Walter Shuker v. Smith & Nephew PLC

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 16-3785
_______________
WALTER SHUKER; VIVIAN SHUKER,
Appellants
v.
SMITH & NEPHEW, PLC; SMITH & NEPHEW, INC.
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(E.D. Pa. No. 5-13-cv-06158)
Honorable Juan R. Sánchez
_______________
Argued: June 16, 2017
Before: JORDAN, GREENAWAY, JR., and KRAUSE,
Circuit Judges
(Opinion Filed: March 1, 2018)
Robert Astrachan [Argued]
Eric G. Zajac
Zajac & Arias
1835 Market Street, Suite 2626
Philadelphia, PA 19103
Counsel for Appellants
Sara J. Gourley [Argued]
Eugene A. Schoon
Jana D. Wozniak
Sidley Austin
One South Dearborn Street
Chicago, IL 60603
Counsel Appellee Smith & Nephew PLC
Edward W. Gerecke
Joseph H. Lang, Jr. [Argued]
David J. Walz
Carlton Fields Jorden Burt
4221 West Boy Scout Boulevard, Suite 1000
Tampa, FL 33607
David W. O’Quinn
Irwin Fritchie Urquhart & Moore
400 Poydras Street
Texaco Center, Suite 2700
New Orleans, LA 70130
Counsel for Appellee Smith & Nephew, Inc.
2
Lindsay Powell
United States Department of Justice
Appellate Section
950 Pennsylvania Avenue, N.W., Room 7259
Washington, DC 20530
Counsel for Amicus Curiae United States Food and
Drug Administration
_______________
OPINION OF THE COURT
_______________
KRAUSE, Circuit Judge.
With the Medical Device Amendments of 1976,
Congress added comprehensive medical device approval
processes to the Federal Food, Drug, and Cosmetic Act,
prescribing tiers of federal requirements for certain devices
corresponding to the device’s inherent risk level. In exchange
for compliance with the strictest federal mandates, Congress
afforded manufacturers express preemption from state laws
imposing different or additional “safety or effectiveness”
requirements for those devices. 21 U.S.C. § 360k(a)(2). This
case presents an issue of first impression among the Courts of
Appeals: how courts should apply that express preemption
provision to state law tort claims challenging the design and
manufacture of a medical device comprised of multiple
components, some of which are from “Class III” medical
devices subject to federal requirements, Riegel v. Medtronic,
Inc., 552 U.S. 312, 322-23 (2008), and some of which are
from medical devices that carry a different class designation
3
and are not subject to those requirements, see Medtronic, Inc.
v. Lohr, 518 U.S. 470, 475-78, 494-95 (1996).
Because the plaintiffs’ negligence, strict liability, and
breach of implied warranty claims in their Second Amended
Complaint are expressly preempted, we will affirm the
District Court’s ruling in that respect. But because the
plaintiffs adequately pleaded other, non-preempted claims,
and because jurisdictional discovery is warranted with respect
to personal jurisdiction over one of the defendants, we will
reverse the District Court’s dismissal of some of the
plaintiffs’ claims in their Third Amended Complaint, vacate
the District Court’s personal jurisdiction ruling, and remand
for proceedings consistent with this opinion.
I. Background
After Walter Shuker underwent a hip replacement
surgery that resulted in unexpected complications, he and his
wife, Vivian Shuker, brought tort claims against Smith &
Nephew, Inc. (“Smith & Nephew”), the manufacturer of his
hip replacement system, and Smith & Nephew, PLC (“PLC”),
the manufacturer’s parent company. Before turning to the
details of Mr. and Mrs. Shuker’s dispute with Smith &
Nephew and with PLC, we review the relevant statutory and
regulatory scheme for context.
A. Statutory and Regulatory Context
For purposes of federal statutes governing medical
devices, the term “device” is a broad one, encompassing
instruments, machines, implants, and “other similar or
related” articles, and “including any component, part, or
4
accessory” of those articles. 21 U.S.C. § 321(h). “Device”
refers not just to “replacement heart valves, implanted
cerebella stimulators, and pacemaker pulse generators,” but
also to “such devices as elastic bandages and examination
gloves,” as well as to the constituent parts of those items.
Riegel, 552 U.S. at 316-17.
The Federal Food, Drug, and Cosmetic Act did not
originally authorize federal regulation in connection with the
introduction of new medical devices, but, over time,
consumers and the U.S. Food and Drug Administration
(“FDA”) began voicing “mounting . . . concern” about the
unexamined health risks of devices being introduced to the
public. Lohr, 518 U.S. at 475-76. Several states responded to
those concerns by adopting regulatory measures, but
Congress “stepped in” by enacting the Medical Device
Amendments of 1976, “which swept back some state
obligations and imposed a regime of detailed federal
oversight.” Riegel, 552 U.S. at 315-16. As explained in more
detail below, Congress’s approach here, as in other regulatory
contexts,1 was twofold: first, it established a system of federal
regulation over the introduction of new devices, instituting
tiered federal requirements calibrated to each device’s risk
level, and, second, it enacted a provision stating that federal
1
See, e.g., Federal Environmental Pesticide Control
Act of 1972, Pub. L. No. 92-516, sec. 2, §§ 3-13, 24, 86 Stat.
973, 979-92, 997 (codified as amended at 7 U.S.C. §§ 136a-
136k, 136v); Federal Cigarette Labeling and Advertising Act,
Pub. L. No. 89-92, §§ 4-5, 79 Stat. 282, 283 (1965) (codified
as amended at 15 U.S.C. §§ 1333-1334).
5
medical device requirements supersede any different or
additional state safety or effectiveness requirements. See
Medical Device Amendments of 1976, Pub. L. No. 94-295,
sec. 2, §§ 513-516, 521, 90 Stat. 539, 540-60, 562 (codified
as amended at 21 U.S.C. §§ 360c-360f, 360k).
1. Medical Device Approval Procedures
Approval procedures for new medical devices under
the Medical Device Amendments vary depending on a
device’s class designation. The statute divides devices into
three classes “based on the risk that they pose to the public”
and applies more rigorous prerequisites to devices that pose
greater risks. Lohr, 518 U.S. at 476-77; see 21 U.S.C.
§§ 360c(a)(1), 360d, 360e. Because Class I devices pose the
least risks, Class II devices are “more harmful,” and Class III
devices pose the greatest risks, Lohr, 518 U.S. at 477; see 21
U.S.C. § 360c(a)(1), Class III devices receive “the most
federal oversight,” and Class I and II devices receive much
less, Riegel, 552 U.S. at 316-17. We describe the FDA’s
comprehensive approval procedures for Class III devices
before summarizing the more lenient approval procedures for
Class I and Class II devices.
a. Class III Devices: Premarket Approval
Before becoming available to the public, a Class III
device must receive “premarket approval” through a process
by which the device’s manufacturer “provide[s] reasonable
assurance of [the device’s] safety and effectiveness.” 21
U.S.C. § 360c(a)(1)(C). The premarket approval process “is a
rigorous one,” requiring manufacturers to “submit detailed
information regarding the safety and efficacy of their devices,
6
which the FDA then reviews, spending an average of 1,200
hours on each submission.” Lohr, 518 U.S. at 477.
Submissions are typically “multivolume
application[s],” and thus the time devoted by the FDA to
reviewing manufacturers’ premarket approval submissions is,
unsurprisingly, substantial. Riegel, 552 U.S. at 317-18.
Pursuant to the Medical Device Amendments, premarket
approval applications must include, among other things, “a
full statement of the device’s components, ingredients, and
properties,” id. at 318 (internal quotation marks omitted); see
21 U.S.C. § 360e(c)(1)(B), which the FDA may choose to
subject to “performance standards,” 21 U.S.C. § 360d(a)(1),
(a)(2)(B)(i). And they likewise must provide “a specimen of
the proposed labeling,” which shall specify “conditions of
use” under which the FDA will evaluate the device’s safety
and effectiveness. Riegel, 552 U.S. at 318; see 21 U.S.C.
