Keralink Int'l v. Stradis Healthcare, LLC, Civil Action CCB-18-2013

CourtUnited States District Courts. 4th Circuit. United States District Court (Maryland)
Writing for the CourtCatherine C. Blake, United States District Judge.
PartiesKERALINK INT'L, INC. Plaintiff v. STRADIS HEALTHCARE, LLC and GERI-CARE PHARMACEUTICALS CORP. Defendants STRADIS HEALTHCARE, LLC Third Party Plaintiff v. INSOURCE, INC. and GERI-CARE PHARMACEUTICALS CORP. Third Party Defendants
Docket NumberCivil Action CCB-18-2013
Decision Date27 September 2021

KERALINK INT'L, INC. Plaintiff
v.
STRADIS HEALTHCARE, LLC and GERI-CARE PHARMACEUTICALS CORP.
Defendants

STRADIS HEALTHCARE, LLC Third Party Plaintiff
v.

INSOURCE, INC. and GERI-CARE PHARMACEUTICALS CORP.
Third Party Defendants

Civil Action No. CCB-18-2013

United States District Court, D. Maryland

September 27, 2021


MEMORANDUM

Catherine C. Blake, United States District Judge.

Pending before the court in this products-liability action are Geri-Care Pharmaceuticals Corporation (“Geri-Care”)'s motion for summary judgment against Stradis Healthcare, LLC (“Stradis”) (ECF No. 117), its motion for summary judgment against KeraLink International, Inc. (“KeraLink”) (ECF No. 118), and its motion in limine to exclude certain damages claimed by Stradis (ECF No. 129); KeraLink's motion for summary judgment against Stradis and Geri-Care (ECF No. 123); Stradis's motions for summary judgment against KeraLink (ECF No. 127), Geri-Care (ECF No. 128), and InSource, Inc. (“InSource”) (ECF No. 132); and InSource's motion for

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summary judgment against Stradis (ECF No. 122).[1] The motions are fully briefed, and no oral argument is necessary. See Local Rule 105.6 (D. Md. 2021). For the reasons that follow, the court will grant in part and deny in part Geri-Care's motions for summary judgment, KeraLink's motion for summary judgment, and Stradis's motion for summary judgment against Geri-Care; deny Stradis's motions against KeraLink and InSource; grant InSource's motion; and deny Geri-Care's motion in limine.

BACKGROUND

This litigation arises from the inclusion of contaminated sterile eye wash (“Geri-Care Eye Wash” or “eyewash”), in surgical packs used to recover corneal tissue. KeraLink, a national network of eye banks that recovers and distributes ocular tissue for use in corneal implants, purchased these surgical packs from Stradis. After the Eye Bank Association of America (“EBAA”) in 2017 notified its members that batches of Geri-Care Eye Wash may be contaminated, KeraLink quarantined, and eventually could not use, some ocular tissue that had been recovered using Geri-Care Eye Wash, resulting in monetary damages.

KeraLink is a not-for-profit charitable corporation with its headquarters and principal place of business located in Baltimore, Maryland. (ECF No. 123-26, Buckley Aff. ¶ 6). During the relevant time period, KeraLink was a network of eye banks located throughout the United States, including in Maryland, Florida, Massachusetts, Texas, New Mexico, and California. (Id. ¶ 7). These eye banks recover corneas and other ocular tissue from recently deceased human donors for

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transplantation into living patients. (Id. ¶ 8). To recover tissue, KeraLink uses a sterile surgical pack which is specifically designed to contain everything needed to perform the procedure. (Id. ¶ 10).

KeraLink purchased some sterile surgical packs, or “Custom Stradi-Paks” from Stradis. (Id. ¶ 11). KeraLink ordered the Custom Stradi-Paks from Stradis pursuant to purchase orders initiated in Baltimore which were then signed by Stradis and sent back to KeraLink in Baltimore where they were counter signed. (ECF No. 118-5, Sokol Dep. at 59-60, 149; ECF No. 123-26, Buckley ¶¶31-32). The Custom Stradi-Paks were then shipped to KeraLink, largely in Maryland though occasionally, at KeraLink's direction, to KeraLink operations in other states. (ECF No. 123-26, Buckley Aff. ¶ 33).

Stradis markets itself as a “supporter of cornea and tissue banks, ” stating, “Our expertise in eye banking and corneal transplantation make us an ideal partner for implementing medical standards to your eye bank operations and procedures. Our custom trays are designed to help recover the highest quality tissue in the most efficient way possible.” (ECF No. 123-35 at 2). Stradis's principal place of business is in Georgia, and it packaged and assembled the Stradi-Paks there. (ECF No. 118-5, A. Sokol Dep. at 15, 24). Stradis determines the contents of each surgical pack based on the customer's individual requests, which can be generic or by brand. (Id. at 17-18, 61, 151). KeraLink did not specify in its requests that it wanted a particular brand of eyewash. (Id. at 149). Stradis stocked the Custom-Stradi Paks for KeraLink to include one bottle of Geri-Care Eye Wash (“the eyewash”). (ECF No. 123-26, Buckley Aff. ¶ 12). The Stradi-Paks included an

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inventory of contents that listed the eyewash as “STERILE EYE WASH.” (ECF No. 123-33; ECF No. 127-6).[2]

