Meier, Markus v. Wright Medical Technology, Inc. et al

Filing 46

ORDER granting 18 Motion to Dismiss For Lack of Personal Jurisdiction by Defendant Wright Medical Group, Inc. Signed by District Judge William M. Conley on 3/30/2015. (voc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

MARKUS MEIER,
Plaintiff,

OPINION & ORDER

v.
14-cv-505-wmc
WRIGHT MEDICAL TECHNOLOGY, INC.,
WRIGHT MEDICAL GROUP, INC., ABC
INSURANCE COMPANY, DEF INSURANCE
COMPANY, and DEAN HEALTH PLAN,
Defendants.

In this civil action, plaintiff Markus Meier claims to have suffered serious injuries
from a defective hip replacement implant, the PROFEMUR® hip, which was
manufactured and sold by defendants Wright Medical Technology, Inc. and Wright
Medical Group, Inc. As the parent company, Wright Medical Group, Inc. has moved to
dismiss the claims against it for lack of personal jurisdiction under Fed. R. Civ. P.
12(b)(2). (Dkt. #18.) For reasons discussed below, the court find that Meier has failed
to establish a prima facie case of personal jurisdiction over WMG, and so it will grant the
motion to dismiss.

ALLEGATIONS OF FACT
I. Allegations in the Complaint
Wright Medical Group (“WMG”) is a Delaware corporation with its principal
place of business in Arlington, Tennessee. Wright Medical Technology, Inc. (“WMT”) is
a wholly-owned subsidiary of WMG and also a Delaware corporation with its principal

place of business in Arlington, Tennessee. Wright Medical Europe, S.A. (“WME”) is a
foreign corporation with its principal place of business in France. It, too, is a whollyowned subsidiary of WMG. Collectively referred to as “Wright” in the complaint, the
defendants are alleged to have designed, manufactured, labeled, marketed, promoted,
distributed and sold various prosthetic orthopedic devices in the United States, including
the Wright Medical PROFEMUR® Hip.1
In December of 1999, Wright acquired a European manufacturer of artificial hip
devices known as Cremascoli Ortho, which had designed and manufactured artificial hips
with a modular neck component. On December 13, 2000, Wright received approval
from the United States FDA to distribute the first PROFEMUR® hip devices, which
included Cremascoli’s modular neck component.

Thereafter, Wright began to

manufacture, market and sell the Wright Medical PROFEMUR® Hip.
The PROFEMUR® Hip’s modular neck component was made of a titanium alloy
known as Ti6A14V. It came in twelve models, six of which were described as “long
necks” and six as “short necks.” According to marketing materials published between
2002 and 2005, the modular necks had been successfully implanted in over 50,000
patients, and none of them had experienced a clinical failure.
In 2001, however, Wright made a design change to the modular neck components
to increase the potential range of motion a patient could have in his or her hip postimplantation. In making the design change, Wright also changed the geometry, weight
and mass of the modular necks.
Previously, WME was also a defendant in this matter. On November 12, 2014, however, the
parties stipulated to the dismissal of WME. (Dtk. #28.)
1

2

In 2005, Wright received its first notification of the fracture of a PROFEMUR®
modular neck in one of the post-2001 designs. Going forward, Wright continued to
receive additional notices of PROFEMUR® modular neck fractures, all of which also
involved post-2001 designs. Of those fractures, more than 95% have occurred in the
“long neck” designs.
Despite an increasing rate of fractures, Wright did not publicly inform surgeons of
concerns with its PROFEMUR® modular necks until December 1, 2008, when it sent a
Safety Alert to “medical professionals.” The Alert indicated that Wright had received
reports of 43 modular neck failures as of November 21, 2008, with commonalities
including “heavy-weight males, long modular necks, and patient activities such as heavy
lifting and impact sports.”

Despite issuing this warning, Wright did not change the

language in its Instructions for Use until August of 2010.

