In re Minnesota Breast Implant Litigation
| Decision Date | 13 November 1998 |
| Docket Number | No. Civ. 97-1497 PAM/JGL.,Civ. 97-1497 PAM/JGL. |
| Parties | In re MINNESOTA BREAST IMPLANT LITIGATION. Hurby Felker, et al., Plaintiffs, v. McGhan Medical Corporation and Minnesota Mining and Manufacturing Company / 3M Company, Defendants. |
| Court | U.S. District Court — District of Minnesota |
John W. Carey, Sieben Grose Von Holtum McCoy, Carey, Fairfax, MN, Robert J. Gordon, Paul J. Pennock, Perry Weitz, Denise M. Dunleavy, Sheila Beckman, Weitz & Luxenberg, New York City, for plaintiff.
Bridget M. Ahmann, Linda Susan Svitak, Joseph Michael Price, Bruce Gregory Jones, Faegre & Benson, Minneapolis, MN, Arvin Maskin, Konrad L Cailteux, Weil Gotshal & Manges, New York City, Peter Braun, for defendants.
This matter is before the Court upon Defendant Minnesota Mining and Manufacturing Company's Motion for Summary Judgment against thirteen of the Plaintiffs. For the following reasons, Defendant's motion is granted.
The present case involves silicone breast implants manufactured by Defendant Minnesota Mining and Manufacturing Company ("3M") and Defendant McGhan Medical Corporation ("McGhan"). In 1997, several hundred silicone breast implant cases were transferred to this Court by the Honorable Jack B. Weinstein of the Eastern District of New York. Included in the cases transferred were disputes involving implants manufactured and sold by McGhan after 3M sold its implant business to McGhan. These cases are the subject of the present motion.
Silicone breast implants were first marketed in the United States by Dow Corning Corporation. At that time, Donald McGhan was an engineer for Dow Corning. In 1974, Donald McGhan and some of his colleagues formed McGhan Medical Corporation ("McGhan I"), where they marketed their own line of breast implants. In 1977, 3M purchased McGhan I. Following the acquisition, 3M created a new wholly-owned subsidiary named McGhan Medical Corporation ("McGhan II").
Plaintiffs allege that 3M learned of many defects and risks associated with silicone implants prior to the purchase of McGhan I. At any rate, it is undisputed that during the time 3M manufactured and sold silicone breast implants, it became aware of risks associated with them. Specifically, patients experienced problems such as capsular contracture (formation of scar tissue through fibrosis), gel bleed (liquid silicone leaking outside of the intact shell of the implant), silent rupture (rupture which was not immediately detected), migration of leaked silicone away from the breasts, and inflammation. In 1984, 3M divested itself of the silicone breast implant product line, selling the business to a newly created McGhan entity, McGhan Medical Corporation ("McGhan III").
McGhan III purchased 3M's breast implant business for $5.5 million; $2.75 million of this purchase price was paid by promissory note, payable within three years of the closing. Although the breast implant business belonged solely to McGhan III following the sale, 3M continued to provide McGhan III with selected services for a short period of time. 3M also retained its leasehold on the property where the implants were manufactured; thus, in effect, 3M became McGhan III's landlord.
When 3M sold its breast implant business to McGhan III in 1984, it issued a press release, stating, (Dunleavy Aff.Ex. 60.) Then-existing 3M customers received a mailing notifying them of the sale to McGhan III. At this same time, an internal memorandum within 3M noted the pending Food and Drug Administration decision to reclassify the breast implant devices to Class 3 status and the number of lawsuits which impacted the profitability of the implant line. (See id. Ex. 45.)
In August 1985, one year after the sale to McGhan III, the $2.75 million in debt was restructured and extended by 3M. This restructuring was defaulted on by McGhan III in April 1987. 3M stayed enforcement of the promissory note, and again restructured the debt in April 1988. At this time, 3M received $1.405 million in cash, and restructured the remaining $1 million in principal. In December 1989, McGhan III paid $100,000 towards the principal, and 3M released the UCC filing on McGhan III, leaving McGhan III free to sell its business to INAMED, a publicly held corporation. Later, in March 1990, 3M loaned $300,000 to McGhan III to allow McGhan III to settle a breast implant products liability lawsuit.
