United States District Court, D. Colorado
MEMORANDUM OPINION AND ORDER
Y. WANG UNITED STATES MAGISTRATE JUDGE.
case comes before the court on four Motions to Dismiss filed
by the three named Defendants in this action, Olympus
America, Inc. (“Olympus America”), Olympus
Corporation of the Americas (“OCA”), and Olympus
Medical Systems Corporation (“Olympus Medical”)
(collectively, “Defendants”). The undersigned
Magistrate Judge fully presides over this case pursuant to 28
U.S.C. § 636(c), the Parties' consent, and the
Orders of Reference dated May 2, 2018 [#11; #14]. In these
Motions to Dismiss, Defendants argue for dismissal pursuant
to Fed.R.Civ.P. 12(b)(6) (“the 12(b)(6)
Motions”), alleging that Plaintiff Kathleen Lynch
(“Plaintiff” or “Ms. Lynch”) has
failed to state a claim upon which relief can be granted
[#18; #19; #20, filed May 14, 2018]. On that same day, Olympus
Medical filed a Rule 12(b)(2) motion (“the 12(b)(2)
Motion” and collectively with the 12(b)(6) Motions,
“Defense Motions”), arguing that it should be
dismissed as a defendant for want of personal jurisdiction.
[#17]. Plaintiff responded to the 12(b)(6) Motions and the
12(b)(2) Motion on May 29 [#21; #22; #23; #24] and the
Defendants replied on June 12 [#28; #29; #30; #31]. The
Defense Motions are now ripe for disposition and this court
concludes that oral argument would not materially assist
resolution of the Defense Motions. For the reasons set forth
in this Memorandum Opinion and Order, the 12(b)(6) Motions by
Olympus America and OCA are GRANTED. In
addition, the Rule 12(b)(2) Motion by Olympus Medical is
GRANTED, and its Rule 12(b)(6) Motion is
DENIED AS MOOT.
following facts are drawn from the operative Complaint in
this action and are taken as true for the purposes of the
instant 12(b)(6) Motions. An endoscopy is a medical procedure
that involves the insertion of an endoscope into a
patient's body for therapeutic and/or diagnostic
purposes. [#1 at ¶¶ 19, 24]. Defendants are in the
business of manufacturing, selling, and distributing such
devices, including the particular device at issue in this
case: the TJF-Q180V Duodenoscope (“Q180V
Scope”). [Id. at ¶ 19]. Olympus
Medical is a Japanese corporation headquartered in Tokyo,
Japan that designs, manufactures, and sells endoscopes.
[Id. at ¶ 5]. Olympus America and OCA are New
York corporations with principal places of business in
Pennsylvania that perform regulatory and quality assurance
functions for the medical devices manufactured by Olympus
Medical. [Id. at ¶¶ 3, 7]. Plaintiff
pleads that Olympus America and OCA are virtually
indistinguishable from one another in functions and
responsibilities. [Id. at ¶ 8].
2010, Olympus Medical redesigned the Q180V Scope, broadening
the range of scope positions in which the guide wire could be
securely locked. [Id. at ¶¶ 19, 26]. This
redesign changed the overall design of the Scope, but Olympus
Medical did not alter the required reprocessing protocols
when selling the redesigned Scope. [Id. at ¶
27]. Sellers of medical equipment like the Q180V Scope are
required to provide instructions for end-users to clean and
sterilize the scope after use to avoid cross-contamination
between patients. [Id. at ¶ 19]. If a seller
provides an inadequate reprocessing protocol, then end-users
following that protocol will not adequately sterilize the
scope between uses. [Id. at ¶ 20]. If a scope
is not adequately cleaned, a patient is placed at an
increased risk for potentially serious infection when they
are exposed to residual fluids and biological matter from a
prior patient. [Id. at ¶ 22].
allege that not only did Olympus Medical fail to update the
reprocessing protocols so end-users could reliably clean
their Q180V Scopes, the Scope was redesigned in such a manner
that reliable cleaning was either difficult or entirely
impossible. [Id. at ¶ 25]. Specifically, the
elevator assembly in the Scope contains microscopic crevices
that cannot be reached with a brush during
cleaning. [Id.]. These crevices can retain
leftover fluids or biological matter after use and lead to
serious infection when used on a new patient. [Id.].
January 2016, Ms. Lynch underwent an ERCP at UCH Hospital
using a contaminated Q180V Scope. [Id. at ¶
23]. Sometime thereafter, Ms. Lynch fell ill with an
infection. [Id.]. Believing that she fell ill due to
a contaminated Q180V Scope used in her ERCP, she filed this
action on March 1, 2018. [Id.].
