Metx, LLC et al v. Wal-Mart Stores Texas, LLC et al

Filing 68

MEMORANDUM ORDER ADOPTING 61 REPORT AND RECOMMENDATIONS for 14 Motion to Dismiss, filed by Wal-Mart Stores Texas, LLC, Wal-Mart Stores, Inc. The Motion to Dismiss 14 is hereby granted in part and denied in part. Signed by Judge Michael H. Schneider on 7/29/14. (bas, )

IN THE UNITED STATES DISTRICT COURT
OF THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
METX, LLC, ET AL.
Plaintiffs

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V.
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WAL-MART STORES TEXAS, LLC, ET§
AL.
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No. 2:13CV547

MEMORANDUM ORDER
The above-entitled and numbered civil action was heretofore referred to United States
Magistrate Judge Caroline M. Craven pursuant to 28 U.S.C. § 636. The Report of the Magistrate
Judge which contains her proposed findings of fact and recommendations for the disposition of such
action has been presented for consideration. Plaintiffs METX, LLC, Saleem Assaf, Roger Garcia,
Scott Simpson, Debby Taylor, and Larry Taylor, on behalf of themselves and all other members of
the proposed class (“Plaintiffs”) filed objections to the June 13, 2014 Report and Recommendation
pursuant to 28 U.S.C. § 636(b)(1)(C). The Court conducts a de novo review of the magistrate
judge’s findings and conclusions.
I. BACKGROUND
Plaintiffs are licensed fitters and/or dispensers of hearing aid devices in the State of Texas.
Plaintiffs have brought suit, on behalf of themselves and all other members of the class, against the
Wal-Mart Defendants (“Defendants”) for fitting and/or dispensing hearing instruments in their Texas
stores in violation of Texas Occupation Code Chapter 402 and the Texas Administrative Code 22
§ 141.16 (the “Texas Hearing Aid Statute”). See Am. Compl., ¶¶ 21-27.
On August 27, 2013, Defendants filed a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6), primarily asserting federal law preempts the Texas Hearing Aid Statute.

According to Defendants, the Food, Drug, and Cosmetic Act (“FDCA”) and related Food and Drug
Administration (“FDA”) regulations expressly preempt state law requirements regarding medical
devices that are “different from, or in addition to” federal requirements. See 21 U.S.C. § 360k(a).
Defendants argue the Texas Hearing Aid Statue imposes such additional state law requirements and
is thus preempted. Defendants further asserted Plaintiffs’ claims for tortious interference and unjust
enrichment should also be dismissed pursuant to FED. R. CIV. P. 12(b)(6).
In the June 13, 2014 Report and Recommendation, the magistrate judge recommended
Defendants’ motion to dismiss be granted in part and denied in part. Specifically, the magistrate
judge recommended Plaintiffs’ claims that Defendants violated the Texas Hearing Aid Statute be
dismissed with prejudice, finding the hearing aid provisions contained within the Texas
Administrative Code are expressly preempted by federal law. The Court further recommended
Plaintiffs be ordered to amend their complaint with more details as to their tortious interference and
unjust enrichment based on fraud claims.
II. OBJECTIONS TO REPORT AND RECOMMENDATION
Plaintiffs filed objections to magistrate judge’s report, asserting she erred as follows: (1)
determining that Texas Administrative Code § 141.16(a)(2) is preempted by federal law; (2)
engaging in statutory construction and assuming restrictions that are not contained in the Texas
Administrative Code; (3) assuming that even though not expressly required by the Texas Hearing
Aid Statute, an audiological examination is required under the Texas Statute; and (4) relying on a
2007 Texas AG opinion which was based on a prior version of the Texas Administrative Code that
did not contain a waiver provision. According to Plaintiffs, Texas’ regulations are “substantially
identical” to the federal regulations with regard to the sale of hearing aid devices and are not

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preempted. See 21 CFR § 808.1(d)(2).
III. DE NOVO REVIEW
The magistrate judge’s determination that the Texas regulations are preempted was based on
three independent grounds, any one of which demonstrates the Texas statutory provisions are
“different from and in addition to” the federal counterparts relating to the “safety and effectiveness”
of hearing aids. First, the Texas regulations require a consumer to seek out a physician “duly licensed
by the Texas Medical Board who specializes in diseases of the ear” to perform a medical evaluation,
rather than merely a “licensed physician” as mandated by federal law. (Report and Recommendation
at pg. 16). Second, the Texas medical evaluation waiver provision, which is made applicable to
licensed “fitters and dispensers,” is materially different from its federal counterpart, which permits
sales by a “hearing aid dispenser” who is not required to be licensed. Id. at pgs. 17-18. Third, the
Texas licensure provisions that a “fitter and dispenser” must perform “fitting services” in the form
of a non-waivable “audiological evaluation” are different from federal regulations that do not require
any audiological exam. Id. at pg. 15.
The arguments raised by Plaintiffs in their objections were carefully considered and rejected
by the magistrate judge in her 23-page Report and Recommendation. For the reasons outlined
therein, the Court also finds the Texas regulations are not substantially identical to the federal
regulations because they impose requirements applicable to a medical device that are different from
and in addition to the federal requirements.
Plaintiffs’ objections are without merit. The Court is of the opinion that the findings and
conclusions of the magistrate judge are correct. Therefore, the Court hereby adopts the Report of
the United States Magistrate Judge as the findings and conclusions of this Court. Accordingly, it is

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hereby
ORDERED that Defendants’ Motion to Dismiss Pursuant to Federal Rule of Civil Procedure
12(b)(6)(Dkt. No. 14) is hereby GRANTED IN PART and DENIED IN PART. It is further
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ORDERED that Plaintiffs’ claims that Defendants violated the Texas Hearing Aid Statute

are dismissed with prejudice. It is further
ORDERED that Plaintiffs shall amend their complaint, within twenty days from the date of
entry of this Order, with more details as to their tortious interference and unjust enrichment based
on fraud claims. Plaintiffs shall also delete any preempted claims.
It is SO ORDERED.
SIGNED this 29th day of July, 2014.

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MICHAEL H. SCHNEIDER
UNITED STATES DISTRICT JUDGE

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