§ 360e(c)(1)(F). The FDA must also determine that the
labeling is not false or misleading before granting premarket
approval to the device. Riegel, 552 U.S. at 318; see 21 U.S.C.
§ 360e(d)(1)(A).
After reviewing an application, the FDA grants
premarket approval only if, based on a weighing of “any
probable benefit to health from the use of the device against
any probable risk of injury or illness from such use,” it finds
“there is a ‘reasonable assurance’ of the device’s ‘safety and
effectiveness.’” Riegel, 552 U.S. at 318 (quoting 21 U.S.C.
§§ 360c(a)(2)(C), 360e(d)). Once approved, the device may
be manufactured, advertised, and distributed to the public, but
those marketing activities may not be done in a manner
“inconsistent with . . . the [premarket] approval order for the
device.” 21 C.F.R. § 814.80. To that end, a manufacturer
7
wishing to make “incremental change[s]” that affect the
device’s safety and effectiveness must submit a supplemental
premarket approval application. 21 U.S.C. § 360e(d)(5);
accord Riegel, 552 U.S. at 319.
Notwithstanding the strictures imposed on
manufacturers, the Act allows more leeway to health care
providers. Even after the FDA grants premarket approval to a
medical device or to any supplements, it does not “limit or
interfere with the authority of a health care practitioner to
prescribe or administer any legally marketed device to a
patient . . . .” 21 U.S.C. § 396. And physicians’ ability to
prescribe legally marketed devices as they see fit means that
“‘off-label’ usage,” or use “for some other purpose than that
for which [a device] has been approved by the FDA,” is “an
accepted and necessary corollary of the FDA’s mission to
regulate . . . without directly interfering with the practice of
medicine.” Buckman Co. v. Plaintiffs’ Legal Comm., 531
U.S. 341, 350 (2001). Although the statute thus expressly
contemplates the possibility that physicians may use a Class
III device for unapproved purposes, a manufacturer may not
vary the design or manufacture of the pre-approved device,
even in anticipation of such uses. See 21 U.S.C. § 396.
b. Class I and Class II Devices: § 510(k)
Approval
In contrast to the rigorous premarket approval process
for Class III devices, Class I and Class II devices are subject
to “a limited form of review” set forth at 21 U.S.C. § 360(k)
and known as the “§ 510(k) process” (reflecting the number
of the relevant section in the Federal Food, Drug, and
Cosmetic Act). Lohr, 518 U.S. at 478. Compared to a
8
premarket approval application, compliance with the § 510(k)
process requires a far less exhaustive submission. See 21
U.S.C. § 360(k); 21 C.F.R. § 807.87. In many cases, § 510(k)
approval rests not on proof of the device’s safety, but merely
on a finding that a device is “substantially equivalent” to a
preexisting approved medical device. Lohr, 518 U.S. at 478.
A § 510(k) approval thus provides comparatively “little
protection to the public.” Id. at 493.
2. Express Preemption Provision
The Medical Device Amendments’ comprehensive and
tiered approval procedures for medical devices leave only
limited room for additional state regulation, especially
considering the statute contains a broad express preemption
provision. This provision proclaims that “no State . . . may
establish or continue in effect with respect to a device . . . any
requirement” that “is different from, or in addition to,” any
federal requirement and that relates either “to the safety or
effectiveness of the device” or “to any other matter” included
in a federal requirement applicable to the device. 21 U.S.C.
§ 360k(a).2 The statute thus preempts any state requirement
that has “the effect of establishing a substantive requirement
for [the] specific device” in question that relates to safety,
2
The express preemption provision includes an
exception for state requirements that the Secretary of Health
and Human Services has exempted from preemption by
regulation, see 21 U.S.C. § 360k(b), but because the Shukers’
common law tort claims are not included within the
Secretary’s regulatory exemptions, see 21 C.F.R. §§ 808.53to .101, that exception is not pertinent here.
9
effectiveness, or “any other matter” that forms a federal
requirement, so long as the state requirement is “different
from, or in addition to,” the federal mandate. Lohr, 518 U.S.
at 499-500 (quoting 21 U.S.C. § 360k(a); 21 C.F.R.
§ 808.1(d)(6)(ii)). The “overarching concern” behind this
provision is “that pre-emption occur only where a particular
state requirement threatens to interfere with a specific federal
interest.” Id. at 500.
Application of the express preemption provision tracks
the Medical Device Amendments’ tiered statutory scheme for
medical device approvals. Because manufacturers of Class I
and Class II devices receive only § 510(k) approval and
emerge from the approval process with no safety review
specific to those devices, manufacturers do not receive the
benefit of express preemption, see Lohr, 518 U.S. at 492-94.
In contrast, because a manufacturer of a Class III device must
receive premarket approval, clear “federal safety review” that
“is specific to [the] individual device[],” and thereby satisfy
federal requirements applicable to the device, the
manufacturer of that Class III device receives express
preemption protections from state requirements that are
“different from, or in addition to,” the federal requirements
imposed on the device through the premarket approval
process. Riegel, 552 U.S. at 322-23 (quoting 21 U.S.C.
§ 360k(a)(1)). This protection inures to manufacturers
regardless of how a device is used by third parties. See
21 U.S.C. § 396 (contemplating off-label uses of devices by
physicians); see also Caplinger v. Medtronic, Inc., 784 F.3d
1335, 1343-45 (10th Cir. 2015) (holding that the fact that a
claim alleges off-label use does not “insulate” it from express
preemption).
10
But state laws are not shut out entirely. Even for Class
III devices, the Medical Device Amendments’ express
preemption provision does not reach “parallel” claims, i.e.,
claims premised on state requirements that merely incorporate
applicable federal requirements and therefore are not
“different from, or in addition to,” federal requirements.
Lohr, 518 U.S. at 494-95 (citing 21 U.S.C. § 360k(a)(1));
accord Riegel, 552 U.S. at 330.
The question of first impression we confront today3
arises at the intersection of these different classes of devices
with their different approval schemes: How do we apply the
Medical Device Amendments’ express preemption provision
to a “hybrid system,” i.e., a system that is itself a “device” but
that is comprised of Class II components in addition to one or
more Class III components?4 We recount the facts of the
parties’ dispute before turning to our answer.
3
Cf. Mink v. Smith & Nephew, Inc., 860 F.3d 1319,
1323, 1327-33 (11th Cir. 2017) (addressing preemption as
applied to a device comprised of only Class III components,
not as applied to a device comprised of a Class III component
and Class II components); Spellman v. Smith & Nephew, Inc.,
No. 16-8080, 2016 WL 5364206, at *1, *3-4 (D. Ariz. Sept.
26, 2016) (same), appeal docketed, No. 17-15351 (9th Cir.
Feb. 28, 2017).
4
Here, and when not quoting another source, we use
the term “component” to mean, collectively, “component,
part, or accessory,” 21 U.S.C. § 321(h), to the extent there are
any differences between the three. By “system” we mean, in
Mr. Shuker’s case, the entire hip replacement “device”
11
B. Factual and Procedural History5
Mr. Shuker underwent total hip replacement surgery in
2009. The hip replacement system “implant[ed]” was
regulated as a “device” under the Federal Food, Drug, and
Cosmetic Act, 21 U.S.C. § 321(h), but was comprised of
multiple components, all manufactured by Smith & Nephew.
Some components replaced the top of Mr. Shuker’s thighbone
(or femur) with a metal head, metal sleeve, and a stem
connecting the metal head to the thighbone, while another
component rested on his hip socket (or acetabulum). These
components were all Class II devices approved through the
relatively lenient § 510(k) process. A final component, the
“R3 metal liner,” mediated the connection between his hip
socket and his thighbone and was seated atop the hip socket
component, App. 42; unlike the other components, the liner
underwent the rigorous premarket approval process as a
supplemental component for a separate Smith & Nephew
implanted in his hip, including all of its constituent
components. Id.