Furthermore, patient

testimonials appearing on the Wright Medical webpages and in printed materials have
represented that users of PROFEMUR® hip replacements are returning to physically
arduous activities, including some testimonials from men weighing in excess of 250
pounds.
In 2010, Wright began offering PROFEMUR® modular necks made of cobalt
chrome, which is (1) stronger than the Ti6A14V modular necks, (2) less susceptible to
fretting corrosion, and (3) less likely to fail from cyclic loading and metal fatigue after
implantation.

Wright has never informed patients who received PROFEMUR® long

modular neck made of Ti6A14V that those products have experienced a higher-thananticipated rate of failure, nor has it ever informed patients, either directly or indirectly,
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that higher weight or activity levels may increase the risk of failure due to fractures of the
long modular necks.
On October 16, 2006, plaintiff Markus Meier had a PROFEMUR® Hip
implanted in the right side of his body.

After the implantation, Meier used his

PROFEMUR® Hip normally, but on June 6, 2013, the modular neck component failed
suddenly and catastrophically. On June 11, 2013, the PROFEMUR® Hip was surgically
removed at St. Mary’s Hospital in Madison, Wisconsin, in a procedure known as a
“revision.”
II. Evidence Proffered by Wright
Defendants have moved to dismiss WMG from this suit for lack of personal
jurisdiction.

In support of their motion, they offered the Declaration of James A.

Lightman, who is the Senior Vice President and General Counsel of WMT and claims to
have personal knowledge regarding the corporate status and activities of WMG.
Specifically, Lightman avers that WMG is a holding company with no employees whose
shares are publicly traded on the NASDAQ stock exchange. (Lightman Decl. (dkt. #10)
¶ 3.) WMG is the parent company of WMT, and its sole shareholder. (Id. at ¶ 4.)
WMG and WMT maintained separate accounting and banking records at times when
each entity had such records. (Id. at ¶ 5.) WMG is not registered to do business in
Wisconsin, does not transact business in Wisconsin, maintains no offices or places of
business in Wisconsin, owns no real property in Wisconsin and has no clients or
employees in Wisconsin. (Id. at ¶ 6.) Nor does it advertise, market or offer services for
sale in Wisconsin. (Id. at ¶ 7.)
4

With respect to the PROFEMUR® Hip at issue in this case, the FDA provided
marketing clearance to WMT, not WMG.

(Id. at ¶ 8.)

WMG did not design,

manufacture, sell, market or distribute the PROFEMUR® Hip in question, nor did it
issue any warnings regarding that product. (Id. at ¶ 9.)

OPINION
As the plaintiff, Meier has the burden of proving that personal jurisdiction exists.
RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997) (citing McIlwee v.
ADM Indus., Inc., 17 F.3d 222, 223 (7th Cir. 1994)). In resolving this motion to dismiss,
the court accepts as true all undisputed factual assertions that Meier makes and resolves
all disputes of relevant facts in his favor. Neiman v. Rudolf Wolff & Co., Ltd., 619 F.2d
1189, 1190 (7th Cir. 1980).

Because Wright has submitted affidavits or contesting

personal jurisdiction, however, Meier must go beyond the pleadings and submit
affirmative evidence supporting the exercise of jurisdiction.

Purdue Research Found. v.

Sanofi-Synthelabo, S.A., 338 F.3d 773, 783 (7th Cir. 2003). Because the court resolves
this motion on the written materials only, however, Meier need only show a prima facie
case for personal jurisdiction.

Neiman, 619 F.2d at 1190.

