United States District Court, N.D. California, San Jose Division
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS RICHARD EIDSON'S COMPLAINT AND SCOTT AND APRIL BELL'S COMPLAINT
LUCY H. KOH, District Judge.
Plaintiffs Scott and April Bell ("the Bells") commenced this action on April 3, 2013, alleging that Scott Bell suffered harmful side effects following a spinal fusion operation in which his surgeon used a spinal fusion device produced by Medtronic, Inc. and Medtronic Sofamor Danek USA, Inc. (collectively, "Defendants"). ECF Bell No. 37, 13-CV-01502, Bell First Amended Complaint (hereinafter "Bell complaint"). Plaintiff Richard Eidson ("Eidson") brought this action on May 6, 2013, also based on harmful effects he suffered after undergoing spinal surgery in which his surgeon used the same medical device produced by Defendants. ECF Eidson No. 38, 13-CV-02049, Eidson First Amended Complaint (hereinafter "Eidson complaint"). The two cases have been related because they involve the same product and similar questions of law. ECF Bell No. 23. On October 3, 2013, the Court granted Defendants' motion to dismiss the Bells' complaint and granted in part and denied in part Defendants' motion to dismiss Eidson's complaint. Eidson v. Medtronic, Inc., 2013 WL 5533081 (N.D. Cal. Oct. 3, 2013) ("October 3, 2013 Order"). The Court held that all of the Bells' claims were barred by the statute of limitations, and that all of Eidson's non-fraud claims were either preempted or failed to show a causal nexus between Eidson's injuries and Defendants' conduct. Id. at *14, *16-18. The Court also held that Eidson's fraud-based claims were not preempted and were pled with sufficient particularity under Federal Rule of Civil Procedure 9(b). Id. at *11. Both the Bells and Eidson were granted leave to amend.
Defendants now move to dismiss both amended complaints pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. ECF Bell No. 42; ECF Eidson No. 39. This Order addresses both motions to dismiss.
The Court vacated the hearing on Defendants' motion to dismiss the Eidson complaint. ECF No. 57. The Court held a hearing on Defendants' motion to dismiss the Bell complaint on May 8, 2014 concerning only the statute of limitations issue. Having considered the submissions and oral arguments of the parties, the relevant law, and the record in this case, the Court GRANTS IN PART with prejudice and DENIES IN PART Defendants' motion to dismiss the Eidson complaint, and GRANTS IN PART with prejudice and DENIES IN PART Defendants' motion to dismiss the Bell complaint.
A. Factual Allegations
1. Infuse Device and Premarket Approval
The Court reviewed the factual background of these cases in its October 3, 2013 Order. See Eidson, 2013 WL 5533081, at *1-3. Here, the Court briefly notes the relevant facts.
Medtronic Sofamor Danek, USA, Inc. manufactures a medical device known as the Infuse Device ("Infuse") which stimulates bone growth in spinal fusion surgeries. Bell Complaint ¶ 2; Eidson Complaint ¶ 2. Infuse consists of three components: (1) the active ingredient, a liquid form of the protein rhBMP-2 which stimulates bone growth, (2) a metallic spinal fusion cage (the "LT Cage") to stabilize and hold in place the liquid protein, and (3) a spongy carrier for the protein. Id. ¶ 34; Id. ¶ 33. The FDA in July 2002 granted Infuse premarket approval ("PMA") as a medical device under the Federal Food, Drug, and Cosmetic Act of 1938 ("FDCA"), as amended by the Medical Device Amendments of 1976 ("MDA"). Id. ¶¶ 58, 63; Id. ¶¶ 45, 60. Following this approval, Defendants were permitted to sell the Infuse Device. Id. ¶ 44; Id. ¶ 43.
The FDA's approval letter stated that the Device may be implanted (1) from the anterior (front) abdomen, (2) for purposes of a single-level fusion, (3) within lumbar spine levels L4 through S1, and that Infuse must not be used without the LT Cage. Id. ¶¶ 65, 66; Id. ¶ 64. Any operation that uses the Device in a manner other than that approved by the FDA is called an "off-label" use. Id. ¶ 67; Id. ¶ 66. This includes operations in which the spine is approached from the back and operations without the LT Cage. Id. ¶¶ 4, 69; Id. ¶¶ 4, 68. During approval hearings, FDA officials expressed concern about potential side effects stemming from off-label use and advised Defendants to take steps to prevent such use. Id. ¶¶ 70, 73, 75-77; Id. ¶¶ 72-76.
