BOWMAN et al v. RAM MEDICAL, INC. et al

Filing 64

OPINION. Signed by Judge Dennis M. Cavanaugh on 5/31/12. (jd, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
EDNA DIANE BOWMAN and AMY
McHENRY,
Plaintiffs,

Hon Dennis M Cavanaugh

OPINION

v.
Civil Action No. I O-cv-4403 (DMC) (MF)
RAM MEDICAL, INC., AMERIMED
CORP., HENRY SCHEIN, INC.,
MARATHON MEDICAL CORP.,
MEDLINE INDUSTRiES, MMS-A
MEDICAL SUPPLY CO., and Q-MED
CORP.,
Defendants,

DENNIS M. CAVANAUGH, U.S.D.J.:
This matter comes before the Court upon the motion by Defendants RAM Medical, Inc., Henry
Schein, Inc., Marathon Medical Corp., Medline Indus., MMS-A Medical Supply Co. and Q-Med Corp.
(collectively, “Defendants”) (ECF No. 34) to dismiss Plaintiff’s complaint (ECF No. 1), filed on January
31, 2011. An amended motion to dismiss was filed by Defendants on September 30, 201 1 (ECF No. 51).
Defendant C.R. Bard, Inc. filed a motion to dismiss on April 23, 2012 (ECF No. 55). Pursuant to
FED.R.CIv.P. 78, which states that the court has the authority to provide for submitting and determining
the motions on briefs without oral hearings, no oral argument was heard.
I.

BAcKGRouND

A.

Factual Background

Defendants are in the business of marketing, distributing, selling, manufacturing or causing to
be manufactured the surgical mesh at issue in this litigation. (Pl.’s Compl.

¶ 35, Aug.

26, 2010. ECF

No, 1), Defendants, at all relevant times, allegedly sold surgical mesh as sterile, Food and Drug
Administration (“FDA”) approved, indicated for surgical use and Bard-manufactured.

Ich at ¶ 36.

Plaintiffs bring this action on behalf of themselves and putatively on behalf all other similarly situated
persons “in the United States who had Defendants’ counterfeit surgical mesh surgically implanted
from September 1, 2007 until the present.” (Pl.’s Compl.

¶ 26). The Complaint includes specific

information about two Plaintiffs, Edna Diane Bowman and Amy McHenry. On December 1, 2009,
Plaintiff Edna Diane Bowman underwent a surgical procedure at Lexington Medical Center in West
Columbia, South Carolina (“LMC”), during which Defendants’ counterfeit mesh was implanted in
her body. Id. at ¶ 40. On February 23, 2010, Plaintiff Amy McHenry underwent a laparoscopic
hernia repair procedure at LMC, during which Defendants’ counterfeit mesh was implanted in her
abdomen. IcL at ¶ 37. On July 19, 2010, Plaintiff Bowman received a letter from LMC informing her
that the surgical mesh implanted during her surgery was “counterfeit surgical mesh.” j4. at ¶ 51. On
July 15, 2010, Plaintiff McHenry received a letter from LMC informing her of the same. jj at ¶ 49.
Essentially, Plaintiffs claim that a counterfeit product was used during surgery without their
consent or knowledge. However, Plaintiffs cite no physical injury or harm resulting. Plaintiffs state
their claims in five counts including: (1) violation of the New Jersey Consumer Fraud Act
(“NJCFA”), (2) unjust enrichment and common law restitution, (3) breach of express warranty, (4)
breach of implied warranty of merchantability and (5) breach of implied warranty of fitness for a
particular purpose. Plaintiffs contend the nature of the action involves false, misleading, inaccurate,
deceptive and unconscionable commercial practices. (Pl.’s Compl.

¶ 1).

Plaintiffs explain that their belief was that the surgical mesh implanted was: (1) Bard
manufactured, (2) sterile, (3) approved for use by the FDA, and (4) indicated for surgical use, (P1.’ s
2

Compi.

¶ 47).

Plaintiffs claim that in the condition in which Defendants sold their counterfeit mesh,

the mesh had zero value. Id. at ¶ 48. Further, Plaintiffs state that had they known that Defendants’
surgical mesh was not as represented, they would not have purchased, or agreed to purchase of the
surgical mesh for use during the surgical procedures.

RI.. at ¶f 54. The only ascertainable loss

Plaintiffs allege is the purchase price of a product they believed to be something else. j.çi at

¶ 55.