5
The factual summary below draws from record
evidence that we consider in reviewing the District Court’s
summary judgment ruling regarding preemption, and its
dismissal of PLC for lack of personal jurisdiction. But we
consider only the complaint, its exhibits, “undisputedly
authentic document[s]” upon which the plaintiffs’ claims are
based, and the public record in reviewing the District Court’s
dismissal of the Shukers’ Third Amended Complaint for
failure to state a claim. Pension Ben. Guar. Corp. v. White
Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).
12
Class III device, the Birmingham Hip Resurfacing System.
Shuker v. Smith & Nephew PLC, No. 13-6158, 2015 WL
1475368, at *2-3 (E.D. Pa. Mar. 31, 2015). Together with the
metal head and metal head sleeve replacing the top of
Mr. Shuker’s thighbone, the metal liner created a “metal-on-
metal articulation” at Mr. Shuker’s hip socket. Id. at *3.
As is customary, the FDA’s premarket approval
requirements for the liner extended to the liner’s
accompanying labeling, which was required to state that “the
R3 metal liner [was] intended for use as part of the
[Birmingham Hip Resurfacing System] only” and that “the
R3 metal liner must be replaced with an R3 poly[ethylene]
liner” if the Birmingham Hip Resurfacing System were
abandoned or later revised in favor of a total hip replacement
system. Id. at *2. Thus, as the parties agree, see Appellant’s
Br. 6-7; Appellee Smith & Nephew’s Br. 6, because the R3
metal liner’s labeling reflected that the FDA had not approved
the liner for use outside of the Birmingham Hip Resurfacing
System or in a total hip replacement system, Smith &
Nephew’s promotional materials marketing the R3 metal liner
as an “option for its R3 Acetabular System,” a separate hip
system, App. 14, constituted “off-label promotion,” Shuker,
2015 WL 1475368, at *13, and the liner’s use in Mr. Shuker’s
total hip replacement system constituted an “off-label” use,
Buckman Co., 531 U.S. at 350.
About twenty-one months after his hip replacement
surgery, Mr. Shuker “began developing increasing pain and
discomfort in his buttocks, groin, and thigh, limiting his daily
activities.” Shuker, 2015 WL 1475368, at *3. His surgeon
performed an aspiration procedure that revealed “metallic
debris” within Mr. Shuker’s body, indicating that
13
“Mr. Shuker’s pain was caused by metal sensitivity due to the
degeneration of the metal-on-metal articulation,” which
needed to be replaced to relieve his pain. Id. Mr. Shuker
then underwent revision surgery to replace the R3 metal liner,
followed by additional surgeries to remove and replace his
entire hip replacement system when the first revision surgery
did not relieve his pain.
Seeking to hold Smith & Nephew and its parent
company PLC liable for Mr. Shuker’s hip replacement
complications and for Mrs. Shuker’s loss of consortium, the
Shukers filed suit, bringing various common law claims, and
later adding claims based on violations of federal law.6 PLC
moved for dismissal from the case for lack of personal
jurisdiction, and Smith & Nephew moved for summary
judgment on some of the Shukers’ claims, asserting that the
Medical Device Amendments expressly preempted those
claims.
Without an opinion but with a lengthy explanatory
footnote accompanying its order, the District Court granted
PLC’s motion to dismiss. In a separate order and opinion, the
District Court granted summary judgment in favor of Smith &
Nephew, holding as relevant to this appeal that the
negligence, strict liability, and breach of implied warranty
claims in the Shukers’ Second Amended Complaint were
6
The Shukers originally filed suit in Pennsylvania
state court, but Smith & Nephew and PLC removed the case
to federal court. The District Court had subject-matter
jurisdiction pursuant to 28 U.S.C. § 1332(a).
14
preempted because “the heart of each of [the Shukers’]
claims” challenged the safety and effectiveness of the
R3 metal liner, which had received premarket approval, was
therefore subject to federal requirements, and, hence, gave
Smith & Nephew the benefit of express preemption. Shuker,
2015 WL 1475368, at *6-11, *17. The District Court also
granted the Shukers the opportunity to amend their complaint
against Smith & Nephew as to their non-preempted claims
alleging off-label promotion in violation of federal law, and
the Shukers proceeded to file a Third Amended Complaint.
Ultimately, however, the District Court dismissed that
complaint for failure to state a claim. See Shuker v. Smith &
Nephew PLC, 211 F. Supp. 3d 695, 700-05 (E.D. Pa. 2016).
This appeal followed.7
II. Discussion
We resolve the questions presented by this case in
three parts. First, we consider whether the negligence, strict
liability, and breach of implied warranty claims in the
Shukers’ Second Amended Complaint are expressly
preempted. See Section II.A, infra. Second, we review the
District Court’s decision to dismiss the claims in the Shukers’
Third Amended Complaint with prejudice. See Section II.B,
infra. Finally, we consider personal jurisdiction as to PLC
and whether jurisdictional discovery is warranted. See
Section II.C, infra.
7
We have jurisdiction pursuant to 28 U.S.C. § 1291.
15
A. Preemption
The District Court granted summary judgment to
Smith & Nephew on express preemption grounds with respect
to the negligence, strict liability, and breach of implied
warranty claims in the Shukers’ Second Amended Complaint.
We review that grant de novo, Steele v. Cicchi, 855 F.3d 494,
500 (3d Cir. 2017), and will affirm if Smith & Nephew has
established that “there is no genuine dispute as to any
material fact” and, viewing the facts in the light most
favorable to plaintiffs, Smith & Nephew “is entitled to
judgment as a matter of law,” Fed. R. Civ. P. 56(a); see also
Steele, 855 F.3d at 500.
Here, that decision turns on whether the Medical
Device Amendments expressly preempt the Shukers’
negligence, strict liability, and breach of implied warranty
claims in their Second Amended Complaint—the primary
issue addressed in the parties’ original briefing, as well as
their supplemental briefing and an amicus brief filed by the
FDA at the request of the Court.8 We undertake this analysis
8
While the supplemental briefing and the FDA’s
submission address implied preemption as well as express
preemption, we confine our analysis to express preemption
today. The Medical Device Amendments can preempt state
common law claims against medical device manufacturers
both expressly and impliedly, see Buckman Co., 531 U.S. at348 & n.2, and the existence of an express preemption
provision like § 360k(a), as the FDA points out, “does not
ordinarily alter the normal operation of implied-preemption
16
by (1) reviewing the two-step framework for determining
whether a claim concerning a “device” is preempted under the
Amendments’ express preemption provision, (2) determining
what constitutes the “device” when a system is comprised of
components with mixed-class designations, and (3) applying
the framework applicable to that “device” to the facts of this
case.
1. Principles Governing Express Preemption
Under the Medical Device Amendments
In products liability actions like this one, the Supreme
Court has specified that “the historic primacy of state
regulation of matters of health and safety” requires us to
apply the “presumption against the pre-emption of state
principles.” FDA Amicus Br. 13. However, because Smith
& Nephew raised only express preemption arguments before
the District Court, we conclude implied preemption
arguments are not properly before us on appeal, see Holk v.
Snapple Beverage Corp., 575 F.3d 329, 335-36 (3d Cir.
2009). Even if they were, because, e.g., Smith & Nephew
preserved its preemption defense and did not “explicitly
disclaim[] the applicability of [implied] preemption,” Holk,
575 F.3d at 336, we would still begin with (and here, would
end with) express preemption, for the statute’s plain wording
“necessarily contains the best evidence of Congress’
preemptive intent,” Chamber of Commerce of the U.S. v.
Whiting, 563 U.S. 582, 594 (2011) (quoting CSX Transp., Inc.
v. Easterwood, 507 U.S. 658, 664 (1993)).
