Connell v. Lima Corporate

• Decision Date: 17 February 2021
• Docket Number: No. 19-35797,19-35797
• Citation: 988 F.3d 1089
• Parties: Jeffrey D. CONNELL; Janet Connell, Plaintiffs-Appellants, v. LIMA CORPORATE ; Lima USA, Inc., an Indiana corporation, Defendants-Appellees, DJO Global, Inc., a Delaware corporation; Encore Medical LP, a Delaware corporation, Defendants-Intervenors.
• Court: U.S. Court of Appeals — Ninth Circuit

988 F.3d 1089

Jeffrey D. CONNELL; Janet Connell, Plaintiffs-Appellants,

v. LIMA CORPORATE ; Lima USA, Inc., an Indiana corporation, Defendants-Appellees,DJO Global, Inc., a Delaware corporation; Encore Medical LP, a Delaware corporation, Defendants-Intervenors.

No. 19-35797

United States Court of Appeals, Ninth Circuit.

Argued and Submitted August 10, 2020 Anchorage, Alaska

Filed February 17, 2021

Eric S. Rossman (argued) and Erica S. Phillips, Rossman Law Group PLLC, Boise, Idaho; George E. McLaughlin, Warshauer McLaughlin Law Group, Denver, Colorado; for Plaintiffs-Appellants.

Stephen R. Thomas (argued) and Andrew J. Rosholt, Hawley Troxell Ennis & Hawley LLP, Boise, Idaho; Brian J. Hurst, Baker McKenzie, Dallas, Texas; for Defendants-Appellees.

Before: Johnnie B. Rawlinson, Mary H. Murguia, and Ryan D. Nelson, Circuit Judges.

R. NELSON, Circuit Judge:

We are presented with a question of first impression: who qualifies as a biomaterials supplier under the Biomaterials Access Assurance Act ("BAAA"), 21 U.S.C. § 1601 et seq. We conclude, in light of the statutory text, context, and stated purpose, that Lima Corporate ("Lima") is a biomaterials supplier of its Hip Stem—a "component part" supplied "for use in the manufacture of an implant." See id. § 1602(1)(A). Therefore, Lima is immune from liability under the BAAA and, under the circumstances here, cannot be impleaded under § 1606.

I

A

Encore Medical L.P., doing business as DJO Surgical ("DJO"), manufactures and sells orthopedic hip, knee, and shoulder devices. DJO purchases medical devices from suppliers such as Lima, an Italian company, to sell in the United States. One of Lima's products is a modular revision hip stem ("Hip Stem") which consists of: (1) a femoral stem, which the surgeon inserts into a channel in the patient's femoral canal; (2) an angled neck, also called a proximal body; and (3) a set screw, which holds the stem and neck together.

Lima supplied the Hip Stem to DJO for sale in the United States. The Supply Agreement between Lima and DJO described the Hip Stem (referred to as the "Revision Femoral Stem") as comprising two parts—the stem and the neck—but included pictures of the screw holding them together. The Supply Agreement also mentioned compatible hip implant

product components not included in the Hip Stem, such as acetabular plates, acetabular cups, polyethylene liners, femoral heads, and bone screws. DJO agreed to obtain regulatory certifications permitting sale of the Hip Stem, such as the required United States Food and Drug Administration ("FDA") clearance letters and 510(k) notifications, in DJO's name. Lima agreed to produce the Hip Stem according to DJO's specifications.

Image 1. Image of the Hip Stem.

DJO submitted a 510(k) notification to the FDA seeking preclearance for the Hip Stem (calling it the "Modular Revision Hip Stem"). DJO described its methods for "steriliz[ing] and packaging" the Hip Stem before labeling and redistribution. DJO also developed and provided instructions for use of the Hip Stem. Lima had provided DJO with access to testing data and results from its European operations and a copy of Lima's "Instructions for Use" for the Hip Stem used in other countries. Lima was not required by law to register or list the Hip Stem it sold to DJO. DJO obtained clearance from the FDA to market the Hip Stem in the United States.

The Hip Stem sold by DJO was essentially identical to the Hip Stem supplied by Lima. DJO's 510(k) notification specified a list of separate "Compatible Components" previously cleared by the FDA, including various femoral heads, acetabular shells

, and liners. DJO's "Instructions for Use" noted the Hip Stem may be used with DJO's "CoCr" brand of femoral heads or ceramic heads, separate pieces that could be paired with the Hip Stem but were not manufactured or supplied by Lima and approved under separate 510(k) notifications. DJO's surgical technique specified that the Hip Stem cannot be implanted or function without a separate compatible femoral head. The surgeon was instructed to attach various component parts with the Hip Stem "in situ," meaning inside the patient's body during surgery.

B

In 2011, Jeffrey Connell underwent left hip revision surgery in Boise, Idaho. The orthopedic surgeon implanted a dual mobility acetabular shell

, polyethylene liner, and a DJO CoCr metal femoral head connected to the Hip Stem.

