WAGNER et al v. MIZUHO ORTHOPEDIC SYSTEMS, INC.
Filing
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ORDER granting Pltfs' 62 Motion to Amend Complaint. Pltfs shall file an Amended Complaint within seven days of the date of this Order. Additionally, the Court hereby orders that Dkt. 62-4 be SEALED in order to comply with the anonymity provision of the MMA (see Order for additional information). Signed by Magistrate Judge Mark J. Dinsmore on 4/30/2012. (SWM)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
JANE E. WAGNER, and
ROBERT A. WAGNER,
Plaintiffs,
vs.
MIZUHO ORTHEPEDIC
SYSTEMS, INC.
Defendants.
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NO. 1:11-cv-00433-TWP-MJD
Order on Plaintiff’s Motion to Amend Complaint
This matter comes before the Court on Plaintiffs Jane and Robert Wagners’ (“the
Wagners”) Motion to Amend the Complaint. [Dkt. 62]. For the following reasons, the Court
hereby GRANTS the Wagners’ Motion to Amend.
I. Background
This case involves a products liability claim brought by the Wagners against Defendant
Mizuho Orthopedic Systems, Inc. (“Mizuho”). According to the Wagners, a defective surgical
table used during Jane Wagner’s hospital treatment malfunctioned, causing her severe injury.
Pursuant to the Indiana Medical Malpractice Act (“MMA”), the Wagners also filed an action for
malpractice against the hospital where the injury occurred (“the Hospital”) with the Indiana
Department of Insurance (“IDOI”), and the proceedings of the medical review board are still
pending. In their Complaint filed in this Court, the Wagners did not name the Hospital as a
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codefendant. [Dkt. 13]. However, the Wagners now move to amend their Complaint to join the
Hospital as a defendant. [Dkt. 62].
II. Discussion
The Wagners argue that, because the matter before the IDOI’s medical review panel
against the Hospital and this matter against Mizuho derive from the same occurrence, joinder is
appropriate and the Court should grant leave to amend the Complaint and join the Hospital as a
defendant. [Dkt. 62, 62-4]. In response, Mizuho argues that the Court may not join the Hospital
as a defendant because of unreasonable delay that would result from waiting for the medical
review panel to rule on the matter. [Dkt. 64].
A. The Court Has Discretion in Giving Leave to Amend the Complaint
Rule 15(a)(2) of the Federal Rules of Civil Procedure states that “[t]he court should freely
give leave [to amend the complaint] when justice so requires.” This is a broad allowance with
few enumerated exceptions. See Bethany Pharmacal Co., Inc. v. QVC, Inc., 241 F.3d 854, 861
(7th Cir. 2001). “[T]he district court need not allow an amendment when there is undue delay,
bad faith, dilatory motive, undue prejudice to the opposing party, or when the amendment would
be futile.” Id. Generally, the grant of leave to amend the pleadings under Rule 15(a) is within
the discretion of the trial court. Sanders v. Venture Stores, Inc., 56 F.3d 771, 773 (7th Cir.
1995).
Because the approved case management plan deadline to file motions for leave to amend
the pleadings has passed [Dkt. 20 at 2], Mizuho argues that the Wagners should not be able to
amend their Complaint. [Dkt. 64 at 3]. However, Mizuho does not cite any court rule or case
law preventing the Court from amending its own case management plan. [Id.] Thus, the Court
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will exercise its discretion under Rule 15 in determining whether the amendment to the
Complaint should be permitted.
Mizuho also argues that the MMA’s anonymity provision prevents the Wagners from
naming the Hospital in question in the proposed Amended Complaint. [Dkt. 64]. Under the
MMA, “the complaint filed in court may not contain any information that would allow a third
party to identify the defendant” in order to protect the reputation of the health care provider. Ind.
Code 34-18-8-7(a)(1); see Kho v. Pennington, 875 N.E.2d 208, 209–16 (Ind. 2007). If, however,
the Wagners join the Hospital under a pseudonym such as “Anonymous Hospital,” the MMA’s
anonymity provision is satisfied, as would be Rule 10(a)’s naming requirement. See Caywood v.
Anonymous Hosp., No. 1:11-cv-01313-TWP-MJD, 2012 U.S. Dist. LEXIS 43708, at *7 n. 2
(S.D. Ind. Mar. 29, 2012).
Mizuho further argues that amending the Complaint would unreasonably delay the
proceedings of the case. However, because it is possible for the Hospital to be “named” without
being identified, the Court would not need to wait until the medical review panel rules in order to
move forward with this case as it relates to Mizuho. Id. The identity of the Hospital can remain
anonymous throughout the proceedings until the medical review board has issued its decision.
