Perez et al v. Nidek Co. Ltd. et al, No. 3:2008cv01261 - Document 49 (S.D. Cal. 2009)
Court Description: ORDER Granting Motions to Dismiss (doc. no. 6 , 9 , 10 , 12 ), Denying Motion to Strike as Moot (doc. no. 5 ), and Granting in Part and Denying In Part Motion for Leave to Amend (doc. no. 20 ). The Second Amended Complaint is dismissed for failur e to state a claim. The Court denies Plaintiffs' request to file the proposed Third Amended Complaint submitted with its papers. However, the Court will allow Plaintiffs to file a new Third Amended Complaint. If Plaintiffs choose to file a new Third Amended Complaint, Plaintiffs must do so within 20 days of the filing of this order. Signed by Judge Barry Ted Moskowitz on 8/31/09. (All non-registered users served via U.S. Mail Service).(vet) (kaj).
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Perez et al v. Nidek Co. Ltd. et al Doc. 49 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 ROBERT PEREZ, NANCY ART and BRETT HARBACH, on behalf of themselves and all others similarly situated, CASE NO. 08cv1261 BTM(JMA) ORDER GRANTING MOTIONS TO DISMISS, DENYING MOTION TO STRIKE AS MOOT, AND GRANTING IN PART AND DENYING IN PART MOTION FOR LEAVE TO AMEND 13 Plaintiffs, 14 vs. 15 NIDEK CO. LTD., et al., 16 Defendants. 17 18 19 20 21 22 23 24 25 26 27 Defendant Nidek Incorporated (“Nidek”) has filed a motion to dismiss and/or strike portions of Plaintiffs’ Second Amended Complaint (“SAC”). Defendants Estate of Glenn A. Kawesch, M.D., Gary Kawesch, M.D. Farzad Yaghouti M.D., and John Kownacki, M.D., have filed separate motions to dismiss the SAC. Defendants Manoj V. Motwani, M.D., Keith Liang, M.D., William Ellis, M.D., Randa Garrana, M.D., Joseph Lee, M.D., Linda Vu, M.D., Michael Rose, M.D., and Thomas S. Tooma, M.D., have filed notices of joinder in the motions to dismiss/strike. Plaintiffs have filed a motion for leave to file a Third Amended Complaint. For the reasons discussed below, Defendants’ motions to dismiss are GRANTED and the motion to strike is DENIED as moot. Plaintiff’s motion for leave to file a Third Amended Complaint is GRANTED IN PART and DENIED IN PART. 28 1 08cv1261 BTM(JMA) Dockets.Justia.com 1 2 3 I. BACKGROUND On October 2, 2008, Plaintiffs filed the SAC. The original complaint and First Amended Complaint had not been served on Defendants. 4 Plaintiffs bring this action on behalf of themselves and a purported class of similarly 5 situated individuals, consisting of persons who underwent Hyperopic Laser in Situ 6 Keratomilesis (“LASIK”) and/or Hyperopic PhotoRefractive Keratectomy (“PRK”) with a 7 NIDEK EC-5000 Excimer Laser System (the “Laser”) on or about February of 1996 until the 8 date of October 11, 2006, and did not consent to and were not included in an approved FDA 9 clinical trial. (SAC ¶ 1.) 10 Under the Federal Food, Drug, and Cometic Act (“FDCPA”), as amended by the 11 Medical Device Amendments of 1976, the Laser is a Class III device. Generally, premarket 12 approval (“PMA”) is required before a Class III device may be marketed. 21 U.S.C. § 13 360e(a). 14 Commencing in 1998, Nidek obtained various PMAs for the Laser for PRK and Lasik 15 for myopia. According to Plaintiffs, the PMAs did not approve use of the Laser for hyperopia. 16 Plaintiffs allege that despite the lack of FDA approval, Nidek and the defendant physicians 17 conspired to perform hyperopic corrections with the Laser and achieved this goal by 18 modifying the device with illegal hardware and software. (SAC ¶ 55.) 19 On December 20, 2002, the FDA sent Nidek a letter in which the FDA expressed 20 concern regarding the replacement of chips in previously distributed Laser units with chips 21 that enable the device “for unapproved applications, such as hyperopia.” (SAC ¶ 56.) The 22 FDA stated that there had been allegations that NIDEK employees had been providing the 23 chips and that at least one employee had been terminated for providing this service. (Id.) 24 On July 11, 2001, the FDA sent certain physicians a Warning Letter that informed 25 them that the Nidek Laser they were using for hyperopia was manufactured prior to the 26 issuance of the PMA. (SAC ¶ 57.) The letter explained that the Laser used by the 27 physicians contained software version 2.2.5 dhc, which was not approved for commercial 28 distribution in the United States. (Id.) The letter further explained, “Because an approved 2 08cv1261 BTM(JMA) 1 PMA or an approved IDE does not cover this laser, it is adulterated within the meaning of the 2 Act. Therefore, you should not be