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Doe v. Xytex Corp.

United States District Court, N.D. California

March 24, 2017

JANE DOE 1 and JANE DOE 2; Plaintiffs,
v.
XYTEX CORPORATION, a Georgia Corporation; Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

          WILLIAM ALSUP UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         In this wrongful-birth action involving the sale of human semen for artificial insemination, one defendant moves to dismiss. For the foregoing reasons, the motion is Granted in part and Denied in part.

         STATEMENT

         1. Jane Doe One & Jane Doe Two.

         Plaintiffs Jane Doe One and Jane Doe Two, a same-sex couple, resided and continue to reside in San Francisco. In 2004, they registered to use xytex.com, a website operated by defendant Xytex Corporation. Xytex, through its website, sold human semen for use in artificial insemination. At the time, Xytex's website declared that it is “an industry leader in reproductive services with a commitment to unsurpassed quality controls, ” and that the donors' personal health and family history are carefully screened through a comprehensive medical process developed by the Centers for Disease Control and Prevention. Additionally, the website proclaimed that Xytex's “FDA-mandated screening and testing also ensures our donors' continued good health.” It further represented that the screening process was so thorough that a mere “1 percent of the men that inquire about being a donor candidate are evaluated, ” and, ultimately, “[f]ewer than 5 percent of the candidates become donors” (Compl. ¶¶ 2, 17).

         Our plaintiffs heard about Xytex through friends and visited Xytex's website. Plaintiffs were impressed by the aforementioned screening procedures described on the website. From looking at the website, plaintiffs got the impression that Xytex seemed to be the sperm bank with the most rigorous qualification standards. Plaintiffs reached out to Xytex and spoke with Mary Hartley, a Xytex representative. They asked her if she knew of any Xytex sperm donors that had a particularly impressive health and education history. Hartley immediately singled out a specific sperm donor, Donor #9623, and stated that although Xytex has not yet published his profile on their website, his sperm had already been used to successfully inseminate women and it would be sold out as soon as his profile was published. Hartley also claimed that Donor #9623 was “ultra intelligent” and that he looked “like a model.” “Moments after” the phone conversation, Jane Doe One and Jane Doe Two purchased sperm from Donor #9623 (id. ¶¶ 30-31).

         After Xytex sent the sperm to San Francisco, licensed independent medical professionals introduced sperm from Donor #9623 into plaintiff Jane Doe One in an artificial insemination procedure. Approximately nine months later, Jane Doe One gave birth to P.S. At the time of the complaint, P.S. was nine years old (id. ¶ 33).

         Nine years passed.

         In April 2015, Jane Doe One and Jane Doe Two saw an article on the website for the Associated Press that discussed a lawsuit that had been filed against Xytex, specifically referencing to Donor #9623. The article revealed that their sperm donor, Xytex Donor #9623, was a mentally ill schizophrenic felon, who had pled guilty to residential burglary. Plaintiffs learned that Donor #9623 had dropped out of college and held no degrees whatsoever. They also discovered that Xytex had altered Donor #9623's photos, removing a large facial mole (id. ¶ 34).

         Subsequently to plaintiffs' discovery of Donor #9623's medical and criminal history, Jane Doe One sent an email to Ronda Drake, an agent of Xytex and expressed her concern regarding the fact that Donor #9623 was a diagnosed schizophrenic. In response, Drake said that she was not aware “of any reported medical issues, ” related to Donor #9623. Additionally, Jane Doe One received an email from J. Todd Spradlin, the Chief Medical and Laboratory Director for Xytex, in which Dr. Spradlin said that he had “received no information to confirm that Donor #9623 has schizophrenia.” Spradlin also said, in the same email, that it “would be irresponsible of Xytex to notify clients of unsubstantiated claims” (id. ¶¶ 35-36).

