1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DONALD NICHOLS, Case No. 20-cv-06836-EMC

8 Plaintiff,

ORDER GRANTING IN PART AND

9 v. DENYING IN PART DEFENDANTS’

MOTION TO DISMISS

10 COVIDIEN LP, et al., Docket No. 27 11 Defendants.

12 13 14 Plaintiff is Mr. Donald Nichols, a former patient at Saint Joseph Hospital in Eureka, 15 California who received surgical treatment for rectal cancer. Mr. Nichols alleges that the medical 16 stapler which was used during his surgery was defective, and he sues the entities responsible for 17 the manufacture and distribution of that stapler. Mr. Nichols has filed a Second Amended 18 Complaint alleging three causes of action: (1) strict products liability for a manufacturing defect, 19 (2) common law negligence, and (3) strict products liability under a failure to warn theory. 20 Docket No. 23. Mr. Nichols seeks medical and incidental expenses, loss of earnings and/or 21 earning capacity, and general damages. Defendants move to dismiss under Rule 12(b)(6). Docket 22 No. 27. 23 I. BACKGROUND 24 A. Factual Allegations in the Complaint 25 In the SAC, Mr. Nichols alleges as follows. Defendant Medtronic, Inc. is a medical device 26 sales company which sells its products throughout California, including to St. Joseph Hospital. 27 SAC ¶ 10. Covidien LLC is a wholly owned subsidiary of Medtronic, Inc. and also maintains a 1 (collectively, “Defendants”) are individually, jointly, and severally liable for damages which Mr. 2 Nichols suffered as a result of Defendants’ design, manufacturing, marketing, labeling, 3 distribution, sale, and placement of the Covidien products at issue in this suit. Id. ¶ 16.1 4 Defendants design, manufacture, and sell End to End Anastomosis Staplers (“EEA 5 staplers”), which are devices used by medical service providers in surgical procedures. Id. ¶ 20. 6 EEA staplers enable surgeons to create a secure anastomosis (i.e., a connection between two 7 internal bodily structures) within the body and form a seal. Id. The stapler used during Mr. 8 Nichols’s surgery (and identified in hospital billing records) is called an Endo GIA stapler. Id. 9 Mr. Nichols was admitted to St. Joseph Hospital in Eureka, California on September 28, 10 2018 for treatment of rectal cancer. Id. ¶ 22. He underwent a low anterior resection, and the 11 surgeon (Dr. Thomas J. Rydz) used an Endo GIA stapler to create an anastomosis. Id. ¶ 23. Even 12 though Dr. Rydz used the stapler properly during the procedure, the stapler misfired repeatedly. 13 Id. ¶¶ 23, 27. Mr. Nichols alleges that Dr. Rydz noted the malfunction in a post-surgery report, 14 writing “we had significant problems with the stapler device used at the time of surgery. There 15 were some misfirings of the stapler…” Id. ¶ 23. See also Kaufman Declaration, Ex. 1 16 (highlighted portions on the official Discharge Report noting that a few days after the surgery, Mr. 17 Nichols suffered from an “anastomotic leak and peritonitis”) (Docket No. 29-1). 18 1. Alleged Manufacturing Defects: Sled Components and Pin Components 19 Mr. Nichols alleges that the misfirings occurred because the Endo GIA stapler was missing 20 a “sled component,” a part of the device which helps ensure staple deployment. Id. ¶ 24. Staplers 21 lacking sled components will not reliably deploy staples, and this can result in a failure to form a 22 robust anastomosis (leading to bleeding or leakage of luminal contents). Id. 23 Next, Mr. Nichols alleges that the Endo GIA stapler that was used is missing one of two 24 “pin components,” which are designed to maintain alignment of the stapler device jaws. Id. ¶ 25. 25 An Endo GIA stapler without a pin component may result in incomplete staple formation, which, 26

