Vaughan Estate of Vaughan v. Olympus Am., Inc.

208 A.3d 66

Freeman Maurice VAUGHAN, Jr., Administrator of the ESTATE OF Janice VAUGHAN, Deceased, Appellant

v.OLYMPUS AMERICA, INC., Olympus Corporation of the Americas, Olympus Medical System Corp. and Custom Ultrasonics, Inc.

No. 3101 EDA 2017

Superior Court of Pennsylvania.

Argued August 29, 2018

Filed April 10, 2019

Reargument Denied June 11, 2019

Peter L. Kaufman, Los Angeles, CA, for appellant.

Brian D. Schmalzbach, Richmond, VA, for Olympus America, appellee.

BEFORE: PANELLA, J., OLSON, J., and McLAUGHLIN, J.

OPINION BY McLAUGHLIN, J.:

Decedent Janice Vaughan underwent medical procedures at Carolinas Medical Center in Charlotte, North Carolina, during which physicians used an Olympus TJF-Q180V duodenoscope (scope). The scope is designed for reuse on multiple patients and must be disinfected – or "reprocessed" – after each use. Allegedly, the scope used on Mrs. Vaughan was contaminated, and she developed a multi-drug-resistant infection and in May 2015, passed away.

Her widower, Freeman Maurice Vaughan, Jr., as administrator of her estate, instituted this suit in Philadelphia. Olympus Medical System Corp. (OMSC) filed preliminary objections seeking dismissal for lack of personal jurisdiction, which the trial court sustained. Because OMSC had contacts with Pennsylvania that were sufficiently related to the causes of action on which Vaughn is suing OMSC, it is subject to Pennsylvania's specific jurisdiction. We therefore reverse the order sustaining the preliminary objection to personal jurisdiction over OMSC.

Other defendants – Olympus America, Inc. (OAI), Olympus Corporation of the Americas (OCA), and Custom Ultrasonics, Inc. (Custom) – sought dismissal based on the doctrine of forum non conveniens . See 42 Pa.C.S. § 5322(e). In our view, the lower court abused its discretion when it found "weighty reasons" to disturb Vaughan's choice of forum. See Bochetto v. Dimeling, Schreiber, & Park , 151 A.3d 1072 (Pa.Super. 2016). Accordingly, we also reverse the order granting the forum non conveniens dismissal.

I. Factual and procedural background

According to the Complaint, OMSC redesigned the scope several years before Decedent's procedures but did not update the reprocessing procedures and instructions, known as the "reprocessing protocol." See Complaint, ¶¶ 1, 3, 22, 23.¹ As a result, end users were allegedly unable to sanitize the redesigned scope effectively. Id. , ¶ 3. Vaughan claims that OMSC failed to update the reprocessing protocol despite its allegedly receiving notice in 2013 of infections in patients involving scopes in the same product line as the subject scope, as well as in another line of scopes. Id. , ¶ 24.

The Complaint names three defendants: OMSC, OAI, and OCA. OMSC allegedly designed and manufactured the subject scope. Id. , ¶ 11. OMSC is a foreign corporation organized under the laws of Japan, and has its principal place of business in Tokyo. Complaint, ¶ 11. As a foreign manufacturer marketing a medical device in the United States, it must not only register with the Food and Drug Administration (FDA), but also must designate an agent in the United States to meet its statutory reporting requirements. See 21 U.S.C.A. § 360(i)(1)(A)(ii) ; 21 C.F.R. §§ 803.58, 807.40.

OCA and OAI are New York corporations, and each maintains its principal place of business in Center Valley, Pennsylvania. OMSC's Preliminary Objections, ¶ 6.² It is undisputed that for FDA purposes, OCA is OMSC's agent. See OMSC's Memorandum of Law in Support of Preliminary Objections, at 12; Exhibit I to OMSC's Preliminary Objections, Affidavit of Laura Storms, ¶ 7. In addition, OCA and OAI are allegedly involved in the marketing, distribution, and post-marketing safety surveillance of the scope. Complaint, ¶ 9, 10.

Vaughan alleges that the FDA granted clearance for marketing the scope pursuant to a procedure known as "section 510(k)^{[3 ]} premarket notification." See Complaint, ¶ 17. Under this procedure, certain classes of medical devices may be marketed if "the FDA concludes on the basis of the [section] 510(k) notification that the device is ‘substantially equivalent’ to a pre-existing device ...." Medtronic, Inc. v. Lohr , 518 U.S. 470, 478, 479, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). Section 510(k) submissions must include, among other things, proposed labels, labeling, and advertisements sufficient to describe the device, its intended use, and the directions for its use. Buckman Co. v. Plaintiffs' Legal Comm. , 531 U.S. 341, 345, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001) (citing 21 CFR § 807.87(e) ). After the FDA granted section 510(k) clearance, OMSC allegedly "remained directly involved with the dissemination of information about the device such as warnings, instructions, and other safety information within the U.S." Complaint, ¶ 17.