Plaintiffs vaguely state they “will incur [future) costs to repair the damages caused by Defendants’
unlawful activity,” but omit to further explain such “repairs.” j
Plaintiffs seek relief that includes: class certification; declarations that Defendants’ unlawful
actions violate the NJCFA, breach express and implied warranties of merchantability and implied
warranties of fitness, and unjustly enrich Defendants; orders directing disgorgement of profits derived
from unlawful practices, compelling Defendants to reimburse Plaintiffs in an amount equal to their
ascertainable loss, and treble damages pursuant to N.J.S.A. 56:8-1 et ç; restitution; and, attorney’s
fees. (Pl.’s Compl.
B.

¶ 93).

Procedural Background

This matter comes before the Court upon the motion by Defendants RAM Medical, Inc.,
Henry Schein, Inc., Marathon Medical Corp., Medline Indus., MMS-A Medical Supply Co. and

Q

Med Corp. (collectively, “Defendants”) (ECF No, 34) to dismiss Plaintiff’s complaint (ECF No, 1),
filed on January 31, 2011. An amended motion to dismiss was filed by Defendants on September 30,
2011 (ECF No. 51). This Court

sponte consolidated the Cab Action (Docket No. 11 -cv-73 81)

with this matter on April 17, 2012.

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Defendant C.R. Bard, Inc. filed a motion to dismiss on April 23, 2012 (ECF No. 55),’
Plaintiff Irene Kirk Cab then filed a motion to voluntarily dismiss her action, without prejudice, on
May 21, 2012 (ECF No. 58), which this Court granted (ECF No. 58) pursuant to FED. R. Civ. P.

41 (a)(2).

fl.

STANDARD OF REvIEw

In deciding a motion to dismiss, the District Court is “required to accept as true all factual
allegations in the complaint and draw all inferences in the facts alleged in the light most favorable to
[the Plaintiff].” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008). The Plaintiff’s
“obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[A court isi not bound to accept as true a legal
conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Instead,
when their truth is assumed, those factual allegations “must be enough to raise a right to relief above
a speculative level.” Twombly, 550 U.S. at 555. Plaintiff’s obligation “requires more than labels and
conclusions.” Id. at 545. To survive a motion to dismiss, the complaint must state a plausible claim,
not merely conclusory statements deriving from assumptions or inferences. Ashcroft v. Iqbal. 129 S.
Ct. 1937. 1950 (2009).
In reviewing a motion to dismiss, it is well-established that a court should “consider only the
allegations in the complaint, exhibits attached to the complaint, matters of public record, and
documents that form the basis of a claim.” M & M Stone Co. v. Pa., 388 Fed.Appx. 156, 162 (3d Cir.
‘Thereafter, Plaintiff Cab and C.R. Bard, Inc. stipulated to dismissal of Plaintiff’s claims
against C.R.Bard, Inc. with prejudice on May 29, 2012. Since Cab’s motion for voluntary
dismissal was granted on this day, this point is moot.
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2010).
jjJ

DISCUSSION

A.

STANDING

As an initial matter, this Court must discuss whether jurisdiction is founded in this case, given
the requirements of Article III. Defendants say Plaintiffs lack standing because they state no injury in
fact. (Def.’s Am. Mot. Dismiss 1, Sept. 30, 2011, ECF No. 51). Under Article Ill, federal judicial
power is restricted to cases and controversies. Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S.
269, 273 (2008). The case-or-controversy requirement means that Plaintiff must establish standing.
Id. Without standing, the federal court lacks subject matter jurisdiction and must dismiss the action.
Common Cause of Pa. v. Pa., 558 F.3d 249, 257 (3d Cir. 2009). Article III standing requires
adequate establishment of: 1) an injury in fact, 2) causation, and 3) redressability. Sprint Commc’ns,
554 U.S. at 273. An injury in fact involves a concrete and particularized and actual or imminent, as
opposed to conjectural or hypothetical, invasion of a legally protected interest. 1çj. (citing Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-1 (1992). The causation element of’ standing requires a
connection between the alleged injury in fact and the alleged conduct of the Defendant. Jçj. The
redressable element means that it is likely, and not merely speculative, that the injury in fact would be
remedied by the relief sought.

