Laughlin v. Shoop et al

Filing 110

OPINION AND ORDER: DENYING 10 Motion to Remand; DENYING 74 Amended Motion to Remand. Signed by Judge Robert L Miller, Jr on 2/17/16. (jld)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
ANNA LAUGHLIN,
PLAINTIFF,
VS.

BIOMET, INC. ET AL.,
DEFENDANTS.

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CAUSE NO. 3:14-CV-1960-RLM-CAN

OPINION and ORDER
Anna Laughlin brought suit in Florida state court against two groups of
defendants: Biomet Orthopedics LLC, Biomet Inc., Biomet US Reconstruction
LLC, and Biomet Manufacturing Inc. (collectively, Biomet), and Brett Shoop and
Mid Atlantic Medical LLC (collectively, Distributors). Ms. Laughlin’s complaint
alleges strict product liability, negligence, failure to warn, breach of implied
warranty, breach of express warranty, misrepresentation, and violations of the
Maryland Consumer Protection Act, all in relation 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 under 28 U.S.C. § 1446,
and the Judicial Panel on Multidistrict Litigation transferred the case into the
Biomet multi-district litigation docket.
This matter is before me on Ms. Laughlin’s motion to remand and amended
motion to remand. For diversity purposes, Ms. Laughlin and the Distributors are
citizens of Maryland; the four Biomet defendants are citizens of Indiana. Biomet

designed and manufactured Ms. Laughlin’s hip implant, while the Distributors
acted as independent contractors for Biomet by marketing, selling, and
distributing the implant. Biomet removed this case to federal court on the
argument that the citizenship of the Distributors should be disregarded for
diversity purposes, because Ms. Laughlin can’t prevail on any claim against them
and they were fraudulently joined solely to defeat diversity. Ms. Laughlin argues
that the removal was improper, because the Distributors were properly joined
and so complete diversity is lacking.
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 remand – bears the heavy burden of showing that joinder was
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fraudulent. Id. at 763. 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)).
In deciding whether a defendant has been fraudulently joined, a court isn’t
limited to the pleadings and may consider summary judgment-type evidence
such as affidavits. Millman v. Biomet Orthopedics, Inc., No. 3:13-CV-77 RLMCAN, 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.”).
The fraudulent joinder analysis requires a district court to apply state law
to determine whether the plaintiff would have any reasonable possibility of
success against the non-diverse defendant in state court. Schur v. L.A. Weight
Loss Centers, Inc., 577 F.3d 752, 764 (7th Cir. 2009). The parties agree that
Maryland law governs, and that in Maryland sellers or distributors of a product
ordinarily can be held strictly liable for product defects. See Owens-Illinois, Inc.
v. Zenobia, 325 Md. 420, 441, 601 A.2d 633, 643 (1992) (holding that 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.”).
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Biomet argues that joinder of the Distributors was fraudulent because
while middlemen are ordinarily liable in Maryland product liability cases, all of
Ms. Laughlin’s claims against the Distributors are defeated by an exception to
that general rule: Maryland’s so-called “sealed container doctrine.” This doctrine,
codified in the Maryland Courts and Judicial Proceedings Code, states that it
“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 seller 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;
(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)).
Ms. Laughlin suggests that even if the sealed container doctrine defeats
some of her claims, it doesn’t defeat her failure to warn claims because the
doctrine as codified applies only to actions for injuries caused by “the defective
design or manufacture of a product.” Id. A failure to warn claim, she insists,
doesn’t require that a product be defectively designed or manufactured, so a
sealed container defense isn’t available for such claims. The Maryland courts
have rejected Ms. Laughlin’s interpretation, reasoning that deficient warnings
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make a product defective within the meaning of § 5-405(b). See Reed v. Sears,
Roebuck & Co., 934 F. Supp. 713, 718 (D. Md. 1996) (“[P]laintiffs’ argument that
the sealed container defense is limited to design and manufacturing defects, but
is not applicable to claims alleging ‘failure to warn’ or ‘inadequate warning,’
conveniently overlooks the fact that ‘failure to warn’ liability is merely a type of
design defect.”). If the defendants can show that the elements of Maryland’s
sealed container doctrine are present, the doctrine applies to Ms. Laughlin’s
failure to warn claims.
Biomet submitted a declaration from Brett Shoop addressing all five
elements necessary for the sealed container doctrine to apply. Mr. Shoop testified
that Biomet packs and seals the Magnum implants in packages before delivering
them to the Distributors, who don’t unseal the packages until they are in the
operating room ready to be implanted. The Distributors played no role in
designing, manufacturing, packaging, or labelling the implants, and didn’t know
or have reason to know of any defects in the product or insufficiencies in the
warning labels. And while the sealed implant packages are in the Distributors’
possession, the Distributors don’t alter the packaging, labels, or implant in any
way. Ms. Laughlin hasn’t come forward with any evidence to contradict any of
the factual assertions in Mr. Shoop’s affidavit. Instead of contesting the affidavit
with evidence of her own, Ms. Laughlin presents several arguments as to why
the sealed container doctrine shouldn’t apply.

