Case Number: BC571026 Hearing Date: August 04, 2015 Dept: 78
Superior Court of California
County of Los Angeles
Department 78

JOHN TOWNE, et al.
Plaintiffs,
v.
MEDTRONIC INC, et al.,
Defendants.
Case No.: BC571026
Hearing Date: Tuesday August 4, 2015

[TENTATIVE] RULING RE:
Defendants Medtronic, Inc. and Medtronic Minimed, Inc’s Demurrer to Plaintiff’s Complaint.

Defendants Medtronic, Inc. and Medtronic Minimed, Inc’s Demurrer to Plaintiffs John Towne and Amy Towne’s Complaint is OVERRULED.

FACTUAL BACKGROUND

This is a medical device defect and negligence case. Andrew Towne (“Andy,” as referred to in the Complaint) was diagnosed with Type 1 diabetes in January 1990. (Complaint ¶ 1.) Andy managed his diabetes with a Medtronic MiniMed MMT-723 insulin pump and Medtronic MMt-377 Infusion Sets (collectively, the “insulin pump.”) (Complaint ¶ 2.) The complaint alleges that on March 6, 2011, Andy’s insulin pump delivered a lethal overdose of insulin. (Complaint ¶ 3.)

The Complaint alleges that more than two years later, in June 2013, defendants Medtronic, Inc. and Medtronic Minimed, Inc. (collectively, “Medtronic”) issued a recall and notified patients and healthcare providers that their infusion sets could cause a lethal overdose of insulin. (Complaint ¶ 4.) Plaintiffs John and Amy Towne (the “Townes”), Andy’s parents, were unaware that Andy’s death could be caused by the insulin pump until they received notice of Medtornic’s June 2013 recall. (Complaint ¶ 5.) They then began investigating whether a defective insulin pump could have caused their son’s death. (Complaint ¶ 5.)

PROCEDURAL HISTORY
This Complaint was filed on February 2, 2015, and states nine causes of action:

1. Strict Product Liability (Manufacturing Defect)
2. Strict Product Liability (Design Defect)
3. Strict Product Liability (Failure to Warn)
4. Negligence
5. Breach of Express Warranty
6. Breach of Implied Warranty
7. Fraudulent Misrepresentation
8. Negligent Concealment
9. Fraudulent Concealment

Medtronic filed their demurrer on March 6, 2015, arguing that the two-year statute of limitations has run on all claims, that manufacturers of prescription medical devices are not liable as a matter of law under a design defect and other theories, and the Complaint fails to state sufficient facts to establish their warranty or fraud claims.
The Townes filed their Opposition on July 9, 2015, arguing that the statute of limitations was tolled until they discovered that the insulin pump may have been responsible for Andy’s death.

DISCUSSION

Legal Standard

I. Demurrer

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro. (“CCP”), §§ 430.30.) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed. Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”)

A. Statute of Limitations as to All Claims

The burden is on plaintiff to plead facts in the complaint to show that the complaint is not barred by the statute of limitations. (McKelvey v. Boeing North American, Inc. (1999) 73 Cal.4th 601, 610.) In Baltins v. James (1995) 36 Cal. App. 4th 1193, 1197, the court stated, “If an action appears time barred on the face of the complaint, the plaintiffs must anticipate the defense and plead facts to negate the bar.” In G.H.R.I. v. MTS, Inc. (1983) 147 Cal.App. 3d 256, 277, the court stated: “[i]f a complaint shows on its face that the action is barred by the governing statute of limitations, it is subject to demurrer.”

CCP section 335.1 sets forth a two year statute of limitations for negligence causes of action and claims for other “wrongful acts” resulting in death. Generally, a cause of action accrues on the date of occurrence of the last element to occur. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806–807.) The “discovery rule,” however, “postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” (Id.) “A plaintiff has reason to discover a cause of action when he or she ‘has reason at least to suspect a factual basis for its elements.’ [Citation.]” (Id. at p. 807.) Courts “look to whether the plaintiffs have reason to at least suspect that a type of wrongdoing has injured them.” (Id. at p. 807.) The accrual of a cause of action in relation to the discovery rule is a question of fact. (Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th at p. 810.) On a demurrer, the court must take as true statements such as that as plaintiff “did not discover, nor suspect, nor was there any means through which her reasonable diligence would have revealed, or through which she would have suspected,” the cause of an injury was the defendant in question. (Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th at p. 811.)