using this laser to treat patients.” (Id.) 3 On July 26, 2001, the FDA sent a second Warning Letter, which reiterated the 4 information in the first Warning Letter and added that the modified Lasers needed to be 5 certified as in compliance with the Federal laser product performance standard pursuant to 6 21 C.F.R. § 1040.10(I). (SAC ¶ 58.) The FDA also pointed out that it had not received 7 product reports for the modified Lasers as required by 21 C.F.R. § 1002. (Id.) 8 Plaintiffs allege that despite the FDA warnings, Nidek and the defendant physicians 9 continued to sell, distribute, lease, use, service, and market the modified Lasers in the United 10 States. Plaintiffs allege that Defendants did not inform them or the other members of the 11 class that underwent Lasik or PRK for hyperopic corrections that the modified Laser was not 12 approved by the FDA. (SAC ¶¶ 10-11.) Plaintiffs do not allege that they or the other 13 members of the class suffered personal injury as a result of the procedures. 14 The SAC asserts the following causes of action (1) violation of the Human Subjects 15 in Medical Experimentation Act, Cal. Health & Safety Code § 24176; (2) unfair or deceptive 16 acts or practices in violation of the Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750 17 et seq. (“CLRA”); (3) violation of the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code 18 § 17200, based upon the FDCA; (4) violation of the UCL based upon FDA regulations and 19 the Cal. Health & Safety Code; (5) violation of the UCL based upon Cal. Health & Safety 20 Code § 24176; (6) civil conspiracy. The SAC seeks statutory damages, injunctive relief, 21 restitution, disgorgement, and punitive damages. (SAC, Prayer for Relief.) 22 II. DISCUSSION 23 24 A. Jurisdiction 25 The SAC asserts that this Court has federal-question jurisdiction over the action 26 because Plaintiffs’ claims concern Defendants’ alleged violations of the FDCA. (SAC ¶ 44.) 27 The SAC also states that the Court has diversity jurisdiction over the action pursuant to the 28 Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d). (Id.) Some of the 3 08cv1261 BTM(JMA) 1 Defendants dispute that the Court has subject-matter jurisdiction. Although the Court 2 concludes that it lacks federal-question jurisdiction, the Court finds that Plaintiffs have 3 satisfied their initial burden of establishing diversity jurisdiction under CAFA. 4 Plaintiffs’ allegations that Defendants violated the FDCA and regulations promulgated 5 thereunder do not give rise to federal question jurisdiction. Section 337(a) of the FDCA 6 provides that “all proceedings for the enforcement, or to restrain violations of [the Act] shall 7 be by and in the name of the United States.” Courts have interpreted this provision to mean 8 that there is no private right of action to enforce the Act’s provisions. See, e.g., Gile v. 9 Optical Radiation Corp., 22 F.3d 540, 544 (3d Cir. 1994); Milan Laboratories, Inc. v. Matcher, 10 7 F.3d 1130, 1139 (4th Cir. 1993); Summit Tech., Inc., v. High-Line Med. Instruments Co., 11 Inc., 922 F. Supp. 299, 305 (C.D. Cal. 1996). When there is no private right of action under 12 a federal statute such as the FDCA, “the presence of a claimed violation of the statute as an 13 element of a state cause of action is insufficiently ‘substantial’ to confer federal-question 14 jurisdiction.” Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 814 (1986). 15 Accordingly, federal question jurisdiction is not created by the fact that Plaintiffs’ state law 16 claims under the CLRA and UCL hinge upon alleged violations of the FDCA and its 17 regulations. 18 Plaintiffs argue that substantial federal issues have been raised by Defendants’ 19 argument that Plaintiffs’ claims are preempted by the FDCA. However, “[t]he fact that a 20 defendant might ultimately prove that a plaintiff’s claims are preempted . . . does not 21 establish” federal jurisdiction. Caterpillar v. Williams, 482 U.S. 386, 398 (1987). Preemption 22 gives rise to federal question jurisdiction only when an area of state law has been completely 23 preempted by federal law. Id. at 393. The FDCA does not completely preempt state law. 24 See, e.g., Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (1986) (holding that the 25 Medical Devices Amendments to the FDCPA do not preempt all state law claims pertaining 26 to devices governed by the federal statute); In re Orthopedic “Bone Screw” Products Liability 27 Litig., 132 F.3d 152 (3d Cir. 1997) (discussing remand of MDL actions which had been 28 removed under the Medical Devices Amendments to the FDCPA because the statute did not 4 08cv1261 BTM(JMA) 1 completely preempt state law). Therefore, the preemption issue raised by Defendants does 2 not confer federal-question jurisdiction. 