Carr et al v. DJO Incorporated et al

Filing 27

ORDER AND RECOMMENDATION Based upon the foregoing, the Court ORDERS as follows:1) Plaintiffs Motion for Leave to File their First Amended Complaint (doc. 23 ) is GRANTED. Additionally, the Court RECOMMENDS as follows: 1) Defendant DJO LLCs motion to dismiss Plaintiffs original complaint for failure to state a claim (doc. 7 ) be DENIED AS MOOT; 2) Defendant DJO Globals motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) (doc. 8 ) be DENIED WITHOUT PREJUDICE ; 3) The parties be given until October 15, 2012 to conduct discovery on the issue of personal jurisdiction regarding DJO Global; and 4) Following discovery, Defendant DJO Global be given until November 1, 2012 to file a renewed motion to dismiss if necessary.Signed by Magistrate Judge Michael J Newman on 08/08/2012. (kf)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON

FAITH CARR, et al.

Case No. 3:12-cv-42

:

Plaintiffs,

:

District Judge Walter H. Rice
Magistrate Judge Michael J. Newman

v.

:

DJO INCORPORATED, et al.

:

Defendants.
ORDER, AND REPORT AND RECOMMENDATION1

I. INTRODUCTION
Plaintiffs Faith Carr and Bruce Carr, husband and wife, bring this tort action against DJO
Global, Inc., formerly known as DJO Incorporated (hereinafter “DJO Global”), and DJO, LLC
(hereinafter “DJO LLC”) (collectively “Defendants”). Diversity jurisdiction lies with this Court
pursuant to 28 U.S.C. § 1332(a). This matter is now before the Court for consideration of three
motions: (1) DJO LLC’s motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P.
9(b) and 12(b)(6) (doc. 7); (2) Plaintiffs’ motion for leave to file their First Amended Original
Complaint (doc. 23); and (3) DJO Global’s motion to dismiss for lack of personal jurisdiction
pursuant to Fed. R. Civ. P. 12(b)(2) (doc. 8). These motions have been fully briefed and are now
ripe for disposition.

1
Attached hereto is NOTICE to the parties regarding objections to this Report and
Recommendation. 

II. LAW & ANALYSIS
The genesis of this action is an injury that Faith Carr allegedly sustained as a result of her
use of a Don Joy Iceman -- a continuous cold therapy device purportedly designed,
manufactured, and distributed by Defendants -- following her knee surgery. (Doc. 3).
Together with her husband, Mrs. Carr originally filed a complaint against Defendants in
the Court of Common Pleas for Hamilton County, Ohio on December 30, 2011. DJO Global and
DJO LLC subsequently removed the case to this Court.2 On February 9, 2012, DJO LLC filed a
motion to dismiss, claiming that Plaintiffs failed to state a claim upon which relief could be
granted. (Doc. 7). On the same day, DJO Global filed a motion to dismiss challenging this
Court’s personal jurisdiction over it, pursuant to Fed. R. Civ. P. 12(b)(2). (Doc. 8).3 Following
briefing on both of Defendants’ motions, on May 2, 2012, Plaintiffs filed a motion for leave to
amend their complaint.4 (Doc. 23). On May 14, 2012, DJO LLC and DJO Global filed separate
responsive briefs in opposition to Plaintiff’s motion for leave to amend. (Docs 25, 26).
For the reasons that follow, Plaintiffs’ motion for leave to file their First Amended
Original Complaint (doc. 23) is granted, and the Court recommends that DJO LLC’s motion to
dismiss Plaintiffs’ original complaint (doc. 7) be denied as moot.

Furthermore, the Court

recommends that DJO Global’s motion to dismiss for lack of personal jurisdiction (doc. 8) be
denied, and Plaintiffs be permitted to conduct limited discovery as to DJO Global to investigate
jurisdictional facts.

2
This case first appeared on the Court’s docket on February 2, 2012. (Docs. 1-5).
3
Both DJO LLC and DJO Global maintain that Plaintiffs’ complaint should be dismissed
with prejudice.
4
Plaintiff’s motion for leave to amend was filed before the deadline to amend pleadings
set by the Scheduling Order the in this case. (See doc. 15). 
2 

