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Gentle v. Portland Orthopaedics Ltd.

United States District Court, E.D. Washington

February 7, 2018

TRAVIS GENTLE and LISA GENTLE, Plaintiffs,
v.
PORTLAND ORTHOPAEDICS LIMITED; PORTLAND ORTHOPAEDICS, INC.; SYMMETRY MEDICAL, INC., doing business as Symmetry Medical Othy; SYMMETRY MEDICAL OTHY; SYMMETRY OTHY; OTHY; MIPRO US, INC.; MAXX HEALTH, INC.; MAXX ORTHOPEDICS, INC.; PLUS ORTHOPEDICS; SMITH & NEPHEW, INC.; and JOHN DOE CORPORATIONS 1-50, Defendants.

          ORDER GRANTING DEFENDANT MIPRO US'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

          ROSANNA MALOUF PETERSON UNITED STATES DISTRICT JUDGE.

         BEFORE THE COURT are cross-motions for summary judgment. Plaintiffs move for partial summary judgment against Defendant Mipro U.S. regarding successor liability. ECF No. 46. Defendants Mipro US, Inc., Maxx Health, Inc., and Maxx Orthopedics, Inc. (collectively, “Defendants”) move for summary judgment on liability grounds. ECF No. 51. The Court has heard the parties' arguments, reviewed the relevant pleadings, and is fully informed.

         BACKGROUND

         Plaintiffs Lisa and Travis Gentle filed this suit against a number of companies alleging state law claims including negligence, breach of express warranty, breach of implied warranty of merchantability, breach of implied warranty of fitness, negligent misrepresentation, and fraud. ECF No. 1 at 8-14. Plaintiffs argue that Defendants are liable as “manufacturers” under RCW 7.72.030, as “sellers” under RCW 7.72.040, and under the doctrines of successor liability, res ipsa loquitor, acting in concert, agency, and vicarious liability. ECF No. 1 at 10-16. The Court has subject matter jurisdiction over this matter pursuant to diversity jurisdiction under 28 U.S.C. § 1332.

         Plaintiffs allege that Mr. Gentle received a surgically implanted M-Cor Modular Hip System (“M-Cor Hip System”) in January 2009. ECF No. 46 at 2. It is undisputed that Defendants did not manufacture Mr. Gentle's hip implant. Plaintiffs further allege that, as part of a bankruptcy asset liquidation, the manufacturer of Mr. Gentle's M-Cor Hip System, Defendant Portland Orthopaedics (“Portland Ortho”), sold the rights to manufacture the M-Cor Hip System to Mipro Ortho Pte. Ltd. (“Mipro Ortho”). Id. Defendants conceded at oral argument that Defendant Mipro U.S. (“Mipro US”) acquired substantially all the assets associated with the M-Cor Hip System product line (“M-Cor product line”) from Mipro Ortho. The following chart indicates the transactions involving these corporations:

Portland Orthopaedics
(original manufacturer of M-Cor Hip System)
entered into bankruptcy on 12/2/2008 and continues its corporate existence operating as PLD Corporation Limited[1]
Mipro Ortho Pte. Ltd.
(a corporation based in Singapore[2])
purchased certain assets including the M-Cor Hip System product line from Portland Ortho bankruptcy receivers and administrators[3]
Mipro US
entered into a Subsidiary Operating Agreement with Mipro Ortho Pte. Ltd. and became the spec manufacturer of record for the M-Cor Hip System product line in the United States from April 2009 until December 2015[4]

         The Court ordered the parties to brief the threshold issue of whether Defendants are liable for the alleged defects of the M-Cor Hip System under the product line theory exception of the successor liability doctrine. ECF No. 45. Plaintiffs allege that Mipro U.S. is liable as a successor to Portland Ortho under the product line theory exception to successor liability, because Mipro U.S. manufactured and distributed the M-Cor product line under the same trade name and design that Portland Ortho had used, “profiting off of the product line's goodwill.” ECF No. 46 at 2. Mipro U.S. denies that it has successor liability under any theory and moves for summary judgment in its favor. ECF No. 51 at 2-3.

         Defendants Maxx Health, Inc., and Maxx Orthopedics, Inc., also move for summary judgment, arguing that they are not liable under the successor liability theory. Id. at 3. Plaintiffs conceded at oral argument that Defendants Maxx Health, Inc., and Maxx Orthopedics, Inc., are not liable under any theory. Therefore, the Court dismisses with prejudice all of Plaintiffs' claims against Defendants Maxx Health, Inc., and Maxx Orthopedics, Inc.

         DISCUSSION

         Legal Standard for Summary Judgment

         A court may grant summary judgment where “there is no genuine dispute as to any material fact” of a party's prima facie case, and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-33 (1986); see also Fed. R. Civ. P. 56(c). A genuine issue of material fact exists if sufficient evidence supports the claimed factual dispute, requiring “a jury or judge to resolve the parties' differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). “A key purpose of summary judgment ‘is to isolate and dispose of factually unsupported claims.'” Id. (citing Celotex, 477 U.S at 324).

         The moving party bears the burden of showing the absence of a genuine issue of material fact, or in the alternative, the moving party may discharge this burden by showing that there is an absence of evidence to support the nonmoving party's prima facie case. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party to set forth specific facts showing a genuine issue for trial. See Id. at 324. The nonmoving party “may not rest on mere allegations, but must by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file designate specific facts showing that there is a genuine issue for trial.” Id. The Court will not infer evidence that does not exist in the record. See Lujan v. National Wildlife Federation, 497 U.S. 871, 888-89 (1990) (court will not presume missing facts). However, the Court will “view the evidence in the light most favorable” to the nonmoving party. Newmaker v. City of Fortuna, 842 F.3d 1108, 1111 (9th Cir. 2016). “[A]ll justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         Applicability of Successor Liability to Defendant Mipro US, Inc.

         Plaintiffs allege that Defendant Mipro U.S. should be liable for Plaintiff's alleged injuries under the Washington state product line exception of the doctrine of successor liability. ECF No. 46. Mipro U.S. contends that none of the successor liability exceptions applies in this case and, thus, that it should not be held liable for Mr. Gentle's M-Cor Hip System failure. ECF No. 51.

         The traditional common law successor liability rule in Washington is that “a corporation purchasing the assets of another corporation does not, by reason of the purchase assets, become liable for the debts and liabilities of the selling corporation.” Martin v. Abbott Labs., 689 P.2d 368, 384 (Wash. 1984). Washington recognizes four common law exceptions to the rule that an asset purchaser is not liable for the seller's debts. Id.

         The common law exceptions include sales where: (1) the purchaser expressly or impliedly agrees to assume the obligations of the predecessor; (2) the transaction amounts to a consolidation or merger; (3) the purchasing corporation is merely a continuation of the predecessor; or (4) the transaction is fraudulent and intended to escape liability. Id. Mipro U.S. asserts that none of the four traditional exceptions is applicable to Mipro U.S. in the present matter, ECF No. 51 at 7, and Plaintiffs concede that no evidence supports the application of any of the four traditional exceptions to Mipro US. ECF No. 46 at 3. However, Washington recognizes ...


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