Davis v. Biomet Orthopaedics, LLC et al

Filing 171

OPINION AND ORDER: GRANTING 11 Motion to remand; DENYING request for fees; and ORDERING this action REMANDED to the Circuit Court of Baltimore City, Maryland for further proceedings. Signed by Judge Robert L Miller, Jr on 4/25/16. (jld) (Certified copy of Opinion and Order and Docket Sheet sent to Clerk, Circuit Court of Baltimore City, Maryland)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
LORI ANN DAVIS,
Plaintiff
vs.
BIOMET ORTHOPEDICS, LLC, et al.,
Defendants

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CAUSE NO. 3:13-CV-251 RLM

OPINION AND ORDER
Lori Ann Davis filed suit in Maryland state court against defendants Biomet
Inc. and Biomet Orthopedics, LLC (collectively Biomet) and Mid Atlantic Medical,
LLC (Mid Atlantic), alleging negligence, failure to warn, breach of express
warranty, breach of implied warranty, fraud, fraudulent misrepresentation,
intentional misrepresentation, fraudulent concealment, violations of the Maryland
Consumer Protection Act, and civil conspiracy, all relating to the alleged failure
of her Biomet M2a-Magnum hip implant. The defendants removed the case to the
District of Maryland based on diversity of citizenship, and the Judicial Panel on
Multidistrict Litigation transferred the case into the Biomet multi-district litigation
docket in this court.
This matter is before me on Ms. Davis’s motion to remand her case to the
Circuit Court of Baltimore City, Maryland, where the action originated. For
diversity purposes, plaintiff Lori Davis and defendant Mid Atlantic are citizens of
Maryland; the Biomet defendants are citizens of Indiana. The defendants removed

this case to federal court based on their claim that the citizenship of Mid Atlantic
should be disregarded for diversity purposes because Ms. Davis can’t prevail on
any of her claims against Mid Atlantic and Mid Atlantic was fraudulently joined
solely to defeat diversity. Ms. Davis counters that Mid Atlantic is a proper
defendant, so complete diversity is lacking and remand is proper. Ms. Davis also
asks that she be awarded attorneys’ fees for the costs she has incurred in
opposing Biomet’s removal of this case to federal court.

I. STANDARD OF REVIEW
For a federal court to have jurisdiction over a suit based on diversity, there
must be complete diversity of citizenship – no defendant may share the citizenship
of any plaintiff. 28 U.S.C. § 1332(a). A plaintiff can’t fraudulently join a
non-diverse defendant solely for the purpose of destroying diversity jurisdiction.
Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 763 (7th Cir. 2009).
“Fraudulent” in this context doesn’t mean bad faith on the plaintiff’s part; it
means that the claims against the non-diverse defendant have no realistic chance
of success. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992). To decide
whether joinder was fraudulent, a court must ask whether, “after resolving all
issues of fact and law in favor of the plaintiff, . . . there is any reasonable
possibility that the plaintiff could prevail against the non-diverse defendant.”
Schur v. L.A. Weight Loss Ctrs., 577 F.3d 752, 764 (7th Cir. 2009) (internal
quotation marks omitted). The party seeking removal – or, as here, resisting
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remand – bears the heavy burden of showing that joinder was fraudulent. Schur
v. L.A. Weight Loss Ctrs., 577 F.3d 752, 763 (7th Cir. 2009). If the removing
defendant meets that heavy burden, the district court “may ‘disregard’ the
nondiverse defendant” for jurisdictional purposes, such that the fraudulent
joinder doctrine acts as “an ‘exception’ to the requirement of complete diversity.”
Morris v. Nuzzo, 718 F.3d 660, 666 (7th Cir. 2013) (quoting Walton v. Bayer Corp.,
643 F.3d 994, 999 (7th Cir. 2011)).
The fraudulent joinder analysis requires a court to determine whether the
plaintiff would have any reasonable possibility of success against the non-diverse
defendant under applicable state law. Schur v. L.A. Weight Loss Centers, Inc., 577
F.3d 752, 764 (7th Cir. 2009). In deciding whether a defendant has been
fraudulently joined, a court isn’t limited to the pleadings, but may instead
consider evidence of the sort seen in summary judgment motions, such as
affidavits and deposition testimony. Millman v. Biomet Orthopedics, Inc., No.
3:13-CV-77, 2013 WL 6498394, at *2 (N.D. Ind. Dec. 10, 2013); Siegel v. H Group
Holding, Inc., No. 07 C 6830, 2008 WL 4547334, at *3 (N.D. Ill. Apr. 9, 2008) (“[A]
limited use of affidavits and other evidence is permissible so long as the evidence
is not used to ‘pre-try’ the case.”); see also Hack v. SAI Rockville L, LLC, No. WDQ14-1985, 2015 WL 795853, at *4 (D.Md. Feb. 24, 2015) (“The Court may consider
the entire record, not only the complaint, to determine the basis of joinder by any
means available. But, it may not act as a factfinder or delve too far into the merits
in deciding a jurisdictional question.”) (internal quotations and citations omitted).
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The parties agree that Maryland law governs, and that in Maryland, sellers and
distributors of a product ordinarily can be held strictly liable for product defects.
See Owens-Illinois, Inc. v. Zenobia, 601 A.2d 633, 643 (Md. 1992) (in cases
involving products that are defective when sold, “middlemen or intermediate
sellers of the defective product are strictly liable to the plaintiff user just as the
manufacturer is liable to the plaintiff”).