17
police power regulations.”9 Lohr, 518 U.S. at 485 (quoting
Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 518 (1992));
accord Wyeth v. Levine, 555 U.S. 555, 565 & n.3 (2009). We
therefore begin with the principle that “the historic police
powers of the States,” such as their power to regulate “matters
of health and safety,” are “not to be superseded” unless
preemption “was the clear and manifest purpose of
Congress.” Lohr, 518 U.S. at 485 (quoting Rice v. Santa Fe
Elevator Corp., 331 U.S. 218, 230 (1947)). Congress’s intent
is our “ultimate touchstone,” and “we look to the language,
structure, and purpose of the relevant statutory and regulatory
scheme to develop a reasoned understanding of the way in
which Congress intended the statute and its surrounding
9
We disagree with Smith & Nephew’s assertion that
“[a]ny presumption against express preemption no longer
exists.” Appellee Smith & Nephew’s Br. 21. Smith &
Nephew relies on a Supreme Court case that addressed
whether the federal Bankruptcy Code’s express preemption
provision preempts a Puerto Rico statute, see Puerto Rico v.
Franklin Cal. Tax-Free Tr., 136 S. Ct. 1938, 1945-46 (2016)
(discussing 11 U.S.C. § 903(1)), but that case did not address
preemption of claims invoking “historic . . . state regulation
of matters of health and safety,” such as the products liability
claims at issue here, Lohr, 518 U.S. at 485. As that case does
not “directly control[]” here, we “leav[e] to [the Supreme
Court] the prerogative of overruling its own decisions,”
Agostini v. Felton, 521 U.S. 203, 237 (1997), and continue to
apply the presumption against preemption to claims, like
those in this case, that invoke “the historic police powers of
the States,” Lohr, 518 U.S. at 485.
18
regulatory scheme to affect business, consumers, and the
law.” Sikkelee v. Precision Airmotive Corp., 822 F.3d 680,
687 (3d Cir. 2016) (internal quotation marks omitted)
(quoting Wyeth, 555 U.S. at 565; Lohr, 518 U.S. at 486).
The express preemption provision of the Medical
Device Amendments states that “no State or political
subdivision of a State may establish or continue in effect with
respect to a device. . . any requirement” that “is different
from, or in addition to, any requirement applicable under [the
Federal Food, Drug, and Cosmetic Act]” and that relates
either “to the safety or effectiveness of the device” or “to any
other matter included in a requirement applicable to the
device under [the Act].” 21 U.S.C. § 360k(a). Based on this
statutory language, the Supreme Court, in Riegel v.
Medtronic, Inc., prescribed a two-step framework for
determining whether a state law cause of action is preempted.
552 U.S. at 321-22. First, we ask “whether the Federal
Government has established requirements applicable” to the
specific “device” at issue. Id. at 321. If it has, then, second,
we ask “whether the [plaintiffs’] claims are based upon [state]
requirements with respect to the device that are ‘different
from, or in addition to,’ the federal ones, and that relate to
safety and effectiveness.” Id. at 321-22 (quoting 21 U.S.C.
§ 360k(a)). If we answer both questions in the affirmative,
then the plaintiffs’ claims are expressly preempted. See id. at
321-30. If, instead, the answer to the second question is no,
then the “state duties in such a case ‘parallel,’ rather than add
to, federal requirements,” and the claims are not preempted.
Id. at 330 (quoting Lohr, 518 U.S. at 495).
The first step of Riegel’s two-step framework,
however, presumes agreement as to the “device” to which it
19
applies. 21 U.S.C. § 360k(a). Therefore, before a court can
apply the test, it must address a threshold question: What
device is the subject of the “federal requirements”? Riegel,
552 U.S. at 321. This question, while ancillary when each
component of a system receives the same review by the FDA,
is central when evaluating hybrid systems, like the one
implanted in Mr. Shuker’s hip that contain both Class II and
Class III components. In that situation, neither the statute nor
the relevant guidance from the Supreme Court, see Riegel,
552 U.S. at 321, specifies how we should apply the Riegel
test. Do we analyze express preemption at the level of the
system or the component? That is the problem we confront
today.
2. Determining the Device at Issue
The Shukers urge on appeal that the “device” at issue
is the entire hybrid system itself. Any other determination,
they argue, would produce unfairness and incongruity by
according preemption even when a component is used off-
label in a manner “that was never studied or approved by the
FDA,” Appellant’s Br. 23 (capitalization omitted), merely
because that component part was pre-approved for use with
another system. Appellees, seconded by the FDA, counter
that analysis at the component level is the only way to
harmonize various provisions of the statute. We agree with
Appellees for three reasons.
First, analysis at the component level finds support in
the text of the statute and regulations. The Federal Food,
Drug, and Cosmetic Act defines “device” to mean not simply
a finished “instrument, apparatus, implement, machine,
contrivance, implant, in vitro reagent, or other similar or
20
related article,” but also “any component, part, or accessory”
of that article. 21 U.S.C. § 321(h). Codified in 1938 with the
original Act, this definition has always provided that the term
“device” includes “components, parts, and accessories,”
mirroring the definition for “drug” immediately preceding it,
which was and is defined to include “articles intended for use
as a component” of a drug. Federal Food, Drug, and
Cosmetic Act, Pub. L. No. 75-717, § 201(g), (h), 52 Stat.
1040, 1041 (1938) (codified as amended at 21 U.S.C.
§ 321(g), (h)). The implementing regulations, at least for
quality control purposes, also describe “[c]omponent” to
include “any raw material, substance, piece, part, software,
firmware, labeling, or assembly which is intended to be
included as part of the finished, packaged, and labeled
device.” 21 C.F.R. § 820.3(c).10
10
We note that neither the definition of “device,” nor
the express preemption provision, makes any exception for
instances where components that received premarket approval
are used with components that did not receive such approval.
See 21 U.S.C. §§ 321(h), 360k(a). That is, no exception
applies where components that confer express preemption
protections (by virtue of being subject to federal requirements
imposed through the premarket approval process) are used
with components that do not. And we cannot ourselves imply
such an exception, for “[w]here Congress explicitly
enumerates certain exceptions to a general prohibition,”
United States v. Smith, 499 U.S. 160, 167 (1991), as it has
done here in the statutory section containing the Medical
Device Amendments’ express preemption provision, see 21
U.S.C. § 360k(b); note 2, supra, then “additional exceptions
21
Second, the Act’s provision for off-label use supports a
component-level analysis. While the premarket approval
process requires strict manufacturer compliance with respect
to a device’s labeling and advertising, see 21 U.S.C.
§§ 352(q)-(r), 360e(d)(1)(A), the statutory scheme
contemplates that physicians will prescribe or administer
components outside of a system with which the FDA
approved their use. As noted, off-label uses of devices (and
components) are “an accepted and necessary corollary of the
FDA’s mission to regulate in this area without directly
interfering with the practice of medicine.” Buckman Co., 531
U.S. at 350. Put differently, the regulatory landscape
contemplates that devices may be broken down into
component parts and individual components used separately
by third parties. Even then, however, premarket approval
requirements “apply equally” to the components, as
manufacturers “generally may not deviate from the
requirements imposed through premarket approval regardless
of how [a component] is used.” FDA Amicus Br. 8; see also
21 U.S.C. § 396. Congress thereby has evinced an intent not
to “discourage[]” device manufacturers “from seeking . . .
approval of devices with potentially beneficial off-label uses
for fear that such use might expose the manufacturer . . . to
unpredictable civil liability,” Buckman Co., 531 U.S. at 350,
and instead to “protect[] manufacturers that have complied
are not to be implied, in the absence of evidence of a contrary
legislative intent,” Smith, 499 U.S. at 167.
22
with detailed federal requirements from being subject[] to
liability under state law for doing what federal law required.”
FDA Amicus Br. 9. It is not surprising, then, that several
courts have held that when a single component of a Class III
device is used on its own, rather than in the premarket-
approved system, express preemption adheres to the
individual premarket-approved component. See, e.g., Arvizu
v. Medtronic Inc., 41 F. Supp. 3d 783, 790 (D. Ariz. 2014);
Martin v. Medtronic, Inc., 32 F. Supp. 3d 1026, 1036 (D.
