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Perez v. Nidek Co.

August 31, 2009


The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge


Defendant Nidek Incorporated ("Nidek") has filed a motion to dismiss and/or strike portions of Plaintiffs' Second Amended Complaint ("SAC"). Defendants Estate of Glenn A. Kawesch, M.D., Gary Kawesch, M.D. Farzad Yaghouti M.D., and John Kownacki, M.D., have filed separate motions to dismiss the SAC. Defendants Manoj V. Motwani, M.D., Keith Liang, M.D., William Ellis, M.D., Randa Garrana, M.D., Joseph Lee, M.D., Linda Vu, M.D., Michael Rose, M.D., and Thomas S. Tooma, M.D., have filed notices of joinder in the motions to dismiss/strike. Plaintiffs have filed a motion for leave to file a Third Amended Complaint. For the reasons discussed below, Defendants' motions to dismiss are GRANTED and the motion to strike is DENIED as moot. Plaintiff's motion for leave to file a Third Amended Complaint is GRANTED IN PART and DENIED IN PART.


On October 2, 2008, Plaintiffs filed the SAC. The original complaint and First Amended Complaint had not been served on Defendants.

Plaintiffs bring this action on behalf of themselves and a purported class of similarly situated individuals, consisting of persons who underwent Hyperopic Laser in Situ Keratomilesis ("LASIK") and/or Hyperopic PhotoRefractive Keratectomy ("PRK") with a NIDEK EC-5000 Excimer Laser System (the "Laser") on or about February of 1996 until the date of October 11, 2006, and did not consent to and were not included in an approved FDA clinical trial. (SAC ¶ 1.)

Under the Federal Food, Drug, and Cometic Act ("FDCPA"), as amended by the Medical Device Amendments of 1976, the Laser is a Class III device. Generally, premarket approval ("PMA") is required before a Class III device may be marketed. 21 U.S.C. § 360e(a).

Commencing in 1998, Nidek obtained various PMAs for the Laser for PRK and Lasik for myopia. According to Plaintiffs, the PMAs did not approve use of the Laser for hyperopia. Plaintiffs allege that despite the lack of FDA approval, Nidek and the defendant physicians conspired to perform hyperopic corrections with the Laser and achieved this goal by modifying the device with illegal hardware and software. (SAC ¶ 55.)

On December 20, 2002, the FDA sent Nidek a letter in which the FDA expressed concern regarding the replacement of chips in previously distributed Laser units with chips that enable the device "for unapproved applications, such as hyperopia." (SAC ¶ 56.) The FDA stated that there had been allegations that NIDEK employees had been providing the chips and that at least one employee had been terminated for providing this service. (Id.)

On July 11, 2001, the FDA sent certain physicians a Warning Letter that informed them that the Nidek Laser they were using for hyperopia was manufactured prior to the issuance of the PMA. (SAC ¶ 57.) The letter explained that the Laser used by the physicians contained software version 2.2.5 dhc, which was not approved for commercial distribution in the United States. (Id.) The letter further explained, "Because an approved PMA or an approved IDE does not cover this laser, it is adulterated within the meaning of the Act. Therefore, you should not be using this laser to treat patients." (Id.)

On July 26, 2001, the FDA sent a second Warning Letter, which reiterated the information in the first Warning Letter and added that the modified Lasers needed to be certified as in compliance with the Federal laser product performance standard pursuant to 21 C.F.R. § 1040.10(I). (SAC ¶ 58.) The FDA also pointed out that it had not received product reports for the modified Lasers as required by 21 C.F.R. § 1002. (Id.)

Plaintiffs allege that despite the FDA warnings, Nidek and the defendant physicians continued to sell, distribute, lease, use, service, and market the modified Lasers in the United States. Plaintiffs allege that Defendants did not inform them or the other members of the class that underwent Lasik or PRK for hyperopic corrections that the modified Laser was not approved by the FDA. (SAC ¶¶ 10-11.) Plaintiffs do not allege that they or the other members of the class suffered personal injury as a result of the procedures.

The SAC asserts the following causes of action (1) violation of the Human Subjects in Medical Experimentation Act, Cal. Health & Safety Code § 24176; (2) unfair or deceptive acts or practices in violation of the Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq. ("CLRA"); (3) violation of the Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, based upon the FDCA; (4) violation of the UCL based upon FDA regulations and the Cal. Health & Safety Code; (5) violation of the UCL based upon Cal. Health & Safety Code § 24176; (6) civil conspiracy. The SAC seeks statutory damages, injunctive relief, restitution, disgorgement, and punitive damages. (SAC, Prayer for Relief.)