II. DISCUSSION
Sealed Container Defense
Biomet maintains joinder of Mid Atlantic was fraudulent. According to
Biomet, even though distributors and sales representatives are subject to liability
in Maryland product liability cases, Ms. Davis’s claims against Mid Atlantic are
defeated by an exception to that general rule: Maryland’s “sealed container
doctrine.” That doctrine, codified in the Maryland Courts and Judicial Proceedings
Code, provides that “[i]t shall be a defense to an action against a seller of a
product for property damage or personal injury allegedly caused by the defective
design or manufacture of a product” if the seller1 can establish that:
(1) the product was acquired and then sold or leased by the
seller in a sealed container or in an unaltered form;
(2) the seller had no knowledge of the defect;

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The term “seller” is defined in the statute as including a “distributor.” MD. CODE ANN., CTS.
& JUD. PROC. § 5-405(a)(5)(i).

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(3) the seller in the performance of the duties he performed or
while the product was in his possession could not have discovered
the defect while exercising reasonable care;
(4) the seller did not manufacture, produce, design, or
designate the specifications for the product which conduct was the
proximate and substantial cause of the claimant’s injury; and
(5) the seller did not alter, modify, assemble, or mishandle the
product while in the seller’s possession in a manner which was the
proximate and substantial cause of the claimant’s injury.
MD. CODE ANN., CTS. & JUD. PROC. § 5-405(b). The sealed container defense is
unavailable if any of the following exceptions apply:
(1) the manufacturer is not subject to service of process under
the laws of [the State of Maryland] or the Maryland Rules;
(2) the manufacturer has been judicially declared insolvent in
that the manufacturer is unable to pay its debts as they become due
in the ordinary course of business;
(3) the court determines by clear and convincing evidence that
the claimant would be unable to enforce a judgment against the
product manufacturer;
(4) the claimant is unable to identify the manufacturer;
(5) the manufacturer is otherwise immune from suit; or
(6) the seller made any express warranties, the breach of which
were the proximate and substantial cause of the claimant’s injury.
MD. CODE ANN., CTS. & JUD. PROC. § 5-405(c).
Biomet relies on the declaration Brett Shoop, the principal for Mid Atlantic
Medical, LLC, Defts. Exh. B (Shoop Dec.), to support its position that Mid
Atlantic’s distribution of Biomet implant products falls within Maryland’s sealed
container doctrine and that no exceptions to the defense apply. Mr. Shoop reports
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the following: Mid Atlantic is an independent contractor sales representative for
Biomet that played no role in the design, manufacture, development, testing,
packaging, or labeling of Biomet orthopedic implants, Shoop Dec., ¶¶ 2, 17; Mid
Atlantic receives implants from Biomet that are labeled, packaged, and sealed by
Biomet before the products are shipped to Mid Atlantic, Shoop Dec., ¶ 8; Mid
Atlantic representatives don’t alter the packaging, labels, or implants in any way
while they have the sealed packages, Shoop Dec., ¶ 10; and Mid Atlantic
representatives don’t inspect or examine the implants or remove them from their
packaging before an implant procedure. Shoop Dec., ¶ 11. According to Mr.
Shoop, “Typically, Mid Atlantic simply hands the unopened box containing the
requested implant to the circulating nurse in the same packaging in which it was
shipped to Biomet. The surgical staff typically opens the box and removes the
implant from the box and the internal packaging using special procedures to
maintain the sterility of the implant.” Shoop Dec., ¶ 11.
Mr. Shoop says Mid Atlantic received no complaints about the Magnum
device before Ms. Davis’s September 15, 2008 surgery, Shoop Dec., ¶ 16, and
didn’t know or have reason to know of any defects in the product or deficiencies
in the warning labels, Shoop Dec., ¶ 12. Mr. Shoop says, too, that Mid Atlantic
“never made any representations or statements or provided any express or implied
warranties regarding any Magnum device to any physician, including plaintiff’s
surgeon, or any member of the public, including Ms. Davis,” Shoop Dec., ¶ 14,
and neither he nor any Mid Atlantic representative had any direct dealings or
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communications with Ms. Davis. Shoop Dec., ¶ 14. Biomet maintains Mr. Shoop’s
declaration establishes that the sealed container defense applies to Ms. Davis’s
claims against Mid Atlantic based on its distribution of Biomet implants and none
of the statutory exceptions bar the applicability of that defense.
Ms. Davis disagrees. She asserts that even though Mr. Shoop stated that
neither Mid Atlantic nor any of its representatives change Biomet’s packaging or
labeling of the implants while the sealed packages are in their possession, he
didn’t address a number of the activities she has alleged Mid Atlantic
representatives to have undertaken – i.e., actively promoting and marketing the
Biomet Magnum device to surgeons, surgical groups, hospitals, surgery centers,
and end users; educating surgeons about the Biomet Magnum device and training
them on the proper use of the tools necessary to implant the Magnum device;
training physicians and surgeons on the selection of complementary components
to Biomet’s Magnum device; and answering surgeons’ questions, preoperatively
and intraoperatively, about the Biomet Magnum device – activities Ms. Davis says
put Mid Atlantic and its representatives in a position to know or learn of defects
in the Magnum device and to make express warranties and misrepresentations to
physicians, including her own surgeon, and other healthcare providers about the