27 1 Mr. Nichols also names DOES 1-10, alleging these unnamed defendants were “representative, 1 in turn, leads to bleeding, anastomotic leaks, peritonitis, or pneumothorax. Id. Mr. Nichols 2 alleges that the stapler which was used by Dr. Rydz suffered from both manufacturing defects, 3 which resulted in the failure of the stapler to form a proper staple line. Id. ¶ 26. 4 As a result, in the days following the surgery, an anastomotic leak was discovered, which 5 physicians attempted to repair and which required prolonged hospitalization for several weeks. Id. 6 ¶¶ 27, 29-30. All told, Mr. Nichols remained in the hospital for nearly a month due to 7 complications from the stapler malfunction and suffered significant scarring. Id. ¶ 31, 32. 8 Mr. Nichols alleges that Defendants were aware that the Endo GIA stapler used for Mr. 9 Nichols’ surgery frequently malfunctions and that it contains defects. Id. ¶¶ 33-34. The stapler 10 used on Mr. Nichols has been the subject of a recall, and the FDA has proposed reclassifying it 11 from a Class I device to a Class II device that one subject to Special Controls – this proposed 12 reclassification meant that manufacturers such as Defendants had to publicly report all 13 malfunctions or injuries related to the Endo GIA stapler. Id. ¶¶ 7, 35, 40. 14 2. Defendants’ Alleged Concealment of Malfunctions via FDA’s Reporting Scheme 15 The next component of Mr. Nichols’s factual allegations involves the Manufacturer and 16 User Facility Device Experience (“MAUDE”) database, a publicly accessible database run by the 17 Food & Drug Administration. Id. ¶ 4. While there are significant numbers of stapler-related 18 incidents each year (including 412 reported deaths, nearly 12,000 reported severe injuries, and 19 roughly 98,500 malfunctions between 2011 and 2018), the majority of Defendants’ reports were 20 submitted to the Alternative Summary Reporting (“ASR”) Program, a non-public database which 21 hides the nature and severity of stapler-related incidents from surgeons and the public.2 Id. ¶¶ 4-5. 22 The purpose of ASR is to allow for quarterly summary reports of well-known events in lieu of 23 individual reports, but Defendants used the ASR system to keep the scope of injuries related to 24 2 Under the ASR Program, manufacturers of certain devices could request an exemption from the 25 requirement to file individual medical device reports for certain events that were well-known and well-established risks associated with a particular device. These manufacturers were permitted to 26 submit “quarterly summary reports” of such events, which allowed FDA to more efficiently review reports of well-known events and focus on taking action on new safety signals and less 27 understood risks. The ASR Program was formally ended in June 2019. See 1 surgical staplers hidden from surgeons and their patients. Id. ¶ 6. 2 Mr. Nichols alleges that Defendants misused the ASR Program to avoid reporting new and 3 novel malfunctions of surgical staplers that cause severe injury, as these new malfunctions would 4 have subjected the staplers to recall or reclassification. Id. ¶ 35. Defendants allegedly reported 5 injuries under the term “malfunctions” to avoid public disclosure and to ensure that the FDA did 6 not recall these devices or reclassify them into a higher risk category. Id. ¶¶ 36-37. This resulted 7 in a vast disparity between the “hidden” database and the public MAUDE reporting system. 8 Despite the dangers of surgical staplers which caused FDA to consider reclassification 9 from Class I to Class II, Defendants continued to market the Endo GIA staplers as safe and failed 10 to include warnings regarding potential malfunctions (which were known to them by virtue of 11 being reported in the ASR system). Id. ¶ 41. More specifically, Defendants intentionally failed to 12 (1) provide warnings regarding the potential for surgical staplers to malfunction in the very 13 manner which occurred during Mr. Nichols’s surgery; (2) warn and inform surgeons of the 14 potential for its staplers to malfunction in that manner; and (3) recall their defective products when 15 Defendants knew they were prone to malfunction. Id. ¶ 42. 16 II. DISCUSSION 17 A. Motion to Dismiss 18 Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include “a short and plain 19 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 20 complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil 21 Procedure 12(b)(6). See Fed. R. Civ. P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss 22 after the Supreme Court’s decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic 23 Corp. v. Twombly, 550 U.S. 544 (2007), a plaintiff’s “factual allegations [in the complaint] ‘must 24 . . . suggest that the claim has at least a plausible chance of success.’” Levitt v. Yelp! Inc., 765 25 F.3d 1123, 1135 (9th Cir. 2014). The court “accept[s] factual allegations in the complaint as true 26 and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. 