Even under this lenient

standard, Meier still fails to establish personal jurisdiction over WMG.
I. Preliminary Arguments
Before addressing the merits of WMG’s motion to dismiss for lack of personal
jurisdiction, Meier advances two preliminary arguments that he contends warrant
summary denial of the motion. The court briefly addresses each below.
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A. The Court Should Disregard Lightman’s Declaration
Meier first argues that the Lightman declaration is so unreliable that the court
should afford it no persuasive value in its personal jurisdiction analysis. In particular, he
contends that Lightman’s statements that WMG was not involved in the manufacture,
distribution or sale of the PROFEMUR® Hip directly contradict WMG’s filings with the
Securities and Exchange Commission (“SEC”). In support, he offers several pages from
WMG’s 2001 Form 10-K, as well as several pages from the 2013 Form 10-K, which
purportedly establish that WMG was, in fact, the manufacturer of the PROFEMUR®
Hip.
Certainly, as noted above, “under the prima facie standard, [Meier] is entitled to
have any conflicts in the affidavits (or supporting materials) resolved in its favor,” Purdue,
338 F.3d at 783, but Meier offers no reason why the court should go a step further and
summarily reject WMG’s entire motion due to an ostensible dispute of fact, particularly
given that the Seventh Circuit has expressly provided for a different procedure when such
conflicts arise. Furthermore, the so-called “inconsistencies” that Meier identifies are not
really inconsistent at all. The 2001 Form 10-K states that “Wright Medical Group, Inc.
(the ‘Company’) is a global orthopaedic device company specializing in the design,
manufacture and marketing of reconstructive joint devices and bio-orthopaedic
materials.” (Robert J. Gingras Decl. Ex. A (dkt. #24-1) 3.) But as WMG points out,
since 2001, its other Forms 10-K spanning the years 2002 through 2013 have contained
modified language indicating that WMG, “through Wright Medical Technology, Inc. and
other operating subsidiaries,” is a global orthopaedic medical device company that
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specializes in such design, manufacture and marketing. (See Br. Reply Ex. A (dkt. #26-1)
4, 7, 10, 13, 16, 19, 22, 25, 28, 31, 34, 37.) Accordingly, the 2001 Form 10-K, which
apparently refers to an earlier corporate structure, does not place into dispute WMG’s
representation that it does not currently manufacture, distribute, market or sell the
PROFEMUR® Hip in Wisconsin.
Meier’s use of the 2013 Form 10-K is similarly unavailing, since he selectively
quotes the following portions of it in his brief:


Stryker’s . . . modular neck hip stems differ in design and material from
the PROFEMUR® modular neck systems we sold. . . .



We received a subpoena . . . requesting records and documentation
relating to our PROFEMUR series of hip replacement devices . . .



We are a defendant in 25 lawsuits in various state and federal courts
involving claims for damages for personal injury associated with fractures
of our PROFEMUR® long titanium modular neck product . . .



[We] received a customary reservation of rights from our primary product
liability insurance carrier asserting that present and future claims related to
fractures of our PROFEMUR® titanium modular neck hip products . . .
would be covered . . .



[We] received a subpoena from the U.S. Attorney’s Office for . . . records
and documentation relating to our PROFEMUR® series of hip replacement
devices . . .



[I]n 2009, we began offering a cobalt-chrome version of our PROFEMUR®
modular neck.

(Pl.’s Br. Opp’n (dkt. #23) 7-8 (emphasis in plaintiff’s brief).) But the 2013 Form 10-K
also makes clear in its very first paragraph that “Wright or we” refers to “Wright Medical
Group, Inc., through Wright Medical Technology, Inc. (WMT) and other operating
subsidiaries.” (Gingras Decl. Ex. B (dkt. #24-2) 4.)

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Read in context, therefore, Meier’s cherry-picked quotations certainly do not
“shatter any illusion that Wright Medical Group is not the manufacturer, distributor, and
developer of the PROFEMUR® Hip,” as Meier contends. (Pl.’s Br. Opp’n (dkt. #23) 8.)
They do not even establish a conflict as to whether WMG itself has any employees or
conducts any business activities in Wisconsin. Thus, the court declines to disregard the
Lightman declaration in conducting its analysis.
B. The Motion is Premature
Meier alternatively argues that WMG’s arguments are inappropriate for a Rule
12(b)(2) motion to dismiss and ought to be deferred until summary judgment. As an
initial matter, Rule 12(b) expressly provides that the defense of lack of personal
jurisdiction may be raised by motion, and that such a motion “must be made before
pleading if a responsive pleading is allowed.” Fed. R. Civ. P. 12(b) (emphasis added.) By
failing to bring such a motion timely or include it in a responsive pleading, a party can
forfeit its personal jurisdiction defense. Fed. R. Civ. P. 12(h)(1); Swaim v. Moltan Co., 73
F.3d 711, 718 (7th Cir. 1996). Thus, Meier’s general statement that WMG’s arguments
“are not appropriate for a motion to dismiss” is incorrect, just as WMG’s rejoinder that it
would necessarily have waived that defense if it had not made the motion is also
incorrect, since it could have reserved that defense via a responsive pleading instead of a
Rule 12(b) motion. See Fed. R. Civ. P. 12(h)(1)(B)(ii).
Meier also implies that the court should delay consideration of WMG’s arguments
until jurisdictional discovery can take place on the issue of whether WMG itself
participated in the creation, manufacturing and distribution of the PROFEMUR® Hip
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(although Meier does not directly request such a delay).

