1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 VICTOR SIVILLI, Case No.: 3:18-cv-02162-AJB-JLB Plaintiff, 12 ORDER: v. 13 (1) GRANTING IN PART AND

WRIGHT MEDICAL TECHNOLOGY,

14 DENYING IN PART DEFENDANTS’ INC., a Delaware corporation;

MOTION TO STRIKE; AND

15 WRIGHT MEDICAL GROUP, INC., a

Delaware corporation; WRIGHT 16 (2) GRANTING IN PART AND MEDICAL GROUP, N.V., a foreign

DENYING IN PART DEFENDANTS’

17 corporation; MICROPORT

MOTION TO DISMISS.

ORTHOPEDICS, INC., a Delaware 18 corporation; and DOES 1-20, (Doc. No. 20) 19 Defendants. 20 21 Presently before the Court is Defendants Wright Medical Technology, Inc. (“Wright 22 Medical”) and Microport Orthopedics, Inc.’s (“Microport” collectively with Wright 23 Medical, “Defendants”) motion to strike and motion to dismiss Plaintiff Victor Sivilli’s 24 (“Plaintiff”) First Amended Complaint. (Doc. No. 20.) Plaintiff opposed both motions. 25 (Doc. No. 22.) The Court held a hearing on Defendants’ motions on December 12, 2019. 26 (Doc. No. 26.) For the reasons set forth below, the Court GRANTS IN PART AND 27 DENIES IN PART Defendants’ motion to strike, and GRANTS IN PART AND 28 Defendants’ motion to dismiss. 1 I. BACKGROUND 2 This case is a products liability action arising out of the alleged failure of a hip 3 replacement device. (First Amended Complaint (“FAC”), Doc. No. 19 ¶ 1.) Plaintiff claims 4 Defendants have known their hip replacement device—the Profemur Total Hip System— 5 was prone to fail within a few years of implantation despite most hip implant devices 6 typically lasting more than 20 years. (Id.) The Profemur device offers a modular neck 7 component made of cobalt chromium alloy, and Plaintiff alleges Defendants have known 8 the device tends to fracture at the neck of the Profemur device. (Id.) 9 On July 10, 2007, Plaintiff had a Profemur device implanted by way of a right total 10 hip arthroplasty. (Id. ¶ 73.) Then in January 2014, Defendant Microport acquired 11 Defendant Wright Medical’s “OrthoRecon Division,” which included Wright Medical’s 12 hip/knee division responsible for designing and selling the Profemur neck component. (Id. 13 ¶ 3.) Ted Davis, the previous president of Wright Medical’s OrthoRecon business, went on 14 to lead the Microport Orthopedic business. (Id. ¶ 60.) Plaintiff alleges that as part of the 15 January 2014 acquisition of Defendant Wright Medical’s OrthoRecon Division, Defendant 16 Microport maintained key personnel previously involved in the marketing, sale, post- 17 market surveillance, complaint tracking, and FDA reporting for the Profemur hip system. 18 (Id. ¶ 61.) 19 On August 15, 2016, the neck component of the Profemur device allegedly fractured 20 in Plaintiff’s hip, and he was taken to the emergency room where he underwent a revision 21 surgery to have the Profemur hip implant system surgically removed. (Id. ¶ 76, 78–79.) 22 Plaintiff alleges he has suffered from unnecessary pain, debilitation, and hospitalization, 23 and was forced to undergo revision surgery because the device was defective and 24 Defendants failed to adequately warn of the dangers of the device. (Id. ¶ 2.) 