A. Jurisdiction

The SAC asserts that this Court has federal-question jurisdiction over the action because Plaintiffs' claims concern Defendants' alleged violations of the FDCA. (SAC ¶ 44.) The SAC also states that the Court has diversity jurisdiction over the action pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d). (Id.) Some of the Defendants dispute that the Court has subject-matter jurisdiction. Although the Court concludes that it lacks federal-question jurisdiction, the Court finds that Plaintiffs have satisfied their initial burden of establishing diversity jurisdiction under CAFA.

Plaintiffs' allegations that Defendants violated the FDCA and regulations promulgated thereunder do not give rise to federal question jurisdiction. Section 337(a) of the FDCA provides that "all proceedings for the enforcement, or to restrain violations of [the Act] shall be by and in the name of the United States." Courts have interpreted this provision to mean that there is no private right of action to enforce the Act's provisions. See, e.g., Gile v. Optical Radiation Corp., 22 F.3d 540, 544 (3d Cir. 1994); Milan Laboratories, Inc. v. Matcher, 7 F.3d 1130, 1139 (4th Cir. 1993); Summit Tech., Inc., v. High-Line Med. Instruments Co., Inc., 922 F. Supp. 299, 305 (C.D. Cal. 1996). When there is no private right of action under a federal statute such as the FDCA, "the presence of a claimed violation of the statute as an element of a state cause of action is insufficiently 'substantial' to confer federal-question jurisdiction." Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 814 (1986). Accordingly, federal question jurisdiction is not created by the fact that Plaintiffs' state law claims under the CLRA and UCL hinge upon alleged violations of the FDCA and its regulations.

Plaintiffs argue that substantial federal issues have been raised by Defendants' argument that Plaintiffs' claims are preempted by the FDCA. However, "[t]he fact that a defendant might ultimately prove that a plaintiff's claims are preempted . . . does not establish" federal jurisdiction. Caterpillar v. Williams, 482 U.S. 386, 398 (1987). Preemption gives rise to federal question jurisdiction only when an area of state law has been completely preempted by federal law. Id. at 393. The FDCA does not completely preempt state law. See, e.g., Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (1986) (holding that the Medical Devices Amendments to the FDCPA do not preempt all state law claims pertaining to devices governed by the federal statute); In re Orthopedic "Bone Screw" Products Liability Litig., 132 F.3d 152 (3d Cir. 1997) (discussing remand of MDL actions which had been removed under the Medical Devices Amendments to the FDCPA because the statute did not completely preempt state law). Therefore, the preemption issue raised by Defendants does not confer federal-question jurisdiction.

Plaintiffs claim that the Court also has diversity jurisdiction over this action pursuant to CAFA. Under CAFA, diversity jurisdiction exists where the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and the action is a class action in which any member of a class of plaintiffs is a citizen of a state and any defendant is a citizen or subject of a foreign state. 28 U.S.C. § 1332((d)(2)(C). The SAC alleges that Plaintiffs are citizens of California and that Nidek Co., Ltd. and TLC Vision Corporation are citizens of a foreign country. (SAC ¶¶ 10-12, 31.) The SAC also alleges that the aggregate amount in controversy is over $5,000,000. (SAC ¶ 44.)

Under CAFA, the initial burden of establishing removal jurisdiction under § 1332(d)(2) rests on the party invoking jurisdiction. Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 685 (9th Cir. 2006). The Court finds that Plaintiffs have satisfied this burden. Based on the allegations of the SAC, there is diversity of citizenship as required by 28 U.S.C. § 1332(d)(2)(C). As for the amount-in-controversy requirement, without reaching the merits of Plaintiffs' claims, it appears that the requirement is easily met based on the scope of the purported class and the remedies sought -- i.e., statutory damages of $10,000 for each willful violation of the Human Subjects in Medical Experimentation Act and restitution under the UCL.*fn1

Defendants do not dispute that Plaintiffs have satisfied CAFA's requirements of diversity of citizenship and an amount in controversy in excess of $5,000,000, but argue that this case falls within CAFA's "local controversy exception." The "local controversy exception" provides:

A district court shall decline to exercise jurisdiction . . .

(A)(i) over a class action in which --(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;

(II) at least 1 defendant is a defendant --(aa) from whom significant relief is sought by ...

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