3 Plaintiffs claim that the Court also has diversity jurisdiction over this action pursuant 4 to CAFA. Under CAFA, diversity jurisdiction exists where the matter in controversy exceeds 5 the sum or value of $5,000,000, exclusive of interest and costs, and the action is a class 6 action in which any member of a class of plaintiffs is a citizen of a state and any defendant 7 is a citizen or subject of a foreign state. 28 U.S.C. § 1332((d)(2)(C). The SAC alleges that 8 Plaintiffs are citizens of California and that Nidek Co., Ltd. and TLC Vision Corporation are 9 citizens of a foreign country. (SAC ¶¶ 10-12, 31.) The SAC also alleges that the aggregate 10 amount in controversy is over $5,000,000. (SAC ¶ 44.) 11 Under CAFA, the initial burden of establishing removal jurisdiction under § 1332(d)(2) 12 rests on the party invoking jurisdiction. Abrego Abrego v. The Dow Chemical Co., 443 F.3d 13 676, 685 (9th Cir. 2006). The Court finds that Plaintiffs have satisfied this burden. Based 14 on the allegations of the SAC, there is diversity of citizenship as required by 28 U.S.C. § 15 1332(d)(2)(C). As for the amount-in-controversy requirement, without reaching the merits 16 of Plaintiffs’ claims, it appears that the requirement is easily met based on the scope of the 17 purported class and the remedies sought – i.e., statutory damages of $10,000 for each willful 18 violation of the Human Subjects in Medical Experimentation Act and restitution under the 19 UCL.1 20 Defendants do not dispute that Plaintiffs have satisfied CAFA’s requirements of 21 diversity of citizenship and an amount in controversy in excess of $5,000,000, but argue that 22 this case falls within CAFA’s “local controversy exception.” The “local controversy exception” 23 provides: 24 A district court shall decline to exercise jurisdiction . . . (A)(i) over a class action in which -- 25 (I) greater than two-thirds of the members of all proposed 26 27 1 28 Defendants challenge the propriety of the class as defined by Plaintiffs. However, issues pertaining to the propriety of the class and whether Plaintiffs are adequate class representatives are better dealt with on a motion for class certification. 5 08cv1261 BTM(JMA) 1 plaintiff classes in the aggregate are citizens of the State in which the action was originally filed; 2 (II) at least 1 defendant is a defendant -3 (aa) from whom significant relief is sought by members of the plaintiff class; 4 5 (bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and 6 7 (cc) who is a citizen of the State in which the action was originally filed; and 8 (III) Principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and 9 10 11 12 13 (ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons . . . . 28 U.S.C. § 1332(d)(4) (emphasis added). 14 Defendants contend that Plaintiffs bear the burden of establishing that the exception 15 does not apply. Defendants are mistaken. The Ninth Circuit has held that once the 16 proponent of federal jurisdiction satisfies its initial burden of establishing jurisdiction under 17 section 1332(d)(2), the party objecting to federal jurisdiction bears the burden of proof as to 18 any express statutory exception under sections 1332(d)(4)(A) and (B). Serrano v. 180 19 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007). Serrano involved a case that was 20 removed. 21 establishing jurisdiction under CAFA, the plaintiff had the burden of proving the applicability 22 of the local controversy exception. 23 proponents of federal jurisdiction. Accordingly, Defendants bear the burden of establishing 24 that the local controversy exception applies. See Beye v. Horizon Blue Cross Blue Shield 25 of New Jersey, 568 F. Supp. 2d 556, 573 (D.N. J. 2008) (explaining that defendants in a case 26 that was commenced in federal court had the burden of showing that an exception to CAFA 27 applied). 