Dumler v. Wright Med. Tech., Inc.

Decision Date26 January 2018
Docket NumberNo. C17-2033-LTS,C17-2033-LTS
PartiesREBECCA DUMLER AND DENNIS DUMLER, Plaintiffs, v. WRIGHT MEDICAL TECHNOLOGY, INC. and WRIGHT MEDICAL GROUP, INC., Defendants.
CourtU.S. District Court — Northern District of Iowa
MEMORANDUM OPINION AND ORDER

TABLE OF CONTENTS

I. INTRODUCTION ........................................................................... 2

II. FACTUAL OVERVIEW ................................................................... 2

III. PROCEDURAL HISTORY ............................................................... 3

IV. APPLICABLE STANDARDS ............................................................ 3

A. Personal Jurisdiction .............................................................. 3
B. Failure to State a Claim ........................................................... 6

V. DISCUSSION ................................................................................ 8

A. Motion to Dismiss for Lack of Personal Jurisdiction ........................ 8
1. Intentional Tort Involving Iowa Resident .............................. 9
2. Statements in SEC Filings .............................................. 10
3. Alter Ego ................................................................... 12
4. Other Cases ................................................................ 15
5. Jurisdictional Discovery and Leave to Amend Complaint .................................................................. 16
B. Motion to Dismiss and Strike ................................................... 16
1. Count I - Negligent Design ............................................ 17
2. Count II - Strict Products Liability: Manufacturing Defect ....................................................................... 19
3. Count VI - Fraudulent Misrepresentation ........................... 21
4. Count VIII - Punitive Damages ....................................... 26

VI. CONCLUSION ............................................................................ 28

I. INTRODUCTION

This case is before me on a motion (Doc. No. 6) to dismiss for lack of personal jurisdiction by defendant Wright Medical Group, Inc. (WMG), and a motion (Doc. No. 7) by both defendants to dismiss Counts I, II, III, IV, VI and VIII for failure to state a claim and to strike plaintiffs' demand for pre-judgment interest. Plaintiffs have filed resistances (Doc. Nos. 15, 16) and defendants have filed replies (Doc. Nos. 22, 24). The parties have not requested oral argument and I do not find it to be necessary. See L.R. 7(c).

II. FACTUAL OVERVIEW

This case involves a Profemur hip implant, which plaintiffs allege was defectively designed and resulted in bodily injury to plaintiff Rebecca Dumler due to corrosion and metal debris and ion cast off from the stem and neck components. Doc. No. 2 at 1. Defendants WMG and Wright Medical Technology, Inc. (WMT), are both Delaware corporations with their principal places of business in Tennessee. Id. at 2. WMT is a wholly-owned subsidiary of WMG. Id.

Plaintiffs allege that the Profemur Titanium Modular Necks were first patented by Cremascoli Ortho Group and marketed by it in 1986. Id. at 7. In December 1999, WMG acquired Cremascoli and its products, including the Profemur line of hip products. After the acquisition, WMG re-designed the Profemur modular artificial hip stem and modular neck and expanded the line to include additional models or versions of Profemur stems and modular necks. Id. The necks continued to be manufactured with titanium alloy. WMG then branded the product as the Wright Medical Profemur Total Hip System. In 2001, it re-styled the modular necks' mid-body. Id. After August 25, 2009, WMG began to offer the Profemur modular necks in the United States. These were made of a cobalt-chromium (CoCr) alloy instead of titanium. Id.

In 2011, a Profemur CoCr Modular Neck and a titanium stem were implanted in plaintiff Rebecca Dumler and allegedly caused injuries and damages due to corrosionbetween the CoCr neck and titanium stem. Specific allegations relating to personal jurisdiction and plaintiffs' claims will be discussed in the analysis below.

III. PROCEDURAL HISTORY

Plaintiffs filed an eight-count complaint (Doc. No. 2) on June 29, 2017, naming both WMG and WMT as defendants. The claims include:

• Count I - Negligent Design and Failure to Warn or Instruct
• Count II - Strict Products Liability: Manufacturing Defect
• Count III - Breach of Express Warranty
• Count IV - Breach of Implied Warranties of Merchantability
• Count V - Negligent Misrepresentation
• Count VI - Fraudulent Misrepresentation
• Count VII - Loss of Consortium
• Count VIII - Punitive Damages

Doc. No. 2. Plaintiffs invoke the court's diversity jurisdiction pursuant to 28 U.S.C. § 1332. Doc. No. 2 at 3.

