Jorgensen v. Wright Medical Group et al

Filing 26

MEMORANDUM DECISION granting 9 Motion to Dismiss Party. Wright Medical Group (a Delaware corporation) terminated. Signed by Judge Ted Stewart on 11/29/18. (jlw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
DIANE JORGENSEN,
MEMORANDUM DECISION AND
ORDER GRANTING DEFENDANT
WRIGHT MEDICAL GROUP’S MOTION
TO DISMISS

Plaintiff,
v.
WRIGHT MEDICAL GROUP, INC., a
Delaware corporation, and WRIGHT
MEDICAL TECHNOLOGY, INC., a
Delaware corporation,

Case No. 2:18-CV-366 TS
District Judge Stewart

Defendants.

This matter is before the Court on Defendant Wright Medical Group, Inc.’s Motion to
Dismiss Plaintiff’s Complaint for Lack of Personal Jurisdiction. For the foregoing reasons, the
Court grants Defendant’s Motion to Dismiss.
I.

BACKGROUND

Plaintiff Diane Jorgenson filed her Complaint against Defendants Wright Medical Group,
Inc. (“WMG”) and Wright Medical Technology, Inc. (“WMT”) on May 4, 2018. WMT is a
wholly owned subsidiary of WMG, and both are Delaware corporations with their principal
places of business in Tennessee. Plaintiff’s Complaint concerns injuries from the Wright Hip
System used in her right and left hip replacement surgeries on June 1, 2009, and January 25,
2010, respectively. According to Plaintiff, this Court has specific jurisdiction over Defendants in
this case because both Defendants “conducted regular and sustained business in Utah by selling
and distributing its products in Utah, and engaged in substantial commerce and business activity

1

in the County of Salt Lake.” 1 Plaintiff also alleges that “Defendants, either directly or through
their agents, apparent agents, servants or employees, sold, distributed and marketed the defective
Wright Hip System in the State of Utah.” 2
On July 25, 2018, Defendant WMG filed its Motion to Dismiss, alleging that “WMG was
merely a holding company with no involvement in the design, development, manufacture,
marketing, or sale of the hip implant components at issue. . . . Simply put, WMG is the parent
company of WMT and is WMT’s sole shareholder.” 3 WMG admits that Defendant WMT “did
design, manufacture, and sell hip implants like that alleged to have been implanted in Plaintiff,”
but states “WMG did not.” 4
II.

DISCUSSION

“To obtain personal jurisdiction over a nonresident defendant . . . a plaintiff must show
that jurisdiction is legitimate under the laws of the forum state and that the exercise of
jurisdiction does not offend the due process clause of the Fourteenth Amendment.” 5 Utah’s longarm statute provides “jurisdiction over nonresident defendants to the fullest extent permitted by
the due process clause of the Fourteenth Amendment,” 6 so only the due process analysis is
necessary to determine whether this Court has jurisdiction over WMG in this case.

1

Docket No. 2 ¶¶ 8–9.

2

Id. ¶ 13.

3

Docket No. 9, at 3 (citations omitted).

4

Id. at 4 (citations omitted).

5

Soma Med. Int’l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir. 1999)
(quoting Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1074 (10th Cir. 1995)).
6

Utah Code Ann. § 78B-3-201(3).

2

Here, Defendant WMG brought a motion to dismiss for lack of personal jurisdiction
under Fed. R. Civ. P. 12(b)(2). “The Plaintiff bears the burden of establishing personal
jurisdiction over the defendant,” 7 and when a district court rules on this kind of motion without
an evidentiary hearing, “the plaintiff need only make a prima facie showing of personal
jurisdiction to defeat the motion.” 8 In these situations, “the allegations in the complaint must be
taken as true to the extent they are uncontroverted by the defendant’s affidavits.” 9 “However,
only the well pled facts of plaintiff’s complaint, as distinguished from mere conclusory
allegations, must be accepted as true.” 10
The Supreme Court has established two main frameworks for establishing personal
jurisdiction under the due process clause of the Fourteenth Amendment, including general and
specific jurisdiction. 11 Plaintiff relies on specific jurisdiction to establish jurisdiction over
WMG, 12 so this case only requires a specific jurisdiction analysis. There is specific jurisdiction
when A) “the plaintiff has shown that the defendant has minimum contacts with the forum
state,” 13 or B) there may be jurisdiction over WMG through the alter ego theory.
7

OMI Holdings v. Royal Ins. Co. of Can., 149 F.3d 1086, 1091 (10th Cir. 1998) (quoting
Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1417 (10th Cir. 1998)).
8

Id. (citation omitted).

