Locke et al v. Ethicon Inc et al
Filing
29
MEMORANDUM OPINION AND ORDER granting 3 Defendants' MOTION to Dismiss , denying 11 Plaintiffs' MOTION to Remand (Signed by Judge Kenneth M. Hoyt) Parties notified.(chorace)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
§
§
§
§
§
§
§
§
JUDY LOCKE, et al,
Plaintiffs,
VS.
ETHICON INC, et al,
Defendants.
CIVIL ACTION NO. 4:14-CV-2648
MEMORANDUM OPINION AND ORDER
I.
INTRODUCTION
This negligence and products liability action, originally filed in Texas state court, comes
before the Court after being removed by the defendants, Johnson & Johnson and Ethicon, Inc.
The defendants now challenge the exercise of personal jurisdiction over them in connection with
claims brought by 76 out-of-state plaintiffs joined in this matter (Docket Entry No. 3). The
plaintiffs, on the other hand, move to remand the case to state court (Docket Entry No. 11). The
parties timely filed their respective responses to these motions (Docket Entry Nos. 12, 21, 24),
which are now ripe for adjudication. After considering their submissions, the record and the
applicable law, the Court determines that the defendants’ motion to dismiss should be
GRANTED and the plaintiffs’ motion to remand should be DENIED. With the exception of
claims brought by plaintiff Judy Locke, a Texas resident injured in Texas, the plaintiffs’ claims
are DISMISSED WITHOUT PREJUDICE.
II.
FACTUAL BACKGROUND, PROCEDURAL HISTORY AND PARTIES’
CONTENTIONS
The defendants are New Jersey corporations principally located in New Jersey. They are
the alleged manufacturers of GYNECARE PROLIFT® Pelvic Floor Repair System, a
1 / 13
transvaginal mesh device implanted in women for the treatment of pelvic organ prolapse and
stress urinary incontinence. Between 2005 and 2012, seventy-three women received implants
with this device and subsequently experienced serious adverse side effects as a result of alleged
product defects.
On or about July 18, 2014, these women and four of their husbands—
collectively, residents from 14 different states—brought suit against the defendants in Texas
state court for damages arising from the defendants’ mesh implants. The plaintiffs asserted
causes of action under state law for negligence, strict liability (design defect, manufacturing
defect, and failure to warn), and loss of consortium against both defendants, with no defendant
specifically included or excluded from any claim. Of the 77 plaintiffs who filed suit, Judy Locke
is the only Texas resident and the only plaintiff to allege injuries arising from a mesh
implantation in Texas.1
The defendants timely removed the matter to this Court based on federal diversity
jurisdiction. In their application, they disputed the state court joinder of Donna Miller, a New
Jersey resident who they contend the plaintiffs improperly joined to defeat diversity.2 The
parties have since filed dueling motions challenging the jurisdiction of this Court.
The
defendants move to dismiss the claims of the out-of-state plaintiffs because those plaintiffs do
not allege injuries in Texas to trigger the specific jurisdiction of the Court. Additionally, they
claim that as New Jersey corporations headquartered in New Jersey, they are not “at home” in
Texas within the meaning of Daimler AG v. Bauman, 134 S. Ct. 746 (2014), to justify the
exercise of general jurisdiction.
1
The 76 other plaintiffs come from New Jersey, North Carolina, South Carolina, Wisconsin, Mississippi,
Massachusetts, New York, Washington, South Dakota, Arkansas, Connecticut, Maryland and Arizona.
2
The Court previously denied the defendants’ motion to sever claims brought by this plaintiff (Docket Entry No.
18).
2 / 13
The plaintiffs contend that the defendants’ position is based on a “rigid, overly-simplistic
interpretation of Daimler AG.” The defendants, they propose, are “at home” in Texas because
they carry out the following activities: they derive significant revenue from their mesh sales in
Texas; they hire and train Texas-based sales representatives and division managers that market
and sell their products in Texas; they pay a Texas-based consultant to train physicians on the use
of their products in Texas; and they maintain websites to market mesh products to all states,
including Texas. Otherwise, the plaintiffs counter the defendants’ jurisdictional challenge with a
motion to remand wherein they urge the Court to resolve the issue of subject matter jurisdiction
first. In it they claim that complete diversity is lacking because New Jersey litigants appear on
both sides of the proverbial “v.”
III.
STANDARD OF REVIEW
Preliminarily, the Court notes that the two motions present the Court with a procedural
dilemma. If the Court addresses the question of subject matter jurisdiction first, then Ms.