28 Therefore, once the removing defendants satisfied their initial burden of Id. at 1024. Here, in contrast, Plaintiffs are the Defendants have not carried their burden of establishing that the local controversy 6 08cv1261 BTM(JMA) 1 exception applies. Defendants have not shown that greater than two-thirds of the members 2 of the proposed plaintiff class are citizens of California, as required by section 3 1332(d)(4)(A)(i)(I). Although the members of the proposed class underwent hyperopic 4 surgery in California, there is no evidence that 2/3 of them actually resided and continue to 5 reside in California. Therefore, the Court finds that it has subject matter jurisdiction under 6 CAFA.2 7 8 B. Motions to Dismiss 9 Defendants seek to dismiss the SAC in its entirety for failure to state a claim. The 10 Court agrees that Plaintiffs have failed state a claim for the specific reasons discussed below. 11 12 1. Cal. Health & Safety Code § 24176 13 Plaintiffs allege that Defendants are liable for statutory damages under Cal. Health & 14 Safety Code § 24176, because Defendants subjected Plaintiffs and the other members of 15 the class to medical experiments without first obtaining their informed consent, as required 16 by Cal. Health & Safety Code § 24175. 17 Section 24175(a) provides: “Except as otherwise provided in this section, no person 18 shall be subjected to any medical experiment unless the informed consent of such person 19 is obtained.” The term “medical experiment,” as used in section 24175(a), is defined as: 20 21 22 (a) The severance or penetration or damaging of tissues of a human subject or the use of a drug or device, as defined in Section 109920 or 109925, electromagnetic radiation, heat or cold, or a biological substance or organism, in or upon a human subject in the practice or research of medicine in a manner not reasonably related to maintaining or improving the health of the subject or otherwise directly benefiting [sic] the subject. 23 24 (b) The investigational use of a drug or device as provided in Sections 111590 and 111595. 25 (c) Withholding medical treatment from a human subject for any purpose other than maintenance or improvement of the health of the subject. 26 Cal. Health & Safety Code § 24174. 27 28 2 The Court need not reach whether Defendants have met their burden of proof with respect to the remaining requirements of the local controversy exception. 7 08cv1261 BTM(JMA) 1 The “informed consent” required by section 24175(a) must meet the detailed 2 requirements set forth in section 24173. Under section 24173, a written consent form must 3 be signed and dated, and the subject must be informed both verbally and within the written 4 consent form of certain enumerated facts regarding the proposed medical experiment. 5 Section 24173 “makes significant specific procedural additions to the general common law 6 requirements” for informed consent. Daum v. Spinecare Medical Group, Inc., 52 Cal. App. 7 4th 1285, 1309 (1997). 8 Defendants contend that the laser surgeries performed on Plaintiffs do not fall within 9 the definition of a “medical experiment, “ and that, therefore, Defendants were not required 10 to give the detailed “informed consent” prescribed by section 24173. The Court agrees. 11 Under section 24174(a), to qualify as a “medical experiment,” the use of a device must 12 be “in the practice or research of medicine in a manner not reasonably related to maintaining 13 or improving the health of the subject or otherwise directly benefiting [sic] the subject.” 14 (Emphasis added.) Here, the use of the Laser to correct farsightedness was reasonably 15 related to improving the health of the subject. See Trantafello v. Medical Center of Tarzana, 16 182 Cal. App. 3d 315, 320 n. 2 (1986) (explaining that section 24174(a) deals with 17 experiments on human subjects in the course of pure research and did not apply to an 18 innovative procedure that had a therapeutic purpose). Therefore, the laser surgeries at issue 19 do not qualify as “medical experiments” under section 24174(a). 20 Under section 24174(b), the investigational use of a drug or device as provided in 21 sections 111590 and 111595 constitutes a “medical experiment.” Section 111590 refers to 22 investigations conducted in accordance with the requirements of section 505(i) or section 23 520(g) of the FDCPA (21 U.S.C. §§ 352, 355(i), 360) and the regulations adopted pursuant 24 to the FDCPA. Similarly, section 111595 refers to investigational use under specified 25 conditions. Plaintiffs do not allege the investigational use of the Laser within the parameters 26 of section 111590 or 111595. Indeed, the SAC specifies that the class does not include 27 individuals who participated in an approved FDA clinical trial. Because there was no 28 “investigational use” of the device under section 24174(b), Defendants were not required to 8 08cv1261 BTM(JMA) 1 provide informed consent under section 24173. See Huntman v. Danek Medical, Inc., 1998 2 WL 663362, at * 7 (S.D. Cal. July 24, 1998) (dismissing negligence per se claim to the extent 3 it was based on allegations that defendant was required to obtain informed consent under 4 section 24173 and federal regulations, because there was no evidence that Plaintiff was part 5 of any Investigational Device Exemption (“IDE”) clinical trial). 