“At a minimum,” however,

Meier “must establish a colorable or prima facie showing of personal jurisdiction before
discovery should be permitted.”

Cent. States, Se. & Sw. Areas Pension Fund v. Reimer

Express World Corp., 230 F.3d 934, 946 (7th Cir. 2000). Accordingly, the court must
consider whether on the written submissions alone, Meier has adequately made a
colorable showing of personal jurisdiction over Wright’s parent holding company, WMG.
If so, he will be permitted to engage in jurisdictional discovery; if not, his failure justifies
denying jurisdictional discovery under Seventh Circuit case law.
II. Motion to Dismiss
In diversity cases like this one, a federal district court has personal jurisdiction
“only if a court of the state in which it sits would have such jurisdiction.” RAR, Inc., 107
F.3d at as75 (quoting Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995)).

The

inquiry is, therefore, a two-step process. First, the court must determine whether the
Wisconsin long-arm statute, Wis. Stat. § 801.05, would subject Wright to personal
jurisdiction in Wisconsin courts. Daniel J. Hartwig Assocs., Inc. v. Kanner, 913 F.2d 1213,
1216 (7th Cir. 1990). Second, if the answer is yes, the court must determine whether the
exercise of personal jurisdiction under § 801.05 nevertheless violates the due process
requirements of the Fourteenth Amendment.

Id.

Since the Wisconsin statute “is

intended to reach to the fullest extent allowed under the due process clause,” the inquiry
can sometimes collapse upon itself. Id. at 1217.
“The nature, quality and quantity of contacts necessary to establish jurisdiction
depend on the type of jurisdiction asserted: general or specific.” Insolia v. Philip Morris
9

Inc., 31 F. Supp. 2d 660, 668 (W.D. Wis. 1998).

Establishing general jurisdiction

requires that the defendant have continuous and systematic contacts with the forum
state, but the cause of action need not arise out of or relate to the defendant’s activities
in the forum. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16
(1984).

This is a high threshold: “the contacts must be sufficiently extensive and

pervasive to approximate physical presence.” Tamburo v. Dworkin, 601 F.3d 693, 701
(7th Cir. 2010). In contrast, a court may exercise specific jurisdiction over a defendant
“where (1) the defendant has purposefully directed his activities at the forum state or
purposefully availed himself of the privilege of conducting business in that state, and (2)
the alleged injury arises out of the defendant’s forum-related activities.” Id. at 702 (citing
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).
Wisconsin’s long-arm statute “accommodates general and specific jurisdiction
through different provisions.” Insolia, 31 F. Supp. 2d at 668. Here, Meier points to one
provision to support his argument for general jurisdiction, and another to support his
alternative argument for specific jurisdiction. Ultimately, neither proves availing.
A. General Jurisdiction
To support his assertion of general jurisdiction, Meier relies on Section
801.05(1)(d). This provision states in relevant part that courts have jurisdiction over a
defendant “who when the action is commenced: . . . (d) Is engaged in substantial and not
isolated activities within this state, whether such activities are wholly interstate,
intrastate, or otherwise.”

Wis. Stat. § 801.05(1)(d).