After being served, WMG filed its motion (Doc. No. 6) to dismiss for lack of personal jurisdiction and both defendants filed their motion (Doc. No. 7) to dismiss and motion to strike.

IV. APPLICABLE STANDARDS

A. Personal Jurisdiction

In order to properly allege personal jurisdiction, "a plaintiff 'must state sufficient facts in the complaint to support a reasonable inference that the defendant[ ] can be subjected to jurisdiction within the state.'" Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004)), cert. denied, 543 U.S. 1147 (2005) (quoting Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 259 (8th Cir. 1974)). In resisting a Rule 12(b)(2) motion, the plaintiff has the burden of proving facts supporting such jurisdiction. WellsDairy, Inc. v. Food Movers Int'l, Inc., 607 F.3d 515, 518 (8th Cir.), cert. denied, 562 U.S. 962 (2010). The court may consider the allegations of the complaint along with any affidavits and exhibits submitted by the parties. Id. The plaintiff's burden, in the absence of an evidentiary hearing, is to make a "minimal" prima facie showing of personal jurisdiction. K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011). The court "must view the evidence in the light most favorable to the plaintiff and resolve all factual conflicts in its favor in deciding whether the plaintiff has made the requisite showing." Id.

In a diversity case, such as this, personal jurisdiction exists "only to the extent permitted by the long-arm statute of the forum state and by the Due Process Clause." Dever, 380 F.3d at 1073 (internal quotation marks omitted). Iowa Rule of Civil Procedure 1.3061 authorizes the exercise of personal jurisdiction to the full extent allowed by the United States Constitution, meaning the court's inquiry is limited to whether the exercise of personal jurisdiction comports with due process. Wells Dairy, 607 F.3d at 518 (citing Hammond v. Fla. Asset Fin. Corp., 695 N.W.2d 1, 5 (Iowa 2005)).

In general, due process requires that a nonresident defendant have at least "certain minimum contacts" with the forum state to support the exercise of personal jurisdiction. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Those contacts must be sufficient that requiring the defendant to litigate in the forum state would not "offend traditional notions of fair play and substantial justice." Id. at 316 (internal quotation marks and citation omitted). They "must come about by an action of the defendant purposefully directed toward the forum State." Asahi Metal Indus. Co., Ltd. v. Super. Ct. of Cal., 480 U.S. 102, 112 (1987) (internal citations omitted).

This "'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts," or due to "the 'unilateral activity of another party or a third person.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (citations omitted). If the defendant made the deliberate choice to "engage[] in significant activities within a State," or to create "'continuing obligations' between himself and residents of the forum," then "it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well." Id. at 475-76 (citations omitted). Thus:

By requiring that individuals have "fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign," the Due Process Clause "gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit[.]"

Id. at 472-73 (citations omitted).

The Eighth Circuit Court of Appeals applies a five-factor test to determine whether a defendant's contacts with the forum state are sufficient to establish personal jurisdiction. Myers v. Casino Queen, Inc., 689 F.3d 904, 911 (8th Cir. 2012). Those factors are: (1) the nature and quality of the contacts with the forum state; (2) the quantity of those contacts; (3) the relationship of those contacts with the cause of action; (4) the forum state's interest in providing a forum for its residents; and (5) the convenience or inconvenience to the parties. Id. (citing Precision Const. Co. v. J.A. Slattery Co., Inc., 765 F.2d 114, 118 (8th Cir. 1985)). The first three factors are considered to be of primary importance. Precision Const. Co., 765 F.2d at 118.

Personal jurisdiction can be either general or specific. General jurisdiction arises when a nonresident maintains "continuous and systematic" contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984). Under those circumstances, jurisdiction over the nonresident is appropriate even when the claims at issue do not arise out of or relate to its activities in the forum state. Id. at 414-15.Specific jurisdiction arises "when the defendant purposely directs its activities at the forum state and the litigation 'result[s] from injuries ... relating to [the defendant's] activities [in the forum state.]'" Myers, 689 F.3d at 912-13 (quoting Steinbuch v. Cutler, 518 F.3d 580, 586 (8th...

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