Johnson v. Smith & Nephew, Inc.

621 F.Supp.3d 593

Matthew A. JOHNSON and Rhonda Johnson, Plaintiffs, v. SMITH & NEPHEW, INC., Defendant.

3:22-cv-00054-RJC-DSC

United States District Court, W.D. North Carolina, Charlotte Division

Signed August 10, 2022

Filed August 11, 2022

Kurt F. Hausler, Hausler Law Firm, PLLC, Charlotte, NC, for Plaintiffs.

Scott Douglas Maclatchie, Jr., Nelson Mullins, Columbia, SC, Terri Steinhaus Reiskin, Pro Hac Vice, Nelson Mullins Riley and Scarborough LLP, Washington, DC, Paul Joseph Osowski, Nelson Mullins Riley & Scarborough LLP, Charlotte, NC, for Defendant.

ORDER

Robert J. Conrad, Jr., United States District Judge

THIS MATTER comes before the Court on Defendant Smith & Nephew, Inc.'s Motion to Dismiss Plaintiff's Breach of Implied Warranty Claim, (DE 9), and the Magistrate Judge's Memorandum and Recommendation ("M&R"), (DE 12), which recommends granting Defendant's motion. For the reasons stated herein, the Court will adopt the M&R.

I. BACKGROUND

A. Factual Background

Defendant Smith & Nephew, Inc. ("Defendant" or "Smith & Nephew") manufactures and sells medical devices, including hip replacement components. (DE 7 at ¶¶2-3). Plaintiff Matthew Johnson ("Mr. Johnson") had a hip replacement where doctors implanted Smith & Nephew products. (Id. at ¶6). A few years after the artificial hip was implanted, the device failed when Mr. Johnson was changing clothes. (Id. at ¶10). Mr. Johnson heard a loud "pop" in his hip and then felt extreme pain and grinding. (Id.). As a result of the failure, Mr. Johnson had to endure another major surgery where doctors removed the failed Smith & Nephew components and replaced them with Stryker components. (Id. at ¶12). Mr. Johnson suffered additional surgical damage to his hip and leg, endured an extended recovery, and continues to deal with limited mobility and pain such that he can no longer work. (Id. at ¶¶13, 19). Mr. Johnson alleges that he "purchased [the] Smith & Nephew components by . . . paying through his health insurance the invoice from Carolinas Healthcare Systems/Carolinas Medical Center-Mercy Hospital for the November 16, 2009 arthroplasty. The Smith & Nephew components, including the Femoral Stem, were itemized on said invoice and, upon information and belief, the cost of the Femoral Stem was $9,000." (Id. at ¶6).

There are no facts that show Mr. Johnson knew of any representations made by Smith & Nephew regarding the hip replacement components, nor are there any facts that show Mr. Johnson elected to undergo the surgery because of such representations.

B. Procedural Background

Mr. Johnson, as well as his wife Rhonda Johnson (collectively, "Plaintiffs"), filed suit against Smith & Nephew, bringing claims for (1) negligence, (2) breach of implied warranty of merchantability, and (3) loss of consortium. (DE 7). Smith & Nephew moves to dismiss the breach of implied warranty claim for failure to state a claim, arguing that Mr. Johnson was not a buyer and that no privity exception applies. (DE 9). The M&R agrees and recommends this Court grant the motion to dismiss. (DE 12).

II. STANDARD OF REVIEW

A district court may assign dispositive pretrial matters to a magistrate judge for "proposed findings of fact and recommendations." 28 U.S.C. § 636(b)(1)(B). The Federal Magistrate Act provides that a district court "shall make a de novo determination of those portions of the report or specific proposed findings or recommendations to which objection is made." Id. § 636(b)(1); Camby v. Davis, 718 F.2d 198, 199 (4th Cir. 1983). However, "when objections to strictly legal issues are raised and no factual issues are challenged, de novo review of the record may be dispensed with." Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982). De novo review is also not required "when a party makes general and conclusory objections that do not direct the court to a specific error in the magistrate's proposed findings and recommendations." Id. Similarly, when no objection is filed, "a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.' " Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005) (quoting FED. R. CIV. P. 72, advisory committee note).