25 II. PROCEDURAL HISTORY 26 Plaintiff filed his complaint in the Superior Court of the State of California for the 27 County of San Diego on August 1, 2018. (Doc. No. 1-3.) The case was removed to this 28 Court on the basis of diversity jurisdiction on September 17, 2018. (Doc. No. 1.) On 1 September 24, 2018, Defendants filed a motion to dismiss, and the Court granted in part, 2 and denied in part Defendants’ motion on August 13, 2019. (Doc. Nos. 3, 18.) The Court 3 dismissed Plaintiff’s manufacturing defect claim without leave to amend, and dismissed 4 Plaintiff’s fraud-related claims with leave to amend. (Doc. No. 18 at 9.) Plaintiff filed his 5 First Amended Complaint on August 26, 2019. (Doc. No. 19.) Remaining in Plaintiff’s 6 FAC are claims for relief for: (1) strict products liability for failure to warn, (2) negligence, 7 (3) negligence for failure to recall/retrofit, (4) fraudulent misrepresentation, (5) fraudulent 8 concealment, and (6) negligent misrepresentation. (Id.) On September 9, 2019, Defendants 9 filed a motion to strike and a motion to dismiss Plaintiff’s FAC. (Doc. No. 20.) The motion 10 was fully briefed, and the Court held oral argument on December 12, 2019. This order 11 follows. 12 III. DEFENDANTS’ REQUEST FOR JUDICIAL NOTICE 13 Defendants request judicial notice of a copy of a letter dated October 23, 2018, sent 14 by Plaintiff’s counsel to Defendants’ counsel regarding the unknown location of the 15 Profemur hip system that was implanted into, and surgically removed from Plaintiff’s 16 body. (Doc. No. 20-2 at 2.) Plaintiff does not oppose the request for judicial notice. Federal 17 Rule of Evidence 201(b) permits judicial notice of a fact when it is “not subject to 18 reasonable dispute because it: (1) is generally known within the trial court’s territorial 19 jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy 20 cannot reasonably be questioned.” Welk v. Beam Suntory Imp. Co., 124 F. Supp. 3d 1039, 21 1041–42 (S.D. Cal. 2015). 22 Here, the fact regarding the unknown location of the Profemur hip device is not 23 generally known within this Court’s jurisdiction. However, as confirmed at oral argument, 24 it is undisputed that the parties are unaware of the location of the original hip system 25 implanted into, and surgically removed from Plaintiff’s body. Additionally, none of the 26 parties question the accuracy or authenticity of the letter. As such, the Court GRANTS 27 Defendants’ unopposed request for judicial notice. 28 // 1 IV. LEGAL STANDARD 2 A. Federal Rule of Civil Procedure Rule 12(f) 3 Under Rule 12(f) of the Federal Rules of Civil Procedure, the Court may “strike from 4 a pleading . . . any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. 5 P. 12(f). In ruling on a motion to strike, just as with a motion to dismiss, the court must 6 view the pleadings in a light most favorable to the nonmoving party. See In re 7 2TheMart.com, Inc. Sec. Litig., 114 F. Supp. 2d 955, 965 (C.D. Cal. 2000). 8 The purpose of a Rule 12(f) motion is “to avoid the expenditure of time and money 9 that must arise from litigating spurious issues by dispensing with those issues prior to trial.” 10 Sidney–Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983) (citation omitted). 11 However, courts often view motions to strike with disfavor, and therefore will not grant a 12 motion to strike “unless the matter to be stricken clearly could have no possible bearing on 13 the subject of the litigation.” Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F. Supp. 2d 1048, 14 1057 (N.D. Cal. 2004) (citations omitted); see also Bureerong v. Uvawas, 922 F. Supp. 15 1450, 1478 (C.D. Cal. 1996). The court should deny the motion to strike if “there is any 16 doubt as to whether the allegations might be an issue in the action.” In re 2TheMart. com, 17 114 F. Supp. 2d at 965 (emphasis in original). 