Ariz. 2014); Beavers-Gabriel v. Medtronic, Inc., 15 F. Supp.
3d 1021, 1035 (D. Haw. 2014); Houston v. Medtronic, Inc.,
No. 13-1679, 2014 WL 1364455, at *4 (C.D. Cal. Apr. 2,
2014).
Third, the FDA, “the federal agency to which
Congress has delegated its authority to implement provisions
of the Act,” Lohr, 518 U.S. at 496, also takes the position that
because “the definition of ‘device’ encompasses . . .
premarket-approved . . . system[s], and each of the
‘component[s], part[s], [and] accessor[ies]’ of these devices,”
the relevant device for preemption purposes must be
evaluated at the component level. FDA Amicus Br. 7 (all but
first alteration in original) (quoting 21 U.S.C. § 321(h)).11
11
We “do not defer to an agency’s view” concerning
preemption, but such views as presented in an amicus brief
are “‘entitled to respect’ . . . to the extent [they] ha[ve] the
‘power to persuade.’” Sikkelee, 822 F.3d at 693-94
(alterations in original) (quoting Gonzalez v. Oregon, 546
U.S. 243, 255-56 (2006)). See also Skidmore v. Swift & Co.,
323 U.S. 134, 140 (1944)).
23
And, contrary to the Shukers’ argument that “[t]he FDA
reviews . . . systems, not individual . . . components,”
Appellant’s Br. 17, the Medical Device Amendments direct
the FDA, “where necessary to provide reasonable assurance
of . . . safe and effective performance,” to establish
performance standards for device components, 21 U.S.C.
§ 360d(a)(2)(B)(i), while the FDA’s regulations require
manufacturers of finished devices, if “deviations from device
specifications could occur as a result of the manufacturing
process,” to monitor and control “component . . .
characteristics during production.” 21 C.F.R. § 820.70(a)(2).
What’s more, just like manufacturers of finished devices,
manufacturers of “components or accessories” are subject to
device registration and reporting requirements. Id.§§ 803.3(l)(3), 806.2(h)(3), 807.20(a)(6); see id. §§ 803.50,
806.10. See generally 21 U.S.C. §§ 360(b), (j), 360i(a)(1),
(g)(1).
Taken together, the statutory definition of “device,”
the treatment of off-label uses, and the guidance of the FDA
all counsel in favor of scrutinizing hybrid systems at the
component-level. In that circumstance, § 360k(a) preempts
any state law “with respect to” a Class III component that is
“different from, or in addition to” a federal requirement and
that relates either “to the safety or effectiveness of the device”
or “to any other matter included in a requirement applicable
to the device under [the Act].” 21 U.S.C. § 360k(a). And the
Riegel test is properly framed at Step One as “whether the
Federal Government has established requirements applicable”
to a component of the hybrid system, and at Step Two,
“whether the [plaintiffs’] claims are based upon [state]
requirements with respect to [that component] that are
‘different from, or in addition to,’ the federal ones, and that
24
relate to safety and effectiveness.” Riegel, 552 U.S. at 321-22(quoting 21 U.S.C. § 360k(a)). This formulation of Riegel’s
test for hybrid systems comports with the “‘most basic’
interpretive rule that a statute is to be construed so that effect
is given to all its provisions.” Doe v. Mercy Catholic Med.
Ctr., 850 F.3d 545, 555 (3d Cir. 2017) (quoting Corley v.
United States, 556 U.S. 303, 314 (2009)).12
3. Application to the Shukers’ Claims
We turn next to the application of this test to the
Shukers’ claims and conclude that both prongs of Riegel are
satisfied. At Step One, the R3 metal liner is a Class III
component that received premarket approval as part of the
Birmingham Hip Resurfacing System; and that premarket
approval “imposed requirements on the liner with respect to
its composition, dimensions, and labeling, among other
specifications.” FDA Amicus Br. 7. See also App. 470-473;
Shuker, 2015 WL 1475368, at *2-3.
12
Our decision accords with those of the district courts
that have grappled with the Act’s definition of “device” while
addressing how the Medical Device Amendments’ express
preemption provision should apply to devices with
components of mixed-class designations. See, e.g., Nagel v.
Smith & Nephew, Inc., No. 15-0927, 2016 WL 4098715, at
*4-5 (D. Conn. July 28, 2016); Hafer v. Medtronic, Inc., 99 F.
Supp. 3d 844, 858 (W.D. Tenn. 2015); Bertini v. Smith &
Nephew, Inc., 8 F. Supp. 3d 246, 255 (E.D.N.Y. 2014); Simon
v. Smith & Nephew, Inc., 990 F. Supp. 2d 395, 405-406
(S.D.N.Y. 2013).
25
Riegel Step Two is also met, given the different
requirements that would follow from imposing liability for
the tort claims at issue; that is, the negligence, strict liability,
and breach of implied warranty claims of the Second
Amended Complaint.13 The express preemption provision
forecloses claims based on “violations of common-law
duties” to the extent that they impose more than “parallel
federal requirements,” Lohr, 518 U.S. at 495. The Shukers’
claims, however, would impose requirements “with respect
to” the R3 metal liner that are “different from, or in addition
to,” federal ones, 21 U.S.C. § 360k(a)), because, as the
District Court correctly observed, “the heart of each of [the
Shukers’] claims” challenged the safety and effectiveness of
the R3 metal liner, Shuker, 2015 WL 1475368, at *11.
Neither in the District Court nor on appeal have the
Shukers identified any freestanding defect with the Class II
device or the R3 Acetabular System per se. To the contrary,
despite conclusory allegations that the R3 System was
defective with and without the R3 metal liner that would
foreseeably be used with it, the Shukers’ negligence, strict
liability and breach of implied warranty claims rest on the
13
Although the Shukers separately asserted ostensibly
parallel claims based on violations of federal law in their
Second Amended Complaint, they do not attempt to revive
those claims on appeal, resting instead on the amended claims
alleging off-label promotion and asserted in their Third
Amended Complaint, which we address later in this opinion,
see infra Part II.B.
26
premise that the R3 System was defective only because it was
used with the R3 metal liner. See Tr. of Oral Arg. 79:13-18
(identifying that the defects arose when “all of the
components” are used “in tandem”); id. at 7:19-22(explaining “[y]ou can’t have the debris coming out without
the conjunction of the Class 2 and Class 3 components
coming together. It’s that friction that causes it. So it would
be irresponsible to say . . . [that] only the liner caused the
metal debris or only the cup caused the metal debris.”).14
14
Some district courts, in evaluating complaints that
allege “injuries stemming from the combination of [premarket
and non-premarket] component parts,” have declined to apply
express preemption to claims arising from the interaction of
these mixed class components because “the combination of
component[s]” itself was not subject to premarket approval.
Lafountain v. Smith & Nephew, No. 14-1598, 2016 WL
3919796, at *5-6 (D. Conn. 2015); see also Huskey v.
Ethicon, 29 F. Supp. 3d 736, 751 (S.D. W. Va. 2014). These
courts “decline[d] to separate the device into its component
parts to create express preemption.” Lafountain, 2016 WL
3919796 at *6. But for the reasons we have explained, see
Section II.A.2, supra, we think the better reading of the
statute is to separate a device into its component parts. See 21
U.S.C. § 321(h). Express preemption therefore applies to a
so-called “combination” claim, like any other, so long as the
claims are based on state requirements “with respect to” a
device that are “different from, or in addition to” federal
requirements. 21 U.S.C. § 360k(a).