The only activities that Meier

identifies, however, are those of the Wright defendants in general -- that is, those
10

allegations

in

his

complaint

that

collectively

the

Wright

defendants

designed,

manufactured, labeled, marketed, promoted, distributed and sold the Wright Medical
PROFEMUR® Hip in the United States, presumably including within Wisconsin. As
discussed above, WMG has proffered unrebutted evidence that it did not take any of
those actions, at least not directly.
All that Meier has to support the exercise of jurisdiction over WMG is the fact
that it is the parent corporation of at least one entity that designs, manufactures, markets,
promotes, distributes and sells the accused products. (See Pl.’s Br. Opp’n (dkt. #23) 6
(citing to pleading that WMG took those actions “directly or through its aforesaid
subsidiaries or affiliates”).)

Unfortunately for Meier, both the Supreme Court of

Wisconsin and the Seventh Circuit have squarely rejected general jurisdiction premised
on nothing more than a parent-subsidiary relationship. See Reimer Express, 230 F.3d at
943 (“[C]onstitutional due process requires that personal jurisdiction cannot be premised
on corporate affiliation or stock ownership alone where corporate formalities are
substantially observed and the parent does not exercise an unusually high degree of
control over the subsidiary”); Rasmussen v. Gen. Motors Corp., 2011 WI 52, 335 Wis. 2d
1, 803 N.W.2d 623 (holding that mere agency relationship between parent corporation
and subsidiary is not enough to support general jurisdiction under Wis. Stat.
§ 801.05(1)(d)). These holdings are grounded by the principle of corporate law that
“[c]ourts begin with the presumption of corporate separateness,” in the context of bith
personal jurisdiction and liability. Taurus IP v. DaimlerChrysler Corp., 519 F. Supp. 2d
905, 919 (W.D. Wis. 2007). “This presumption can be rebutted only if ‘there is a basis
11

for piercing the corporate veil and thus attributing the subsidiaries’ torts to the
parent[.]’” Insolia, 31 F. Supp. 2d at 669 (quoting IDS Life Ins. Co. v. SunAmerica Life Ins.
Co., 136 F.3d 537, 540 (7th Cir. 1998)).
“[I]n order to accord general personal jurisdiction over a nonresident corporate
defendant . . . there must be something more than merely an agency relationship. As in
other circumstances where general personal jurisdiction is sought for a nonresident
defendant based on the acts of another in an alleged agency relationship with a
subsidiary, there also must be control by the nonresident parent corporation sufficient to
cause us to disregard the separate corporate identities of the subsidiary and the parent
corporations.” Rasmussen, 2011 WI 52, at ¶ 35. In particular, “in assessing corporate
separateness, Wisconsin courts have focused most directly on the amount of control that
one corporation exercises or has the right to exercise over the other; whether both
corporations employ independent decision-making; whether corporate formalities were
observed; whether the corporations operated as one corporation; and whether observing
the corporate separateness would facilitate fraud.” Id. at ¶ 38.
The only evidence in the record with respect to these factors is Lightman’s sworn
statement that WMG and WMT maintained separate banking and accounting records
when both entities had such records. While this weighs against piercing the corporate
veil, Meier’s real problem as the party with the burden of proof is his failure to offer any
evidence showing that:

(1) WMG exercises a significant amount of control over its

subsidiaries; (2) WMG and its subsidiaries have failed to make decisions independently
or observe corporate formalities; (3) WMG and its subsidiaries operate as one
12

corporation; or (4) adhering to the presumption of separate corporate identity would
perpetrate a fraud. Meier has advanced no basis for piercing the corporate veil in this
case.

Therefore, no basis exists for exercising general jurisdiction under either

§ 801.05(1)(d) or the due process clause.
As a final argument, Meier briefly invokes the general rule that the court is to
resolve factual disputes in his favor on a Rule 12(b)(2) motion to dismiss, arguing that
the court must presume at this point that WMG itself made and sold the PROFEMUR®
Hip based on the allegations in the complaint alone.