Miller’s New Jersey citizenship destroys diversity, thereby justifying remand for the Texas state
court to resolve the personal jurisdiction issue. Alternatively, if the Court addresses the question
of personal jurisdiction first and finds for the defendants, dismissal would simultaneously reduce
the number of plaintiffs to one and permit the Court to retain jurisdiction over the case. It is well
settled that a district court has discretion to dispose of jurisdictional questions in a manner that
promotes judicial economy. E.g., Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 586-87
(1999) (upholding district court’s decision to dispose of personal jurisdiction first); Pervasive
Software Inc. v. Lexware GMBH & Co., 688 F.3d 214, 232 (5th Cir. 2010) (same). Here,
3 / 13
because resolution of the personal jurisdiction question leads to a more efficient result without
offending principles of federalism, the Court will address personal jurisdiction first. Id.3
Rule 12(b)(2) of the Federal Rules of Civil Procedure authorizes a motion to dismiss
based on the defense that a court lacks jurisdiction over the defendant. See FED R. CIV. P.
12(b)(2). On such a motion, the plaintiff bears the burden of establishing personal jurisdiction
over a non-resident defendant. See Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 431 (5th
Cir. 2014) (citing Luv N’ Care, Ltd. v. Insta–Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006)).
Where a court rules on such a motion without a hearing, however, the court must accept, as true,
all uncontroverted allegations in the plaintiff’s complaint and resolve all factual conflicts
presented by the parties’ affidavits in the plaintiff's favor. Id. (citing Revell v. Lidov, 317 F.3d
467, 469 (5th Cir. 2002)). Thus, absent a hearing, the plaintiff need only establish a prima
facie case for personal jurisdiction. See Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990).
Nevertheless, after the plaintiff establishes its prima facie case, the burden then shifts to the nonresident defendant to demonstrate a “compelling case that the presence of some other
consideration would render jurisdiction unreasonable.” Burger King Corp. v. Rudzewicz, 471
U.S. 462, 477 (1985).
Generally, in a diversity action, a federal court may exercise personal jurisdiction over a
non-resident defendant if two conditions are met: (1) the forum state’s long-arm statute confers
personal jurisdiction over that defendant; and (2) the exercise of personal jurisdiction complies
with the due process requirements of the Fourteenth Amendment of the United States
Constitution. Revell, 317 F.3d at 469. This Court, however, need only consider whether the
exercise of jurisdiction over the non-resident defendant comports with due process “because the
3
When, as here, “removal is nonfrivolous and personal jurisdiction turns on federal constitutional issues, ‘federal
intrusion into state courts’ authority ... is minimized.’ ” Ruhrgas, 526 U.S. at 586-87 (quoting Asociacion Nacional
de Pescadores v. Dow Quimica, 988 F.2d 559, 566–67 (5th Cir. 1993)).
4 / 13
Texas Supreme Court has [long] established that the Texas long-arm statute . . . ‘reaches as far as
the federal constitutional requirements of due process will permit.’ ” Irving v. Owens–Corning
Fiberglas Corp., 864 F.2d 383, 385 (5th Cir. 1989) (quoting Kawasaki Steel Corp. v.
Middleton, 699 S.W.2d 199, 200 (Tex. 1985)); accord Revell, 317 F.3d at 469-70.
“The Due Process Clause . . . permits the exercise of personal jurisdiction over a
nonresident defendant when (1) [the] defendant has purposefully availed himself of the benefits
and protections of the forum state by establishing ‘minimum contacts’ with the forum state; and
(2) the exercise of jurisdiction over [the] defendant does not offend ‘traditional notions of fair
play and substantial justice.’ ” Alpine View Co. Ltd. v. Atlas Copco AB, 205 F.3d 208, 214-15
(5th Cir. 2000) (quoting Mink v. AAAA Dev. LLC, 190 F.3d 333, 336 (5th Cir. 1999)); accord
Daimler, 134 S. Ct. at 754; Monkton, 768 F.3d at 431. Both portions of this test must be
satisfied before the Court can exercise personal jurisdiction over the defendants. Ruston Gas
Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418 (5th Cir. 1993).