3M now moves for summary judgment on claims raised by Arizona plaintiffs ("Plaintiffs") who purchased breast implants manufactured and sold by McGhan after the 1984 divestiture.1 The Arizona Plaintiffs asserted their claims in the Master Complaint on file in In re: Silicone Breast Implant Products Liability Litigation (MDL-926), now pending in the United States District Court for the District of Alabama, before the Honorable Sam C. Pointer. The First Amended Master Complaint contains the following causes of action: strict liability, negligence, failure to warn, breach of express and implied warranties, breach of warranty of fitness for a particular purpose, breach of Uniform Commercial Code or applicable state law, breach of Uniform Commercial Code or applicable state law/negligence per se, violation of the Food, Drug and Cosmetics Act/negligence per se, misrepresentation/fraud, fraud by concealment, violation of state consumer protection statutes, false advertising, violation of state consumer protection statutes/negligence per se, res ipsa loquitor, common plan to prevent public awareness of breast implant hazards, conspiracy/concert of action, market share liability, intentional infliction of emotional distress, negligent infliction of emotional distress, fear of future product failure, liability for participation in joint enterprises/joint ventures, control and/or supervision of joint ventures, invalidity of indemnification agreements, controlling person/aiderabettor/and/or alter ego liability, application of collateral estoppel/res judicata, violations of the Lanham Act, violations of the Magnuson-Moss Act, declaration that compensatory/punitive damages limitations violate federal/state constitutions, and punitive damages.
3M asserts that summary judgment is proper because 3M owed no duty to Plaintiffs who received implants manufactured and sold by McGhan III. Plaintiffs contend that 3M remains liable because it perpetrated a fraud on consumers when it sold the breast implant division to McGhan to avert liability. The Court now turns to addressing the issues raised in this motion.
Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Unigroup, Inc. v. O'Rourke Storage & Transfer Co., 980 F.2d 1217, 1219-20 (8th Cir.1992). The court determines materiality from the substantive law governing the claim. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Disputes over facts that might affect the outcome of the lawsuit according to applicable substantive law are material. See id. A material fact dispute is "genuine" if the evidence is sufficient to allow a reasonable jury to return a verdict for the non-moving party. See id. at 248-49, 106 S.Ct. 2505.
When a case is transferred pursuant to 28 U.S.C. § 1404(a), the transferee court must apply the law of the transferor court. See Ferens v. John Deere Co., 494 U.S. 516, 521-22, 110 S.Ct. 1274, 108 L.Ed.2d 443 (1990). This principle also applies to choice of law decisions. See id. Accordingly, this Court must apply New York's choice of law rules. New York law provides that the law of the state having the "greatest interest in resolving the particular issue" governs. See Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 595 N.Y.S.2d 919, 612 N.E.2d 277, 280 (1993). Further, in determining which state has the greatest interest, the court is to focus on "`the parties' domiciles and the locus of the tort.'" AroChem Int'l, Inc. v. Buirkle, 968 F.2d 266, 270 (2d Cir. 1992) (quoting Schultz v. Boy Scouts of Amer., Inc., 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679, 684 (1985)).
3M asserts that Arizona law applies to the present motion because all of the Plaintiffs are from Arizona, the implant surgery for each took place in Arizona, and all of their alleged injuries were suffered in Arizona. In contrast, Plaintiffs contend that "Defendant's choice of law logic applies only to standard products liability issues vis-a-vis the injured Plaintiffs and the product, none of which are before this Court as the asserted basis for 3M's liability." (Mem. Opp'n at 21.) Instead, Plaintiffs now assert that the basis for their claims against 3M is 3M's alleged fraudulent divestiture of its breast implant division. Essentially, Plaintiffs argue that 3M perpetrated a fraud on all consumers nationwide when it failed to publicly admit that the sole reason for the divestiture of the breast implant division was to avert liability.
Plaintiffs arguments do not change the fact that their physical injuries occurred in Arizona. Thus, with respect to Plaintiffs' claims which are rooted in products liability theory, i.e., claims relying on allegations that the breast implants were defective, Arizona law applies. However, Plaintiffs' claims of fraud are based upon 3M's actions at the time of the divestiture of the breast implant business. It is undisputed that 3M's actions regarding that transfer occurred in Minnesota; thus,...
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