Magnum device.
Ms. Davis says, too, that Mr. Shoop’s declaration says nothing about
another relevant issue: that Mid Atlantic representatives provide direct service to
doctors and other healthcare providers, both inside and outside the operating
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room, during the implanting of Biomet’s Magnum devices. Ms. Davis alleges that
a Mid Atlantic employee was present during her initial procedure when she
received a Biomet Magnum device and also during her revision procedure. As Ms.
Davis notes, “[i]t is unlikely that [Mr.] Shoop can speak on behalf of the knowledge
held by all of [Mid Atlantic’s] current and former employees with regard to [their]
activities and individual personal knowledge of Biomet Magnum hip implants . .
. , or can encapsulate what was said by those employees in their various contacts
with doctors, hospitals, and other medical personnel.” Reply, at 6. Ms. Davis
claims that by providing advice and assistance to surgeons during hip
replacement procedures involving Biomet Magnum devices, Mid Atlantic
employees are in a position to make warranties and/or misrepresentations about
Biomet products, an issue Mr. Shoop didn’t address.
Ms. Davis also alleges that because studies had taken place and reports had
been published before her surgery, Mid Atlantic knew or could have known of the
risks associated with the Magnum device. Ms. Davis cites to studies and
publications that include Adverse Event Reports submitted to the FDA and
specific medical journal articles that all raised concerns about an unreasonably
high risk of injury posed by Magnum-styled implants many years before her
receipt of a Biomet Magnum device. Ms. Davis alleges that because Mid Atlantic
and its representatives received continuous training and detailed product
information from Biomet about the Magnum devices, Mid Atlantic and its
representatives knew or could have known about the Biomet product defects.
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Lastly, Ms. Davis says Mr. Shoop’s declaration statements stand in contrast
to pleadings Biomet filed in other cases, specifically noting a 2007 action Biomet
filed in this court against three of its former distributors to enforce a non-compete
clause. In Biomet v. Fields, Cause No. 3:07-CV-346 RLM, Biomet explained the
expansive role of its distributors and sales representatives:
One of the most important ways that Biomet invests in [healthcare
customer] relationships [is] through training its distributors and sales
representatives. Upon becoming a Biomet distributor or sales
representative, Biomet educates the distributor and representatives
with detailed confidential information about Biomet’s products,
business strategies, pricing, and customers. Biomet continues its
training of the distributors by providing updated products, business
strategies, pricing, and customer information as developments arise.
Biomet then relies on its distributors and sales representatives to
nurture Biomet’s customer relationships. The distributors, in part,
are charged with assisting Biomet with introducing Biomet customers
in their territory to new products and to secure further orders from
those Biomet customers. Biomet distributors also are typically on the
‘front line’ to deal with any customer issues, problems, or questions
that may arise. As a result of this intense hands-on and direct
interaction, Biomet’s distributors become intimately familiar with
Biomet’s customers and their needs.
Compl. [docket # 1 in Cause No. 3:07-CV-346], ¶¶ 12-13. While Biomet complains
that the Fields case contains no facts specific to Mid Atlantic, Ms. Davis claims
that Biomet’s own statements about the role its distributors play in marketing and
selling Biomet products could demonstrate that like other Biomet distributors,
Mid Atlantic knew about or could have discovered defects in Biomet hip products
in a variety of ways.
While a court can consider affidavits and other evidence in ruling on a
motion to remand, the permissible evidence is limited to “uncontroverted . . .
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evidence which establishes unmistakably that a diversity-defeating defendant
cannot possibly be liable to a plaintiff under applicable state law.” Rutherford v.
Merck & Co., Inc., 428 F. Supp. 2d 842, 848 (S.D. Ill. 2006). Ms. Davis alleges
that based on Mid Atlantic’s close relationship with Biomet, Mid Atlantic knew or
could have known that the Magnum device was defective, and Mid Atlantic
representatives were in a position to make express warranties and/or
misrepresentations about Biomet Magnum devices to surgeons and physicians,
including her own. Mr. Shoop’s testimony isn’t uncontroverted evidence that
unmistakably establishes that Ms. Davis can’t reasonably prevail against Mid
Atlantic under Maryland state law.
Resolving all issues of fact and law in favor of Ms. Davis, I conclude that
Biomet hasn’t met its heavy burden of showing that there is no reasonable
possibility that Ms. Davis could succeed on her claims against Mid Atlantic. The
allegations of Ms. Davis’s complaint, if proven, could show that Mid Atlantic knew
or could have known that the Magnum device was defective, removing Mid Atlantic
from the protection of the sealed container doctrine, and/or that Mid Atlantic
representatives made warranties, the breach of which caused Ms. Davis’s injuries.
Thus, Mid Atlantic wasn’t fraudulently joined, jurisdiction in this court isn’t
proper under 28 U.S.C. § 1332, and Ms. Davis’s motion for remand will be
granted.
Because Ms. Davis states a claim such that Maryland law might impose
liability on Mid Atlantic under the facts alleged, I needn’t address the other issues
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raised by the parties, i.e., whether Mid Atlantic could be held liable for fraud, civil
conspiracy, or a violation of the Maryland Consumer Protection Act.