There are two categories of personal jurisdiction:
specific jurisdiction and general
jurisdiction. Daimler, 134 S. Ct. at 754; Goodyear v. Dunlop Tires Operations, S.A. v. Brown,
131 S. Ct. 2846, 2853 (2011). Specific jurisdiction over a non-resident defendant arises when
the non-resident defendant has “purposefully directed its activities at the forum state and the
litigation results from alleged injuries that arise out of or relate to those activities.” Alpine
View, 205 F.3d at 215 (quoting Burger King, 471 U.S. at 472) (internal quotation marks
omitted). General jurisdiction, on the other hand, arises when the defendant’s “continuous
corporate operations within a state [are] so substantial and of such a nature as to justify suit
against it on causes of action arising from dealings entirely distinct from those activities.”
5 / 13
Daimler, 134 S. Ct. at 754 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)); see
Monkton, 768 F.3d at 432.
“For an individual, the paradigm forum for the exercise of general jurisdiction is the
individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is
fairly regarded as at home”—typically, “the place of incorporation and principal place of
business.” Daimler, 134 S. Ct. at 760 (quoting Goodyear, 131 S. Ct. at 2853-54); Monkton, 768
F.3d at 432. A corporation is not “at home” in “every state in which it ‘engages in a substantial,
continuous, and systematic course of business.’ ” Daimler, 134 S. Ct. at 760-61. “Otherwise, ‘at
home’ would be synonymous with ‘doing business’ tests” implicating the exercise of specific
jurisdiction. Id. at 762 n.20. The test for determining general jurisdiction over a foreign
corporation is “whether that corporation’s affiliations with the [forum] State are so ‘continuous
and systematic’ as to render [it] essentially at home in the . . . State.” Id. at 761. In other words,
the test is “not [simply] whether [the] corporation’s in-forum contacts can be said to be in some
sense ‘continuous and systematic.” Id. It is the exceptional case that “a corporation’s operations
in a forum other than its formal place of incorporation or principal place of business [are] so
substantial and of such a nature as to render the corporation at home in that State.” Id. at 761
n.19 (citing Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952)). Based on these
principles, the Fifth Circuit has observed that “[i]t is . . . incredibly difficult to establish general
jurisdiction in a forum other than the place of incorporation or principal place of business.”
Monkton, 768 F.3d at 432.
IV.
ANALYSIS AND DISCUSSION
The exercise of general jurisdiction over the defendants turns on the sufficiency of their
affiliations with Texas. Here, neither defendant’s affiliations with Texas are insufficient because
6 / 13
neither is incorporated in Texas nor does either defendant maintain its principal corporate office
there. There is no dispute that the defendants are New Jersey corporations who are physically
headquartered in New Jersey. The defendants are therefore “at home” in New Jersey and not in
Texas. Daimler, 134 S. Ct. at 760; Monkton, 768 F.3d at 432.
To support their claim of general jurisdiction, the plaintiffs point to several operations
carried on by the defendants to make them “at home” in Texas.
They first cite to the
$18,697,674 the companies earned from mesh product sales in Texas between 2004 and 2013,
compared to the $10,464,887 earned from New Jersey sales during the same period. They
contend that the substantial revenue earned from Texas sales render the defendants amenable to
suit there. The argument resembles the very stream-of-commerce theory of general jurisdiction
rejected by the Supreme Court in Goodyear and Daimler. In both cases the argument was made
that the exercise of general jurisdiction is proper in every state where a defendant engages in a
substantial, continuous and systematic course of business.
In Goodyear, The Good Year Tire and Rubber Company (“Goodyear”), an Ohio
corporation, and several of its foreign subsidiaries were named as defendants in a wrongful-death
lawsuit. The suit arose from a bus accident outside Paris that killed two boys from North
Carolina. As administrators of the boys’ estates, the boys’ parents sued the defendants in North
Carolina state court, where they predicated their claims on the allegation that the bus’s tire was
defectively manufactured. Although a small percentage of tires manufactured by Goodyear’s
subsidiaries were distributed in North Carolina, the subsidiaries otherwise lacked any affiliation
with North Carolina.
The North Carolina Court of Appeals held the subsidiaries amenable to
suit in North Carolina on the grounds that the defendants “placed their tires ‘in the stream of
interstate commerce without any limitation on the extent to which those tires could be sold in
7 / 13
North Carolina.’ ” Goodyear, 131 S. Ct. at 2852 (quoting Brown v. Meter, 681 S.E.2d 382, 394
(N.C. Ct. App. 2009)).