Plaintiffs allege that beginning in 1999, Defendants were aware that medical studies had found evidence of severe side effects associated with the off-label use of Infuse, particularly excessive bone growth. Id. ¶¶ 103-105; Id. ¶¶ 104-105, 123. Despite this knowledge, Defendants embarked on a vigorous campaign to promote off-label uses of Infuse by establishing consulting/royalty agreements with physicians who advocated off-label uses. Id. ¶¶ 120-121, 179-184; Id. ¶¶ 119-120, 178-183. Defendants also funded studies and articles by opinion leaders that omitted mentions of the risks of off-label use or understated the incidence of adverse effects. Id. ¶¶ 105, 127; Id. ¶¶ 71, 104, 126. In addition, Defendants failed to report adverse events suffered by patients who used Infuse off-label to the FDA, and by April 2008 Defendants had reported only 262 of an estimated 50, 000-250, 000 adverse events. Id. ¶ 319; Id. ¶ 309. This failure to report led to the omission of these events from the FDA's publicly accessible MAUDE database. Id. ¶¶ 113, 280; Id. ¶¶ 111-112, 279. These activities led to investigations by the Department of Justice resulting in a $40 million settlement and Corporate Integrity Agreement on July 18, 2006. Id. ¶¶ 146-150; Id. ¶¶ 145-149. Defendant's promotion of off-label use also led to significant controversial media coverage in the Wall Street Journal and the New York Times. Id. ¶¶ 96, 185, 191; Id. ¶¶ 95, 184, 190-191.
2. Scott Bell's surgery
In February 2005, Scott Bell underwent a spinal fusion operation in which his surgeon, Dr. Seago, used Infuse in an off-label manner by implanting it by posterior approach and by failing to use an LT Cage. Bell Complaint ¶ 286. The Bells allege that Defendants directly and indirectly encouraged his surgeon to use an off-label procedure. Id. ¶ 287. Dr. Seago did not inform the Bells that the operation would involve rhBMP-2, and the surgical consent form Mr. Bell signed inaccurately implied that the surgery would instead involve a natural iliac crest bone graft. Id. ¶ 290, 292. Only the hospital's "sticker page" of equipment used in the procedure notes the use of an artificial protein graft. Id. ¶ 293. After his surgery, Scott Bell experienced increased pain and was told by Dr. Seago that this was due to a "biological phenomenon." Id. ¶ 291. On March 2, 2007, Scott Bell was diagnosed with advanced bony overgrowth in the area of his spine targeted by the surgery. Id. ¶ 288. Scott Bell underwent corrective surgery for this overgrowth on May 3, 2007. Id. Neither Dr. Seago nor any of Scott Bell's other physicians ever informed him that Infuse was used in his surgery and may have contributed to his side effects. Id. ¶¶ 294-296.
As a result, Plaintiffs Scott and April Bell bring five causes of action against Defendants in connection with Infuse: (1) fraudulent misrepresentation/fraud in the inducement ( id. ¶¶ 299-311); (2) strict products liability-failure to warn ( id. ¶¶ 312-327); (3) negligent misrepresentation ( id. ¶¶ 328-338); (4) negligent failure to warn ( id. ¶¶ 329-353); and (5) loss of consortium on behalf of April Bell ( id. ¶¶ 354-356).
3. Richard Eidson's surgery
On November 11, 2008, Plaintiff Richard Eidson underwent a spinal fusion operation that utilized Infuse in an off-label manner by implanting the device from the back, by using a multi-level fusion, and by failing to use an LT Cage. Eidson Complaint ¶ 285. Eidson alleges Defendants directly and indirectly encouraged his surgeon, Dr. Smith, to use an off-label procedure. Id. ¶ 285-286. After the surgery, Eidson began experiencing pain, weakness, decreased sensation, and decreased reflexes in his legs and back pain. Id. ¶ 287. On May 14, 2012, he was diagnosed with fluid-filled cysts within the vertebral bodies where the surgery had taken place, and now has severe pain, reduced sensation, strength, and reflexes in his lower extremities. Id. ¶ 288. He has also suffered bone resorption and bone overgrowth. Id. ¶ 12.