6 7 Section 24174(c) concerns the withholding of medical treatment and is inapplicable here. 8 The laser surgeries at issue do not satisfy any of the statutory definitions of “medical 9 experiment.” Therefore, Plaintiffs’ claim under section 24176 is dismissed for failure to state 10 a claim. 11 12 2. CLRA and UCL Claims 13 Plaintiffs’ CLRA and UCL claims are premised on violations of the FDCA and its 14 regulations.3 As discussed below, Plaintiffs’ CLRA and UCL claims are dismissed because 15 they impermissibly seek private enforcement of the FDCA. Furthermore, Plaintiffs’ UCL 16 claims are time-barred. 17 18 a. No Private Right of Action Under FDCA 19 Section 337(a) of the FDCA provides that “all proceedings for the enforcement , or to 20 restrain violations of [the Act] shall be by and in the name of the United States.” Courts have 21 interpreted section 337(a) as prohibiting private rights of action under the FDCA and have 22 dismissed state law claims that seek to enforce the FDCA or its regulations. 23 In Summit Tech. Inc. v. High-Line Med. Instruments Co., Inc., 922 F. Supp. 299 (C.D. 24 Cal. 1996) (“Summit I”), the plaintiff asserted a Lanham Act claim based on the defendants’ 25 alleged failure to disclose that their re-imported excimer laser systems were materially 26 different from the FDA-approved systems and were not actually approved by the FDA. The 27 3 28 Plaintiffs’ Fifth Cause of Action pleads a UCL claim premised upon Cal. Health & Safety Code § 24176. As discussed above, Plaintiffs have failed to state a claim under Cal. Health & Safety Code § 24176. 9 08cv1261 BTM(JMA) 1 court dismissed plaintiff’s Lanham Act claim, explaining that because the FDA had not 2 completed its investigation into whether the defendants had violated FDA regulations by 3 marketing the re-imported machines, plaintiff’s claim would require the court to usurp the 4 FDA’s authority to enforce the FDCA: 5 7 A Lanham Act cause of action cannot stand if it alleges that a defendant has failed to disclose the fact of FDA non-approval, when the FDA has not yet determined whether or not the product in question has been approved. Simply put, the Lanham Act does not allow a federal court to “determine preemptively how a federal agency will interpret and enforce its own regulations.” Id. 8 Id. at 306 (quoting Sandoz Pharm. v. Richardson-Vicks, Inc., 902 F.2d 222 (3d Cir. 1990)). 9 Similarly, in Photomedex, Inc. v. RA Med. Sys. Inc., 2007 WL 3203039 (S. D. Cal. Oct. 10 29, 2007), the court dismissed plaintiff’s claims under the Lanham Act and Cal. Bus. & Prof. 11 Code §§ 17200, 17500, because the claims rested upon whether the design changes made 12 by defendants to their laser required defendants to file additional documents with the FDA 13 to obtain further FDA pre-market clearance. The court held that the determination of whether 14 the defendants were improperly marketing a laser that was not FDA-approved required 15 application of FDA regulations and the FDA’s expertise. See also In re Epogen & Aranesp 16 Off-Label Marketing & Sales Practices Litig., __ F. Supp. 2d __, 2008 WL 5335062 (C.D. Cal. 17 Dec. 17, 2008) (dismissing plaintiffs’ RICO and Cal. Bus. & Prof. Code § 17200 claims 18 because they were primarily based on allegations that the defendants promoted a 19 prescription drug for off-label uses, causing the drug to be “misbranded” in violation of the 20 FDCA). 6 21 In Sandoz Pharm. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222 (3d Cir. 1990), the 22 Third Circuit affirmed the dismissal of a Lanham Act claim that the defendant engaged in 23 false labeling of its over-the-counter cough medicine by listing demulcents (locally-acting 24 inert sugary liquids which operate directly on cough receptors in the throat and respiratory 25 passages) as “inactive.” The Third Circuit explained that the FDA had not yet found 26 conclusively whether demulcents must be labeled as “active” within the meaning of 21 C.F.R. 27 § 210.3(b)(7), and that it was not proper for a district court to “usurp administrative agencies’ 28 responsibility for interpreting and enforcing potentially ambiguous regulations.” Id. at 231. 