         2. Xytex and Donor #9623.

         Donor #9623 first came to the Xytex office in late 2000. At that time, he worked as a janitor/waiter, who had dropped out of school. Prior to selling his sperm to Xytex, Donor #9623 had been hospitalized, as an adult, for mental health reasons on at least two separate occasions. During these hospitalizations, which sometimes lasted for more than two weeks, the medical staff of two different hospitals diagnosed Donor #9623 with psychotic schizophrenia, narcisstic personality disorder, and significant grandiose delusions (id. ¶¶ 21-22).

         Xytex's “rigorous qualification procedure” included filling out a questionnaire on his first visit and undergoing a ten-minute physical examination, in which the examining physician did not discuss Donor #9623's physical or mental health history. Donor #9623 told Hartley that he thought his IQ was about 130, but Hartley “suggested to him that he was a genius with an IQ of about 160.” Hartley further told him that the more educated donors did well selling their sperm, and that Xytex usually dealt with donors with higher education. Two weeks after the initial visit in 2000, Donor #9623 won approval to be a Xytex sperm donor (id. ¶¶ 22-23).

         While Xytex represented Donor #9623 as a healthy, intelligent, and highly educated sperm donor, he underwent hospitalization for mental health problems and got arrested on numerous occasions for burglary, trespassing, DUI, and disorderly conduct. In 2002, Donor #9623 was found to be disabled for his schizophrenia and placed on full Social Security Disability (id. ¶ 24). Xytex alleged that it had no knowledge of either Donor #9623's medical or criminal record.

         Recently, Jane Doe One and Jane Doe Two have come to discover that “their child needs counseling.” Additionally, Jane Doe One and Jane Doe Two have each attended conferences regarding best practices “for parents in their situation, ” suffered stress and worry, and been required to, and will be required to, expend funds to evaluate and care for their child to ensure that should she become schizophrenic, she will have the best care possible (id. ¶ 37).

* * *

         In April 2016, plaintiffs filed their complaint in San Francisco County Superior Court. Plaintiffs alleged claims for intentional misrepresentation, negligent misrepresentation, strict products liability, products liability based on negligence, breach of express warranty, breach of implied warranty of merchantability, battery, negligence, false advertising, wrongful birth, specific performance, punitive damages, and violations of the California Unfair Competition law.

         The action was removed to federal court here in San Francisco on June 1, 2016, based on diversity jurisdiction (Dkt. No. 1). One defendant moved to enforce a forum-selection clause in the usage agreement on its website (Dkt. No. 11). An order rejected defendant's argument that they had provided reasonable notice of the usage agreement but allowed discovery into whether plaintiffs had actual notice of the agreement (Dkt. No. 27). The parties' briefs following that discovery revealed inappropriate conduct at the deposition of one of the plaintiffs by counsel for both sides, so the Court held an evidentiary hearing to complete the testimony, then invited supplemental briefing (Dkt. No. 45). After the evidentiary hearing, while the supplemental briefing proceeded, defendant brought a motion to stay discovery pending review of its petition to consolidate this action with several others in multi-district litigation which was granted in part (Dkt. No. 60). The Judicial Panel on Multidistrict Litigation decided not to institute a multidistrict litigation and the partial stay was lifted (Dkt. No. 69). Now Xytex moves to dismiss. This order follows full briefing and oral argument.

         ANALYSIS

         To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662 (2009). A claim is facially plausible when there are sufficient factual allegations to draw a reasonable inference that the defendant is liable for the conduct alleged. While a court “must take all of the factual allegations in the complaint as true, ” it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Id. at 1949-50 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (internal quotation marks omitted). “[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim.” Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996) (citation omitted).

California recognizes the tort of “wrongful birth.” Turpin v. Sortini, 31 Cal.3d 220 (1982). The essence of the tort is negligence by a professional service provider leading to a problematic birth. Before addressing the challenge to the wrongful birth claim for relief, however, this order will address the challenge to plaintiffs' intentional and negligent ...


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