See Caywood v. Anonymous Hosp., No. 1:11-cv-01313-TWP-MJD, 2012 U.S. Dist. LEXIS
43706 (S.D. Ind. Mar. 29, 2012). Thus, there is no reason to believe that joining the Hospital in
question would unreasonably delay this case, and the Court may exercise its discretion under
Rule 15 in granting the Wagner’s leave to amend their complaint.
B. Joinder of the Hospital is Proper
Although the Court is exercising its discretion under Rule 15 in permitting the Wagners
to amend their Complaint, the principles underlying Federal Rules of Civil Procedure 19 and 20
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further support the decision to permit the Wagners to amend their Complaint to join the Hospital.
Because jurisdiction was not properly pleaded in the proposed Amended Complaint, the question
of the Court’s continuing jurisdiction must remain undecided at present. However, because
information of which the Court is aware suggests that the Hospital is an Indiana entity and,
therefore, non-diverse, the Court’s analysis will proceed on the assumption that joinder of the
Hospital will defeat the Court’s subject matter jurisdiction.
The jurisdiction of federal courts is fundamentally limited, through both the Constitution
and Congress. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). In any case in
federal court based on diversity jurisdiction, there must be “complete” diversity between each
defendant and each plaintiff. See 28 U.S.C. § 1332. The United States Code provides that, “[i]f
after removal the plaintiff seeks to join additional defendants whose joinder would destroy
subject matter jurisdiction, the court may [1] deny joinder, or [2] permit joinder and remand the
action to the State court.” 28 U.S.C. § 1447(e). A district court cannot retain subject matter
jurisdiction after permitting joinder of a non-diverse party, so the court must balance the equities
to make the determination. Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 759 (7th Cir.
2009). The Court looks to the principles underlying these rules in support of the conclusion that
the Wagners may amend their complaint under Rule 15.
Rule 20(a)(2) provides that a defendant may be joined (1) when any right to relief stems
from the same occurrence and (2) when any question of law or fact common to all of the
defendants will arise. Fed. R. Civ. P. 20(a)(2). The district court is given wide discretion in its
decisions concerning the joinder of parties, so long as it is consistent with the principles of
fundamental fairness. Chavez v. Illinois State Police, 251 F.3d 612, 632 (7th Cir. 2001).
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Specifically, when joinder under Rule 20 will affect federal jurisdiction over a case, the Seventh
Circuit looks to four factors in particular when analyzing the joinder of a non-diverse party:
(1) the plaintiff's motive for seeking joinder, particularly whether the purpose is to
defeat federal jurisdiction;
(2) the timeliness of the request to amend;
(3) whether the plaintiff will be significantly injured if amendment is not allowed;
and
(4) any other relevant equitable considerations.
Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 759 (7th Cir. 2009). This analysis
is appropriate in order to prevent fraudulent joinder. Id.
Under Federal Rule of Civil Procedure 19, an entity is a required party if, in that
entity’s absence, the court cannot accord complete relief among the existing parties, or if
that entity claims an interest relating to the subject of the action and is so situated that
disposing of the action in the entity’s absence may impair or impede that entity’s ability
to protect its interest, or would leave an existing party subject to inconsistent obligations
because of the interest. Fed. R. Civ. P. 19(a)(1)(B). Such a party must be joined if its
joinder will not deprive the court of subject matter jurisdiction. Fed. R. Civ. P. 19(a)(1);
Krueger v. Cartwright, 996 F.2d 928, 932 (7th Cir. 1993). Under Rule 19(b), when
joinder is not feasible, the court must determine whether, in equity and good conscience,
the action should proceed among the existing parties or be dismissed.
In this matter, the Court will apply the Federal Rules of Civil Procedure and the
test outlined in Schur, not Trial Rule 15 of the Indiana Rules of Procedure that is cited by
the Wagners [Dkt. 62]. Joinder of the Hospital – a likely non-diverse party – is
appropriate under the Schur test. First, there is no ill motive in the Wagner’s desire to
join the Hospital, as their purpose is simply to join all related issues into one case.
Second, the request to join the Hospital is timely, as the failure by the Wagners to join the
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Hospital at the outset of the litigation was a result of the Wagners’ efforts to comply with
the MMA by filing an action for malpractice against the Hospital first with the IDOI. In
addition, discovery in this case is still in its infancy, so there is no harm or delay to
Mizuho in that respect. Finally, there would be no harm to Mizuho if the amendment is
allowed, and in fact the parties may both be prejudiced by not joining the Hospital at this
time, as further discussed below.
The other requirements for proper joinder under Rules 19 and 20 are satisfied in this case.
