Spencer et al v. Wright Medical Technology, Inc. et al

Filing 17

MEMORANDUM OPINION ORDER by Judge John G. Heyburn, II on 2/17/12 sustaining 11 Motion to Remand; case is hereby REMANDED to Jefferson Circuit Court.cc:counsel (DAK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
CIVIL ACTION NO. 3:11-CV-632-H

JOHN B. SPENCER and
TABITHA A. SPENCER,
PLAINTIFFS
V.
WRIGHT MEDICAL TECHNOLOGY,
INC., et. al.,

DEFENDANTS

MEMORANDUM OPINION AND ORDER
Plaintiffs, John B. Spencer and Tabitha A. Spencer (the “Spencers”) brought this suit in
Jefferson Circuit Court against Wright Medical Technology (“Wright”), manufacturer of the
Profemur hip implant, and Barry Stokes and Greg May (“Stokes” and “May”), sales
representatives and distributors of Wright’s implants in Kentucky. Plaintiffs assert claims under
strict liability, negligence, and breach of warranty based on a Profemur hip implant, installed in
John Spencer on December 1, 2005, that fractured on February 9, 2009. After deposing John
Spencer’s physician, Dr. Richard Sweet, Wright removed the case to federal court, invoking this
Court’s diversity jurisdiction. See 28 U.S.C. § 1332 and 1441. Now before the Court is
Plaintiffs’ motion to remand the case to state court.
I.
As the removing party, Wright carries the burden to show this Court has subject matter
jurisdiction over the suit. Gafford v. Gen. Elec. Co., 997 F.2d 150, 155 (6th Cir.1993).
Diversity jurisdiction exists only when there is complete diversity between plaintiffs and
defendants. E.g., Cleveland Hous. Renewal Project v. Deutsche Bank, 621 F.3d 554, 559 (6th

Cir. 2010). Here, Stokes and May are both Kentucky residents, as are the Spencers. Nondiverse
defendants will typically preclude diversity jurisdiction, but Wright alleges the Spencers
fraudulently joined Stokes and May to this action for the sole purpose of preventing removal
from state court. Wright argues that it learned through Dr. Sweet’s deposition that no basis
exists for a cause of action against Stokes and May and therefore the proper parties to the suit are
completely diverse.
To invoke the judicially-created fraudulent joinder exception to the complete diversity
requirement, Wright “must present sufficient evidence that a plaintiff could not have established
a cause of action against non-diverse defendants under state law.” Coyne v. Am. Tobacco Co.,
183 F.3d 488, 493 (6th Cir. 1999) (citing Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949
(6th Cir. 1994)). The Court must resolve disputed questions of fact and any ambiguities in the
controlling state law in favor of the Spencers as the nonremoving party. Alexander, 13 F.3d at
949 (quoting Carriere v. Sears Roebuck & Co., 893 F.2d 98, 100 (5th Cir.)). If there is a
colorable basis for a cause of action against the nondiverse defendants, the Court must remand
the action to state court. Coyne, 183 F.3d at 493.
II.
The parties agree as to most of the facts relevant to Plaintiffs’ remand motion. Before
selecting the Profemur device, Dr. Sweet met with Stokes and May to discuss its suitability for a
patient of John Spencer’s size, age, and activity level. Stokes and May gave Dr. Sweet technical
literature regarding Profemur and answered his questions. Dr. Sweet was concerned particularly
about the modular neck component of the device and asked Stokes and May about the potential
for failure. According to Dr. Sweet, Stokes and May represented to him that there had been no

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fractures of the Profemur modular neck.1
The modular neck of the Profemur device implanted in John Spencer failed three years
after his surgery. Dr. Sweet met with Stokes and May again after the failure and learned that the
Profemur “had some failures around the world with heavy patients,” including failures in the
modular neck. Dr. Sweet Dep., Oct. 20, 2010 at 32. Most of these failures occurred in Europe,
where the Profemur primarily had been used before introduction in the United States. Stokes
was aware of these failure rates in Europe prior to John Spencer’s initial surgery, but did not
know whether any failures were in the neck of the device. Dr. Sweet testified that had he known
about these failure rates he would not have selected the Profemur device because John Spencer’s
age, size, and activity level would put him among the most likely patients to suffer a fracture.
III.
Plaintiffs make three arguments in support of their motion to remand, but the Court need
only address their argument that Stokes and May were not fraudulently joined as nondiverse
defendants.2 The Complaint alleges claims for strict liability, negligence, and breach of warranty
against Stokes and May based on their failure to provide appropriate information regarding the
Profemur’s strength, endurance, and weight limits. Kentucky courts impose liability on sellers
of a product “who knew or should have known at the time of distribution or sale that the product
was in a defective condition and unreasonably dangerous.” Adams v. Minnesota Mining & Mfg.,
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Neither Stokes nor May recall any conversation about modular neck failures with Dr. Sweet. The Court
accepts Dr. Sweet’s testimony as fact for the purpose of determining fraudulent joinder. See Alexander, 13 F.3d at
949.
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Plaintiffs argue that Wright’s removal of this action was procedurally defective, as it came more than one
year after the filing of the action and more than 30 days from the date on which Wright learned the information it
claims gave it notice that Stokes and May were fraudulently joined. The Court does not address these procedural
arguments because the Court’s decision on the substantive issue – whether a colorable claim exists against Stokes
and May – resolves the matter.