27
Even the failure-to-warn allegations embedded in the
Shukers’ negligence claim would impose different
requirements on the R3 metal liner, as the Shukers seek to
impose liability because defendants did not accompany their
product with proper warnings regarding the risks associated
with a premarket-approved device, the R3 metal liner. But
the FDA already imposed device-specific labeling
requirements on the liner, and thus, as the FDA itself points
out in its amicus submission, “a state warning requirement
that applie[s] specifically to the use of the R3 system’s
components with the R3 metal liner in particular” is
preempted. FDA Amicus Br. 11 n. 3.15
In sum, the negligence, strict liability, and breach of
implied warranty claims asserted in the Second Amended
15
This is not to say that all failure-to-warn allegations
as to hybrid systems would be preempted. On the contrary, as
the FDA notes, a claim premised on a state requirement that
the R3 System carry a warning against “use with metal
liners,” or that it only be used with polyethylene liners, for
example, “would not implicate § 360k(a)” because “the FDA
did not impose device-specific labeling requirements on the
R3 system components.” FDA Amicus Br. 11. But such a
claim is not before us, and to the extent the Shukers take issue
with the off-label use of the R3 liner as opposed to the
promotion of that use, their recourse is in a malpractice claim
against the physician that prescribed the off-label use, not in a
products liability claim against the Appellees. See generally,
e.g., Pa. R. Civ. P. 1042.1 (discussing professional liability
actions in Pennsylvania); Thierfelder v. Wolfert, 52 A.3d
1251, 1253-54, 1261, 1264 (Pa. 2012) (same).
28
Complaint, would impose non-parallel state law requirements
and are therefore expressly preempted. We will affirm the
District Court’s order in that respect.
B. Claims in the Third Amended Complaint
We turn next to the Shukers’ contention that the
District Court erred in holding that their off-label promotion
claims in the Third Amended Complaint failed to state a
claim. We exercise plenary review over the District Court’s
dismissal of those claims, see Santiago v. Warminster Twp.,
629 F.3d 121, 128 (3d Cir. 2010), and thus we will affirm
only if the Shukers did not plead “factual content that allows
the court to draw the reasonable inference that [Smith &
Nephew] is liable for the misconduct alleged,” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
The Shukers’ Third Amended Complaint included
three state law tort claims based on Smith & Nephew’s
alleged off-label promotion in violation of federal law:
negligence, loss of consortium, and fraud. We assess each
claim in turn, first acknowledging “the elements [the Shukers]
must plead to state a claim,” then accepting “all of the
complaint’s well-pleaded facts as true” while disregarding
“any legal conclusions,” and finally determining whether the
well-pleaded factual allegations “plausibly give rise to an
entitlement to relief.” Santiago, 629 F.3d at 129-31 (brackets
and internal quotation marks omitted). We view the factual
allegations in the light most favorable to the Shukers and
construe all reasonable inferences in their favor. See United
States ex rel. Customs Fraud Investigations, LLC v. Victaulic
Co., 839 F.3d 242, 257 (3d Cir. 2016); Connelly v. Lane
Constr. Corp., 809 F.3d 780, 790, 793 (3d Cir. 2016). If the
Shukers have specified “the means through which” Smith &
29
Nephew acted unlawfully, included “details” confirming
those means, and alleged facts connecting those means to
their own injuries, then we must conclude that they have
plausibly stated a claim for relief. Schuchardt v. President of
the U.S., 839 F.3d 336, 349-50 (3d Cir. 2016).
Applying these principles, we hold that the Shukers
have met their pleading burden with respect to their
negligence and loss of consortium claims. Although they did
not adequately plead their fraud claim, which they were
required to plead with particularity, see Fed. R. Civ. P. 9(b),
we will nonetheless vacate the District Court’s dismissal of
that claim to the extent that it was with prejudice. We discuss
each of the Shukers’ three claims from their Third Amended
Complaint below.
1. Negligence Based on Off-Label Promotion
The elements of negligence under Pennsylvania law
are: (1) “a legally recognized duty or obligation of the
defendant,” (2) “the breach thereof,” and (3) a “causal
connection” between the breach and the plaintiffs’ damages.
Green v. Pa. Hosp., 123 A.3d 310, 315-16 (Pa. 2015).16 We
16
We assume that Pennsylvania law applies without
undertaking a choice of law analysis, because both Smith &
Nephew and the District Court assumed that Pennsylvania
law applied to the claims in the Third Amended Complaint,
and because the Shukers have waived any objection to that
choice of law by failing to make it, see Williams v. BASF
Catalysts LLC, 765 F.3d 306, 316 (3d Cir. 2014) (“[P]arties
may waive choice-of-law issues.”).
30
modify these elements somewhat because, for the negligence
claim alleged here to escape express preemption as a parallel
claim, the “duty” element must arise from federal
requirements applicable to a medical device. Id. at 316; see
Riegel, 552 U.S. at 330; Lohr, 518 U.S. at 495. To state a
parallel negligence claim, then, the Shukers were required to
plead (1) a duty arising from federal requirements applicable
to a medical device, (2) a breach of that duty, and (3) a causal
connection between the breach and the Shukers’ injuries.
Construing all reasonable inferences in the Shukers’
favor, see Victaulic Co., 839 F.3d at 257, the Shukers’ Third
Amended Complaint plausibly alleges each of these three
required elements. First, as to duty, the complaint alleges that
the R3 metal liner received premarket approval as part of the
Birmingham Hip Resurfacing System and was approved
“only . . for use with [that] . . . [s]ystem,” App. 473, leading
to the reasonable inference that the R3 metal liner was a
“restricted device” under the Medical Device Amendments,
21 U.S.C. § 360j(e), and that federal law therefore imposed a
duty on Smith & Nephew to refrain from publishing “false or
misleading” advertising with respect to the R3 metal liner,
21 U.S.C. §§ 331(b), 352(q), even if such advertising was for
the purpose of marketing a separate device, 21 C.F.R.
§ 801.6.
Second, as to breach, the complaint asserts that, even
though the FDA did not approve the R3 metal liner for use
with any hip system other than the Birmingham Hip
Resurfacing System, Smith & Nephew “actively marketed the
[R3] metal liner as ‘optional’ for the [separate] R3 Acetabular
System,” App. 479. The complaint also cites to Smith &
Nephew’s February 2009 press release, which explicitly
31
announces “the introduction of a metal liner option for [Smith
& Nephew’s] R3 Acetabular System.” App. 14.17 These
factual allegations give rise to the reasonable inference that
Smith & Nephew’s marketing was “misleading” regarding the
FDA-approved uses of the R3 metal liner, 21 U.S.C. § 352(q),
and that Smith & Nephew breached its duty under federal law
not to advertise its medical device in that misleading
manner.18
Finally, as to causation, the Shukers’ Third Amended
Complaint alleges that Mr. Shuker’s surgeon “either read” or
“was aware” of the information in Smith & Nephew’s press
release, that the surgeon proceeded to find the R3 metal liner
“appropriate” for Mr. Shuker, “given his body habitus and his
17
Because we may consider a “document integral to or
explicitly relied upon in the complaint” in considering a Rule
12(b)(6) motion to dismiss, In re Rockefeller Ctr. Props., Inc.
Sec. Litig., 184 F.3d 280, 292 (3d Cir. 1999), our analysis
relies on the text of the entire Smith & Nephew press release
from February 2009, which is reproduced only in part in the
Shukers’ Third Amended Complaint but is part of the District
Court record.
18
To the extent Smith & Nephew contends that a
dispute of fact exists as to whether Smith & Nephew’s
promotional materials were false or misleading, the Shukers
are entitled to discovery to explore this issue for, if discovery
produces “conflicting evidence,” a factual dispute like this
one can ripen into a question for a jury to decide. In re
Fosamax (Alendronate Sodium) Prods. Liab. Litig., 852 F.3d
268, 290 (3d Cir. 2017).
32
activity level,” and that Mr. Shuker endured pain “caused by
metal sensitivity due to the degeneration of the metal on
metal articulation” in his hip replacement system. App. 480,
483. Together these factual allegations lead to the reasonable
inference that Smith & Nephew’s marketing materials caused
Mr. Shuker’s surgeon to recommend the R3 metal liner and to
install it within Mr. Shuker’s hip replacement system, a
course of action which in turn caused Mr. Shuker’s
subsequent injuries.