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First, Ms. Laughlin points out that while a court may consider affidavits
and other evidence in ruling on a motion to remand, the permissible evidence is
limited to “uncontroverted . . . 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). She insists that Mr. Shoop’s affidavit isn’t truly uncontroverted
as to the second element of the sealed container doctrine – the seller’s knowledge
of the defect – because her complaint “alleged that the DISTRIBUTOR
DEFENDANTS did have knowledge” of the dangers posed by the Magnum
implants.
Ms. Laughlin is incorrect. The first paragraph of her complaint defines two
groups: “BIOMET” or “Defendants” refers to the four Biomet entities, while
“DISTRIBUTORS” refers to Mr. Shoop and Mid Atlantic. While the complaint
includes detailed allegations about what the “Defendants” knew about the
Magnum implant’s problems, it has no allegations about the knowledge of the
“DISTRIBUTORS.” Ms. Laughlin recognizes this but characterizes it as “obviously
a scrivener’s error,” insisting that she meant for the allegations about Biomet’s
knowledge to apply to the Distributors too and that it was a “harmless mistake.”
That this was somehow a clerical error appears unlikely. Immediately after the
section of the complaint detailing what “Defendants” knew about implant failures
is a section subtitled “DISTRIBUTORS,” which makes separate allegations about
the conduct of the Distributors; clearly, Ms. Laughlin knew how to differentiate
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between the two subgroups of defendants she herself defined and how to make
different allegations pertaining to each.
Regardless of what Ms. Laughlin might have meant the complaint to say,
I can only give legal effect to what it actually says. The purpose of the pleading
standards in the Federal Rules of Civil Procedures is to ensure that a defendant
has fair notice of the allegations against him or her, and the complete absence
of allegations about the Distributors’ knowledge of defects wouldn’t have alerted
the Distributors that they were accused of knowing about the dangers posed by
the Magnum implants. Ms. Laughlin argues that the Distributors’ failure to move
to dismiss the complaint based on this “error” proves that it was harmless, but
she cites no authority suggesting that a court can read allegations into a
complaint simply because the defendant didn’t formally object to their absence.
She also suggests that it would be unfair to allow Biomet to capitalize on her
error without giving her a chance to correct the error by amending her complaint,
but she has had such an opportunity; this case was filed more than a year and
half ago, and nothing prevented Ms. Laughlin from asking for leave to amend her
complaint in that time.
In short, Mr. Shoop’s affidavit isn’t contradicted by the allegations in Ms.
Laughlin’s complaint or by anything else in the record. Even the self-serving
testimony of the non-diverse defendant alone can establish fraudulent joinder,
if it’s uncontradicted by any other evidence in the record. See Faucet v. IngersollRand Min. & Machinery Co., 960 F.2d 653, 654-655 (7th Cir. 1992) (holding that
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fraudulent joinder was established, when the uncontroverted affidavit of the nondiverse defendant stated that he “had absolutely nothing to do with” the machine
alleged to have caused the plaintiff’s injury). Mr. Shoop’s unrebutted testimony
shows that Maryland’s sealed container doctrine applies. Because the doctrine
provides a complete defense to Ms. Laughlin’s claims against the Distributors,
the defendants have met their heavy burden of showing that there is no
reasonable probability Ms. Laughlin could prevail against the Distributors in
state court.
None of the cases Ms. Laughlin relies on compel a different conclusion.
She cites a long list of cases involving medical devices in which federal courts
granted remand motions based on the existence of a non-diverse distributor
defendant. Whether remand is proper turns on whether Maryland’s particular
sealed container doctrine applies – and only one of the cases Ms. Laughlin cites
applies Maryland law. Whether suits similar to this one can proceed against
distributors under the laws of other states is simply irrelevant.1 In the one case
that applied Maryland law, Harris v. Biomet, Civil Action No. GLR-12-575 (June
25, 2012), the District of Maryland granted a motion to remand in a case very
similar to this one: the plaintiff was suing Biomet and these same distributors