10 08cv1261 BTM(JMA) 1 See also Braintree Lab., Inc. v. Nephro-Tech, Inc., 1997 WL 94237 (D. Kan. Feb. 26, 1997) 2 (granting motion to dismiss Lanham Act and common law unfair competition claims because 3 the crux of the claims was that defendants had failed to receive FDA approval for a “dietary 4 supplement,” resulting in misbranding under the FDCA); Healthpoint, Ltd. v. Ethex Corp., 273 5 F. Supp. 2d 817 (W.D. Tex. 2001) (dismissing claims requiring a determination of whether 6 drugs were on the market lawfully under the FDCA). 7 Of course, not all claims that touch upon subject matter regulated by the FDCA are 8 preempted. For example, literally false or misleading statements made to promote drugs or 9 devices are actionable if they do not depend on a determination by the court whether the 10 FDCA has been violated. See, e.g., In re Epogen, 2008 WL 5335062 at *9; Healthpoint, 273 11 F. Supp. 2d at 846; Summit Tech., Inc, v. High-Line Med. Instruments, Co., 933 F. Supp. 918 12 (C.D. Cal. 1996) (“Summit II”). 13 Here, Plaintiffs’ CLRA and UCL claims rest upon allegations that (1) Defendants 14 permitted the use, sale, lease, distribution and/or service of Lasers that were modified to 15 perform hyperopic corrections in violation of the PMA, resulting in the device being 16 “adulterated” within the meaning of the FDCA; (2) Defendants failed to re-certify and re- 17 identify the modified Lasers as required by 21 C.F.R. § 1040.10; and (3) Defendants failed 18 to inform patients that the modified Lasers were not approved by the FDA and were not 19 properly certified. 20 Plaintiffs’ claims require the Court to make determinations regarding the scope of the 21 PMA, whether the modified Lasers were “adulterated” under section 501(f)(1)(B) of the 22 FDCA, and whether re-certification was required under 21 C.F.R. § 1040.10. These matters 23 should be decided by the FDA in the first instance. Although the FDA issued Warning Letters 24 regarding the modified Laser’s lack of pre-market approval and Defendants’ failure to re- 25 certify and re-identify the Lasers pursuant to 21 C.F.R. § 1040.10, such letters do not 26 constitute a final decision by the FDA. Summit I, 922 F. Supp. at 306. 27 The Court will not permit Plaintiffs to privately enforce the FDCA and its regulations 28 under the guise of state law claims. Accordingly, the Court dismisses Plaintiffs’ CLRA and 11 08cv1261 BTM(JMA) 1 UCL claims.4 2 b. UCL Statute of Limitations 3 4 5 Plaintiffs’ UCL claims are dismissed on the additional ground that they are barred by the applicable statute of limitations. 6 Cal. Bus. & Prof. Code § 17208 provides: “Any action to enforce any cause of action 7 pursuant to this chapter shall be commenced within four years after the cause of action 8 accrued.” The Ninth Circuit has interpreted this provision to mean that claims under Cal. 9 Bus. & Prof. Code § 17200 “are subject to a four-year statute of limitations which [begins] to 10 run on the date the cause of action accrue[s], not on the date of discovery.” Karl Storz 11 Endoscopy-America, Inc. v. Surgical Tech., Inc., 285 F.3d 848, 857 (9th Cir. 2002). 12 One published California Court of Appeal case has similarly held that the “discovery 13 rule” does not apply to unfair competition actions. Snapp & Assoc. Ins. Services, Inc. v. 14 Robertson, 96 Cal. App. 4th 884, 891 (2002). However, another published California Court 15 of Appeal case, Massachusetts Mutual Life Ins. Co. v. Superior Court, 97 Cal. App. 4th 1282, 16 1295 (2002), stated that the statute of limitations for a claim under Bus. & Prof. Code § 17 17208 would “probably” run from the time a reasonable person would have discovered the 18 basis for the claim. Massachusetts Mutual did not provide any reasoning in support of its 19 conclusion. The California Supreme Court has not yet decided whether the “discovery rule” 20 applies to unfair competition claims and has noted that the matter is not settled under 21 California law. Grisham v. Philip Morris U.S.A., Inc., 40 Cal. 4th 623, 635 n. 7 (2007). 22 Absent a clear indication from the California courts that the Ninth Circuit’s 23 interpretation of Cal. Bus. & Prof. Code § 17208 was incorrect, this Court must follow Karl 24 Storz. See Jones-Hamilton Co. v. Beazer Materials & Services, Inc., 973 F.2d 688, 696 n. 25 4 (9th Cir. 1992) (explaining that an additional intermediate appellate court decision on one 26 4 27 28 Plaintiffs cite to Evraets v. Intermedics Intraocular, Inc., 29 Cal. App. 4th 779 (1994), in support of their position that their state law claims need not be dismissed. However, Evraets concerned preemption under the FDCA’s express preemption clause (21 U.S.C. § 360k). The court did not analyze whether the state law claims required the court to resolve matters under the FDCA that should be decided by the FDA in the first instance. 