The Supreme Court reversed the North Carolina court, finding the court’s stream-ofcommerce analysis “elided the essential difference between case-specific and all-purpose
(general) jurisdiction.” Id. at 2855. The Court explained that while the flow of the defendants’
tires into the forum “may bolster an affiliation germane to specific jurisdiction,” such contact
does not “warrant a determination that . . . the forum has general jurisdiction over a defendant.”
Id. The Court anchored this rationale in its “canonical” holding in Int’l Shoe: “A corporation’s
‘continuous activity of some sorts within a state’ . . . ‘is not enough to support the demand that
the corporation be amenable to suits unrelated to that activity.’ ” Id. at 2856 (quoting Int’l Shoe,
326 U.S. at 318).
Similarly, in Daimler, the Court was unwilling to sustain the exercise of general
jurisdiction where a foreign corporation’s in-forum contacts may be “in some sense ‘continuous
and systematic.’ ” Daimler, 134 S. Ct. at 761 (quoting Goodyear, 131 S. Ct. at 2851).
In that
case, the foreign plaintiffs sought damages from DaimlerChrysler Aktiengesellschaft
(“Daimler”), a German public stock company headquartered in Stuttgart, for alleged humanrights violations in Argentina. Jurisdiction over the lawsuit was predicated on the California
contacts of Daimler’s subsidiary, a Delaware corporation headquartered in New Jersey with
multiple California-based facilities, including a regional office, a Vehicle Preparation Center and
a Classic Center. The subsidiary distributed Daimler’s vehicles to independent dealerships
throughout the United States, including California. The subsidiary’s California sales accounted
for 2.4% of Daimler’s worldwide Mercedes-Benz sales.
8 / 13
Notwithstanding these arguably significant affiliations with California, the Court declined
the invitation to hold Daimler subject to suit in California because neither it nor its subsidiary
was incorporated in California, nor did either entity have its principal business office there. Id.
at 752, 760-62. The Court expressed concern that “[i]f Daimler’s California activities sufficed to
allow adjudication of this Argentina-rooted case in California, the same global reach would
presumably be available in every other State in which [its subsidiary’s] sales are sizable.” Id. at
761. The Court rejected “[s]uch exorbitant exercises of all-purpose jurisdiction.” Id. at 761-62.
The plaintiffs’ substantial revenue argument cannot withstand the holding in Daimler.
Moreover, they have not substantiated their claim that the defendants’ Texas sales, based on any
meaningful comparisons, are so sizable to render them at home in Texas. Cf. id. at 761 n.19
(“We do not foreclose the possibility that in an exceptional case, a corporation’s operations in a
forum other than its formal place of incorporation or principal place of business may be so
substantial and of such a nature as to render the corporation at home in that State.” (internal
citation omitted)). Fatally, the plaintiffs limit their product sales analysis to Texas and New
Jersey without “apprais[ing] [the defendants’] activities in their entirety, nationwide and
worldwide.” Id. at 762 n.20. On such a meager record, this case presents no occasion to
recognize an exception to Goodyear’s exemplar bases for general jurisdiction. See id. at 761
n.19.
Next, the plaintiffs rely on the defendants’ use of Texas-based sales representatives,
division managers, and a consultant to train physicians on how to use their products and to
market and sell their products in Texas. In Daimler, the Supreme Court had the opportunity to
create an exception based on the service and sales support to customers provided by the
9 / 13
defendant’s subsidiary throughout the forum State. The Court created no such exception, and
neither does this Court under the facts of this case.
Finally, the plaintiffs point to the defendants’ contact with Texas through websites
designed to market their mesh products nationwide. In Monkton, the Fifth Circuit addressed a
similar claim brought by a third-party complaint, a Texas resident, against third-party defendant
Butterfield Bank (Cayman) Limited (“Butterfield”), a Cayman-organized bank located on the
island of Grand Cayman. The in-state third-party plaintiff sought to establish general jurisdiction
over Butterfield in a Texas federal district court based on the bank’s website contacts with Texas,
among other contacts. The Fifth Circuit acknowledged the its historical reliance on the sliding
scale test set forth in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa.
1997), to determine “whether the operation of an internet site can support the minimum contacts
necessary for the exercise of personal jurisdiction.” Monkton, 768 F.3d at 432; Revell, 317 F.3d
at 470.4 Under that scale, the court has explained,
[a] ‘passive’ website, one that merely allows the owner to post information on the
internet, is at one end of the scale. It will not be sufficient to establish personal
jurisdiction. At the other end are sites whose owners engage in repeated online
contacts with forum residents over the internet, and in these cases personal
jurisdiction may be proper. In between are those sites with some interactive
elements, through which a site allows for bilateral information exchange with its
visitors. Here, we find more familiar terrain, requiring that we examine the extent
of the interactivity and nature of the forum contacts.