9

Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995) (internal quotation marks
and citations omitted).
10

Id. (citation omitted).

11

See Bristol-Myers Squibb Co. v. Super. Ct. of Cal., --- U.S. ---, 137 S. Ct. 1773, 1779–
80 (2017).
12

See Docket No. 13, at 3 (“Plaintiff pleaded specific personal jurisdiction against WMG
in her complaint.”).
13

Old Republic Ins. Co. v. Cont’l Motors, Inc., 877 F.3d 895, 904 (10th Cir. 2017) (citing
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476–77 (1985); Shrader v. Biddinger, 633 F.3d
1235, 1239–40 (10th Cir. 2011)).
3

A.

Minimum Contacts

The Supreme Court explained that “due process requires only that . . . [the defendant]
have certain minimum contacts with [the forum state] that the maintenance of the suit does not
offend ‘traditional notions of fair play and substantial justice.’” 14 To establish minimum
contacts, “the relationship [with the forum state] must arise out of contacts that the ‘defendant
himself’ creates with the forum State,” 15 and the “analysis looks to the defendant’s contacts with
the forum State itself, not the defendant’s contacts with persons who reside there.” 16 Minimum
contacts also requires that “the plaintiff’s claim arises out of or results from ‘actions by the
defendant himself that create a substantial connection with the forum state.’” 17
Plaintiff’s Complaint alleges WMG and WMT both “sold, distributed and marketed the
defective Wright Hip System in the State of Utah,” 18 but Defendant WMG submitted an
affidavit with its Motion to Dismiss controverting this allegation. According to the affidavit,
WMG has no contacts with Utah because it “is not registered to do business in Utah, does not
transact business in Utah, maintains no office or place of business in Utah, owns no real property
in Utah, and has no clients or employees in Utah.” 19 The affidavit also explains that WMG “does
not advertise, market, or offer services for sale in Utah.” 20
14

Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (quoting Miliken v. Meyer, 311 U.S.
457, 463 (1940)).
15

Walden v. Fiore, 571 U.S. 277, 284 (2014) (citation omitted).

16

Id. at 285

17

OMI Holdings, 149 F.3d at 1091 (quoting Asahi Metal Indus. Co. v. Super. Ct. of Cal.,
480 U.S. 102, 109 (1987)).
18

Docket No. 2 ¶ 13.

19

Docket No. 9-1 ¶ 14.

20

Id. ¶ 15.
4

Plaintiff argues the allegations in her Complaint “on their face confer personal
jurisdiction over [WMG]” 21 because the Court should accept the allegations in the Complaint as
true, but this is only “to the extent they are uncontroverted by the defendant’s affidavits.” 22 Here,
the Complaint’s allegations are not enough to establish jurisdiction because Defendant presented
an affidavit that controverts Plaintiff’s allegations. Further, the personal jurisdiction requirements
“must be met as to each defendant,” 23 but Plaintiff’s Complaint merges WMG and WMT
together without adequately explaining which company does what in connection with her claims.
Because these allegations are not specific, they do not clearly establish whether this Court has
jurisdiction over both companies in this case.
To counter Defendant’s affidavit, Plaintiff relies on WMG’s SEC filings, press releases,
and other cases in which WMG appears as a defendant. In regards to the SEC filings,
Defendant’s 2001 10-K Report says WMG “specializ[es] in the design, manufacture, and
marketing of reconstructive joint devices” and “offers a comprehensive line of products for hip
joint reconstruction.” 24 This annual filing also says that “[a]s of December 31, 2001, the
Company employed directly and through our subsidiaries 751 people.” 25 Plaintiff also looks to a
2014 10-K report in which Defendant says it is a “defendant in 25 lawsuits” for personal
injury. 26

21

Docket No. 13, at 2.

22

Wenz, 55 F.3d at 1505.

23

Rush v. Savchut, 444 U.S. 320, 332 (1980).

24

Docket No. 13, at 11.

25

Id. at 12.

26

Id. at 14.