Because the factual allegations in the Shukers’ Third
Amended Complaint allow us reasonably to infer each of the
three legal elements of the Shukers’ parallel negligence claim,
the complaint contains sufficient facts to “nudg[e]” that claim
“across the line from conceivable to plausible,” Iqbal, 556
U.S. at 683, and hence the District Court’s dismissal of that
claim was in error.
2. Loss of Consortium
Loss of consortium is an injury referring to “the impact
of one spouse’s physical injuries upon the other spouse’s
marital privileges and amenities,” and, while remaining “a . . .
distinct cause of action” for “loss of services, society, and
conjugal affection of one’s spouse,” is a claim “derivative” of
a spouse’s separate claim of injury. Darr Constr. Co. v.
Workmen’s Comp. Appeal Bd., 715 A.2d 1075, 1079-80 (Pa.
1998). Because we hold the Shukers have adequately pleaded
a negligence claim premised on Mr. Shuker’s injuries, they
have also adequately pleaded the derivative claim of loss of
consortium.
33
The Third Amended Complaint alleges that, after
Mr. Shuker’s hip replacement surgery and “due to the
degeneration of the metal on metal articulation,” he
experienced “buttocks, groin and thigh discomfort” that
“caused him pain and extremely limited his daily activities.”
App. 483. Thus, we can reasonably infer that, because of
Smith & Nephew’s misleading marketing in violation of
federal law, the R3 metal liner’s subsequent use in
Mr. Shuker’s hip replacement surgery, and Mr. Shuker’s
ensuing “physical injuries,” Mrs. Shuker suffered a loss of her
husband’s “services, society, and conjugal affection.” Darr
Constr., 715 A.2d at 1080. The Shukers’ loss of consortium
claim therefore states a facially plausible entitlement to relief
arising from state requirements that are “parallel” to federal
ones, Lohr, 518 U.S. at 495; see Iqbal, 556 U.S. at 678, and
the District Court erred in dismissing it.
3. Fraud
In contrast to the Shukers’ pleading of their other
claims, the Shukers’ pleading of their fraud claim is not
adequate because it does not satisfy Rule 9(b)’s requirement
that, though “intent . . . and other conditions of a person’s
mind may be alleged generally,” plaintiffs “must state with
particularity the circumstances constituting fraud.” Fed. R.
Civ. P. 9(b).
To plead fraud under Pennsylvania law, a plaintiff
must allege (1) “a representation” which is (2) “material to
the transaction at hand,” (3) “made falsely, with knowledge of
its falsity or recklessness as to whether it is true or false,” and
(4) made “with the intent of misleading another into relying
on it”; (5) “justifiable reliance on the misrepresentation”; and
34
(6) that “the resulting injury was proximately caused by the
reliance.” Gibbs v. Ernst, 647 A.2d 882, 889 (Pa. 1994). But
in addition, a plaintiff in federal court, to comply with Rule
9(b), must allege “the date, time and place of the alleged
fraud or otherwise inject precision or some measure of
substantiation into a fraud allegation” and must state “the
circumstances of the alleged fraud with sufficient particularity
to place the defendant on notice of the precise misconduct
with which it is charged.” Frederico v. Home Depot, 507
F.3d 188, 200 (3d Cir. 2007) (brackets and internal quotation
marks omitted).
Here, the Shukers’ Third Amended Complaint pleads
many of the elements of a fraud claim: (1) it alleges that
Smith & Nephew made “representation[s]” by including and
incorporating representations Smith & Nephew made
regarding the R3 metal liner; (2) it alleges “material[ity]” by
describing those representations’ importance in influencing
surgeons, such as Mr. Shuker’s surgeon, to use the R3 metal
liner off-label; (3) it alleges “falsity” by stating that, contrary
to Smith & Nephew’s representations, the company received
FDA approval regarding the R3 metal liner’s use within the
Birmingham Hip Resurfacing system only; and (4) it alleges
“intent” by contending that Smith & Nephew represented that
the R3 metal liner was available for use within other hip
systems, even though the company had never sought FDA
approval for use within those systems. Gibbs, 647 A.2d at
889.
Their complaint comes up short, however, because it
does not plead the element of “justifiable reliance” on Smith
& Nephew’s misrepresentation with the particularly required
for Rule 9(b). Id. Specifically, because “[i]t is not enough
35
simply to assert that a statement was ‘fraudulent’ and that
reliance upon it induced some action,” Blumenstock v.
Gibson, 811 A.2d 1029, 1038 (Pa. Super. Ct. 2002), the
complaint had to contain details about “the relationship of the
parties involved and the nature of the transaction,” Drelles v.
Mfrs. Life Ins. Co., 881 A.2d 822, 841 (Pa. Super. Ct. 2005).
Such details are necessary for a reviewing court to determine,
for example, whether a representation’s “obvious” falsity
precludes a finding of justifiable reliance, id. at 840, or, if the
representations at issue were not obviously false, whether the
representation actually provoked reliance by “induc[ing] or
influenc[ing] the plaintiff’s [or his agent’s] course of
conduct,” Commonwealth v. TAP Pharm. Prods., Inc., 36
A.3d 1112, 1144 (Pa. Commw. Ct. 2011), vacated on other
grounds, 94 A.3d 364 (Pa. 2014) (mem.) (per curiam).
The complaint does not meet this standard. In
asserting that Mr. Shuker’s surgeon “read” or “was aware” of
Smith & Nephew’s press release about the R3 metal liner,
App. 480, the complaint does not provide any details about
how the press release “induced or influenced” the surgeon’s
course of conduct, TAP Pharm Prods., 36 A.3d at 1144. The
bald assertion that “[the press release’s] claims (or those of
equal substance) influenced [the surgeon]” does not suffice,
App. 480, because, at least for Rule 9(b) purposes, that
statement is merely a “naked assertion[] devoid of further
factual enhancement,” amounting to “nothing more than a
formulaic recitation of the element[] of a cause of action,”
Iqbal, 556 U.S. at 678. As the Shukers have not stated “the
circumstances of the alleged [influence on Mr. Shuker’s
surgeon] with sufficient particularity to place [Smith &
Nephew] on notice of the precise misconduct with which it is
charged,” Frederico, 507 F.3d at 200 (brackets and internal
36
quotation marks omitted), we conclude that the Shukers’
fraud claim was insufficiently pleaded under Rule 9(b), and
we will therefore affirm the District Court’s dismissal.
We hold, however, that the District Court erred in
dismissing the Shukers’ fraud claim with prejudice. In most
instances where plaintiffs fail to plead fraud with
particularity—and especially in cases where plaintiffs may be
able to supplement their complaints with additional factual
content after discovery—district courts should dismiss the
fraud claim “with leave to amend the deficient pleading.”
5A Charles Alan Wright et al., Federal Practice & Procedure
§ 1300 (3d ed. 2017); accord Warden v. McLelland, 288 F.3d
105, 115 (3d Cir. 2002). Accordingly, given that we will
reverse the District Court’s dismissal of the negligence and
loss of consortium claims and allow those claims to proceed
to discovery, we will vacate the dismissal of the fraud claim
to the extent that it was with prejudice and without leave to
amend.19
C. Personal Jurisdiction
Because two of the Shukers’ claims will proceed to
discovery, we turn now to the Shukers’ challenge to the
19
As we are allowing some of the claims in the Third
Amended Complaint to proceed to discovery, we need not
address the Shukers’ contention that, if we hold they failed to
state a claim in their Third Amended Complaint, then they
were entitled to additional discovery before that complaint
was filed.
37
District Court’s denial of jurisdictional discovery as to Smith
& Nephew’s parent company, PLC, and to the District
Court’s dismissal of PLC for lack of personal jurisdiction.
We review the District Court’s decision to deny jurisdictional
discovery for abuse of discretion, see Toys “R” Us, Inc. v.
Step Two, S.A., 318 F.3d 446, 455 (3d Cir. 2003), and we
exercise plenary review over the District Court’s ultimate
personal jurisdiction determination, see D’Jamoos ex rel.