18 B. Federal Rule of Civil Procedure Rule 12(b)(6) 19 A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a plaintiff’s 20 complaint. See Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “[A] court may dismiss 21 a complaint as a matter of law for (1) lack of cognizable legal theory or (2) insufficient 22 facts under a cognizable legal claim.” SmileCare Dental Grp. v. Delta Dental Plan of Cal., 23 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). However, a complaint will survive a 24 motion to dismiss if it contains “enough facts to state a claim to relief that is plausible on 25 its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In making this 26 determination, a court reviews the contents of the complaint, accepting all factual 27 allegations as true and drawing all reasonable inferences in favor of the nonmoving party. 28 See Cedars-Sinai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972, 975 (9th 1 Cir. 2007). Notwithstanding this deference, the reviewing court need not accept legal 2 conclusions as true. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). It is also improper for 3 a court to assume “the [plaintiff] can prove facts that [he or she] has not alleged.” Assoc. 4 Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 5 (1983). However, “[w]hen there are well-pleaded factual allegations, a court should assume 6 their veracity and then determine whether they plausibly give rise to an entitlement to 7 relief.” Iqbal, 556 U.S. at 664. 8 V. DISCUSSION 9 The Court will first address Defendants’ motion to strike, and will follow with a 10 discussion of Defendants’ motion to dismiss. 11 A. Defendants’ Rule 12(f) Motion to Strike 12 Defendants first move to strike all references to manufacturing defects in Plaintiff’s 13 FAC. (Doc. No. 20-1 at 8.) In particular, Defendants argues that the references to 14 manufacturing defects circumvents the Court’s August 13, 2019 order dismissing 15 Plaintiff’s manufacturing defect claim without leave to amend, and essentially adds new 16 manufacturing allegations to the FAC. (Id.) 17 Rule 12(f) permits the Court to strike from any pleadings any “immaterial matter.” 18 Fed. R. Civ. P. 12(f). Such matters are those that have “no essential or important 19 relationship to the claim for relief or the defenses being pleaded, or a statement of 20 unnecessary particulars in connection with and descriptive of that which is material.” 21 Rivers v. Cty. of Marin, No. C 05-4251, 2006 WL 581096, at *3 (N.D. Cal. Mar. 7, 2006). 22 The Court will analyze in turn whether each reference to manufacturing defects is to be 23 stricken from the FAC. 24 1. Reference No. 1 25 Defendants first take issue with Reference #1 in Plaintiff’s FAC. (Doc. No. 20-1 at 26 9.) Reference #1 is nestled in the “First Claim for Relief: Strict Products Liability – Failure 27 To Warn” section of the FAC, and states: 28 At all times relevant hereto, the PROFEMUR® Total Hip System was 1 dangerous, unsafe, and defective in manufacture. Such defects included but were not limited to an unreasonably high propensity for corrosion, fretting, 2 and fatigue under normal and expected use of the device, leading to fracture 3 of the modular neck and catastrophic failure of the device, requiring revision surgery. 4