5

The Tenth Circuit has explained that it is a “common business practice” for parent and
subsidiary companies to consolidate their financial reports, 27 so the 2001 SEC filings do not
establish that WMG actually designed, manufactured, or marketed the implant devices. Later
SEC filings confirm that WMG operates through WMT and other subsidiaries. 28 Additionally,
the SEC filings do not mention Utah at all, so they do not provide any evidence that WMG
purposely directed any of its activities to Utah or Utah residents.
Around the country, several federal district courts have dismissed WMG from cases
against Defendants when the plaintiffs have used the same evidence Plaintiff included. 29 Dumler
and Simpson used the same reports to try to establish specific personal jurisdiction. 30 These
courts both reasoned that “[c]ourts have recognized that companies may omit distinctions
between related corporate entities in their SEC filings, and still insist on these distinctions when
haled into court.” 31 Ultimately, these SEC filings are not sufficient to establish that WMG
purposely directed its activities to Utah or Utah residents.

27

Lowell Staats Mining Co. v. Pioneer Uravan, Inc., 878 F.2d 1259, 1264 (10th Cir.

28

Docket 20-2, at 5.

1989).
29

See Simpson v. Wright Med. Grp., Inc., No. 5:17-cv-00062-KGB, 2018 WL 1570795,
at *12 (E.D. Ark. Mar. 30, 2018); Bittner v. Wright Med. Grp., Inc., No. 4:17-cv-04241-SLDJEH, 2018 WL 1115211, at *2 (C.D. Ill. Mar. 1, 2018); Dumler v. Wright Med. Tech., Inc., No.
C17-2033-LTS, 2018 WL 576848, at *16 (N.D. Iowa Jan. 26, 2018); Sarafian v. Wright Med.
Tech., Inc., No. 2:15-cv-09397-CAS(KSx), 2016 WL 1305087, at *7 (C.D. Cal. Apr. 1, 2016).
30

Compare Docket No. 13, at 11 with Simpson, No. 5:17-cv-0062-KGB, 2018 WL
1570795, at *5–*6 and Dumler, No. C17-2033-LTS, 2018 WL 576848, at *6.
31

Simpson, No. 5:16-cv-00062-KGB, 2018 WL 1570795, at *6 (quoting Cheatham v.
ADT Corp., 161 F. Supp. 3d 815, 824 (D. Ariz. 2016)); see also Dumler, No. C17-2033-LTS,
2018 WL 576848, at *6 (citing Cheatham, 161 F. Supp. 3d at 824).

6

Plaintiff also presents some press releases from 2006 and 2014. In the 2006 press release,
WMG describes itself as a “global orthopedic medical device company specializing in the
design, manufacture and marketing of reconstructive joint devices.” 32 One 2014 press release is
from the sale of OrthoRecon, and there is a 2014 press release about WMG acquiring OrthoPro,
which is based in Salt Lake City, Utah.
These press releases do not establish a sufficient connection with Utah. While the latter
press release does appear to establish some connection with Utah, there must also be a
connection between WMG’s activities in Utah and Plaintiff’s claims to support a finding of
specific jurisdiction. Plaintiff does not allege that OrthoPro or its foot and ankle products are
related to Plaintiff’s claims regarding her hip implants. The court in Sarafian considered the
same and similar press releases and found that “none of these documents is evidence that WMG
has any contacts in California.” 33 This Court comes to the same conclusion and finds that none
of these documents amount to evidence that WMG has sufficient minimum contacts in Utah to
establish jurisdiction over WMG in this case.
Finally, Plaintiff points out two cases where courts have denied WMG’s motions to
dismiss for lack of personal jurisdiction and one case where the court failed to grant a motion for
summary judgment in favor of WMG. Of the two cases Plaintiff alleges denied WMG’s motions
to dismiss, one of them took the issue under advisement to allow for jurisdictional discovery, and
the other recognized that “the question of jurisdiction . . . can be raised at any time” because it

32

Docket No. 13, at 15.

33

No. 2:15-cv-09397, 2016 WL 1305087, at *5.

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was unclear whether there would be jurisdiction after discovery. 34 As Defendant points out,
Christiansen v. Wright Medical Group actually went to trial after the motion for summary
judgment was denied, and “both plaintiff and defense counsel agreed that a directed verdict was
appropriate on all claims against WMG because there was no evidence that WMG had any
involvement with the allegations underlying plaintiff’s complaint.” 35 Ultimately, these cases do
not provide legal support to show WMG has minimum contacts in Utah.
Because Plaintiff failed to make a connection between WMG’s activities and the forum
and Plaintiff’s claims, Plaintiff has not made a prima facie showing that WMG has minimum
contacts in Utah. Therefore, this Court does not have specific jurisdiction over WMG in this
case.
B.