Revell, 317 F.3d at 470 (footnotes omitted). The court further acknowledged its pre-Daimler
cautionary observation that even this framework
[i]s not well adapted to the general jurisdiction inquiry, because even repeated
contacts with forum residents by a foreign defendant may not constitute the
requisite substantial continuous and systematic contacts required for a finding of
4
The court in Zippo held that where, on an interactive website, “a user can exchange information with the host
computer[,] . . . the exercise of jurisdiction is determined by examining the level of interactivity and commercial
nature of the exchange of information that occurs on the Web site.” Zippo, 952 F. Supp. at 1124.
10 / 13
general jurisdiction—in other words, while it may be doing business with Texas,
it is not doing business in Texas.
Monkton, 768 F.3d at 432 (quoting Revell, 317 F.3d at 471).
Based on this observation, the Fifth Circuit found that Butterfield’s website “at most”
demonstrated that Butterfield conducted business with Texas, not in Texas. Id. The court made
this determination based on the parties’ submissions and not on an independent review of
Butterfield’s website. Id. at 431-32 & n.1. In any event, the court held, the exercise of general
jurisdiction was not proper because Butterfield’s status as a foreign corporation did not meet
Daimler’s paradigm test: it was neither incorporated in Texas nor was its principal office located
there. Id. at 432. Ultimately, the court was unable to identify any pleaded facts to show that
Butterfield’s contacts with Texas were so continuous and systematic to render it “at home” in
Texas. Id.
Here, like Monkton, the plaintiffs have not established personal jurisdiction over the
defendants by pleading cognizable facts about the companies’ incorporation or business
headquarters, nor have they substantiated their claim that the defendants’ websites constitute an
exception to the general jurisdiction paradigms.
In an attempt to show the defendants’
nationwide presence, the plaintiffs cite a two-page document that they attached as an exhibit to
their dismissal opposition and appears to be a page from Ethicon, Inc.’s website. The page is
entitled “gynecology solutions” and predominately advertises the defendants’ GYNECARE
TVT™ (“transvaginal tape”) product in the form of two charts: one chart lists the benefits of the
defendants’ device and the other compares the textile properties of the device with those of other
mesh brands. The second page of the printout states that the contents of the site are “published
for . . . healthcare professionals only,” without reference to any targeted State or region.
11 / 13
Other than these marketing features, the webpage printout does not, on its face, appear to
possess the kind of repeated online contacts with Texas residents to establish jurisdiction there,
nor does it contain any “interactive elements” inferable by the Court as bases for “bilateral
information exchange with [the defendants’ website] visitors.” Revell, 317 F.3d at 470. Without
this showing, the plaintiffs’ assertion of jurisdiction cannot meet Zippo’s sliding scale.
Alternatively and irrespective of the sliding scale, as noted earlier the question of general
jurisdiction is easily resolved under Daimler’s limiting and “[s]imple jurisdictional rule[]” that,
barring exceptional circumstances, a corporate defendant subjects itself to suit only in the State
of incorporation and where its principal business office is located. Daimler, 134 S. Ct. at 760
(quoting Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010)).
On the record before the Court, Texas is simply not a forum in which it would be
permissible to subject the defendants to general jurisdiction. The defendants’ operations in
Texas are not so substantial and of such nature as to render them at home in the State. Because
the out-of-state plaintiffs cannot meet their burden of establishing personal jurisdiction over
these New Jersey defendants, dismissal of their claims is proper.
The claims that remain are those brought by Ms. Locke, a Texas resident and the sole
plaintiff claiming injury in Texas. With respect to these claims, the defendants concede that
specific jurisdiction exists to render them amendable to suit in Texas. They also concede that the
Court has subject matter jurisdiction over Ms. Locke’s claims on the basis of federal diversity.
Because the Court has jurisdiction over the remaining parties and claims, the plaintiffs’ motion
to remand is DENIED.
12 / 13
V.
CONCLUSION
Based on the foregoing analysis and discussion, the defendants’ motion to dismiss is
GRANTED and the plaintiffs’ motion to remand is DENIED.
It is so ORDERED.
SIGNED on this 10th day of November, 2014.
___________________________________
Kenneth M. Hoyt
United States District Judge
13 / 13
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?