In re TMJ Implants Products Liability Litigation

• Decision Date: 31 March 1995
• Docket Number: No. 94-MD-1001.,94-MD-1001.
• Citation: 880 F. Supp. 1311
• Parties: In re TMJ IMPLANTS PRODUCTS LIABILITY LITIGATION. This Document Relates To: All Actions.
• Court: U.S. District Court — District of Minnesota

880 F. Supp. 1311

In re TMJ IMPLANTS PRODUCTS LIABILITY LITIGATION.

This Document Relates To: All Actions.

No. 94-MD-1001.

United States District Court, D. Minnesota, Third Division.

March 31, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

MEMORANDUM AND ORDER

MAGNUSON, Chief Judge.

I. INTRODUCTION

These matters, which are consolidated for pretrial purposes under 28 U.S.C. § 1407, are before the Court upon Defendants Corning, Incorporated and Dow Chemical Company's Motions for Summary Judgment. For the following reasons, the Court grants summary judgment in favor of these Defendants.

II. BACKGROUND

Plaintiffs in these cases seek recovery for injuries they allege were caused by temporomandibular joint (TMJ) implants, some of which were manufactured by Dow Corning Corporation (Dow Corning). Movants Dow Chemical Company (Dow Chemical) and Corning, Incorporated (Corning) each own 50 percent of the shares in Dow Corning, a Michigan corporation. They seek summary judgment on all claims against them.

Physicians recommended the TMJ implants as a means of alleviating pain and difficulties associated with improper functioning of Plaintiffs' temporomandibular joints. The implants received by Plaintiffs contained either silicone or Teflon®. These materials, the Plaintiffs allege, deteriorated following the implantation of the TMJ devices in Plaintiffs' jaws, causing a serious and painful auto-immune response. In many cases, the auto-immune reaction resulted in permanent destruction of bone and tissue within the jaw.

Those who allegedly marketed the implants to physicians and Plaintiffs included Vitek, Inc., which sold the implants containing Teflon®,¹ and Dow Corning and its subsidiary Dow Corning Wright, which sold implants containing silicone compounds. Plaintiffs do not assert that Dow Chemical or Corning ever sold TMJ implants. Nevertheless, several of the Complaints allege liability against Dow Chemical and Corning through both corporate control claims and direct liability. Plaintiffs argue that genuine issues of material fact exist as to whether Dow Chemical should be held liable under a variety of theories, including fraud, aiding and abetting tortious conduct, coconspiracy, concert of action, a trademark licensors theory, negligent performance of an undertaking, state consumer protection laws, and participation theory.

III. DISCUSSION

A transferee court has authority to enter dispositive orders terminating cases transferred under 28 U.S.C. § 1407. In re Donald J. Trump Casino Sec. Litig., 7 F.3d 357, 364-68 (3rd Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1219, 127 L.Ed.2d 565 (1994). In analyzing questions of federal law, the transferee court should give "close consideration" to the law of the transferor court, but should apply the law as it has been interpreted by the transferee circuit court. In re Korean Air Lines Disaster, 829 F.2d 1171, 1176 (D.C.Cir.1987). For issues governed by state law, the transferee court must apply the state law that would have been applied if the case had not been transferred. Id. at 1175 ("Our system contemplates differences between different states' laws; thus a multidistrict judge asked to apply divergent state positions on a point of law would face a coherent, if sometimes difficult, task."); see Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 821, 11 L.Ed.2d 945 (1964).

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. 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. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Disputes over facts that might affect the outcome of the lawsuit according to applicable substantive law are material. 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. Id. at 248-49, 106 S.Ct. at 2510.

A. Corporate Control Claims

Several of the issues raised by Plaintiffs' corporate control claims were addressed by Chief Judge Pointer in In re Silicone Gel Breast Implants Products Liability Litigation, 837 F.Supp. 1128 (N.D.Ala.1993). Although some of the facts that are before this Court were not before Chief Judge Pointer at the time of that opinion, much of his legal analysis is applicable to the instant motions. For the reasons that Judge Pointer granted the motions before him and for the additional reasons referred to below, this Court holds that Dow Chemical and Corning are entitled to summary judgment on Plaintiffs' corporate control claims.