Ii

Defendants, in their motion to dismiss, explain how Plaintiffs fail to adequately establish the
injury in fact element of standing:
In the instant matter, [P]laintiffs summarily allege that they ‘will incur costs to repair the
damages caused by [D]efendants’ unlawful activity” [(P1.’s Compi. ¶J 55 and 64) (emphasis
omitted)] without any indication of when or why such costs might be incurred, and while
explicitly excluding any allegations of personal injury, either present or future. [(Pl.’s Compl.
Plaintiffs have not alleged present, manifest or even imminent damages, or any
¶ 10)]
.

.

.

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adverse consequences whatsoever. The allegations are purely subjective and hypothetical.
(Def.’s Am. Mot. Dismiss 7).
Plaintiffs counter that the injury in fact is the cost of buying a product that they would not have
bought, had facts that arose later been apparent at the time when they could have made a choice.
(Pl.’s Opp’n 10, Mar. 28, 2011, ECF No. 37). In the same vein, Plaintiffs argue that they received
something other than what was bargained for.
Defendants supply strong argument showing that Plaintiffs fail to adequately establish that the
instant scenario demonstrates injury in fact. On the spectrum of proof relevant to injury in fact,
Plaintiffs’ case presents more of an “abstract” notion of injury, rather than a harm that is distinct and
palpable.” See Whitmore v. Arkansas, 495 U.S. 149, 155 (1990) (citing Warth v. Seldin. 422 U.S.
490, 501;

O’Sheav. Littleton, 414 U.S. 488, 494 (1974)). Indeed, it can be assumed from the

complaint that Plaintiffs might not have even discovered that “counterfeit mesh” was implanted
without the letter from LMC describing the situation as such. Though Plaintiffs cleverly oscillate
between contract and tort theories in an attempt to show that a harm amounts to “injury in fact” as
envisioned under the standards for Article III standing, their arguments fall short of concrete proof.
Thus, this Court lacks subject matter jurisdiction over Plaintiffs claim and must dismiss. Though no
further analysis is required due to the lack of subject matter jurisdiction, this Court will engage in a
brief analysis of each Count of the Complaint.

fi.

Count I: Violation of the New Jersey Consumer Fraud Act (“NJCFA”)

Plaintiffs argue that their NJCFA claims are distinct and sustainable based on an economic
injury theory, given they paid a premium for a product based on Defendants’ misrepresentations. jç
Id. at 9; ç. also Medley v. Johnson & Johnson Consumer Cos., Inc., No. l0-cv-2291, 2011 Wi.

6

159674, at *2 n. 2 (D.N.J. Jan. 18, 201 1) (DMC). Plaintiffs will not establish the elements required
by the NJCFA based on the fact that their allegations are “founded in the principals of economic
inequities, not tort.

.

.

“(Pl.’s Opp’n 5). A claim under the NJCFA requires proof of: 1) an unlawful

practice as defined under the Act; 2) ascertainable loss of moneys or property: and 3) a causal
relationship between Defendant’s unlawful conduct and Plaintiff’s ascertainable loss. N.J.S.A. 56:819 (1998).
Plaintiffs state that Defendants’ business practice of marketing, advertising and promoting
counterfeit surgical mesh is “false, misleading, inaccurate and deceptive.” (Pl.’s Compi.

¶ 58).

However, Plaintiffs oppose Defendants’ motion to dismiss with argument that focuses almost
exclusively upon the heightened pleading requirement Defendants’ suggest, and not at all upon the
supplemental evidence that would buttress Plaintiffs otherwise conclusory claims. The NJCFA
requires an unlawful practice such as an affirmative act, a knowing omission or a regulatory violation.
Parker v. Howmedica Osteonics Corp., 2008 WL 141628, *2 (D.N.J. Jan. 14, 2008) (citation
omitted). Plaintiffs did not specifically allege any conduct that tends to amount to an “unlawful
practice” under the NJCFA.
Otherwise fatal to Plaintiffs’ claim is the failure of proof problem with the contention that
they never received the benefit of the bargain or “paid for a product that was of no value.” (Pl.’s
Compl.

¶ 63).