The complaint adequately pleads that the discovery rule tolled the accrual of their cause of action until, at the earliest, June 2013, making their February 2, 2015 complaint within the two year statute of limitations. The complaint clearly states that the Townes were unaware that Andy’s death could be caused by the insulin pump until learning of Medtronics’ June 2013 recall. (Complaint ¶ 5.)
Medtronics argues that the complaint shows that the Townes should have had suspicion that Andy’s death was due to wrongdoing on the part of his insulin pump on the date of his death because the complaint states that “there is no feasible explanation for Andy’s death other than an infusion set malfunction.” (Demurrer at pp. 4–6; Complaint ¶ 36.) Medtronics argues that the complaint alleges that there was a July 2009 recall that, had the Townes exercised reasonable diligence, they would have discovered, thus putting them on notice of potential wrongdoing by Medtronic in the death of Andy. (Demurrer at pp. 5–6.)

The court finds that the complaint adequately pleads discovery of the defect in 2013. The Townes have alleged both that they did not know the cause of Andy’s death when it happened in 2011 and were not aware of the 2009 recall, but rather, first learned of the malfunctioning equipment at the time of the recall in 2013. Taking the complaint as true, there is nothing showing that the Townes knew that the precise cause of Andy’s death was a massive insulin overdose. It is a reasonable inference in light of these pled facts that the lay parents of a recently-deceased child, with no medical training, would not know the precise cause of their son’s death, nor be on notice that it may have been caused by a malfunctioning insulin pump. The facts alleged in the complaint are highly technical, and the complaint makes no mention that the Townes knew these extensive facts at the time of Andy’s death.

The language in the complaint cited by Medtronics regarding the near certainty that Andy’s death was caused by an insulin overdose due to the insulin pump’s defect may plausibly be read as the Townes seeking to assert their claims against Medtronics, not that any reasonable lay person back in 2011 would have known that the infusion set was malfunctioning. Ultimately, whether the Townes discovered or had reason to discover the facts relating to the malfunctioning of the pump more than two years before the filing of the complaint is a question of fact to be determined on a motion for summary judgment or at trial.

The complaint therefore states sufficient facts to invoke the discovery rule at this stage in the litigation. Accordingly, to the extent the demurrer to each cause of action is based on the statute of limitations bar, the demurrer is overruled.

B. First Cause of Action – Strict Products
Liability (Manufacturing Defect)

A product defect is “a flaw in the manufacturing process, resulting in a product that differs from the manufacturer’s intended result.” (Brown v. Superior Court (1988) 44 Cal.3d 1049, 1057.) “[A] manufacturing or production defect is readily identifiable because a defective product is one that differs from the manufacturer’s intended result or from other ostensibly identical units of the same product line. For example, when a product comes off the assembly line in a substandard condition it has incurred a manufacturing defect.” (Barker v. Lull Engineering Co. (1978) 20 Cal.3d 413, 429.)
Medtronics argues that the Townes’ complaint has failed to plead sufficient facts to support a claim for a manufacturing defect because they fail to plead how the product deviated from the manufacturer’s original design or from seemingly identical models. (Demurrer at pp. 6–7.) In support of this claimed pleading requirement, Medtronic only cites to two federal cases, which are not binding on this court.
Regardless, the complaint, when taken as a whole, does state sufficient facts to support their manufacturing defect theory. The complaint states that “Andy’s MMT-377 Infusion Set was defectively manufactured in that it was manufactured in such a manner that during the ordinary, foreseeable, and intended use of the set it was prone to unexpectedly fail to deliver the correct amount of insulin.” (Complaint ¶ 82.) Additionally, the complaint alleges that “the silicone lubricant clogged the vents in some infusion sets.” (Complaint ¶ 46.)

At this stage in litigation, this statement is sufficient to state a cause of action for strict products liability under a manufacturing defect theory. A clog only affecting “some” of the insulin pumps is the very definition of a manufacturing defect. Although the complaint states additional facts that support a theory of design defect, the Townes are entitled to plead in the alternative, especially at this early stage of litigation. After discovery commences, it may become clear that the insulin pump was not manufactured defectively, but was designed defectively, thus making their manufacturing defect theory untenable. Such a determination is more proper on summary judgment, where there is a developed evidentiary record, as opposed to on a demurrer. The demurrer to the first cause of action for strict products liability, manufacturing defect, is OVERRULED.