12 08cv1261 BTM(JMA) 1 side of a clear split was not the kind of indication that the Ninth Circuit’s past interpretation 2 of California law was incorrect that would cause the Ninth Circuit to revisit its prior holding). 3 See also Endres v. Wells Fargo Bank, 2008 WL 344204 (N.D. Cal. Feb. 6, 2008) (citing Karl 4 Storz and explaining that the UCL limitations period begins to run at the time of the alleged 5 misrepresentation, not on the date of discovery by the plaintiff). 6 Plaintiffs’ UCL claims are premised on Defendants’ use of the modified Laser on them 7 to perform hyperopic surgery. Plaintiffs’ surgeries took place in 2000-2002. (Robert Perez 8 underwent surgery on August 15, 2002 and September 12, 2002; Nancy Art underwent 9 surgery on September 28, 2000; and Brett Harbach underwent surgery on September 28, 10 2000 and May 23, 2001). Therefore, the four-year statute of limitations on all of Plaintiffs’ 11 UCL claims expired prior to the filing of this lawsuit on July 14, 2008.5 12 13 c. Conspiracy 14 In light of the dismissal of Plaintiffs’ substantive claims, Plaintiffs’ conspiracy claim is 15 dismissed as well. See Oregon Laborers-Employers Health & Welfare Trust Fund v. Philip 16 Morris Inc., 185 F.3d 957, 969 (9th Cir. 1999). The Court notes that although Defendants 17 argue that Plaintiffs must allege the conspiracy itself with particularity under Fed. R. Civ. P. 18 9(b), the Ninth Circuit has held that “under federal law a plaintiff must plead at a minimum, 19 the basic elements of a civil conspiracy if the object of the conspiracy is fraudulent.” Wasco 20 Products, Inc. v. Southwall Tech., Inc., 435 F.3d 989, 991 (9th Cir. 2006). 21 5 22 23 24 25 26 27 28 The Estate of Glenn A. Kawesch argues that all of Plaintiffs’ claims against it are barred by Cal. Civ. Proc. Code § 366.2, which provides: “If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply.” Plaintiffs do not dispute that Dr. Kawesch died on March 14, 2007, and that this action was not commenced until July 14, 2008. However, Plaintiffs’ claims may be timely under Cal. Civ. Proc. Code § 366.2(b)(2), because it appears that Plaintiffs timely filed their claims in probate proceedings - Plaintiffs were served with a Notice to Creditors on or about July 17 2008, and filed their claims shortly thereafter (Exs. 2-3 to Thale Decl.). See Levine v. Levine, 102 Cal. App. 4th 1256, 1261 (2002) (explaining that if a claim is timely filed in probate proceedings, it remains timely filed even though the claim is allowed, approved, or rejected outside the limitations period set forth in Cal. Civ. Proc. Code § 366.2). 13 08cv1261 BTM(JMA) 1 d. Abatement 2 In their motions to dismiss, Defendants argue that this action must be abated due to 3 Williams v. Nidek, Case No. GIC 842089, an action pending in state court which, according 4 to Defendants, involves some of the same parties, similar class allegations, and similar 5 causes of action. 6 Whether a federal court should stay a case due to the pendency of a state court 7 proceeding is governed by Colorado River Water Conserv. Dist. v. United States, 424 U.S. 8 800, 817-19 (1976). 9 circumstances” stay or dismiss a case in deference to pending state proceedings. 10 Abstention is not appropriate unless the state and federal actions are “substantially similar.” 11 Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir. 1989). Under Colorado River, federal courts may under “exceptional 12 Here, it appears that the federal action and state action are not substantially similar. 13 As pointed out by Plaintiffs, although four of the defendants are the same, the plaintiffs and 14 potential classes are different. In addition, the state case seeks individual damages for 15 physical injury suffered by class members as a result of hyperopic surgery using the modified 16 Laser. The federal case does not seek damages for physical injury, but, rather, seeks 17 restitution and statutory penalties. 