Such allegations do not satisfy the NJCFA’s “ascertainable loss” requirement, without

more. Though the “counterfeit surgical mesh” has a price tag, the no value” concept of it.
considering Plaintiffs do not assert any physical injury or otherwise, is abstract. Plaintiffs do not
provide specific proofs of harm to support, or upon which this Court could infer a quantifiable loss.
Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 252 (2005);

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also, Parker v. Howmedica

Osteonics Corp., 2008 WL 141628, at *3 (D.N.J. Jan. 14, 2008). Stating the expectation of a future
loss, similarly fails to meet the requirement of the CFA, because it is too speculative. jcj. This
insurmountable problem is the same as that which precluded Plaintiff from establishing injury in fact
for standing purposes. Plaintiffs fail to state a claim under the NJCFA.
Count II: Unjust Enrichment and Common Law Restitution

Plaintiffs may not sidestep Article III standing requirements by basing their claim in contract
theory. Plaintiffs allege that they would not have purchased the product if it was not sterile, Bardmanufactured, FDA approved or indicated for surgical use. As such, Plaintiffs contend Defendants
were unjustly enriched by their purchase and that they are therefore entitled to restitution. The parties
point to a matter previously before this Court, Koronthaly v. L’Oreal USA. Inc., No. 07-cv-5588.
2008 WL 2938045 (D.N.J. July 29, 2008),

374 Fed.Appx. 257 (3d Cir. 2010) (Plaintiff asserted

lipstick products contained lead in far greater amounts than permitted in candy by the FDA). The
Third Circuit reviewed a similar issue of whether a consumer could recover on the basis that she did
not know what she was getting or would not have purchased the product had she known certain
details about it. Koronthaly, 374 Fed.Appx. at 258. In a short opinion, the Court held that the
purchases were not made pursuant to a contract and therefore Plaintiff had failed to prove that that
which would have precluded her from buying the product had formed part of the basis of any bargain.

Rh at 259. Plaintiffs claim failed because she did not demonstrate a concrete injury in fact, and it
could not otherwise be sustained by artful pleading dependent upon contract theory. Rh Despite
Plaintiffs’ contentions that this case is distinguishable from Koronthaly, the fact that Plaintiffs did not
actually received the product they intended to purchase and paid for, does not affect Plaintiffs’ failing
contract claims. Rather, the Third Circuit guides that the focus is upon the harm, or in this case. the
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lack thereof rather than the buyer’s expectation.
j.,

Count III: Breach of Express Warranty

Plaintiffs fail to demonstrate specifically that they relied upon labeling or other expressions of
promise that could have formed the “basis of the bargain.” Plaintiffs frame their breach of express
warranty claim almost identically to their breach of implied warranty claims. In other words,
Plaintiffs submit no specific proof of promises that were expressed, whether they amounted to. as
Plaintiffs suggest, assertions that the product was (1) Bard-manufactured, (2) sterile, (3) FDA
approved, (4) indicated for surgical use or otherwise. Rather, Plaintiffs frame their claims upon
assumptions of promise and information that the surgical mesh used was counterfeit. Establishing an
express warranty requires more substantial proof. Indeed, the Third Circuit held that breach of an
express warranty sounds in breach of contract and, as such, Plaintiffs’ claim fails for reasons similar
to those described in the prior section. Pritchard v. Liggett & Myers Tobacco Co., 350 F.2d 479, 484
(3d Cir. 1965). This Court will not assume, even considering LMC’s concession that the mesh was
counterfeit, that these four expressions were specifically made and relied upon. Such a lack of
specificity does not comport with the nature of the theories supporting consumer reliance upon an
express warranty.

L

Counts IV and V: Breach of Implied Warranty of Merchantability and Fitness
for a Particular Purpose

Defendants convince this Court that, standing alone, the counterfeit nature of the surgical
mesh “does not demonstrate that [Plaintiffsi or others could not use the product safely.” (P1.’ s Oppn
27). Plaintiffs do not supply any supporting facts, other than the counterfeit designation of the mesh,

rendering the product valueless or unfit. Finally, Plaintiffs fail to assert any injury, and in fact

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disclaim any physical harm, resulting from the product. Plaintiffs again rely on the abstract concept
of the mesh’s “zero value” without proving specifically how the product failed. Plaintiffs further fail
to show that the product is generally or otherwise unfit for the ordinary purpose which it was used.
Rather, Plaintiffs declare that the surgical mesh continues to work for the purpose for which it was
designed, to this day, despite any misrepresentations or omissions regarding the brand or otherwise.
Plaintiffs can sustain neither a claim of breach of implied warranty of merchantability nor fitness for a
particular purpose.

11.

CoNcLusioN

For the foregoing reasons, this Court hereby grants Defendants’ motion to dismiss Plaintiffs
complaint. An appropriate order, filed on this day, follows this opinion.

.cavanaugh,U...Jc
M
s
Date:
Original:

cc:

May 31 ,2012
Clerk
Honorable Mark Falk, U.S.M.J.

All Counsel of Record
File

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