A. Plaintiffs’ Motion for Leave to Amend and DJO LLC’s Motion to Dismiss
Rule 15 provides, “a party may amend its pleadings with the opposing party's written
consent or the court’s leave. The court should freely give leave when justice so requires.” Fed.
R. Civ. P. 15(a)(2). The decision to grant or deny leave to amend lies within the discretion of the
district court. Foman v. Davis, 371 U.S. 178, 182 (1962). “A court need not grant leave to
amend, however, where amendment would be ‘futile.’” Miller v. Calhoun Cty., 408 F.3d 803,
817 (6th Cir. 2005) (quoting Foman, 371 U.S. at 182)). Courts find futility “when the proposed
amendment would not permit the complaint to survive a motion to dismiss.” Id. Thus, courts
may deny leave to amend when a proposed amendment fails to “state a claim upon which relief
can be granted.” See Fed. R. Civ. P. 12(b)(6).
Although the grounds discussed above may warrant denial of leave to amend in certain
circumstances, courts interpret Rule 15(a) “as setting forth a ‘liberal policy of permitting
amendments to ensure the determination of claims on their merits.’” Oleson v. United States, 27
F.App’x 566, 569 (6th Cir. 2001) (citations omitted). Here, with the liberal policy of Rule 15(a)
in mind, the Court GRANTS Plaintiffs’ motion for leave to amend their complaint (doc. 23).
DJO LLC does not raise a “futility” argument, but instead argues in its responsive brief
that it and DJO Global would be subject to prejudice as a result of Plaintiffs’ motion to amend.
(Doc. 25). However, Defendants themselves acknowledge that they have engaged in virtually no
discovery thus far (id. at PageID 288; doc. 26 at PageID 295), and the Court notes that the
discovery cut-off is May 14, 2013 – more than eight months away (doc. 15). Therefore, the
Court finds Defendants’ allegations of prejudice to be without merit.5

5
The Court notes that DJO LLC’s reliance on Brown v. FirstEnergy Corp., 159 Ohio
App. 3d 696, 700 (Ct. App. 2005), is misplaced. In Brown, the Ohio Court of Appeals found that
the plaintiff’s attempt to amend his complaint was not “timely” nearly three years after filing his
3 

Furthermore, in light of the Court’s Order granting Plaintiffs leave to amend their
complaint, DJO LLC’s motion to dismiss Plaintiffs’ original complaint for failure to state a claim
(doc. 7) should be DENIED AS MOOT -- since it is addressed to a pleading which is no longer
operative -- AND WITHOUT PREJUDICE TO REFILE.
B. DJO Global’s Motion To Dismiss For Lack of Personal Jurisdiction
Pursuant to Fed. R. Civ. P. 12(b)(2), DJO Global filed a motion to dismiss for lack of
personal jurisdiction, arguing that it is not subject to the jurisdiction of this Court because it has
not purposefully availed itself of the privilege of doing business in the State of Ohio. (Doc. 8).
In support of its motion, DJO Global attached an unnotarized, two-page affidavit of
Tighe Reardon (“Reardon”), DJO LLC’s Vice President of Corporate Tax. (Doc. 8-1, PageID
94-95). Reardon avers that DJO Global is a Delaware corporation with its principal place of
business located in California, and that DJO LLC is an indirect, wholly owned subsidiary of DJO
Global. (Id.; PageID 96, 98). He also avers that DJO Global is a holding company that
“transacts no business, maintains no office, has no employees, pays no taxes, and does no
advertising in Ohio.” (Id., PageID 94-95). Furthermore, Reardon asserts that DJO does not own
any real estate in Ohio, manufacture any products at issue in this case that are sold in Ohio, and
has no agent in Ohio for conducting business. (Id). He acknowledges that DJO Global was
known as DJO Incorporated until it formally changed its name on February 10, 2011. (Id.).
In response, Plaintiffs maintain that they have not yet had the opportunity to examine the
relationship between DJO Global and DJO LLC; nor have they had the opportunity to test the
assertions raised in DJO Global’s motion or Reardon’s affidavit. (Doc. 16). Plaintiffs request a
period of limited discovery on the issue of this Court’s personal jurisdiction over DJO Global.

original complaint, and more than two years after the trial court had dismissed one of two causes
of action on summary judgment.
4 

(Id.). Additionally, Plaintiffs request that Reardon’s affidavit be stricken because it is based on
information “gained through corporate sources,” not his own personal knowledge. (Id.; cf. doc.
8-1, PageID 94).
When faced with a personal jurisdiction issue, a federal district court has three procedural
alternatives: (1) “[it] may determine the motion on the basis of affidavits alone;” (2) “it may
permit discovery in aid of the motion;” or (3) “it may conduct an evidentiary hearing on the
merits of the motion.” Dean v. Motel 6 Operating L.P., 134 F.3d 1269, 1272 (6th Cir. 1998)
(quoting Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212, 1214 (6th Cir. 1989)). The
Court’s “decision whether to grant discovery or an evidentiary hearing before ruling on a
12(b)(2) motion is discretionary.” Burnshire Dev., LLC v. Cliffs Reduced Iron Corp., 198 F.
App’x 425, 434 (6th Cir. 2006) (citing Intera Corp. v. Henderson, 428 F.3d 605, 614 n. 7 (6th
Cir. 2005)).