Personal Jurisdiction under Rule 12(b)(2)
Medical has filed motions to dismiss for both lack of
personal jurisdiction and for failure to state a claim.
“A federal court generally may not rule on the merits
of a case without first determining that it has jurisdiction
over the category of claim in suit (subject-matter
jurisdiction) and the parties (personal jurisdiction).”
Sinochem Int'l Co. v. Malaysia Int'l Shipping
Corp., 549 U.S. 422, 430-31, 127 S.Ct. 1184, 1191, 167
L.Ed.2d 15 (2007) (observing that without jurisdiction the
court cannot proceed at all in any cause; it may not assume
jurisdiction for the purpose of deciding the merits of the
case). Though a motion to dismiss pursuant to Rule 12(b)(6)
considers the sufficiency of the operative pleading and does
not weigh the potential evidence that the parties might
present in the case, see Pirraglia v. Novell, Inc.,
339 F.3d 1182, 1187 (10th Cir. 2003), Rule 12(b)(6) judgments
are considered by the United States Court of Appeals for the
Tenth Circuit (“Tenth Circuit”) as dismissals on
the merits. See Slocum v. Corp. Exp. U.S. Inc., 446
Fed.Appx. 957, 960 (10th Cir. 2011) (observing that a Rule
12(b)(6) dismissal is considered an adjudication on the
merits since it requires an evaluation of the substance of a
complaint). Accordingly, this court first considers whether
Ms. Lynch has established personal jurisdiction over Olympus
12(b)(2) of the Federal Rules of Civil Procedure allows a
defendant to challenge the court's exercise of personal
jurisdiction. Fed.R.Civ.P. 12(b)(2). Plaintiff bears the
burden of demonstrating that the court has personal
jurisdiction over the Defendants. See Dudnikov v.
Chalk & Vermilion Fine Arts, 514 F.3d 1063,
1069 (10th Cir. 2008). When, as here, the court decides a
Rule 12(b)(2) motion to dismiss without holding an
evidentiary hearing, “the plaintiff need only make a
prima facie showing of personal jurisdiction to defeat the
motion.” AST Sports Sci., Inc. v. CLF Distrib.
Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008). “The
plaintiff[s] may make this prima facie showing by
demonstrating, via affidavit or other written materials,
facts that if true would support jurisdiction over the
defendant.” OMI Holdings, Inc. v. Royal Ins. Co. of
Canada, 149 F.3d 1086, 1091 (10th Cir. 1998). In
considering this question, the court must accept all well
pleaded facts as true and must resolve any factual disputes
in favor of the plaintiff. See Wenz v. Memery
Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995).
establish jurisdiction over a non-resident defendant, a
plaintiff must show that the exercise of jurisdiction is
authorized under the relevant state long-arm statute, and
does not offend due process. Wenz, 55 F.3d at 1506
(10th Cir. 1995). Because the Colorado Supreme Court has
determined that Colorado's long-arm statute, Colo. Rev.
Stat. § 13-1-124 (2018), is coextensive with due process
requirements, Keefe v. Kirschenbaum & Kirschenbaum,
P.C., 40 P.3d 1267, 1270 (Colo. 2002), the inquiry is
thus simplified into one basic question: whether the exercise
of personal jurisdiction comports with the requirements of
due process under the Fourteenth Amendment to the United
States Constitution. AST Sports Sci., Inc. v. CLF
Distrib. Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008).
even if this test is met, a court must still consider whether
“the exercise of personal jurisdiction over the
defendant offends traditional notions of fair play and
substantial justice.” OMI Holdings, 149 F.3d
at 1091. In this inquiry the court considers: (1) the burden
on the defendant, (2) the forum state's interest in
resolving the dispute, (3) the plaintiff's interest in
receiving convenient and effective relief, (4) the interstate
judicial system's interest in obtaining the most
efficient resolution of controversies, and (5) the shared
interest of the several states in furthering fundamental
social policies. Id. at 1095.
determine whether this court may exercise specific
jurisdiction over Olympus Medical, this court looks to
whether its contacts with this forum associated with the
action at hand is sufficient for it to be haled into court in
this District: “(a) whether the plaintiff has shown
that the defendant has minimum contacts with the forum state;
and, if so, (b) whether the defendant has presented a
compelling case that the presence of some other
considerations would render jurisdiction unreasonable.”
Old Republic Ins. Co. v. Cont'l Motors, Inc.,
877 F.3d 895, 904 (10th Cir. 2017). When a corporation sells
products that reach the forum and form the basis for the
litigation where personal jurisdiction is challenged, courts
apply the “stream of commerce” test. J.
McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873,
881-82 (2011). Broadly speaking, there are two
interpretations of the stream of commerce test. The most
permissive test requires only that the defendant place an
object into the stream of commerce with the awareness that
the product is being marketed in the forum state, even if the
defendant does not undertake any action specifically designed
to avail itself of the forum. See Asahi Metal Indus. Co.,
Ltd. v. Sup. Court, 480 U.S. 102, 117-21 (1987)
(Brennan, J., concurring). The more demanding test requires
that the defendant undertake an action purposefully directed
toward the forum state; mere awareness that a third party
supplier was marketing and selling the product in the forum
is insufficient without such action. See Id. at
United States Supreme Court addressed the stream of commerce
test most recently in J. McIntyre Mach, Ltd. v.
Nicastro, 564 U.S. 873 (2011). In that case, the Court
reversed the New Jersey Supreme Court's exercise of
jurisdiction in a plurality opinion. Id. at 887.
Defendant was a foreign corporation who sold products in the
United States through an intermediary. Id. at 886.
One of the products ended up in New Jersey and injured
Plaintiff, who sued. Id. at 878. Although defendant
sold products in the United States, there was no allegation
that defendant sold, marketed, or shipped products
specifically in or to the forum, New Jersey. Id. J.
McIntyre simply sold the machines to an American distributor
it did not control, at least one of which ended up in New
Jersey and harmed plaintiff. Id. “[A]
defendant may in an appropriate case be subject to
jurisdiction without entering the forum . . . where
manufacturers or distributors ‘seek to serve' a
given State's market.” Id. at 882 (quoting
World-Wide Volkswagen v. Woodson, 444 U.S. 286, 295
(1980)). The fundamental question is whether the
defendant's activities manifest an intention to submit to
the power of a sovereign. Id. at 881. In other
words, the defendant must “purposefully avail itself of
the privilege of conducting activities within the forum
State, thus invoking the benefits and protections of its
laws.” Id. at 882 (quotations and citations
Tenth Circuit discussed the competing formulations of the
stream of commerce test in Monge v. RG Petro-Machinery
(Group) Co. Ltd., 701 F.3d 598 (10th Cir. 2012), but did
not adopt a single test. Id. at 620 (stating that
there was no personal jurisdiction under either test).
Nevertheless, the Circuit made clear that “specific
jurisdiction must be based on actions by the defendant and
not on events that are the result of unilateral actions taken
by someone else.” Id. at 618. Absent explicit
guidance from the Tenth Circuit, courts in this Circuit have
handled the lack of clear authority from the Supreme Court in
Affiliated Entities and Personal Jurisdiction
contends that this court may properly exercise personal
jurisdiction over Olympus Medical because it worked “in
tandem” with Olympus America and OCA. See
[#24]. But courts are not free to disregard corporate
formalities, and for purposes of personal jurisdiction
“a holding or parent company has a separate corporate
existence and is treated separately from the subsidiary in
the absence of circumstances justifying disregard of the
corporate entity.” Quarles v. Fuqua Indus.,
Inc., 504 F.2d 1358, 1362 (10th Cir. 1974); see also
Good v. Fuji Fire & Marine, Ins. Co. Ltd., 271
Fed.Appx. 756, 759 (10th Cir. 2008).
Quarles, the Tenth Circuit held that even a wholly
owned subsidiary was insufficient to impute the
subsidiary's contacts to its parent corporation.
Id. at 1360, 1364. Similarly, in Good the
Tenth Circuit came to the same conclusion when the roles were
reversed-a company that held 20% of the defendant's stock
could not have its contacts imputed to the defendant for
purposes of personal jurisdiction. Good¸ 271
Fed.Appx. at 759. Good mirrored the Tenth
Circuit's prior decision in Benton v. Cameco
Corp., 375 F.3d 1070, 1080-81 (10th Cir. 2004) where the
plaintiff's claim of jurisdiction was the same but the
subsidiary was wholly owned. See also Pennington v. Kan.
Univ. Med. Ctr. Research Inst., 17-1152-JWB, 2018 WL
2388898, at *3 (D. Kan. 2018) (holding the court lacked
personal jurisdiction over the parent of a subsidiary in the
absence of “any circumstances that could justify
disregarding the corporate entity”).
this court is not free to disregard corporate formalities
when assessing whether it may properly exercise personal
jurisdiction over a defendant. Rather, it must look to
Olympus Medical's specific contacts not with the United
States, but with Colorado.
also argues that Olympus Medical has consented to
jurisdiction in this forum, citing other cases across the
nation where it has consented to jurisdiction. [#24 at 7]. A
party may consent to a court's exercise of personal
jurisdiction even if the court would not otherwise have
personal jurisdiction. Ins. Corp. of Ireland v. Compagnie
des Bauxites de Guinee, 456 U.S. 694, 703 (1982).