C. Second Cause of Action – Strict Products Liability (Design Defect)

“A defectively designed product either ‘fails to satisfy such ordinary consumer expectations as to safety in its intended or reasonably foreseeable operation,’ or has an inherent risk of danger that outweighs its benefits. [Citations.]” (Hufft v. Horowitz (1992) 4 Cal.App.4th 8, 13.) “The risk/benefit test considers factors such as seriousness of the potential danger, likelihood of its occurrence, and feasibility, cost and ‘adverse consequences to the product and the consumer’ of a safer alternative design.” (Id.)

Certain limitations on strict liability in the medical field have been made in the interest of public policy. A manufacturer of prescription drugs is not strictly liable for injuries “so long as the drug was properly prepared and accompanied by warnings of its dangerous propensities that were either known or reasonably scientifically knowable at the time of distribution.” (Brown v. Superior Court (1988) 44 Cal.3d 1049, 1069.) This strict liability restriction also applies to “implanted medical devices.” (Scott v. C.R. Bard, Inc. (2014) 231 Cal.App.4th 763, 773; see Hufft v. Horowitz, supra, 4 Cal.App.4th at p. 19–20.)

Brown distinguished between prescription drugs and other medical devices, such as wheelchairs, on the basis that “harm to some users from prescription drugs is unavoidable.” (Brown v. Superior Court, supra, 44 Cal.3d at p. 1063.) In holding that this reasoning applied to implanted medical devices, the court in Hufft reasoned:

We perceive the risks attendant to implanted medical devices are akin to those of prescription drugs. Just as drugs and vaccines are injected or ingested into the body, implant devices must be “plugged in” to the individual, to work their effect upon or respond to complex systems imperfectly understood by medical science. Just as with drugs and vaccines, the result may be dependent upon the peculiar physical characteristics of the individual, as is graphically illustrated in this case, where Hufft’s IPP malfunctioned only because of his extraordinary abdominal musculature. The surgical implantation process itself poses the potential of harm, as does the equally invasive removal process which will be required in some cases. Thus, when distinctions are made among medical products, implanted medical devices must be placed in a category with prescription drugs, not wheelchairs or other important items that are of comfort or assistance to patients, but do not become an integrated part of the person.

(Hufft v. Horowitz, supra, 4 Cal.App.4th at p. 18–19.)

Medtronics argues that because the insulin pump is “plugged into” the patient, it is shielded from strict liability. (Demurrer at p. 7.) The device in Hufft was an “inflatable penile prosthesis.” (Hufft v. Horowitz, supra, 4 Cal.App.4th at p. 10.) Other devices held to be “implanted” medical devices afforded a shield from strict liability include surgically-implanted “polypropylene mesh kits to treat women with pelvic organ prolapse” (Scott v. C.R. Bard, Inc., supra, 231 Cal.App.4th 763, 767) and intrauterine devices. (Plenger v. Alza Corp. (1992) 11 Cal.App.4th 349, 351.)

The device alleged to have caused Andy’s death, however, is not an “implanted” medical device. Here, the device was not surgically implanted. The complaint alleges: “Insulin pumps are cell phone-size devices, typically worn on the hip.” (Complaint ¶ 38.) Additionally, the alleged cause of death of Andy was not of the same “unavoidable” type referred to in Brown. While some drugs may cause rare, if serious, side effects in some individuals, a defective pump which gives a patient a massive overdose of insulin would be fatal to any user of the device. Andy’s death was not caused by a “peculiar physical characteristics of the individual,” but rather by an inherent design flaw in the insulin pump that would be dangerous to all users, not just those specifically vulnerable.

The insulin pump is therefore more similar to a defectively designed wheelchair that drops patients to the ground, irrespective of their individual physiology, than an implanted device such as a heart stent, whose interactions with an individual are so complex that all dangers are essentially unknowable by the designer. There are no public policy reasons to shield Medtronics from strict liability for designing a medical product whose design flaw would cause death or harm to all users by its very nature.
The demurrer to the second cause of action for strict products liability, design defect, is OVERRULED.

D. Third Cause of Action – Failure to Warn

Medtronics does not demur specifically to the third
cause of action for failure to warn. To the extent that their demurrer is based on the either their arguments above in section B or below in section D, the demurrer is OVERRULED for the same reasons therein.