As a result, Eidson brings four causes of action against Defendants in connection with Infuse: (1) fraudulent misrepresentation/fraud in the inducement ( id. ¶¶ 290-302); (2) strict products liability-failure to warn ( id. ¶¶ 303-317); (3) negligent misrepresentation ( id. ¶¶ 318-328); and (4) negligent failure to warn ( id. ¶¶ 329-342).
B. Procedural History
Plaintiffs Scott and April Bell filed their original complaint on April 3, 2013. ECF Bell No. 1. Defendants filed a Motion to Dismiss the Complaint on May 14, 2013. ECF Bell No. 10. Plaintiffs filed an opposition to the Motion to Dismiss on July 1, 2013. ECF Bell No. 20. Defendants filed a reply on July 22, 2013. ECF Bell No. 24.
Plaintiff Richard Eidson filed his complaint on May 6, 2013. ECF Eidson No. 1. Defendants filed a Motion to Dismiss the Complaint on May 28, 2013. ECF Eidson No. 9. Plaintiff filed an opposition to the Motion to Dismiss on July 1, 2013. ECF Edison No. 18. Defendants filed a reply on July 22, 2013. ECF Eidson No. 21.
On October 3, 2013, the Court granted Defendants' motion to dismiss as to the Bells' claims and granted in part and denied in part Defendants' motion to dismiss as to Eidson, giving both plaintiffs leave to amend.
Plaintiffs Scott and April Bell filed a First Amended Complaint on November 15, 2013. ECF Bell No. 37. Defendants filed a Motion to Dismiss the First Amended Complaint on January 8, 2014. ECF Bell No. 42 ("Bell MTD"). Plaintiffs filed an opposition on February 7, 2014. ECF Bell No. 46 ("Bell MTD Opp'n"). Defendants filed a reply on February 21, 2014. ECF Bell No. 47.
Plaintiff Richard Eidson filed a First Amended Complaint on November 15, 2013. ECF Eidson No. 38. Defendants filed a Motion to Dismiss the First Amended Complaint on January 8, 2014. ECF Eidson No. 39 ("Eidson MTD"). Plaintiff filed an opposition on February 7, 2014. ECF Edison No. 46 ("Eidson Opp'n"). Defendants filed a reply on February 21, 2014. ECF Eidson No. 47 ("Eidson Reply").
II. LEGAL STANDARDS
A. Motion to Dismiss Under Rule 12(b)(6)
Federal Rule of Civil Procedure 12(b)(6) permits a party to move to dismiss a complaint for failure to state a claim upon which relief can be granted. To survive a motion to dismiss, a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is plausible when the plaintiff pleads "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). For purposes of ruling on a Rule 12(b)(6) motion, a court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.2008). Moreover, the court "presume[s] that general allegations embrace those specific facts that are necessary to support the claim." Nat'l Org. for Women v. Scheidler, 510 U.S. 249, 256, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994), quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). A complaint's non-conclusory factual allegations and reasonable inferences drawn from them, "must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 970 (9th Cir.2009), citing Iqbal, 129 S.Ct. at 1949.
A court is not required, however, to "assume the truth of legal conclusions merely because they are cast in the form of factual allegations.'" Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir.2011) (per curiam) (quoting W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)). A court also need not accept as true allegations contradicted by judicially noticeable facts, Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). Mere "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); accord Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
B. Federal Rule of Civil Procedure 9(b)
When sitting in diversity, a court applies Federal Rule of Civil Procedure 9(b)'s heightened pleading standard to any state law causes of action sounding in fraud or deceit. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). Rule 9(b) provides that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." A complaint must "be specific enough to give defendants notice of the particular misconduct... so that they can defend against the charge and not just deny that they have done anything wrong.'" Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (citation omitted). The complaint must include facts regarding the "time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004) (citation omitted). In addition, "[t]he plaintiff must set forth what is false or misleading about a statement, and why it is false." In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994) (en banc), superseded by statute on other grounds.