However, such a consent is limited in its effectiveness to
the case in which the party so consented. A consent in one
case does not affect the propriety of a court's exercise
of personal jurisdiction in another case, even if related and
even if in the same forum. See Alkanani v. Aegis Def.
Svcs., LLC, 976 F.Supp., 976 F.Supp.3d 13, 37 (D.D.C.
alternative, Plaintiff seeks jurisdictional discovery to
establish Olympus Medical's relevant contacts with this
forum. [#24 at 18]. “When a defendant moves to dismiss
for lack of jurisdiction, either party should be allowed
discovery on the factual issues raised by that motion.
Grynberg v. Ivanhoe Energy, Inc., 666 F.Supp.2d
1218, 1227 (D. Colo. 2009) (quoting Budde v.
Ling-Temco-Vought, Inc., 511 F.2d 1033, 1035 (10th Cir.
1975)). Whether to allow jurisdictional discovery is within
“the broad discretion” of the trial court.
Id. The court abuses its discretion if the denial of
limited discovery results in prejudice to a litigant.
Sizova v. Nat'l Inst. of Stds. & Tech., 282
F.3d 1320, 1326 (10th Cir. 2002). “Prejudice is present
where ‘pertinent facts bearing on the question of
jurisdiction are controverted . . . or where a more
satisfactory showing of the facts is necessary.'”
Sizova, 282 F.3d at 1326. To obtain jurisdictional
discovery, a plaintiff must “present a sufficient
factual predicate for the establishment of personal
jurisdiction.” Gordon Howard Assocs. v. Lunareye,
Inc., No. 13-cv- 01829-CMA-MJW, 2013 WL 5637678, at *4
(D. Colo. 2013) (citing St. Paul Travelers Cas. &
Sur. Co. of Am. v. Guar. Bank & Tr. Co., 2006 WL
1897173, at *4 (D. Colo. 2006)).
Failure to State a Claim under Rule 12(b)(6)
Rule 12(b)(6) a court may dismiss a complaint for
“failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). In deciding a motion
under Rule 12(b)(6), the court must “accept as true all
well-pleaded factual allegations . . . and view these
allegations in the light most favorable to the
plaintiff.” Casanova v. Ulibarri, 595 F.3d
1120, 1124 (10th Cir. 2010) (quoting Smith v. United
States, 561 F.3d 1090, 1098 (10th Cir. 2009)). A
plaintiff may not rely on mere labels or conclusions,
“and a formulaic recitation of the elements of a cause
of action will not do.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Rather, “a
complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 677
(2009); see also Robbins v. Oklahoma, 519 F.3d 1242,
1247 (10th Cir. 2008) (explaining that plausibility refers
“to the scope of the allegations in a complaint,
” and that the allegations must be sufficient to nudge
a plaintiff's claim(s) “across the line from
conceivable to plausible.”). To state a claim that is
plausible on its face, a complaint must “sufficiently
alleges facts supporting all the elements necessary to
establish an entitlement to relief under the legal theory
proposed.” Forest Guardians v. Forsgren, 478
F.3d 1149, 1160 (10th Cir. 2007).
court has subject matter jurisdiction over this case because
the parties are completely diverse and the amount in
controversy exceeds $75, 000. 28 U.S.C. § 1332(a).
Therefore, the court applies Colorado law when evaluating
whether Plaintiff's state law claims state a claim under
Rule 12(b)(6). Rancho Lobo, Ltd. v. Devargas, 303
F.3d 1195, 1200 (10th Cir. 2002). Absent clear guidance from
the Colorado Supreme Court, a federal court exercising
diversity jurisdiction must make an Erie guess as to
how that court would rule. Pehle v. Farm Bureau Life Ins.
Co., 397 F.3d 897, 901 (10th Cir. 2005) (“Because
Wyoming has not directly addressed this issue, this court
must make an Erie-guess as to how the Wyoming
Supreme Court would rule.”). In making an Erie
guess, courts look to decisions of the state court of appeals
as strongly persuasive, if not governing, authority as to how
the state supreme court would rule. Koch v. Koch Indus.,
Inc., 203 F.3d 1202, 1230 (10th Cir. 2000)
(“Furthermore, this court must follow any intermediate
state court decision unless other authority convinces us that
the state supreme court would decide otherwise.”