Estate of Weingeroff v. Pilatus Aircraft Ltd., 566 F.3d 94, 101
(3d Cir. 2009). As the District Court did not hold an
evidentiary hearing on personal jurisdiction in this case, we
take the Shukers’ allegations as true, resolve all factual
disputes in the Shukers’ favor, and require them merely to
“establish a prima facie case of personal jurisdiction . . . .”
O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316 (3d
Cir. 2007) (quoting Miller Yacht Sales, Inc. v. Smith, 384
F.3d 93, 97 (3d Cir. 2004)). We separately consider the
Shukers’ two theories of personal jurisdiction: specific
personal jurisdiction premised on a “stream-of-commerce”
theory, and general personal jurisdiction premised on an
“alter ego” theory. Appellant’s Br. 14.
We perceive no merit in the Shukers’ stream-of-
commerce theory of personal jurisdiction. That theory sounds
in specific personal jurisdiction, which exists when alleged
injuries “arise out of or relate to” activities ‘“purposefully
directed” by a defendant toward residents of the forum state.
Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 334 (3d
Cir. 2009). The stream-of-commerce theory contends,
essentially, that specific personal jurisdiction exists over a
non-resident defendant when that defendant “has injected its
goods into the forum state indirectly via the so-called stream
of commerce,” rendering it foreseeable that one of the
38
defendant’s goods could cause injury in the forum state.
D’Jamoos, 566 F.3d at 104-05.
A plurality of Supreme Court Justices has twice
rejected the stream-of-commerce theory, see J. McIntyre
Mach., Ltd. v. Nicastro, 564 U.S. 873, 877-85 (2011)
(plurality opinion); Asahi Metal Indus. Co. v. Superior Court,
480 U.S. 102, 108-13 (1987) (plurality opinion), stating, in a
manner consistent with our own case law, that plaintiffs must
instead rely on “some act by which the defendant
purposefully avails itself of the privilege of conducting
activities within the forum State, thus invoking the benefits
and protections of its laws,” Asahi, 480 U.S. at 109; see
D’Jamoos, 566 F.3d at 102-03. Indeed, the Supreme Court
has recently held that “[t]he bare fact that [a non-resident
defendant] contracted with a [resident] distributor is not
enough to establish personal jurisdiction in the State.”
Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773,
1783 (2017). We thus have no cause to revisit our Court’s
precedent on this issue, and we decline to adopt the Shukers’
stream-of-commerce theory of specific personal jurisdiction.
See D’Jamoos, 566 F.3d at 102-06.
To the extent the Shukers seek to establish specific
personal jurisdiction over PLC without reference to the
stream-of-commerce theory, their allegations do not meet our
Circuit’s requirement of purposeful availment: “what is
necessary is a deliberate targeting of the forum,” O’Connor,
496 F.3d at 317, so efforts “to exploit a national market” that
“necessarily included Pennsylvania” are insufficient,
D’Jamoos, 566 F.3d at 104. Yet, nationally directed efforts
are all that the Shukers alleged here, for their factual
allegations state only that PLC sold its products through
39
Smith & Nephew in Pennsylvania as part of its efforts to sell
products in the United States generally—not in Pennsylvania
specifically. We therefore agree with the District Court’s
decision to reject the Shukers’ arguments regarding specific
personal jurisdiction over PLC.
We hold, however, that the Shukers are entitled to
limited jurisdictional discovery to explore their alter ego
theory of general personal jurisdiction, i.e., jurisdiction
arising from a defendant’s “‘continuous and systematic’
contacts with the forum, whether or not those contacts are
related to the [plaintiffs’] cause of action.” Metcalfe, 566
F.3d at 334 (quoting Helicopteros Nacionales de Colom., S.A.
v. Hall, 466 U.S. 408, 416 (1984)). Unlike the Shukers’
stream-of-commerce theory, the alter ego theory finds support
in our case law, which instructs that, if a subsidiary is merely
the agent of a parent corporation, see D’Jamoos, 566 F.3d at
108-09; Lucas v. Gulf & W. Indus., Inc., 666 F.2d 800, 805-
06 (3d Cir. 1981), abrogated in part on other grounds by EF
Operating Corp. v. Am. Bldgs., 993 F.2d 1046 (3d Cir. 1993),
or if the parent corporation otherwise “controls” the
subsidiary, Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 300
(3d Cir. 2008), then personal jurisdiction exists over the
parent whenever personal jurisdiction (whether general or
specific) exists over the subsidiary.
Under the alter ego theory, the Shukers’ factual
allegations regarding PLC, if viewed in isolation, suffice to
make a prima facie showing of personal jurisdiction, which is
all they must do at this juncture. See D’Jamoos, 566 F.3d at
102. Their allegations paint a plausible picture of control by
PLC over Smith & Nephew: the two companies’
decisionmaking is integrated, PLC has authority over Smith
40
& Nephew’s strategic business decisions, PLC pays for the
development of Smith & Nephew’s products, and executives
from both companies work together to make decisions
regarding Smith & Nephew’s hip systems, as shown in a 2012
Smith & Nephew press release that directed investor and
media inquiries not to Smith & Nephew employees, but to
PLC executives. Given that no party disputes that personal
jurisdiction exists over Smith & Nephew as PLC’s subsidiary
in Pennsylvania, the Shukers’ allegations, taken as true and in
isolation, would suffice to show that PLC controlled Smith &
Nephew, that Smith & Nephew was PLC’s agent, and that
personal jurisdiction must exist over both Smith & Nephew
and PLC in Pennsylvania. See Kehm Oil, 537 F.3d at 300-01.
Our record, though, is not limited to the Shukers’
allegations about personal jurisdiction over PLC; it includes
declarations from PLC and Smith & Nephew executives that
contradict many of the Shukers’ assertions. For instance, the
executives assert that PLC had “no involvement” in the
design, manufacture, or distribution of Smith & Nephew’s R3
Acetabular System for hip replacements in the United States
and, moreover, that PLC had never approved any business
decision regarding that system. App. 320. Because the
executives’ declarations create a factual dispute regarding the
basis for personal jurisdiction over PLC, it is appropriate here
to allow the parties and the District Court to “revisit[]” the
factual issues by means of limited jurisdictional discovery,
which we “ordinarily allow” when a plaintiff’s claim to
personal jurisdiction “is not clearly frivolous.”20 Metcalfe,
20
We note that such jurisdictional discovery “is not a
license for the parties to engage in a fishing expedition” and
41
566 F.3d at 331, 336. Accordingly, the District Court abused
its discretion in denying jurisdictional discovery, and we will
therefore vacate the dismissal of PLC for lack of personal
jurisdiction and remand for the District Court to grant the
Shukers the opportunity to conduct jurisdictional discovery.21
that “the District Court should take care to circumscribe the
scope of discovery . . . to only the factual questions necessary
to determine its jurisdiction.” Schuchardt, 839 F.3d at 353-
54. This principle is all the more true after the 2015
amendments to the Federal Rules of Civil Procedure, which
added a discussion of proportionality to Rule 26(b)(1).
Victaulic Co., 839 F.3d at 258-59. Applying that rule here,
the Shukers may obtain only jurisdictional discovery
“regarding . . . nonprivileged matter that is relevant to
[personal jurisdiction over PLC] and proportional to the needs
of the case,” taking into account “the importance of the
issue[] at stake . . . , the amount in controversy, the parties’
relative access to relevant information, the parties’ resources,
the importance of the discovery in resolving the issue[], and
whether the burden or expense of the proposed discovery
outweighs its likely benefit.” Id. at 259 (quoting Fed. R. Civ.
P. 26(b)(1)).
21
If evidence adduced from such discovery supports
the conclusion that personal jurisdiction is proper as to PLC,
then the Shukers may to seek leave under Federal Rule of
Civil Procedure 15(a)(2) to amend their Third Amended
Complaint to join PLC as a co-defendant.
42
III. Conclusion
For the foregoing reasons, we will affirm in part,
reverse in part, and remand to the District Court for
proceedings consistent with this opinion.
43