18 Even if the cases were “substantially similar,” Defendants have not shown that 19 abstention is warranted by “exceptional circumstances.” In assessing whether Colorado 20 River abstention is appropriate, federal courts should consider the following factors: (1) 21 whether either court has assumed jurisdiction over a res; (2) the relative convenience of the 22 forums; (3) the desirability of avoiding piecemeal litigation; (4) the order in which the forums 23 obtained jurisdiction; (5) whether state or federal law controls; (6) whether the state forum 24 will adequately protect the interests of the parties; and (7) whether the parties have engaged 25 in forum shopping. Colorado River, 434 U.S. at 817-818; Travelers Indemnity Co. v. 26 Madonna, 914 F.2d 1364, 1367-68 (9th Cir. 1990). The aforementioned factors are not a 27 “mechanical checklist.” Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 28 1, 16 (1983). Rather, the decision whether to abstain in favor of parallel state-court litigation 14 08cv1261 BTM(JMA) 1 rests on a “careful balancing of the important factors as they apply in a given case, with the 2 balance heavily weighted in favor of the exercise of jurisdiction.” Id. (emphasis added). 3 Defendants did not discuss any of the aforementioned factors. 4 5 Therefore, the Court denies Defendants’ request to stay the case pending the litigation of Williams v. Nidek. 6 7 C. Motions to Strike 8 Nidek has filed a motion to strike portions of the prayer for relief and allegations 9 regarding an agency relationship between Nidek and the defendant physicians. Nidek’s 10 motion to strike is denied as moot in light of the dismissal of Plaintiffs’ SAC. 11 12 D. Motion for Leave to Amend 13 Plaintiffs have filed a motion for leave to amend complaint and have submitted a 14 proposed Third Amended Complaint. The proposed Third Amended Complaint adds a cause 15 of action for “aiding and abetting,” adds allegations against a Defendant Doctor Class, and 16 pleads additional facts regarding Defendants’ alleged intentional omissions regarding the lack 17 of FDA approval for the Laser. The proposed Third Amended Complaint also drops 18 Defendant Paul C. Lee, M.D., because he did not perform the surgical procedures at issue 19 during the Class Period. 20 Leave to amend a complaint should be freely given when justice so requires. Fed. R. 21 Civ. P. 15(a)(2). However, “[l]iberality in granting a plaintiff leave to amend is subject to the 22 qualification that the amendment not cause undue prejudice to the defendant, is not sought 23 in bad faith, and is not futile.” Bowles v. Reade, 198 F.3d 752, 758 (9th Cir. 1999). 24 Here, the proposed Third Amended Complaint suffers from the same defects as the 25 SAC and would be dismissed for the same reasons.6 Therefore, the Court denies Plaintiffs’ 26 6 27 28 The Third Cause of Action for violations of the Unfair Competition Law adds allegations that in addition to violating the FDCA, Defendants violated California’s Sherman Food, Drug, and Cosmetics Laws, including Cal. Health & Safety Code §§ 111295, 111300, and 111305, by adulterating a device and/or by manufacturing, selling, delivering, holding, or offering for sale an adulterated device. However, Plaintiffs do not claim that the device 15 08cv1261 BTM(JMA) 1 motion to file the proposed Third Amended Complaint. However, the Court will give Plaintiffs 2 one more chance to state claims against Defendants in a new Third Amended Complaint. 3 4 III. CONCLUSION 5 For the reasons discussed above, Defendants’ motions to dismiss are GRANTED. 6 Defendant Nidek’s motion to strike is DENIED AS MOOT. The Second Amended Complaint 7 is DISMISSED for failure to state a claim. Plaintiffs’ motion for leave to amend the complaint 8 is GRANTED IN PART and DENIED IN PART. The Court denies Plaintiffs’ request to file 9 the proposed Third Amended Complaint submitted with its papers. However, the Court will 10 allow Plaintiffs to file a new Third Amended Complaint. If Plaintiffs choose to file a new Third 11 Amended Complaint, Plaintiffs must do so within 20 days of the filing of this order. 12 IT IS SO ORDERED. 13 DATED: August 31, 2009 14 15 16 Honorable Barry Ted Moskowitz United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 in question was “adulterated” under an independent standard set forth in the California statute, but, rather, that the device was “adulterated” because it was used to perform hyperopic corrections in violation of the PMA. (Proposed Third Amended Complaint, ¶¶ 8184). Therefore, even though Plaintiffs cite to violations of California law, this cause of action would be dismissed because it seeks to privately enforce violations of the FDCA and its regulations. At any rate, as discussed above, Plaintiffs’ UCL claims are barred by the applicable statute of limitations. 08cv1261 BTM(JMA) 16
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