(formatting altered) (quoting Daitom, Inc. v. Pennwalt
Corp., 741 F.2d 1569, 1574 (10th Cir. 1984)); see
also, e.g., U.S. ex rel. Sun Constr. Co. v. Torix
Gen. Contractors, LLC, No. 07-CV-01355-LTB-MJW, 2011 WL
841277, at *1 (D. Colo. 2011).
Pleading Special Matters Under Rule 9(b)
plaintiff alleges fraud or mistake, Federal Rule of Civil
Procedure 9(b) requires that the plaintiff “state with
particularity the circumstances constituting fraud or
mistake.” The rule's purpose is to “to afford
[a] defendant fair notice” of a plaintiff's claims
and the factual grounds supporting those claims, George
v. Urban Settlement Svcs., 833 F.3d 1242, 1255 (10th
Cir. 2016) (quoting Schwartz v. Celestial Seasonings,
Inc., 124 F.3d 1246, 1252 (10th Cir. 1997)), such that
the defendant is provided the “minimum degree of detail
necessary to begin a competent defense.” Fulghum v.
Embarq Corp., 785 F.3d 395, 416 (10th Cir. 2015). Rule
9(b) does not require any particularity in connection with an
averment of intent, knowledge or condition of mind, rather it
simply refers to only the requirement that a plaintiff
identify the circumstances constituting fraud.
Schwartz, 124 F.3d at 1252.
simply, Rule 9(b) requires that a complaint “set forth
the time, place and contents of the false representation, the
identity of the party making the false statements and the
consequences thereof.” Id. (quoting In re
Edmonds, 924 F.2d 176, 180 (10th Cir. 1991)). When
plaintiff brings a claim against multiple defendants, Rule
9(b) obliges a plaintiff to specify the manner in which each
defendant participated. Brooks v. Bank of Boulder,
891 F.Supp. 1469, 1477 (D. Colo. 1995); see also Lillard
v. Stockton, 267 F.Supp.2d 1081, 1094 (D. Kan. 2003)
(“[W]here fraud is alleged against multiple defendants,
blanket allegations of fraud couched in language such as
‘by the defendants' are insufficient. Instead, the
specifics of the alleged fraudulent activity of each
defendant must be set forth.”).
9(b) clearly applies to intentional misrepresentation and
fraud, but the law is unsettled on whether it applies to a
claim of negligent misrepresentation. Compare Conrad v.
The Educ. Res. Inst., 652 F.Supp.2d 1172, 1183 (D. Colo.
2009) (“Thus, a claim for negligent misrepresentation
should not be governed by the pleading standard set forth in
Rule 9(b).”) and Denver Health & Hosp. Auth. v.
Beverage Distributors Co., LLC, 843 F.Supp.2d 1171, 1177
(D. Colo. 2012) (“Rule 9(b) does not apply to the
negligent misrepresentation claim before me. The crux of the
claim . . . . rings not of fraud but negligence.”),
with Gunningham v. Standard Fire Ins. Co., No.
07-cv-02538-REB-KLM, 2008 WL 4377451, at *2 (D. Colo. 2008)
(“I conclude that the particularity requirement is
applicable to the negligent misrepresentation claim. In this
context, negligence is a type of mistake and Rule 9(b)
concerns allegations of fraud or mistake.”). In
determining whether the heightened pleading requirements of
Rule 9(b) apply, courts look not to a bright-line rule, but
to the substance of the underlying allegations to determine
if it is essentially a claim of fraud or mistake or a claim
of pure negligence.
court finds that Rule 9(b) applies to Plaintiff's
negligent misrepresentation claim. Plaintiff's claim of
negligent misrepresentation is rife with allegations of
willful misconduct. So much so that it scarcely resembles a
claim for negligence at all; absent the heading “Fraud-
Negligent Misrepresentation, ” the court would likely
not have interpreted the claim as a negligence claim.
See [#1 at ¶ 68] (“Defendants made false
representations . . . . Defendants falsely represented that
the Q180V Scope would be disinfected and safe for subsequent
use . . . . Defendants made those false representations in an
effort to encourage consumers to purchase and use the Q180V
Scope for medical procedures, so Defendants could
profit.”); [id. at ¶ 71]
(“Defendants intended medical professionals, including
Plaintiff's physicians, and patients to rely on the
Defendants' the important material representations . . .
.”). Because the negligent misrepresentation claim
alleges knowing material misrepresentations, the court finds
that the heightened pleading standards of Rule 9(b) apply.
Cf. Conrad, 652 F.Supp.2d at 1183 (Rule 9(b) does
not apply when the negligent misrepresentation claim
“is one of negligence, rather than of intent to
Personal Jurisdiction ...