Image 2. A dual mobility acetabular shell

, liner, and ceramic femoral head.

Image 3. The Hip Stem attached to a shell, liner, and ceramic femoral head.

Three years after surgery, Mr. Connell had gained weight and the femoral stem portion of Mr. Connell's implant fractured. The failed hip prosthesis

was removed, discarded, and replaced. Because the explanted products were not returned, DJO did not determine a definitive root cause for the fracture.

Mr. Connell and his wife filed this action against DJO and Lima for product liability, negligence, breach of warranties, and negligent infliction of emotional distress. After discovery, DJO and the Connells settled and the district court dismissed the claims against DJO with prejudice on November 16, 2018.

Lima then moved for summary judgment as a "biomaterials supplier" entitled to immunity under the BAAA. The district court held the Connells' claims against Lima were preempted by the BAAA and granted summary judgment on January 30, 2019. The district court reasoned that the pieces supplied by Lima were not ready for implantation when they arrived at DJO's facility and thus were not an implant under the BAAA. The district court also noted, incorrectly as it turned out, that the screw used in the Hip Stem was not provided by Lima and, therefore, Lima supplied only two of the three pieces of the Hip Stem.

The Connells timely requested reconsideration under Rule 59(e) noting the district court's misunderstanding that Lima did not provide the screw and arguing the district court erroneously interpreted the BAAA. The Connells separately sought to implead Lima back into the action pursuant to 21 U.S.C. § 1606(a)(2), which provides that under specific circumstances a claimant may implead a dismissed biomaterials supplier within 90 days after a "final judgment in an action by the claimant against a manufacturer."

The district court denied reconsideration, explaining that who manufactured the screw was not dispositive because the Hip Stem was not ready for implantation when DJO received it. DJO still had to complete several steps before the Hip Stem was ready for commercial distribution. The district court also held that Lima was not a manufacturer of the Hip Stem under the BAAA given the FDA's determination pursuant to 21 C.F.R. § 807.20 that Lima "was exempt from FDA's registration and listing requirements as an entity that manufactured ‘devices for another party who both initiates the specifications and commercially distributes the device.’ " The district court declined to consider new arguments or evidence regarding the other two exceptions to preemption of liability for a biomaterials supplier under the BAAA, which the Connells had not previously raised.

The district court also denied the Connells' motion to implead Lima under 21 U.S.C. § 1606(a), because there was no "final judgment" against DJO, the "manufacturer." The district court held that the settlement agreement resulting in a voluntary dismissal with prejudice of the claims against DJO was not an adjudication on the merits and thus not an appealable judgment. The Connells timely appealed the district court's grant of summary judgment and denial of the Connells' motions for reconsideration and impleader, and we have appellate jurisdiction under 28 U.S.C. § 1291.

II

"We review the district court's order granting summary judgment de novo." Guenther v. Lockheed Martin Corp. , 972 F.3d 1043, 1052 (9th Cir. 2020) (citation omitted). A party is entitled to summary judgment only when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).¹ We view all facts in the light most favorable to the non-moving party. Guenther , 972 F.3d at 1052.

The denial of a Rule 59(e) motion is reviewed for abuse of discretion. 389 Orange St. Partners v. Arnold , 179 F.3d 656, 661 (9th Cir. 1999). We review the denial of a motion to implead under Federal Rule of Civil Procedure 14 for abuse of discretion, Stewart v. Am. Int'l Oil & Gas Co. , 845 F.2d 196, 199 (9th Cir. 1988), and assume the same standard of review applies by analogy to impleader under § 1606, which is permissive. See 21 U.S.C. § 1606(a) ("A court ... may implead a biomaterials supplier who has been dismissed from the action ..." (emphasis added)). Lastly, we review issues of statutory interpretation de novo. United States v. Schmidt , 947 F.2d 362, 370 (9th Cir. 1991).

III

We begin by interpreting the language of the BAAA. Whether a company like Lima is immune from liability as a "biomaterials supplier" under the BAAA is a question of first impression in the courts of appeal. But our de novo review is guided by well-established rules of statutory interpretation. We "begin[ ] with the statutory text, and end[ ] there as well if the text is unambiguous." BedRoc Ltd., LLC v. United States , 541 U.S. 176, 183, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004). "[W]hen the statute's language is plain, the sole function of the courts ... is to enforce it according to its terms." Lamie v. U.S. Tr. , 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004) (citations omitted). "[U]nless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning" existing "at the time Congress enacted the statute." Perrin v. United States , 444 U.S. 37, 42, 100 S.Ct. 311, 62 L.Ed.2d 199 (1979) (citation omitted).

"[B]ecause the statute contains an express pre-emption clause, we do not invoke any presumption against pre-emption but instead focus on the plain wording of the clause, which...