C. Leave to Amend
If the Court determines that the complaint should be dismissed, it must then decide whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend "should be freely granted when justice so requires, " bearing in mind that "the underlying purpose of Rule 15... [is] to facilitate decision on the merits, rather than on the pleadings or technicalities." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks omitted). Nonetheless, a court "may exercise its discretion to deny leave to amend due to undue delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party..., [and] futility of amendment.'" Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892-93 (9th Cir. 2010) (alterations in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
D. Requests for Judicial Notice
While a court generally may not consider evidence or documents beyond the complaint in the context of a Rule 12(b)(6) motion to dismiss, Federal Rule of Evidence 201(d) provides that "[a] court shall take judicial notice [of an adjudicative fact] if requested by a party and supplied with the necessary information." A court may take judicial notice of any fact that is "not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned." Id.
A court may consider documents "whose contents are alleged in a complaint and whose authenticity no party questions, " despite such documents not being physically attached to the pleadings. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). A court may also take judicial notice of "matters of public record outside the pleadings." Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir.1986), overruled on other grounds by Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991). While matters of public record are proper subjects of judicial notice, a court may take notice only of the authenticity and existence of the documents, not the veracity or validity of their contents. See Lee v. City of Los Angeles, 250 F.3d (9th Cir. 2001).
Defendants have filed Requests for Judicial Notice in support of their motions to dismiss both Plaintiffs' complaints. ECF Bell No. 44; ECF Eidson No. 41. With regard to Defendants' motion to dismiss the Bell complaint, the documents as to which Defendants request notice are precisely the same as those contained in the Request for Judicial Notice accompanying their motion to dismiss the original complaint. See ECF Bell No. 11; ECF Bell No. 44. Because Plaintiffs have not filed an opposition to these requests and for the reasons set forth in this Court's October 3, 2103 Order, the Court grants all of Defendants' requests.
With regard to Defendant's motion to dismiss the Eidson complaint, Exhibits A-H, for which Defendants request notice, are the same as those contained in the Request for Judicial Notice accompanying Defendants' motion to dismiss the original complaint. See ECF Eidson No. 10; ECF Eidson No. 41. Plaintiffs have not filed an opposition to these requests, and for the reasons set forth in this Court's October 3, 2103 Order, the Court grants Defendants' request for judicial notice with regard to those exhibits.
However, Defendants also request judicial notice of one document not contained in the Request for Judicial Notice accompanying their motion to dismiss the original complaint. The newly included document, Exhibit I, consists of a Medtronic "Important Medical Information" label regarding the use of Infuse. ECF Eidson No. 41, at 2. Defendants assert that Exhibit I is the warning label in effect at the time of Eidson's surgery. Id. at 3-4. The Court based its grant of all Defendants' previous requests on the fact that "all of the documents at issue appear on the FDA's public website, " and were matters of the public record. Eidson, 2013 WL 5533081, at *5-6. With regard to Exhibit I, however, Defendants provide no citation to any FDA website or publication, and the label itself is a creation of Medtronic rather than the FDA. Exhibit I thus does not qualify as a matter of public record. Nonetheless, the Court grants the request for judicial notice. Defendants invoke the doctrine of incorporation by reference, claiming that the Eidson complaint challenges the sufficiency of the Infuse warning label and thus incorporates that label by reference. ECF Eidson No. 41, at 3-4. The Court agrees. Eidson's complaint asserts that any warnings issued by Defendants regarding the dangers of off-label use were "insufficient in light of" Defendant's promotional activities. Eidson Complaint ¶ 309(iii). Accordingly, Eidson directly challenges the sufficiency of the FDA-approved warnings and the contents of those warnings are thus incorporated in his complaint. Moreover, Eidson has not opposed Defendants' Request for Judicial Notice of Exhibit I nor questioned its authenticity. Thus, because a court may consider documents "whose contents are alleged in a complaint and whose authenticity no party questions, " Knievel, 393 F.3d at 1076, the Court takes judicial notice of Exhibit I.
III. REGULATORY BACKGROUND AND PREEMPTION LAW
Before addressing Defendants' arguments, the Court sets forth the regulatory background and legal ...