27 Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But “allegations in a 1 allegations of underlying facts to give fair notice and to enable the opposing party to defend itself 2 effectively.” Levitt, 765 F.3d at 1135 (internal quotation marks omitted). “A claim has facial 3 plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable 4 inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The 5 plausibility standard is not akin to a probability requirement, but it asks for more than a sheer 6 possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted). 7 B. Strict Products Liability Manufacturing Defect 8 To state a claim under a strict liability theory for a manufacturing defect, Mr. Nichols must 9 allege the following elements: “(1) he has been injured by the product; (2) the injury occurred 10 because the product was defective; and (3) the defect existed when the product left the hands of 11 the defendant.” Tucker v. Wright Med. Tech., Inc., No. 11-cv-03086-YGR, 2013 U.S. Dist. 12 LEXIS 38354, at *34 (N.D. Cal. Mar. 19, 2013); Wu v. EAN Holdings, LLC, No. 5:13-cv-00188- 13 PSG, 2014 U.S. Dist. LEXIS 4010, at *3-5 (N.D. Cal. Jan. 10, 2014) (same). 14 A manufacturing defect exists where the product “is one that differs from the 15 manufacturer’s intended result or from other ostensibly identical units of the same product line.” 16 Barker v. Lull Eng’g Co., 20 Cal. 3d 413, 429, 143 Cal. Rptr. 225, 236, 573 P.2d 443, 454 (1978)). 17 Cf. Carson v. Depuy Spine, Inc., 365 F. App’x 812, 814 (9th Cir. 2010) (“[t]o prove a negligent 18 manufacturing claim under California law, a plaintiff must first show that the product as delivered 19 departed from the governing specifications”). Thus, a manufacturing defect claim alleges that “a 20 suitable design is in place, but that the manufacturing process has in some way deviated from that 21 design.” In re Coordinated Latex Glove Litig., 99 Cal. App. 4th 594, 613, 121 Cal. Rptr. 2d 301, 22 315 (2002). For instance, “when a product comes off the assembly line in a substandard condition 23 it has incurred a manufacturing defect.” Barker, 20 Cal. 3d at 429. 24 Mr. Nichols has plausibly alleged the necessary components for a strict liability 25 manufacturing defects claim. Mr. Nichols alleges that the described defect existed when the 26 product left Defendants’ hands. Id. ¶¶ 44 (“[t]hese manufacturing defects existed when the 27 products left the manufacturers’ control”), 47 (“[t]he Endo GIA stapler used in Plaintiff's 1 alleges but-for causation: he alleges that he was injured by the Endo GIA stapler as a direct result 2 of the defects he describes. SAC ¶ 48 (“[a]s a direct and proximate result of the exposure to the 3 defective Endo GIA stapler, Plaintiff suffered injuries and damages as described herein”). 4 Mr. Nichols further provides specific details about how the Endo GIA stapler used in his 5 surgery deviated from its intended design and from other ostensibly identical units of the same 6 product line. The SAC alleges that the stapler used on him lacked a “sled component,” which 7 helps ensure staple deployment. Id. ¶¶ 24, 26. And Mr. Nichols alleges that the stapler lacked one 8 of two pin components designed to maintain the alignment of the device jaws, and that using 9 staplers with incomplete pin components can lead to incomplete staple formation (which 10 Defendants have acknowledged can lead to an anastomotic leak). Id. ¶¶ 25, 26. Defendants have 11 “publically acknowledged” that these defective staplers were distributed to physicians between 12 April 2014 and April 2019, during the timeframe of Mr. Nichols’s surgery (September 2018). 13 SAC ¶ 25; Opp. at 6. Because this stapler lacked a sled component and one of two pin 14 components, it “was manufactured in [a] manner that deviated from Defendants[’] intended 15 design, and in a way which failed to meet Defendants[’] specification.”3 Id. ¶ 44. In sum, Mr. 16 Nichols has plausibly alleged a manufacturing defect under a strict liability theory. 17 C. Negligent Design 18 Mr. Nichols alleges, as part of his negligence claim, negligence in design. A product’s 19