The eyewash found its way into the Custom-Stradi-Paks through several other businesses. Defendant Geri-Care purchased the eyewash from Kareway Product, Inc. (“Kareway”), a California company which had obtained the eyewash from the manufacturer, a company in Korea. (ECF No. 118-6, Kleyn Dep. at 91). Geri-Care wanted to begin selling a private label eyewash in order to have Geri-Care's name on the market. (Id. at 18). Its agreement with Kareway was that Kareway would provide a private-label eyewash to Geri-Care, carrying the Geri-Care logo and brand, that was comparable to Bausch & Lomb Advanced Eye Care. (Id. at 78).[3] Geri-Care specified that the eyewash was to be comparable to that product, with a label that was reminiscent of that product. (Id. at 78-79). Though the eyewash was an existing product of Kareway's, the agreement between Kareway and Geri-Care made Geri-Care the exclusive seller of the eyewash, including to other companies that wanted their own private label on the same eyewash. (Id. at 2930, 35).

Geri-Care provided a logo and distribution statement to Kareway to place on the eyewash bottles and was able to review and make changes to the label. (ECF No. 118-6, Kleyn Dep. at 1920; ECF No. 123-8 at 5). It reviewed the label and box for “accuracy, ” (ECF No. 118-6, Kleyn Dep. at 20) and directed Kareway to make a number of changes to the label, including edits to the directions for use, changing the expiration date, and inserting comparisons to Bausch & Lomb eyewash. (ECF No. 123-9; ECF No. 118-6 at 11-14). Geri-Care specified to Kareway that the

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eyewash should be sterile. (ECF No. 118-6, Kleyn Dep. at 80). The label indicates that the eyewash is a “STERILE EYE IRRIGATING SOLUTION, ” that it is “Distributed by Geri-Care Pharmaceuticals Corp., ” and that it is a “Product of Korea.” (ECF No. 123-5; ECF No. 123-9; ECF No. 123-8 at 3, 4, 5).

Geri-Care's corporate representative has stated that the company was aware that customers expected the eyewash to be sterile. (ECF No. 118-6, Kleyn Dep. at 26). It was important to Geri-Care that the product was safe, and it wanted to make sure that the product did not harm the eyes or the vision of any customer. (Id. at 27). Geri-Care recognized that it had to be “super cautious” when selling a sterile product intended for the eyes because of the danger that the eyewash could become contaminated. (Id. at 25).

Geri-Care marketed the eyewash to the public as a Geri-Care product, and Geri-Care's corporate representative testified that the company wanted the public to think it was the manufacturer of the product. (Id. at 76, 114). The label does not indicate what company manufactured the product in Korea. (Id. at 76). Geri-Care is the only company named on the label. (Id. at 77). There was no way for a purchaser of the eyewash to know that Geri-Care was not the manufacturer and did not have facilities in Korea. (Id. at 113). The publicly available FDA registration for the eyewash identifies Geri-Care as the registrant and the labeler. (ECF No. 1234; ECF No. 123-6).

Geri-Care received the eyewash, packaged, sealed, and labeled, from Kareway. (ECF No. 118-6, Kleyn Dep. at 8). The eyewash was delivered in large boxes, each of which contained approximately twenty-four sealed units of eyewash. (ECF No. 118-9, Kleyn Aff. ¶ 3-5). Geri-Care did not open the boxes and did not conduct any testing to confirm the sterility of the eyewash prior to distributing the product. (ECF No. 118-9, Kleyn Aff. ¶ 6; ECF No. 118-6, Kleyn Dep. at 103).

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Instead, Geri-Care relied on a certificate of analysis from Kareway that accompanied each box of eyewash, which included the lot number, the contents, and whether the product had been tested. (ECF No. 118-9, Kleyn Dep. at 23, 100).

Geri-Care shipped some of the eyewash, including at least part of Lot #86041601, in its original packaging, to Henry Schein, Inc., an affiliate of InSource, Inc. (ECF No. 118-9, Kleyn Aff. ¶ 6; ECF No. 122-4 at 5-7). InSource is a wholesaler that fills orders from customers for an assortment of products. (ECF No. 122-4 at 19). InSource received the eyewash from Geri-Care prepackaged and did not alter, change, or repackage the product in any way. (ECF No. 122-4 at 7). InSource then sold the eyewash to Stradis. (ECF No. 118-5, Sokol Dep. at 43). Stradis received the eyewash from Insource at Stradis's Georgia facilities. (Id. at 138). Stradis's packaging process is regulated by the FDA, and it assembles the Custom-Stradi-Paks according to Stradis's Standard Operating Procedures and FDA regulations. (Id. at 26, 34, 49). This process consisted of removing the bottles of eyewash from their original packaging and inspecting them to ensure they had a plastic heat seal on the opening cap and a lot number. (Id. at 142-43). The bottles of eyewash were then repackaged, along with other components, into Stradi-Paks. This was done in an assembly room with a “positive pressure . . . so that there's no contaminates in the room.” (Id. at 55-56). Stradis did not conduct any testing to confirm the sterility of the eyewash before packaging it into Custom-Stradi-Paks; rather, it relied on the representation on the label that the eyewash was sterile. (Id. at 105, 157-58). Stradis labeled each Stradi-Pak as “Sterile: Unless Opened or Damaged” and stated that the Stradi-Pak was “Manufactured & Distributed by Stradis Healthcare, LLC.” (ECF No. 123-31; ECF No. 123-33).

KeraLink used the eyewash...

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