E. Fourth Cause of Action – Negligence

“‘The elements of a negligence cause of action are the existence of a legal duty of care, breach of that duty, and proximate cause resulting in injury.’ [Citation.]” (McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.) Because Medtronic makes no additional arguments regarding negligence other than the statute of limitations, the demurrer to the fourth cause of action is OVERRULED.

F. Fifth Cause of Action – Breach of Express Warranty

Section 2313, subdivision (1)(a) and (b) of the California Uniform Commercial Code provides that express warranties are created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. [¶] (b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

“[T]o prevail on a breach of express warranty claim, the plaintiff must prove (1) the seller’s statements constitute an ‘ “affirmation of fact or promise” ‘ or a ‘ “description of the goods” ‘; (2) the statement was ‘ “part of the basis of the bargain” ‘; and (3) the warranty was breached.” (Weinstat v. Dentsply Intern., Inc. (2010) 180 Cal.App.4th 1213, 1227.)
Medtronic argues that the complaint fails to identify any specific statement made by Medtronic to Andy or the Townes, or that any statement was “part of the basis of the bargain.” (Demurrer at pp. 7–8.) In response, the Townes argue that there is warranty information in the package inserts in defendants’ infusion sets, which directs to a cited website, and that this warranty was made to Andy and his doctors through their labeling, marketing, advertising, and other promotional materials. (Opposition at pp. 8–9; Complaint ¶ 55, 56, Ex. 2.)

The complaint, on its face, states sufficient facts for a breach of express warranty cause of action. The complaint alleges that Medtronic “expressly warranted to Andy and his doctors, through labeling, advertising and promotional materials, and other devices, that the MMT-377 Infusion Set was fit for its intended use, free of defects, reasonably safe, and would not cause side effects other than those which the Defendants warned about.” (Complaint ¶ 118.) These statements are sufficiently clear to establish that Medtronic did expressly warranty the insulin pump, and sufficiently detailed as to what the warrant was. The complaint then states that “[i]n reliance on the Defendants’ warranties, Andy purchased the MMT-377.” (Complaint ¶ 119.) These allegations are sufficient to state a cause of action for breach of express warranty. The demurrer to the fifth cause of action is OVERRULED.

G. Sixth Cause of Action – Breach of Implied Warranty

“The implied warranty of fitness requires that a buyer of goods rely upon the seller’s skill or judgment to select or furnish a suitable product.” (Evraets v. Intermedics Intraocular, Inc. (1994) 29 Cal.app.4th 779, 783.) To state a cause of action for a breach of an implied warranty, there must be privity between the plaintiff and defendant. (Id.)
In Evraets, the plaintiff was injured by an intraocular lens that was surgically implanted. (Id. at p. 783.) The court found that there was no privity between the plaintiff and defendant manufacturer, holding: “Evraets did not rely on respondents’ judgment that an intraocular device was appropriate for him. Rather, he relied upon his physician’s skill or judgment to select or furnish a suitable product. Thus, Evraets cannot sue the manufacturers, suppliers or distributors of the lens on an implied warranty of fitness theory.” (Id. at p. 788.) A similar holding was made regarding an artificial heart valve implanted during surgery in Blanco v. Baxter Health Care Corp. (2008) 158 Cal.App.4th 1039.

The complaint states a legally sufficient claim for breach of implied warranty. The complaint states that Medtronics “were and are the merchants of the MMT-377 Infusion Set and knew that consumers, including Andy, relied upon their skills to develop, manufacture and sell products that were reasonably safe.” (Complaint ¶ 123.) Unlike an intraocular lens implanted in an unconscious patient, Andy was conscious when he began using the insulin pump. The insulin pump is much more similar to a consumer product than a generic lens used by a doctor on an unconscious patient. While the complaint does allege that the insulin pump was “prescribed” by Andy’s doctor, the complaint also states that there were other choices for managing Andy’s diabetes, such as standard insulin injections. (Complaint ¶ 66.) The complaint’s alleged facts show that while Andy was prescribed the insulin pump, he was not unconscious at the time it was prescribed, and while he may have relied upon his physician’s skill or judgment in deciding to use the insulin pump instead of standard insulin injections, Andy also relied on Medtronics skill in furnishing a properly functioning product.
The demurrer to the sixth cause of action for breach of implied warranty is OVERRULED.