20 3 Mr. Nichols notes that EEA is an acronym for “end-to-end anastomosis,” and is a generic term for all staplers, regardless of manufacturer or brand name. Opp. at 1. Thus, even though hospital 21 billing records indicate that Mr. Nichols was operated on with an Endo GIA stapler, his surgeon, Dr. Rydz, used the generic term EEA stapler. Id. at 1-2 (citing Kaufman Decl., Ex. 1 (“[w]e had 22 significant problems with the EEA stapler device”)) (emphasis added). In the Reply brief, Defendants note that EEA staplers are circular staplers and are a different product altogether from 23 Endo GIA staplers (which are linear staplers). Reply at 4. Because EEA and Endo GIA staplers have different applications, Defendants demand a clearer allegation from Mr. Nichols as to which 24 product he was injured by. Id. However, the Complaint is replete with allegations that it was the “Endo GIA” stapler which specifically harmed Mr. Nichols, and Mr. Nichols also attached a 25 hospital billing report with highlighted portions indicating that Dr. Rydz used the Endo GIA stapler in particular. See Kaufman Decl., Ex. 2 (hospital billing records) (Docket No. 29-1). 26 Further, Mr. Nichols cites this hospital billing report, and the price of an Endo GIA stapler, when alleging that there was an economically feasible alternative design under a negligent design defect 27 theory. SAC ¶ 59 (“[a]ccording to Mr. Nichols’ medical billing records, Plaintiff was billed 1 design is defective “if it either violates the minimum safety expectations of an ordinary consumer 2 or contains dangers which outweigh its benefits.” Soule v. Gen. Motors Corp., 8 Cal. 4th 548, 3 570 n.7, 34 Cal. Rptr. 2d 607, 619, 882 P.2d 298, 310 (1994). As the California Supreme Court 4 has explained, the test for negligent design “involves a balancing of the likelihood of harm to be 5 expected from a machine with a given design and the gravity of harm if it happens against the 6 burden of the precaution which would be effective to avoid the harm.” Merrill v. Navegar, Inc., 7 26 Cal. 4th 465, 479, 110 Cal. Rptr. 2d 370, 381, 28 P.3d 116, 125 (2001) (citing Pike v. Frank G. 8 Hough Co., 2 Cal. 3d 465, 470, 85 Cal. Rptr. 629, 632, 467 P.2d 229, 232 (1970)). The Ninth 9 Circuit has also held that “[a]s the common law of torts long ago recognized, the rational 10 calculation of risk requires multiplying the magnitude of a threatened loss by the probability of its 11 occurrence.” Arrendondo v. Neven, 763 F.3d 1122, 1131 (9th Cir. 2014) (citing United States v. 12 Carroll Towing Co., 159 F.2d 169, 173 (2d Cir. 1947)) (the famous “burden-probability-loss,” or 13 “BPL” formula, for the law of negligence developed by Judge Hand). Separate and distinct from 14 the balancing test of negligence, is an inquiry into the availability of reasonable alternative design; 15 the plaintiff must demonstrate that there was a safer design that was also economically feasible. 16 See Restat. 3d of Torts: Products Liability, § 2(b) (“[a] product is … defective in design when the 17 foreseeable risks of harm posed by the product could have been reduced or avoided by the 18 adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the 19 commercial chain of distribution, and the omission of the alternative design renders the product 20 not reasonably safe”). 21 The defective design which Mr. Nichols alleges is the Endo GIA stapler’s manual 22 operation, which results in the stapler “failing to fire staples properly, despite appropriate 23 utilization by a surgeon.” SAC ¶ 53. At the motion hearing, the Court expressed concerns about 24 the scope of Plaintiff’s negligent design defect theory, which seemed to sweep all manually 25 operated staplers into its reach. The complaint lacks reasonable specificity in this regard. Plaintiff 26 must specifically allege why the Covidien Endo GIA stapler is defectively designed. The 27 ambiguity of Plaintiff’s negligent design claim fails to give Defendants fair notice of the claim. 1 defect cause of action with leave to amend. 