Alter Ego Theory

In the Motion to Dismiss, Defendant argued that the alter ego theory cannot apply to
WMG and WMT to establish personal jurisdiction over WMG. In her Response to the Motion to
Dismiss, Plaintiff did not allege that there could be jurisdiction over WMG based on an alter ego
theory, but her Complaint did briefly allege that “each of the Defendants was the representative,
agent, employee, joint venture, or alter ego of each of the other Defendants,” 36 so the Court will
apply an alter ego analysis.
“Ordinarily a corporation is regarded as a legal entity, separate and apart from its
stockholders.” 37 Under Utah law, the alter ego theory allows courts to disregard the corporate
34

Docket No. 13-8, at 35.

35

Docket No. 20, at 8; Docket 20-4, at 17.

36

Docket No. 2 ¶ 12 (emphasis added).

37

Dockstader v. Walker, 510 P.2d 526, 528 (Utah 1973).
8

form when two requirements are met: “(1) there must be such unity of interest and ownership
that the separate personalities of the corporation and the individual no longer exist . . . and (2) the
observance of the corporate form would sanction a fraud, promote injustice, or an inequitable
result would follow.” 38
Plaintiff’s only evidence suggesting WMG and WMT do not have “separate
personalities” are the facts already discussed regarding the SEC filings from 2001 and 2014 and
the 2006 and 2014 press releases. As discussed above, combining parent and subsidiary
corporations in these statements is a normal business practice that does not conclusively establish
that WMG and WMT are essentially the same corporation. The plaintiff in Dumler relied on
WMG’s financial gain from the sale of OrthoRecon as evidence that WMG is the alter ego of
WMT. The court in Dumler found “[t]hese assertions fall short of establishing that WMG is the
alter ego of WMT” because “collective reference does not establish that corporate formalities
have been ignored or that WMG is the alter ego of WMT.” 39 This is consistent with the prior
analyses of this evidence, so this is not enough to establish that the “separate personalities of the
corporation[s] . . . no longer exist.” 40
To support the assertion that the two corporations do have separate personalities,
Defendant’s affidavit explains that WMG “maintains separate accounting and banking records
from the accounting and banking records of [WMT].” 41 Plaintiff has not rebutted this statement.

38

Cascade Energy & Metals Corp. v. Banks, 896 F.2d 1557, 1575 (10th Cir. 1990)
(quoting Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028, 1030 (Utah 1979)).
39

Dumler, No. C17-2033-LTS, 2018 WL 576848, at *8 (citation omitted).

40

Cascade Energy & Metals Corp., 896 F.2d at 1575 (citation omitted).

41

Docket No. 9-1 ¶ 13.

9

In addition, Plaintiff offers no allegations that Defendants are committing any fraud or injustice
with the observance of the corporate form. Plaintiff has not established the required elements for
the alter ego theory to apply, so the alter ego theory cannot establish personal jurisdiction over
WMG through WMT’s actions in this case.
C.

Jurisdictional Discovery

Plaintiff argues, in the alternative, to allow jurisdictional discovery. “The trial court . . . is
vested with broad discretion” to determine whether jurisdictional discovery is appropriate in a
particular case. 42 “The district court does not abuse its discretion by denying jurisdictional
discovery where there is a very low probability that the lack of discovery” would affect the
outcome of the case. 43
In her argument for jurisdictional discovery, Plaintiff asserts “the Bill of Print Material
documents” used in the Christiansen case “will most likely confirm WMG’s direct involvement
in the hip system at issue that was implanted in Plaintiff in the forum Utah.” 44 As described
above, the Christiansen court later dismissed WMG from the case for lack of evidence of
WMG’s involvement, despite the fact that the plaintiff had the Bill of Print Material documents.
These are the only documents Plaintiff specifically suggests would help establish specific
jurisdiction, and it is highly unlikely the documents would establish this Court’s jurisdiction over
WMG. As a matter within this Court’s discretion, this Court will not allow jurisdictional
discovery in this case.

42

Grynberg v. Ivanhoe Energy, Inc., 490 Fed. App’x. 86, 102 (10th Cir. 2012) (internal
quotations and citation omitted).
43

Id. at 103 (internal quotation marks and citation omitted).

44

Docket 13, at 18.

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III.

CONCLUSION

It is therefore
ORDERED that Defendant Wright Medical Group, Inc.’s Motion to Dismiss Plaintiff’s
Complaint for Lack of Personal Jurisdiction (Docket No. 9) is GRANTED.
DATED this 29th day of November, 2018.
BY THE COURT:

Judge Stewart
United States District Judge

11