Usually our posts have a fairly singular focus. We think that helps keep them more useful – short, topical, easy to search. It is also the result of most opinions generally being issue-specific as well. But, occasionally we find a case that says a little bit about several topics. When that happens, our standard procedure is to pick through and select the nuggets we want to talk about. We can picky here on this defense blog and opt to take the good without the bad. Or censure the negative with all the indignation we can muster. Or simply ignore the parts of an opinion we don’t find blog-worthy. It’s fun to take those creative liberties that are forbidden in critical, legal analysis while at the same time providing useful information to our defense comrades.
So, there may be a few aspects of Tansey v. Cochlear Limited, 2014 U.S. Dist. LEXIS 138250 (E.D.N.Y. Sep. 26, 2014) that won’t get our full and undivided attention today, but at its core, it’s pretty good.
We’ll start with one of the first applications of Baumanpersonal jurisdiction in the pharmaceutical/medical device arena. For a more detailed discussion of Daimler A.G. v. Bauman, 134 S. Ct. 746 (2014) – reversing the Ninth Circuit’s overwhelmingly broad “agency test” for imputing a subsidiary's jurisdictional contacts to a parent – see our post here. Plaintiff Tansey is a New York resident who was implanted with a Cochlear device that later had to be removed due to a malfunction. Tansey, 2014 U.S. Dist. LEXIS 138250 at *1-4. Plaintiff sued both Cochlear Americas Corporation (“CAM”), a Delaware corporation with its principal place of business in Colorado, and its foreign parent corporation -- Cochlear Limited (“CLTD”), an Australian company. Id. at *1-2.
First, it appears to have been undisputed that CLTD did not itself have a sufficient presence in New York to find personal jurisdiction. While CLTD products are sold in the U.S., including New York, CLTD has no commercial agents in New York, CLTD is not registered to do business in New York, it does not maintain any office or plant in New York, owns no real or tangible property in New York, and does not pay taxes in New York. Id. at *9. So, instead plaintiff argued that the court should impute CAM’s presence and actions to its foreign-parent.
This is where Bauman comes in – establishing that it is inappropriate to subject a foreign corporation to general jurisdiction simply because it has an in-state subsidiary. Id. at *10. And it is particularly inappropriate where the subsidiary’s place of business is also out of state – in this case Colorado.
Plaintiff similarly was unsuccessful in piercing the corporate veil as a way of extending jurisdiction over CAM to its foreign parent. Id. at *11. This left plaintiff with one final argument—that CLTD made itself at home in New York via its website. Websites aren’t new, but they do present novel issues regarding how information is disseminated and shared. Courts, lawyers, legislators and regulators all are still grappling with various aspects of modern marketing and promotion. The accessibility of the web, the less-formal social media method of communication, the longevity of available information – once on the web, always on the web. And, the reality is that with information technology continuing to develop – we may always be playing a bit of catch-up.
Since we can’t solve all those problems – back to the case at hand. The court found that CLTD’s website is deemed “passive” and therefore cannot provide a basis for personal jurisdiction. The court’s conclusion rested on the fact that when a user accesses the CLTD website, she is asked to select her country. If a user selects “United States & Canada,” she is re-directed to CAM’s website. And, CLTD is “not responsible for maintaining and/or updating the content of the CAM website.” Id. at *12-13.
With CLTD out of the case, the court moved on to CAM’s motion to dismiss. The Cochlear implant is a pre-market approved device and therefore subject to Riegel preemption. So, it is not surprising that the court found plaintiff’s design defect claim preempted.
[Design defect] claims challenge the PMA approval of the design . . . . For plaintiff to prevail on a design defect claim, she must demonstrate the existence of a feasible and safer alternative design than that espoused by the FDA, which is at odds with its approval of the design and adds to the federal requirements.
Id. at *28-29. On the flip side, the court found plaintiff’s manufacturing defect claims (and related negligence claims) not preempted. This is one of those times we are going to choose to gloss over this particular aspect of the decision except to say that the claim was supported by a warning letter and a recall.
The court also dismissed plaintiff’s strict liability failure to inspect claim. Here the court found that plaintiff’s allegations didn’t meet the TwIqbal pleadings standards – plaintiff failed to allege what FDA regulations defendant allegedly violated. Further, the claim couldn’t be considered a parallel violation claim because plaintiff didn’t cite to any New York case law supporting a failure to inspect claim. Id. at *32.
Finally, the court dismissed plaintiff’s failure to warn claim. Plaintiff alleged that one year after her Cochlear device was implanted, both the Australian and U.S. governments issued warnings and recalls for the device. Id. at *33-34. Based on those alleged facts, “plaintiff cannot establish proximate cause because a failure to warn after the fact cannot be the cause of plaintiff’s damages.” Id. at *34.
A little bit of personal jurisdiction, a smattering of preemption, a taste of pleading deficiencies, and a word on proximate cause. We’re sure there is something in the mix you’ll find to your liking.