Request for Fees
Ms. Davis has requested, pursuant to 28 U.S.C. § 1447(c), that she be
awarded the fees she incurred in opposing Biomet’s removal of this case to federal
court. Plaintiffs are entitled to attorneys’ fees in removal cases “only where the
removing party lacked an objectively reasonable basis for seeking removal.” Martin
v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). A defendant will be found to
lack an objectively reasonable basis for seeking removal if “clearly established law
demonstrated that he had no basis for removal.” Lott v. Pfizer, Inc., 492 F.3d 789,
793 (7th Cir. 2007). “The appropriate test for awarding fees under § 1447(c)
should recognize the desire to deter removals sought for the purpose of prolonging
litigation and imposing costs on the opposing party, while not undermining
Congress’ basic decision to afford defendants a right to remove as a general
matter, when the statutory criteria are satisfied.” Martin v. Franklin Capital Corp.,
546 U.S. 132, 140 (2005).
Biomet didn’t carry its burden of establishing that Ms. Davis had no
possibility of recovery against Mid Atlantic, but its bases for removal weren’t
objectively unreasonable. See Feldman’s Med. Ctr. Pharmacy, Inc. v. CareFirst,
Inc., 959 F. Supp. 2d 783, 798 (D.Md. 2013) (“[A] plaintiff has every right to do all
that is possible, within the bounds of ethical constraints, to ensure that his case
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remains in state court; a defendant has an equally defensible privilege to do all it
can, under like constraints, to push or pull the action into federal court.”)
(internal quotation and citation omitted). I will deny Ms. Davis’s request for fees.

III. CONCLUSION
Ms. Davis has alleged a claim that isn’t clearly barred by Maryland’s sealed
container doctrine, so Mid Atlantic's joinder wasn’t fraudulent, diversity of
citizenship isn’t complete, and this court lacks subject matter jurisdiction over the
claims of Ms. Davis’s complaint. The court, therefore, GRANTS Ms. Davis’s motion
to remand [docket # 11], DENIES her request for fees, and ORDERS this action
REMANDED to the Circuit Court of Baltimore City, Maryland for further
proceedings.
SO ORDERED.
ENTERED:

April 25, 2016
/s/ Robert L. Miller, Jr.
Judge, United States District Court

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