5 (FAC ¶ 111 (emphasis added).) 6 While Plaintiff argues this allegation “does not concern a manufacturing defect,” the 7 Court is not convinced that is true given the unequivocal reference to the Profemur device 8 being “defective in manufacture.” (Id.) As Plaintiff’s manufacturing defect claim did not 9 survive Defendants’ first motion to dismiss, Plaintiff may not rely on any reference to 10 defects in manufacturing to continue to assert allegations of a manufacturing defect. 11 However, the Court will also not entertain Defendants’ request to strike the entire 12 paragraph. (Doc. No. 20-1 at 9.) Paragraph 111 of the FAC, without reference to a 13 manufacturing defect, may stand as an allegation relevant to Plaintiff’s strict liability 14 failure to warn claim that the Profemur device had “potential risks that were known or 15 knowable” to Defendants. Rosa v. City of Seaside, 675 F. Supp. 2d 1006, 1011 (N.D. Cal. 16 2009), aff’d sub nom., Rosa v. Taser Int’l, Inc., 684 F.3d 941 (9th Cir. 2012) (stating 17 elements of strict liability failure to warn claim under California law). 18 Accordingly, the Court GRANTS IN PART AND DENIES IN PART Defendants’ 19 motion to strike Reference #1. The reference to “defective in manufacture” is stricken 20 from the FAC. However, the rest of paragraph 111 of the FAC may remain as alleged. 21 2. Reference Nos. 2–3 22 Next, Defendants maintain that References #2 and #3 should be stricken from the 23 FAC because of its mention of “manufacturing.” Reference #2 and #3 appear under 24 Plaintiff’s second claim for relief for negligence, and alleges: 25 • As a direct, legal, proximate, and producing cause of Defendants’ negligent design, testing, manufacturing, marketing, selling, and promoting the PROFEMUR® Total 26 Hip System, Plaintiff suffered injuries as set forth above. (FAC ¶ 126 (emphasis 27 added).) 28 1 • Defendants’ negligent design, testing, manufacturing, selling, and promoting the PROFEMUR® Total Hip System, was a substantial factor in causing Plaintiff’s 2 injuries as set forth above. (FAC ¶ 127 (emphasis added).) 3 4 Plaintiff contends the term “manufacturing” need not be sanitized from the FAC 5 because the allegations “are relevant to Plaintiff’s negligence and other causes of action.” (Doc. No. 22 at 24.) The Court does not agree. In order to prove a negligence theory based 6 on a manufacturing defect, Plaintiff will need to prove a duty and breach as it relates to the 7 manufacturing of the Profemur device in the first place. Plaintiff has simply failed to 8 provide any facts as to how the Profemur device implanted in Plaintiff deviated from 9 Defendant Wright Medical’s intended result. Plaintiff may not masquerade a 10 manufacturing defect claim as a negligence claim to end run the Court’s order dismissing 11 the manufacturing defect claim for relief. See Zetz v. Bos. Sci. Corp., 398 F. Supp. 3d 700, 12 709 (E.D. Cal. 2019) (dismissing both strict liability and negligence theories of 13 manufacturing defect claim for failure to plead how the product deviated from the 14 manufacturer’s intended result). 15 Therefore, the Court GRANTS Defendants’ motion to strike the term 16 “manufacturing” from paragraphs 126 and 127 of Plaintiff’s FAC. The remaining portions 17 of paragraphs 126 and 127 may stand as alleged. 18 3. Reference No. 4 19 Finally, the Court examines whether the term “manufacturing” should be stricken 20 from Reference #4. In relevant part, Reference #4 from the “fraudulent concealment” 21 section of Plaintiff’s FAC states: 22