“Although the plaintiff bears the burden of demonstrating facts that support

personal jurisdiction, courts are to assist the plaintiff by allowing jurisdictional discovery unless
the plaintiff’s claim is ‘clearly frivolous.’” Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446,
456 (3d Cir. 2003) (citation omitted). See also Drexel Chem. Co. v. SGS Depauw & Stokoe, No.
94-5564,  1995 U.S. App. LEXIS 15760, at *2 (6th Cir. June 22, 1995) (When “the written
submissions raise[] disputed issues of fact with regard to cross-corporate entanglements…the
district court should [allow] further discovery or [hold] an evidentiary hearing.”); Tech. & Servs.,
Inc. v. TACS Automation, LLC, No. 2:09-cv-11132010, U.S. Dist. LEXIS 81496, at *3 (S.D.
Ohio June 29, 2010).
Allowing Plaintiffs a period of time in which to conduct limited discovery -- related to
whether the Court has personal jurisdiction over DJO Global -- is warranted in the present case.
Although DJO Global lists all of the contacts it does not have with the forum state, DJO LLC --

5 

the company that manufactures, sells, and distributes the Don Joy Iceman -- is a wholly owned
subsidiary of DJO Global. The Sixth Circuit has long held that a wholly owned subsidiary may
subject its parent company to minimum contacts with the forum state under certain
circumstances. Velandra v. Regie Nationale Des Usines Renault, 336 F.2d 292, 296 (6th Cir.
1964). Additional facts regarding the relationship between DJO Global and DJO LLC, as well as
the contacts by DJO Global with the forum state, are needed to determine whether the minimum
contacts requirement is satisfied.
Accordingly, Plaintiff’s request for limited discovery on the matter of jurisdiction is well
taken. The Court RECOMMENDS that DJO Global’s motion to dismiss for lack of personal
jurisdiction (doc. 8) be DENIED WITHOUT PREJUDICE TO REFILE, and Plaintiffs be
granted until October 15, 2012 to engage in limited discovery on the sole issue of personal
jurisdiction over DJO Global.
III. ORDER AND RECOMMENDATION
Based upon the foregoing, the Court ORDERS as follows:
1) Plaintiffs’ Motion for Leave to File their First Amended Complaint (doc. 23)
is GRANTED.
Additionally, the Court RECOMMENDS as follows:
1) Defendant DJO LLC’s motion to dismiss Plaintiffs’ original complaint for
failure to state a claim (doc. 7) be DENIED AS MOOT;
2) Defendant DJO Global’s motion to dismiss for lack of personal jurisdiction
pursuant to Fed. R. Civ. P. 12(b)(2) (doc. 8) be DENIED WITHOUT
PREJUDICE;
3) The parties be given until October 15, 2012 to conduct discovery on the issue
of personal jurisdiction regarding DJO Global; and
4) Following discovery, Defendant DJO Global be given until November 1,
2012 to file a renewed motion to dismiss if necessary.

6 

s/ Michael J. Newman
United States Magistrate Judge

August 8, 2012

NOTICE REGARDING OBJECTIONS
Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written
objections to the proposed findings and recommendations within fourteen days after being served
with this Report and Recommendation. Pursuant to Fed. R. Civ. P. 6(d), this period is
automatically extended to seventeen days because this Report is being served by one of the
methods of service listed in Fed. R. Civ. P. 5(b)(2)(B), (C), or (D) and may be extended further
by the Court on timely motion for an extension. Such objections shall specify the portions of the
Report & Recommendation objected to and shall be accompanied by a memorandum in support
of the objections. If the Report & Recommendation is based in whole or in part upon matters
occurring of record at an oral hearing, the objecting party shall promptly arrange for the
transcription of the record, or such portions of it as all parties may agree upon or the Magistrate
Judge deems sufficient, unless the assigned District Judge otherwise directs. A party may
respond to another party’s objections within fourteen days after being served with a copy thereof.
Failure to make objections in accordance with this procedure may forfeit rights on appeal. See
United States v. Walters, 638 F.2d 947 (6th Cir. 1981); Thomas v. Arn, 474 U.S. 140 (1985).

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