2 D. Strict Products Liability Failure to Warn 3 California law recognizes failure to warn claims under both strict liability and negligence 4 theories. Webb v. Special Elec. Co., Inc., 63 Cal. 4th 167, 181, 202 Cal. Rptr. 3d 460, 470, 370 5 P.3d 1022, 1030 (2016). In general, “a product seller will be strictly liable for failure to warn if a 6 warning was feasible and the absence of a warning caused the plaintiff’s injury.” Id. See also 7 Kase v. Metalclad Insulation Corp., 6 Cal. App. 5th 623, 644, 212 Cal. Rptr. 3d 198, 214 (2016) 8 (holding that a product seller “will be strictly liable for failure to warn if a warning was feasible 9 and the absence of a warning caused the plaintiff’s injury … [r]easonableness of the seller’s 10 failure to warn is immaterial in the strict liability context”). Manufacturers must warn about 11 known dangers in that scientific field: “manufacturers [are held] strictly liable for injuries caused 12 by their failure to warn of dangers that were known to the scientific community at the time they 13 manufactured and distributed their product.” Johnson v. Am. Standard, Inc., 43 Cal. 4th 56, 64, 74 14 Cal. Rptr. 3d 108, 114, 179 P.3d 905, 910 (2008). Cf. Anderson v. Owens-Corning Fiberglas 15 Corp., 53 Cal. 3d 987, 1003, 281 Cal. Rptr. 528, 538, 810 P.2d 549, 559 (1991) (“under strict 16 liability principles … the manufacturer is liable if it failed to give warning of dangers that were 17 known to the scientific community at the time it manufactured or distributed the product”). These 18 principles for strict liability apply to the dangers which were known at the time of manufacture or 19 distribution. 20 Mr. Nichols alleges that the stapler which was used in his September 2018 surgery was a 21 model which Defendants knew malfunctioned frequently and contained defects. SAC ¶¶ 33, 34. 22 Mr. Nichols also alleges that he was injured as a direct result of this failure to warn. Id. ¶ 67. But 23 Mr. Nichols has not provided any details about the warnings which Dr. Rydz received before the 24 surgery, and why those warnings were inadequate (i.e., why those warnings did not inform Dr. 25 Rydz of the known danger of staples misfiring during the manual operation of the Endo GIA 26 Stapler). Nor has Mr. Nichols alleged with specificity what warning was feasible (e.g., he does 27 not provide an indication as to what a proper warning would look like and how it would be placed 1 Nonetheless, Mr. Nichols describes the deficiencies of the ASR program, and how it 2 conceals the nature and severity of Endo GIA stapler-related incidents. Mr. Nichols alleges that 3 Defendants abused the ASR Program to avoid public reporting of stapler-related incidents in the 4 MAUDE database, which would have subjected the staplers to a recall. SAC ¶ 35. Further, 5 Defendants allegedly reported injuries under the term “malfunctions” to avoid public disclosure 6 and to ensure that FDA did not recall the staplers. Id. ¶¶ 36-37. This resulted in a vast disparity in 7 reporting between the ASR database and the public MAUDE reporting system. For instance, Mr. 8 Nichols notes that in 2016, nearly 10,000 stapler “malfunctions” were included in the non-public 9 ASR system but only 84 stapler injuries or malfunctions were submitted to the public MAUDE 10 database. Id. ¶ 38. It may reasonably be inferred that public reporting in the MAUDE database 11 would have provided a feasible warning to patients and doctors alike about the dangers of the 12 Endo GIA stapler. Wider dissemination of information would have provided the requisite 13 warnings about the potential for sled and pin components to be missing from the stapler. This 14 particular failure to warn theory, which involves the ASR and MAUDE databases, is therefore 15 plausible. The SAC does not state whether there are other failure to warn theories which Mr. 16 Nichols alleges. 17 Accordingly, the Court denies Defendants’ motion to dismiss the strict products liability 18 failure to warn cause of action. 19 III. CONCLUSION 20 For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendants’ 21 Motion to Dismiss. The Court GRANTS Defendants’ motion to dismiss the negligent design 22 claim without prejudice. It DENIES Defendants’ motion to dismiss the strict products liability 23 manufacturing defect claim and the strict products liability failure to warn claim. 24 This order disposes of Docket No. 27. 25 IT IS SO ORDERED. 26 Dated: February 26, 2021 27 ______________________________________