23 In representations to Plaintiff, Plaintiff’s healthcare providers, and/or the FDA, Wright and Microport intentionally omitted, concealed or suppressed 24 material information regarding the safety and performance of the 25 PROFEMUR® Total Hip System, including, but not limited to . . . The PROFEMUR® Total Hip System was designed, manufactured, marketed, 26 promoted, distributed, and sold negligently, defectively, and/or improperly[.] 27 28 (FAC ¶ 160(e).) 1 For similar reasons as those stated above, Plaintiff’s references to “manufactured” 2 are improper as they are an attempt to revive Plaintiff’s manufacturing defect claim. 3 Additionally, the reference is immaterial and unnecessary because Plaintiff may still rely 4 on defective design or negligence as a basis for its fraudulent concealment claim. 5 Accordingly, the Court GRANTS Defendants’ motion to strike the term “manufactured” 6 from paragraph 160(e). The rest of paragraph 160(e) of the FAC may remain as alleged. 7 B. Rule 12(b)(6) Motion to Dismiss 8 The Court now turns to Defendants’ motion to dismiss. Specifically, Defendants 9 move to dismiss (1) Microport as a defendant in this action; and (2) Plaintiff’s negligent 10 misrepresentation claim. (Doc. No. 20-1 at 12–15.) 11 1. Microport is Dismissed from the Action 12 Defendants request dismissal of Microport from this action because Microport “was 13 not involved with the PROFEMUR® device until more than six years after Plaintiff was 14 implanted with the PROFEMUR® hip system.” (Doc. No. 20-1 at 12.) While Plaintiff’s 15 implantation of the Profemur device occurred in 2007, Microport allegedly did not acquire 16 Wright Medical’s hip implant device division until January 2014. (FAC ¶ 59.) In 17 opposition, Plaintiff rebuts that Microport is liable as Wright’s successor because 18 “MicroPort manufactured, marketed, and sold the Profemur Device for two and one-half 19 years before the Profemur titanium modular neck fractured in Mr. Sivilli’s hip.” (Doc. No. 20 22 at 12.) 21 Under California law, when a corporation purchases the principal assets of another 22 corporation, the purchaser does not assume the seller’s liabilities unless: “(1) there is an 23 express or implied agreement of assumption, (2) the transaction amounts to a consolidation 24 or merger of the two corporations, (3) the purchasing corporation is a mere continuation of 25 the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of 26 escaping liability for the seller’s debts.” Hernandez v. Enter. Rent-A-Car Co. of San 27 Francisco, 37 Cal. App. 5th 187, 192 (2019) (quoting Ray v. Alad Corp., 19 Cal.3d 22, 28 28 (1977)). At issue is whether the third exception applies to impose liability onto Microport 1 as a “mere continuation” of Wright Medical. 2 Plaintiff argues that Microport, as the purchaser of Wright Medical’s hip device 3 division, is liable as a successor manufacturer because Microport is a “mere continuation” 4 of Wright Medical. (Doc. No. 22 at 12.) Under California law, a “mere continuation” exists 5 upon the showing of one or both of the following factual elements: (1) no adequate 6 consideration was given for the predecessor corporation’s assets and made available for 7 meeting the claims of its unsecured creditors; or (2) one or more persons were officers, 8 directors, or stockholders of both corporations. See Alad Corp., 19 Cal. 3d at 28. Plaintiff 9 maintains the second element is applicable. Specifically, Plaintiff points out that Microport 10 hired Ted Davis, Wright Medical’s former OrthoRecon Division President, to lead its 11 orthopedic business, and Microport “maintained other crucial personnel previously 12 involved in Wright’s marketing, sale, post-market surveillance, complaint tracking, and 13 FDA reporting of/for the Profemur Device.” (Doc. No. 22 at 13 (quoting FAC ¶¶ 59–61).) 14 Defendants disagree, maintaining “the officers, directors, or stockholders must have been 15 working concurrently in both corporations.” (Doc. No. 23 at 6.) 16 While case law does not support Defendants’ contention that the officers, directors, 17 or stockholders must have been working for both corporations simultaneously, the Court 18 agrees with Defendants that applying the “mere continuation” exception would be 19 inappropriate. “[E]ven when the same persons are officers or directors of the two 20 corporations, liability is not imposed on the acquiring corporation when recourse to the 21 debtor corporation is available and the two corporations have separate identities.” Beatrice 22 Co. v. State Bd. of Equalization, 6 Cal. 4th 767, 778 (1993). And, the imposition of 23 successor liability under the “mere continuation” doctrine requires that the predecessor 24 entity that was purportedly acquired by the successor entity no longer exist. See Butler v. 25 Adoption Media, LLC, 486 F. Supp. 2d 1022, 1064 (N.D. Cal. 2007) (“With regard to the 26 third exception, the ‘mere continuation’ doctrine [] requires that the selling entity 27 dissolve—because only one corporation may remain after the transaction.”). Here, Plaintiff 28 is pursuing recourse against Wright Medical, who concedes that it alone is the properly 1 named defendant in this action. (Doc. No. 23 at 7.) Moreover, Plaintiff himself 2 acknowledges that Wright Medical and Microport are two separate entities, and Wright 3 Medical, as the precedessor entity, still exists. (FAC ¶¶ 4–7.) 