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No. 4:03-CV-182-M, 2004 WL 718917, at *3 (W.D. Ky. March 30, 2004) (citing Worldwide
Equip., Inc. v. Mullins, 11 S.W.3d 50, 60 (Ky. Ct. App. 1999)). Plaintiffs argue that since
Kentucky recognizes the type of claim it alleges against Stokes and May as sellers of the
Profemur device, Wright cannot invoke the fraudulent joinder exception to the complete
diversity requirement.
Wright responds that Ky. Rev. Stat. § 411.340, Kentucky’s “middleman” statute,
precludes any cause of action the Spencers could maintain against Stokes and May. That statute
provides:
In any product liability action, if the manufacturer is identified and subject to the
jurisdiction of the court, a wholesaler, distributor, or retailer who distributes or
sells a product, upon his showing by a preponderance of the evidence that said
product was sold by him in its original manufactured condition or package, or in
the same condition such product was in when received by said wholesaler,
distributor or retailer, shall not be liable to the plaintiff for damages arising solely
from the distribution or sale of such product, unless such wholesaler, distributor
or retailer, breached an express warranty or knew or should have known at the
time of distribution or sale of such product that the product was in a defective
condition, unreasonably dangerous to the user or consumer.
Ky. Rev. Stat. Ann. § 411.340 (LexisNexis 2010). Wright argues that Stokes and May were
distributors of the Profemur device and there is no allegation that the device John Spencer
received was not in its original manufactured condition. The statute, Wright contends, protects
Stokes and May from any possible liability towards the Spencers. As such, Plaintiffs have no
colorable claim against Stokes and May and the Court should consider them fraudulently joined
for the purpose of assessing diversity jurisdiction, Wright argues.
The Court is not convinced that Ky. Rev. Stat. § 411.340 undoubtedly exempts Stokes
and May from liability here so that no colorable claim exists against them. This Court
previously has considered § 411.340 in the context of fraudulent joinder and reached different
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conclusions based on factual differences in the cases. Compare Bennet v. Ford Motor Co., No.
5:07-CV-115-R, 2007 WL 456281, at *3 (W.D. Ky. Dec. 21, 2007) (finding car dealership
immune under § 411.340 where plaintiff made no effort to develop facts indicating dealership
knew about alleged defect), and Salisbury v. Purdue Pharm., L.P., 166 F. Supp. 2d 546, 551
(E.D. Ky. 2001) (finding pharmacies immune under § 411.340 where plaintiffs did not allege
pharmacies knew or should have known product was defective), with Adams, 2004 WL 718917,
at *3 (finding § 411.340 did not apply so as to establish fraudulent joinder where plaintiffs
alleged distributors knew or should have known respirators were defective and unreasonably
dangerous for use in humid coal mines).
The Spencers’ claims against Stokes and May appears more similar to the Adams case
because the nondiverse defendant distributors are alleged to have known that the product was
unreasonably dangerous to the consumer. This allegation satisfies an express condition by
which § 411.340 does not protect a distributor from a product liability action. See Ky. Rev. Stat.
Ann. § 411.340 (distributor not liable “unless . . . [it] knew or should have known at the time of
distribution or sale of such product that the product was in defective condition, unreasonably
dangerous to the user or consumer”).
Facts in the record support the Spencers’ allegations. For example, Stokes testified in his
deposition that at the time of his first meeting with Dr. Sweet he knew about Profemur failure
rates in Europe but did not know the specific part of the device that had failed in those patients.
The existing information on Profemur failures, combined with Dr. Sweet’s expressed concern
about using a model with a modular neck on a patient of John Spencer’s size and age, give
Plaintiffs a colorable argument that Stokes and May either knew or should have known the

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device would be unreasonably dangerous. In contrast, the plaintiffs in Bennet, a case in which
this Court found fraudulent joinder, did not develop facts or propound discovery requests against
the nondiverse defendant, nor opposed its summary judgment motion dismissing the claim.
Wright’s attempt to distinguish Adams falls short of its goal. Wright argues the plaintiffs
in Adams alleged “more specific or special knowledge of dangerousness by the retailer.” 2004
WL 718917, at *3 (internal quotations omitted). But the Adams plaintiffs did not allege
knowledge any more specific or special than what the Spencers have alleged here. Nor does
Wright’s citation to this Court’s decision in Webb v. Humana Inc., No. 3:09-CV-857-H, 2010
WL 456915 (W.D. Ky. Feb. 3, 2010) bolster its argument for fraudulent joinder. In Webb, it was
“essential” to the Court’s finding of fraudulent joinder that the plaintiff admitted he did not
engage in a “protected activity,” a required element of his retaliation claim against the
nondiverse defendant. The Court explained that had “plaintiff disputed the lack of evidence to
support his claim, remand would be necessary.” Webb, 2010 WL 456915, at *2, n.1 (citations
omitted). Removal was only appropriate in Webb because there was no dispute that facts
necessary to the claim against the nondiverse defendant were absent. Id.
The Sixth Circuit has set a high bar for defendants invoking the fraudulent joinder
exception to the requirement of complete diversity between parties in actions removed to federal
court. Wright has not shown Kentucky’s middleman statute necessarily precludes a colorable
claim against Stokes and May. Although such claims may ultimately fail on the merits, the
ultimate success of claims is not the focus of this Court’s jurisdictional analysis. Resolving any
ambiguities of fact or law in favor of the nonremoving party, the Court finds the Spencers’
claims colorable and diversity between the parties lacking. See Alexander, 13 F.3d at 949.

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Being otherwise sufficiently advised,
IT IS HEREBY ORDERED that Plaintiffs’ motion to remand the action to state court is
SUSTAINED and this case is hereby REMANDED to Jefferson Circuit Court.

February 17, 2012

cc:

Counsel of Record

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