First, the Plaintiffs cannot, given the undisputed facts, "pierce the corporate veil" to reach Dow Chemical and Corning. Under Michigan law,² a corporation's separate identity will only be disregarded where the subsidiary has become "a mere instrumentality" of its parent or parents. Maki v. Copper Range Co., 121 Mich.App. 518, 328 N.W.2d 430, 433 (1982).

In this case, there are no facts that would demonstrate that Dow Corning is a "mere instrumentality" of either Dow Chemical or Corning. Dow Corning is a "Fortune 500" company, that is, one of the 500 largest corporations in the United States according to Fortune magazine. The undisputed evidence shows that Dow Corning and its parents have observed corporate formalities throughout Dow Corning's more than fifty years of existence, that Dow Corning has two billion dollars in assets, that it has an asset-to-debt ratio of almost two to one, and that it has paid regular dividends throughout most of its years. Given these facts, the Court holds as a matter of law that the Plaintiffs cannot pierce Dow Corning's corporate veil.

Second, Plaintiffs' "joint venture" claims are unsupported by the facts. They contend that Dow Chemical and Corning have fostered the public perception that Dow Corning is a joint venture of those two companies. In the alternative, they assert that Dow Corning actually is a joint venture of Dow Chemical and Corning. As Chief Judge Pointer noted in his opinion, Dow Corning is a "joint venture" of Dow Chemical and Corning in a non-legalistic use of the term. Most jurisdictions, however, will not find that a joint venture exists in the legal sense unless the parties involved have agreed to share both profits and losses. In re Silicone Gel Breast Implants Prods. Liab. Lit., 837 F.Supp. 1128, 1138-39 (N.D.Ala.1993). There is no evidence of such an agreement between Dow Chemical and Corning. They specifically elected to do business together via the corporate form, a method that is viewed as distinct from a joint venture. Id. at 1139. Based on these undisputed facts, the Court holds as a matter of law that Dow Chemical and Corning are entitled to summary judgment on all of Plaintiffs' joint venture claims as well as the other corporate control claims.

B. Direct Liability

In their opposition to Dow Chemical's and Corning's Motions for Summary Judgment, Plaintiffs rely primarily on several theories of direct liability. Having carefully reviewed the arguments and evidence submitted by the Plaintiffs in support of these theories, the Court concludes that no genuine issues of fact remain as to any of Plaintiffs' claims against Dow Chemical and Corning and that those Defendants are entitled to summary judgment for the reasons set forth below.³

1. Fraudulent Concealment and Misrepresentation

One of Plaintiffs' central claims against Dow Chemical is fraudulent concealment or misrepresentation.⁴ Plaintiffs recognize that in order to prevail on this claim, they must establish the following elements:

(1) Deliberate concealment by the defendant of a material past or present fact, or silence in the face of a duty to speak; (2) That the defendant acted with scienter; (3) An intent to induce plaintiff's reliance upon the concealment; (4) Causation; and (5) Damages resulting from the concealment.

Nicolet, Inc. v. Nutt, 525 A.2d 146, 149 (Del. 1987). They also note that "generally, there is no duty to disclose a material fact or opinion unless a defendant had a duty to speak." Id. (Pltfs.Mem.Opp. at 16-17.)

According to Plaintiffs, Dow Chemical had a duty to reveal its knowledge regarding the dangers of using silicone within the human body. Dow Chemical responds that there is no evidence it misrepresented or concealed the dangerousness of silicone and that it had no duty to disclose the information it had regarding silicone. Dow Chemical also points out that there are hundreds of thousands of kinds of silicone compounds, commonly referred to as silicones, each with different characteristics. There is no evidence, it adds, that Dow Chemical even knew which particular silicones were used in TMJ implants manufactured by Dow Corning.

In asserting that Dow Chemical had a duty to disclose information regarding the toxicity of silicones, Plaintiffs first argue that Dow Chemical had a "duty to correct" information it had previously released regarding the safety of silicones for use in human implants. In 1948 and 1950, Dow Chemical scientists published two articles about the safety of silicones. (See Pltfs.Exhs. 54 & 56.) In these articles, the authors examined health and safety issues involved in the handling of silicone materials by workers. Plaintiffs contend that Dow Chemical should have published updates to these articles when later research revealed that some silicones were bioactive and inappropriate for certain medical uses.

Dow Chemical correctly points out that to adopt Plaintiffs' position would impose a heavy burden on scientists. Research that lays the basic groundwork in any scientific field is nearly always refined with time by subsequent discoveries. Many hypotheses are...