4 Furthermore, in Alad, the California Supreme Court contemplated a situation, such 5 as here, in which none of the four exceptions apply to impose liability on a successor 6 corporation in a strict products liability action. The Alad court noted that the purpose of the 7 doctrine of strict products liability “is to insure that the costs of injuries be borne by the 8 manufacturers that put such products on the markets rather than by the injured persons who 9 are powerless to protect themselves.” Alad Corp., 19 Cal. 3d at 30. In light of these 10 principles, the court concluded that strict liability could still be imposed upon the successor 11 to a manufacturer where: “1) the plaintiff’s remedies against the original manufacturer are 12 effectively destroyed by the successor’s acquisition of the business; 2) the successor is able 13 to assume the original manufacturer’s risk-spreading role; and 3) it is fair to require the 14 successor to assume a responsibility for defective products that was a burden necessarily 15 attached to the original manufacturer’s good will being enjoyed by the successor in the 16 continued operation of its business.” Alad Corp., 19 Cal. 3d at 31. In effect, Alad created a 17 fifth exception to the general rule against imposing liability on a successor corporation in 18 product liability cases. But as illuminated above, this fifth exception does not apply because 19 Plaintiff is unable to show that his remedies against Wright Medical are destroyed by 20 Microport’s acquisition of the OrthoRecon division. Wright Medical has not been 21 dissolved, and Plaintiff has properly asserted claims against Wright Medical. 22 Accordingly, the Court DISMISSES Defendant Microport. The Court need not 23 address any further arguments concerning Microport’s liability because those arguments 24 are contingent upon a finding that Microport is a suitable defendant, which it is not. 25 2. Defendants’ Motion to Dismiss Plaintiff’s Claim for Negligent 26 Misrepresentation is Denied. 27 Defendants move to dismiss Plaintiff’s negligent misrepresentation claim on the 28 ground that Plaintiff impermissibly lumps together both Wright Medical and Microport in 1 the FAC. (Doc. No. 20-1 at 14.) However, Microport’s dismissal from this action moots 2 this argument as against Microport. Nevertheless, the Court reviews the FAC and 3 Defendants’ motion to dismiss to assess whether a negligent misrepresentation claim has 4 been adequately pled against Wright Medical. 5 The elements of a negligent misrepresentation claim are: “(1) a misrepresentation of 6 a past or existing material fact, (2) without reasonable ground for believing it to be true, 7 (3) with the intent to induce another’s reliance on the fact misrepresented, (4) justifiable 8 reliance on the misrepresentation, and (5) resulting damages.” Mottale v. Kimball Tirey & 9 St. John, LLP, No. 13cv1160-GPC-JMA, 2013 WL 5570193, at *3 (S.D. Cal. Oct. 9, 2013) 10 (quoting Nat’l Union Fire Ins. Co. v. Cambridge Integrated Servs. Group, Inc., 171 Cal. 11 App. 4th 35, 50 (2009)). 12 The Court holds that Plaintiff has sufficiently pled a negligent misrepresentation 13 claim for relief against Wright Medical. Here, Plaintiff alleges Wright Medical 14 misrepresented the safety of the Profemur device. (FAC ¶ 26 (alleging that Wright 15 Medical’s marketing materials included statements such as “[n]one of the necks has 16 experienced a clinical failure since their inception.”) Plaintiff pleads that there were 17 unreasonable grounds for Wright Medical to believe the statement to be true. (See e.g., 18 FAC ¶ 93 (“The Device was known by Wright to be failing from fatigue failures of the 19 modular necks prior to December 13, 2000, the date it received permission from the FDA 20 to distribute these devices in the United States.”). Plaintiff additionally provides that 21 Wright Medical intended to induce justifiable reliance on the misrepresentation. (FAC ¶ 22 144, 148 (“Plaintiff was induced to continue believing that the PROFEMUR® Total Hip 23 System implanted in his hip was safe and would not fracture and that there would be no 24 need for him to make adjustments to his activities or seek a prophylactic revision surgery 25 to replace the Device.”). Lastly, Plaintiff alleges adequate damages arising out of his injury. 26 (FAC ¶ 108.) 27 Thus, Plaintiff’s claim for negligent misrepresentation against Wright Medical 28 survives Defendants’ motion to dismiss. 1 || VI. CONCLUSION 2 Based on the reasons stated above, the Court GRANTS IN PART AND DENIES 3 || IN PART Defendants’ motion to strike, DISMISSES Defendant Microport from the 4 || action, and DENIES Defendants’ motion to dismiss Plaintiffs negligent misrepresentation 5 claim against Wright Medical. Plaintiff must file an amended complaint consistent with the 6 instructions provided herein within 21 days from the date this order is filed. 7 8 IT IS SO ORDERED. 9 || Dated: May 29, 2020 © 10 Hon, Anthony J.Battaglia 11 United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12