The claims against both Mizuho and the Hospital arise out of the same occurrence and operative
facts. Mrs. Wagner was injured while on a table manufactured by Mizuho while under the care
of the Hospital. In fact, Mizuho raises several affirmative defenses in its answer that implicate
the Hospital. Mizuho alleges that the Mrs. Wagner’s injuries were proximately caused by the
Hospital, that misuse of the table -- presumably by the Hospital-- proximately caused or
contributed to the her damages, and that Mrs. Wagner’s damages were a proximate result of
unforeseeable modifications to the table, also presumably by the Hospital. [Dkt. 8 at 14-15].
Identical questions of law and fact will be common to both proposed defendants, the maker of
the table as well as the hospital where the treatment took place, so Rule 20’s second prong is also
satisfied. In addition, in analyzing this matter under Rule 19, disposing of this action in the
absence of the Hospital would both impair the Hospital’s ability to protect its interest, as well as
possibly subject Mizuho to inconsistent obligations because of the possibility that the Hospital’s
actions contributed to Mrs. Wagner’s injuries. See Fed. R. Civ. P. 19(a)(1)(B). Thus, Federal
Rules of Civil Procedure 19 and 20 support the Court’s decision to permit amendments to the
complaint that result in the joinder of the Hospital.
C. The Proposed Amended Complaint Lacks Proper Jurisdictional Allegations
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As stated above, the Wagners fail to include proper jurisdictional allegations in their
proposed Amended Complaint. When a corporation is a party, it is deemed to be a citizen of any
state where it is incorporated and where it has its “principal place of business.” Id. The Supreme
Court recently found that a corporation’s principal place of business refers to its “nerve
center”—“the place where a corporation's officers direct, control, and coordinate the
corporation's activities.” Hertz Corp. v. Friend, 130 S. Ct. 1181, 1192 (2010).
Regarding the jurisdictional requirement, in their proposed Amended Complaint the
Wagners note that Mizuho is incorporated and has its principle place of business “in states other
than Indiana.” [Dkt. 62-4]. Additionally, the Wagners state that the Hospital they wish to join as
a co-defendant is “located in Indianapolis, Indiana.” Id. However, when a corporation is a party
to a suit in federal court on the basis of complete diversity, the complaint filed in the Court must
specify each state in which the corporation is incorporated and where it has a nerve center.
Friend, 130 S. Ct. 1192. A plaintiff may not plead jurisdiction in the negative by asserting that a
party is not a citizen of a particular state. See Peters v. Astrazeneca LP, 224 Fed. Appx. 503, 505
(7th Cir. 2007). Thus, the proposed Amended Complaint currently lacks the jurisdictional
requirements necessary to move forward.1 Nevertheless, the Wagners will be permitted to
amend their complaint to add the Hospital as a defendant, and if the Hospital is in fact a nondiverse party, the Court will address the proper course of action in a separate order in accordance
with 28 U.S.C. § 1332 and 28 U.S.C. § 1447(c), as appropriate.
III. CONCLUSION
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The proposed Amended Complaint also identifies the Hospital, which would violate Ind. Code. § 34-18-8-7 if the Amended
Complaint were accepted for filing. Accordingly, the Wagners’ proposed Amended Complaint [Dkt. 62-4] is hereby SEALED
and in the revised Amended Complaint, the Wagners shall refer to the hospital as “Anonymous Hospital” and shall excise from
the Amended Complaint any references providing the actual identity of the Hospital.
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In summary, the Wagners’ claims against both Mizuho and the Hospital arise from a
single incident and the interests of judicial economy and simple common sense dictate that those
claims be litigated in a single lawsuit. For the reasons stated above, the Court hereby GRANTS
the Wagners’ Motion to Amend Complaint [Dkt. 62], pending revisions that satisfy the
jurisdictional requirement, the naming requirement, and the anonymity provision of the MMA,
discussed in this Order. Plaintiffs are required to include a proper jurisdictional statement in
their Amended Complaint, which must specifically provide the state of incorporation, as well as
the principal place of business, of each defendant, not merely state where each defendant does or
does not do business, or where they are located. Plaintiffs shall file an Amended Complaint
within seven days of the date of this Order. Additionally, the Court hereby orders that Dkt. 62-4
be SEALED in order to comply with the anonymity provision of the MMA.
So ordered.
Date:
04/30/2012
Mark J. Dinsmore
United States Magistrate Judge
Southern District of Indiana
Distribution list:
Edward W. Hearn
JOHNSON & BELL
hearne@jbltd.com
Tony B. Manns
WAGNER CRAWFORD & GAMBILL
tbmanns@wagnerlawfirm.biz
Susan Kathleen Swing
JOHNSON & BELL, LTD
swingS@jbltd.com
Larry J. Wagner
WAGNER CRAWFORD GAMBILL & TROUT
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wcg@wagnerlawfirm.biz
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