1, 10 (2009). But the discovery rule would not save the plaintiffs' tort claims from dismissal for untimeliness. True, the plaintiffs argue that they didn't have enough information on which to base a suit until a New York Times article about the contamination of clotting factors with HIV was published on May 22, 2003, and therefore that their suit, filed in 2004, was timely, since the California statute of limitationsfor personal-injury claims is two years. Cal. Civ. P.Code § 335.1; Fox v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 797, 27 Cal.Rptr.3d 661, 110 P.3d 914, 921 n. 3 (2005). But as the district court found, the plaintiffs had had a reasonable basis to suspect that they had a cause of action more than five years before the article appeared, when their counsel had begun negotiations with two of the defendants to settle negligence claims arising from the contamination of the defendants' clotting factors with HIV. These negotiations culminated in the settlement in 1998 on which the plaintiffs' breach of contract claim is based.

The plaintiffs argue that the limitations period should have been tolled by defendants' "fraudulent concealment" because when entering into the settlement agreement they said they had done nothing wrong and that they were offering financial aid purely as a humanitarian gesture. The plaintiffs are mistaken. Denial of liability when negotiating a settlement agreement is the norm; it is not evidence of fraudulent concealment of anything.

The district court was also correct in ruling in the alternative that a California court would apply ("borrow" is the technical legal term) the Taiwanese 10-year statute of repose, because the plaintiffs' tort claims arose under Taiwanese law. The hemophiliacs whom the plaintiffs represent were infected in the 1980s, more than a decade before these suits were brought.

A statute of repose, which is...