The standard of review for a motion to dismiss under Rule 12(b)(6) for failure to state a claim is well known. FED. R. CIV. P. 12(b)(6). "A motion to dismiss under Rule 12(b)(6) 'challenges the legal sufficiency of a complaint,' including whether it meets the pleading standard of Rule 8(a)(2)." Fannie Mae v. Quicksilver LLC, 155 F. Supp. 3d 535, 542 (M.D.N.C. 2015) (quoting Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009)). A complaint attacked by a Rule 12(b)(6) motion to dismiss will survive if it contains enough facts "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Facial plausibility means allegations that allow the court to draw the reasonable inference that defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678, 129 S.Ct. 1937.

Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2). Specific facts are not necessary; the statement need only "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Additionally, when ruling on a motion to dismiss, a court must accept as true all of the factual allegations contained in the complaint. Erickson v. Pardus, 551 U.S. 89, 93-94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). Nonetheless, a court is not bound to accept as true legal conclusions couched as factual allegations. Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). "Courts cannot weigh the facts or assess the evidence at this stage, but a complaint entirely devoid of any facts supporting a given claim cannot proceed." Potomac Conference Corp. of Seventh-Day Adventists v. Takoma Acad. Alumni Ass'n, Inc., 2 F. Supp. 3d 758, 767-68 (D. Md. 2014). Furthermore, the court "should view the complaint in a light most favorable to the plaintiff." Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993).

III. DISCUSSION

At issue is whether a patient can bring a breach of implied warranty of merchantability claim against the manufacturer of a medical device that is implanted by a doctor in the patient. The M&R recommends dismissing the implied warranty of merchantability claim because there is no privity. In particular, the M&R found that no exception to the privity requirement applied because Mr. Johnson was not a buyer under the UCC. (DE 12). Plaintiffs object, arguing that Mr. Johnson was a buyer as he purchased the artificial hip by paying, through his health insurance, the invoice from the hospital which included an itemized cost for the Smith & Nephew components. (DE 13).

In North Carolina, "a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind." N.C. GEN. STAT. ANN. § 25-2-313(1)(a). Generally, a plaintiff must have contractual privity with a defendant to bring a breach of warranty claim. Atl. Coast Mech., Inc. v. Arcadis, Geraghty & Miller of N.C., Inc., 175 N.C. App. 339, 345, 623 S.E.2d 334 (2006); Crews v. W.A. Brown & Son, Inc., 106 N.C. App. 324, 332, 416 S.E.2d 924 (1992); Terry v. Double Cola Bottling Co., 263 N.C. 1, 2, 138 S.E.2d 753 (1964); Thomason v. Ballard and Ballard Co., 208 N.C. 1, 4, 179 S.E. 30 (1935). However, North Carolina's version of the Uniform Commercial Code removes the privity requirement in personal injury cases for express or implied warranties where the injured party is a "natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume or be affected by the goods." N.C. GEN. STAT. ANN. § 25-2-318. In other words, when the buyer is in privity of contract with the seller, any express or implied warranties made to the buyer inure to the benefit of the buyer's family or household guests.

Another statutory exception, under the North Carolina Products Liability Act, removes the privity requirement for "a buyer, as defined in the Uniform Commercial Code, of the product involved" where the buyer brings "a product liability action directly against the manufacturer of the product involved for breach of implied warranty." N.C. GEN. STAT. ANN. § 99B-2. Thus, a buyer who is not in privity with the manufacturer can bring a breach of implied warranty claim, notwithstanding the lack of privity. Under North Carolina's Uniform Commercial Code, a buyer is "a person who buys or contracts to buy goods." N.C. GEN. STAT. § 25-2-103(1)(a). "Goods" include "all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale." Id. § 25-2-105(a).

North Carolina courts also tend to uphold an exception for buyers who are not in privity with the manufacturer when the manufacturer intends its warranties to be conveyed to a buyer through the retailer. Kinlaw v. Long Mfg. N. C., Inc., 298 N.C. 494, 499, 259 S.E.2d 552 (1979) ("[A] manufacturer can extend a warranty beyond the bounds of privity if he makes representations designed to induce a purchase and directed to the ultimate purchaser."). This normally occurs when a manufacturer advertises, labels, or provides manuals with its products with the intention of inducing the ultimate purchaser to buy the product from a retailer. Id. at 500, 259 S.E.2d 552. For example, in Kinlaw the court removed the...