The Complaint also alleges certain of the regulatory duties of a medical device manufacturer such as OMSC. Id. , ¶ 2 (citing 21 C.F.R. §§ 820.181, 820.30(j) ). FDA regulations require a device manufacturer to obtain approval of a device master record, defined as "a compilation of records containing the procedures and specifications for a finished device." 21 C.F.R. §§ 820.30, 820.181. This includes information regarding device maintenance, as well as servicing procedures and methods. 21 C.F.R. § 820.181(e).

OMSC allegedly had a duty to ensure that an effective and validated reprocessing protocol is disseminated to medical facilities and professionals. Complaint, ¶¶ 2, 26. Nonetheless, and despite its redesign of the scope, OMSC allegedly took no action to update the reprocessing protocol, and thus failed to provide end users of the redesigned scope an effective and validated protocol. Id. , ¶¶ 23, 27. If OMSC wanted or needed to disseminate information about changes to the reprocessing protocol, it allegedly would do so through OCA. Id. , ¶ 16.

Vaughan asserts four causes of action, all four against OMSC, OCA, and OAI. The causes of action center on the claim that the reprocessing protocol was inadequate. Vaughan claims negligence for (among other things) the alleged failure to provide an "effective and validated" reprocessing protocol. Id. , ¶¶ 41(a), 51. He also asserts "fraud-intentional misrepresentation" for "misrepresent[ing] that the reprocessing protocol ... was a safe and adequate means of cleaning and disinfecting" the scope. Id. , ¶ 57. He claims "fraud-negligent misrepresentation" for "falsely represent[ing] that the [scope] would be disinfected and safe for subsequent use in a new patient after administration of the reprocessing protocol." Id. , ¶ 68. He also asserts loss of consortium.

OCA and OAI answered the Complaint and joined Custom as an additional defendant.⁴ Custom is a Pennsylvania company headquartered in Ivyland, Pennsylvania. Using OMSC's reprocessing protocol, Custom designed, manufactured, and tested an automated endoscope reprocessor (AER) to clean and disinfect the scope. Custom does not sell or service the AER, relying instead on third-party contractors.

OMSC filed preliminary objections in December 2016, asserting, inter alia , a lack of personal jurisdiction. It included as an exhibit the affidavit of Laura Storms, OCA's Vice President of Regulatory and Clinical Affairs and Quality Assurance. Exhibit I to OMSC's Preliminary Objections, Affidavit of Laura Storms, ¶ 2. She is responsible at OCA for compliance with FDA regulations, including premarket applications and post market complaints. Id. Her office is in Center Valley.⁵ Her affidavit confirmed that the subject scope was manufactured by OMSC and it constitutes a medical device subject to FDA regulations. Id. , ¶ 4. She also admitted that because OMSC is a foreign manufacturer, "it designates OCA as its U.S. agent for all its products sold in the United States." Id. That agency relationship extends to OMSC's statutory reporting requirements with the FDA, including "premarket notifications related to approval of the device," i.e. , section 510(k) premarket notifications. Id. , ¶ 6.

The trial court sustained the preliminary objection regarding personal jurisdiction in February 2016 and granted dismissal as to OMSC. Subsequently, OCA, OAI, and Custom filed a joint motion to dismiss based on forum non conveniens . Following additional discovery and supplemental briefing, the trial court dismissed Vaughan's claims without prejudice to re-institute litigation in North Carolina. Vaughan timely appealed and filed a court-ordered Pa.R.A.P. 1925(b) statement. The trial court issued a responsive opinion.

Vaughan raises the following issues:

1. Did the court err in ruling that Pennsylvania does not have personal jurisdiction over OMSC when that entity regularly sent employee liaisons to live in Pennsylvania and to work with its sister corporations, which are located in Pennsylvania, and when all regulatory, sales, marketing, and quality assurance functions necessary to make its medical device available in the U.S. were carried out in, or controlled from, Pennsylvania[?]

2. Did the court abuse its discretion in granting OAI, OCA and Custom's motion to dismiss for forum non conveniens when all those entities are headquartered in Pennsylvania, all or nearly all of their facilities are located in Pennsylvania, all or nearly all of their employees are located in Pennsylvania, and all or nearly all of their conduct giving rise to this action took place in Pennsylvania?

Vaughan's Br. at 4.

II. Discussion

A. Specific Jurisdiction Is Proper in Pennsylvania.

In his first issue, Vaughan contends the trial court erred in ruling that Pennsylvania may not exercise personal jurisdiction over OMSC. Id. at 10. He argues that specific jurisdiction is proper in Pennsylvania because "[t]he acts of the corporations which were affiliated with OMSC, and which were acting as its agent in Pennsylvania, engaged in significant conduct that was directly related to the [plaintiff's] claims here." Vaughan's Br. at 29. We agree.

We reverse an order sustaining preliminary...