Ms. Laughlin points in particular to a recent case in which Biomet argued in favor of
remand. Martin v. DePuy Orthopaedics, Inc., No. 12CV2292-LAB JMA, 2013 WL 607855
(S.D. Cal. Feb. 15, 2013). Contrary to Ms. Laughlin’s suggestion, there’s nothing unfair
or inconsistent about Biomet arguing that remand of a case is appropriate under
California law and that remand of an allegedly similar case is improper under Maryland
law.
1

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about a hip implant, Biomet removed for fraudulent joinder based on Mr. Shoop’s
affidavit, and the plaintiff moved to remand. The district judge held that Mr.
Shoop’s declaration wasn’t enough to meet Biomet’s heavy burden of showing
fraudulent joinder, and granted the motion to remand.
The opinion in Harris doesn’t bind this court and its reasoning isn’t
persuasive as applied to this case. The Harris court didn’t mention Maryland’s
sealed container doctrine at all. And even if the opinion is read as implicitly
considering and rejecting a sealed container defense, whether such a defense
applies depends on the specific allegations in the complaint and other evidence
in the record. The Harris court emphasized that it was granting the motion to
remand “in light of the allegations contained within the Complaint and
supporting documentation within the Motion to Remand,” but didn’t make clear
what those allegations and supporting documents might have. Without knowing
how comparable the complaint and factual record in this case are to those in
Harris, the court can’t determine whether Harris is analogous. The plaintiff in
Harris might, for example, have alleged that the distributors knew of the
problems with Biomet’s hip implants and produced evidence to that effect.
Finally, Ms. Laughlin argues that even if the sealed container doctrine
would ordinarily shield the Distributors, it doesn’t apply because this case fits
into one2 of six codified exceptions to the doctrine. The Maryland Code states

Ms. Laughlin also mentions a separate exception, which renders the sealed container
doctrine inapplicable where the claimant would be unable to enforce a judgment against

2

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that the sealed container defense isn’t available if “[t]he manufacturer is
otherwise immune from suit.” Md. Code Ann., Cts. & Jud. Proc. § 5-405. Ms.
Laughlin believes that this exception applies because Biomet has asserted 36
affirmative defenses, 27 of which would bar any recovery. Ms. Laughlin conflates
immunity from suit with a defense on the merits. None of Biomet’s laundry list
of affirmative defenses asserts that Biomet is categorically immune from suit.
They are defenses such as contributory negligence, assumption of the risk, the
learned intermediary doctrine, and laches – none of which bars suit against a
defendant completely. Put differently, Biomet’s affirmative defenses don’t assert
that the company can’t be sued; they assert only that if sued, it will win. If
plaintiffs could escape the effects of the sealed container doctrine whenever the
manufacturer of a product has potentially valid defenses to liability, the doctrine
would mean nothing – and would, perversely, afford more protection to the least
meritorious cases.

the product’s manufacturer. She doesn’t develop this argument, and in any case there’s
no evidence from which the court could conclude that Biomet lacks sufficient resources
to pay a judgment against it. This distinguishes this case from Richardson v. Philip
Morris Inc., 950 F. Supp. 700 (D. Md. 1997), in which the district court held that
cigarette distributors could be liable in a tobacco class action suit despite the sealed
container doctrine, “[g]iven the scope of this potential class action, and the filing of
similar suits in other states.” Id. at 704-705. Litigation surrounding the Magnum hip
implants is much more limited in scope than that surrounding tobacco products in the
1990s, and the concern expressed in Richardson – that cigarette manufacturers might
run out of money before all plaintiffs’ claims were resolved – isn’t present here. In fact,
Biomet has already funded settlement of the vast majority of Magnum hip implant cases
and there has been no indication in this MDL that the funds available are nearly
depleted.

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The sealed container doctrine shields the Distributors from liability, and
Ms. Laughlin has no reasonable possibility of prevailing against them in a
Maryland court. Accordingly, the case was properly removed based on fraudulent
joinder, and the court DENIES Ms. Laughlin’s motion for remand (Doc. No. 10)
and amended motion for remand (Doc. No. 74).
SO ORDERED.
ENTERED: February 17, 2016

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

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