Regular readers will recall our post, “Three Dumb Legal Theories Walk into a Bar,” about the dismissal of a suit brought by a couple of convicted drunk drivers against the maker of the breathalyzers (technically the “AlcoTest 7110”) that provided evidence used in their successful prosecution. In addition to the prior conviction practically screaming “collateral estoppel,” we were interested in the Buckman aspects of the original opinion, Johnson v. Draeger Safety Diagnostics, Inc., 2013 WL 3788937 (D.N.J. July 19, 2013), because the plaintiffs alleged that the defendant obtained government approval of the device by means of false statements to the FDA.
As we mentioned in the prior post, the court’s “giv[ing] leave to amend takes generosity to a fault.” Now it turns out the court thought so, too. Our correspondent, Terry Henry of Blank Rome, has just sent us the opinion dismissing the amended complaint. Johnson v. Draeger Safety Diagnostics, Inc., C.A. No. 13-2439 (JLL), slip op. (D.N.J. July 19, 2013).
If you’re a fan of unusual forms of collateral estoppel, then Johnson II is for you. The opinion is an application of the “Rooker-Feldman” doctrine, which has four elements:
(1) the federal plaintiff lost in state court;
(2) the plaintiff complains of injuries caused by the state-court judgments;
(3) those judgments were rendered before the federal suit was filed; and
(4) the plaintiff is inviting the district court to review and reject the state judgments.
Johnson II, slip op. at 6 (citation and quotation marks omitted).
Now, we’re not really interested in collateral estoppel of this sort – it rarely comes up in our cases – so to make a long story short, these plaintiffs had pleaded guilty. As for the other elements, the reliability of this particular breathalyzer had already been litigated to a favorable (to the device) conclusion in a prior case that went all the way to the New Jersey Supreme Court earlier in 2013, in a case called Chun. Indeed, these plaintiffs went so far as to accuse an executive of the defendant of testifying falsely in the Chun matter. Slip op. at 8. Obviously, this action was a collateral attack on the Chun decision, and so the court held, declining subject matter jurisdiction under Rooker-Feldman. Id. at 10.
If that were all, we probably wouldn’t be writing this post. The plaintiff dropped the Buckman-barred allegations of fraud on the FDA, and the court didn’t reach any product liability issue in Johnson II.
But, as we mentioned, this breaking news is a twofer. Our intrepid correspondent sent us another win in an unrelated case that is more interesting. In this increasingly globalized world, personal jurisdiction over foreign contract manufacturers is an increasingly important issue, and that’s what Woods v. Claris Lifesciences Ltd., No. 4:13CV00286 JLH, slip op. (E.D. Ark. Oct. 28, 2013) is all about.
In Woods, the plaintiffs alleged injuries from a drug, metronidazole, that had been recalled due to mold contamination. That’s a generic drug, and with the specter of Mensing/Bartlett preemption haunting the plaintiffs (it’s almost Halloween, after all), the plaintiff sued not only the company that labeled and sold the drug, but a contract manufacturer and its US affiliate in the downstream pipeline. Defendant Claris Lifesciences (“Claris India”) “manufactured [the drug] in India for sale to [the seller] under a supply agreement.” Woods, slip op. at 2. The seller “sold the drug as its own product,” but its label “reflect[ed] that it was manufactured at Claris India’s facility. Id. The second Claris defendant, which is called “Claris USA,” seems to be a bystander to the transaction. It “was not a party to Claris India’s supply agreement with [the seller] and did not participate in the manufacture or distribution of the [drug] used by [plaintiffs]. Id. The plaintiffs sued in Arkansas court. Claris USA was a New Jersey company, and Claris India was (of course) in India.
Both Claris defendants moved to dismiss for lack of personal jurisdiction. Both won. There was no general jurisdiction. Neither Claris defendant has any presence in Arkansas. That was easy. Wood, slip op. at 4.
Specific jurisdiction depended on whether these entities: (1) Claris India, the Indian contract manufacturer of the drug, and (2) its US subsidiary, which had nothing to do with the transaction in question, satisfied the “purposeful availment” test.
They didn’t, and anybody out there representing a foreign contract manufacturer pursuant to similar supply agreements (quite common) should pay attention to the facts that did not establish personal jurisdiction.
For Claris India the relevant jurisdictional facts were: (1) it made the drug in India; (2) it gave up control of the drug in India; (3) it did not distribute the drug in the US (or anywhere); (4) it subjected itself to the supervision of the FDA, but this was not “purposeful” as to any particular state, as opposed to the entire US; (5) it did not “target” any particular state or region in the US; (6) it did not send any representatives to the US; and (7) it did not label the product as its own. Wood, slip op. at 2, 8-10. Essentially, “the only contact between Claris India and [the state] is that some of Claris India’s product was distributed here by [an unaffiliated third party].” Id. at 10. Not enough. That the “stream of commerce” brought drugs that this foreign defendant ultimately manufactured and sold overseas, and those drugs injured the plaintiffs, was not enough to establish personal jurisdiction under J. McIntyre Machine, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011). Wood, slip op. at 10-11.
For Claris USA the relevant jurisdictional facts were: (1) it was not a party to the supply agreement; (2) it had nothing to do with distribution of the drug in question; (3) it “interacted with the [FDA] as U.S. Agent” for Claris India, but this non-specific “this contact with a U.S. regulatory agency is not of a nature or quality that would support a finding of personal jurisdiction”; (5) it maintained a website that could be accessed from the jurisdiction; (6) in connection with the recall, it “sent letters to physicians and clinics who had received the contaminated product to notify them of the recall” (note: this was disputed, but the court assumed it was true) but these “scattered” contacts were not enough, as they related “to the recall of the drug and not to its distribution”; and (7) generally acting as “agent” in receiving product “complaints” (probably ADEs) Wood, slip op. at 6-7. So, for a US subsidiary acting as agent of a foreign company, FDA-related activities, a website, participation in a recall, and receiving “complaints”/ADEs, combined, was not enough to establish jurisdiction in a given state.
With preemption precluding most, if not all, claims against generic manufacturers, that plaintiffs would scramble to find other defendants to sue should come as no surprise. Non-manufacturing innovator drug companies have been fighting (and mostly winning) this same fight for years. Overseas contract manufacturers and their US affiliates are another predictable target. Wood demonstrates that personal jurisdiction can be a winning defense against such plaintiffs – we assume that the US side to any such supply agreement will address dispute resolution appropriately in their contracts with contract manufacturers.
Congrats to Terry. Good win(s), especially the second.