But where the defendant has

submitted affidavits or other evidence opposing the exercise of personal jurisdiction, as is
true here, “the plaintiff must go beyond the pleadings and submit affirmative evidence
supporting the exercise of jurisdiction.” Purdue, 338 F.3d at 783 & n.13 (citing Meier v.
Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002); United States v. Swiss Am.
Bank, Ltd., 274 F.3d 610, 619 (1st Cir. 2001)). Meier has simply not done so.
B. Specific Jurisdiction
Alternatively, Meier argues that this court may exercise specific jurisdiction over
WMG under Wis. Stat. § 801.05(4)(b), which states in relevant part that a court may
exercise jurisdiction “[i]n any action claiming injury to person or property within this
state arising out of an act or omission outside this state by the defendant, provided in
addition that at the time of the injury, . . . (b) Products, materials or things processed,
serviced or manufactured by the defendant were used or consumed within this state in
the ordinary course of trade.”

Meier’s problem with respect to asserting personal

jurisdiction here remains the same:

nothing in the record suggests that WMG itself
13

manufactured the PROFEMUR® Hip components that allegedly caused Meier’s injury.
Accordingly, the court must again consider whether the alleged activities of WMG’s
subsidiaries support the exercise of specific jurisdiction over WMG itself.
The threshold for holding a parent subject to jurisdiction based on its subsidiary’s
activities is somewhat lower in the context of specific personal jurisdiction. A court may
exercise specific personal jurisdiction over a parent corporation based on its subsidiary’s
activities when an agency relationship exists. See Insolia, 31 F. Supp. 2d at 671. While
Insolia specifically addressed § 801.05(4)(a), not § 801.05(4)(b), the Supreme Court of
Wisconsin appears to have extended that conclusion generally, noting that “Wis. Stat.
§ 801.05(4) provides for specific personal jurisdiction based on the acts of an agent so
that a Wisconsin forum is not denied when the facts show that a Wisconsin forum
should be accorded. . . . Specific personal jurisdiction is a limited form of personal
jurisdiction well[-]tailored to an agency relationship.” Rasmussen, 2011 WI 52, at ¶ 34
(internal citations omitted).

“As Insolia correctly notes, no other provision of

Wisconsin’s long-arm statute besides Wis. Stat. § 801.05(4), which relates to specific
personal jurisdiction, ‘supports the exercise of jurisdiction based on an agency theory.’”
Id. at ¶ 24 (quoting Insolia, 31 F. Supp. 2d at 671).
In Wisconsin, an agency relationship requires a principal and an agent, “the latter
of which is defined as ‘a person authorized by another to act on his account and under
his control.’” Kolbe & Kolbe Millwork Co. v. Manson Ins. Agency, Inc., 983 F. Supp. 2d
1035, 1041 (W.D. Wis. 2013) (quoting Arsand v. City of Franklin, 83 Wis. 2d 40, 48,
264 N.W.2d 579 (1978)).

However, the mere existence of a parent-subsidiary
14

relationship between two entities is not enough by itself to establish an agency
relationship. Zurich Am. Ins. Co v. Watts Indus., Inc., 417 F.3d 682, 688 (7th Cir. 2005);
Insolia, 31 F. Supp. 2d at 671 (citing Flintridge Station Assocs. v. Am. Fletcher Mortg. Co.,
761 F.2d 434, 437 (7th Cir. 1985)).
Once again, Meier failed to offer any evidence or argument demonstrating that an
agency relationship existed between WMG and any subsidiary that manufactured the
PROFEMUR® Hip.

This is fatal to his claim that the court may exercise specific

jurisdiction over WMG, since that claim is premised entirely on the activities of WMG’s
subsidiaries, rather than WMG itself.

Meier has failed to make even a prima facie

showing of personal jurisdiction over WMG.

Accordingly, WMG must be dismissed

from this case.

ORDER
IT IS ORDERED that:
1) Defendant Wright Medical Group, Inc.’s motion to dismiss for lack of personal
jurisdiction (dkt. #18) is GRANTED.
Entered this 30th day of March, 2015.
BY THE COURT:
/s/
________________________________________
WILLIAM M. CONLEY
District Judge

15