H. Seventh, Eighth, and Ninth Causes of Action – Fraud

The elements of fraud are: (1) misrepresentation, (2) knowledge of its falsity, (3) intent to defraud, (4) justifiable reliance and (5) resulting damage. (Gil v. Bank of America, Nat. Ass’n (2006) 138 Cal. App. 4th 1371, 1381; Barbara A. v. John G. (1983) 145 C.A.3d 369, 376.) Further, “[f]raud causes of actions must be pled with specificity in order to give notice to the defendant and to furnish him or her with definite charges.” (Gil. v. Bank of Am., supra, 138 Cal.App.4th at p. 1381; see also Blickman Turkus, LP v. MF Downtown Sunnyvale LLC (2008) 162 Cal.App.4th 858, 878.) “Fraud allegations must be pled with more detail than other causes of action.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 240 (“Apollo”).)
General and conclusory allegations do not suffice, and the policy of liberal construction of the pleadings will not ordinarily be invoked to sustain a pleading defective in any material respect. (Gil v. Bank of America, supra, 138 Cal.App.4th at p. 1381.)

The requirement of particularity in the pleadings for fraud necessitates pleading facts that show how, when, where, to whom, and by what means the representations were tendered. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

In Khan v. Shiley Inc. (1990) 217 Cal.App.3d 848, 858, the court overturned a trial court’s granting of summary judgment on fraud issues relating to a heart valve. The complaint in that case allege that:

Defendants misrepresented the valve’s propensity to fail, and omitted material facts showing the product had a history of strut failure even before one was implanted into Khan’s heart. And they did so with knowledge of the substantial risk of death and without providing adequate warnings which fairly reflected the known risks. Furthermore, defendants allegedly made these misrepresentations with the intention plaintiffs would rely on them in selecting the Shiley valve. Plaintiffs relied on and were induced by these representations in making their selection. They would not otherwise have selected the Shiley valve; indeed, at least six other mechanical heart valves were available at the time of Khan’s surgery.

The court found that these allegations were sufficient to state a fraud claim. (Khan v. Shiley Inc. (1990) 217 Cal.App.3d 848, 858.)
Medtronics argues that the complaint fails to state where, to whom, when, why, or how they made any misrepresentations. (Demurrer at p. 9.) The complaint, however, alleges very similar facts to Khan. The complaint alleges that “by July 2009 at the latest, Defendants knew (or with the exercise of reasonable or even slight care should have known) that the vents on its infusion sets could easily be blocked with liquid and cause injury and death” and that “Defendants, however, downplayed the risk, asserting that it only affected ‘60,000 infusion sets out of an estimated 3 million infusion sets currently with customers.’” (Complaint ¶¶ 49–50.) These risks were not explained to Andy, and the complaint alleges that “[t]he Defendants knew these representations to be false and nonetheless made them with the intent to induce patients (including Andy) to rely upon them so as to increase sales and profits.” (Complaint ¶ 132.) These alleged facts show when, how, and to whom the misrepresentations were made.

Medtronic argues that the July 2009 infusion sets are irrelevant because those “infusion sets” were not the same model used by Andy. The complaint, however, alleges that the same basic design or manufacturing flaw was present in the model Andy used. (See e.g., Complaint ¶¶ 38-43, 71-76.) That the actual model numbers may have been different does not mean that Medtronics didn’t know that a similar problem could be experienced by similar products. Such a determination would be improper on a demurrer. As shown above, the insulin pump in question is similar enough to a consumer product that Andy could have relied upon representations by Medtronics in deciding to us their products instead of either standard insulin injections or other manufacturer’s insulin pumps.

Medtronic also argues that California courts have found that the tort of “negligent concealment” is “non-existent.” (Reply at p. 9.) However, the case law used to support this position is unpublished, and therefore is not good law. “Negligent misrepresentation is a species of fraud or deceit specifically requiring a ‘positive assertion’ . . . or ‘assertion’ . . . of fact. . . . An ‘implied’ assertion or representation is not enough.” (Wilson v. Century 21 Great Western Realty (1993) 15 Cal.App.4th 298, 306.) As shown above, the complaint states that Medtronics representations regarding the insulin pump failed to include the risk that the vents could easily be blocked with fluid. The complaint is therefore alleging an affirmative representation.

The demurrer to the seventh, eighth, and ninth causes of action is OVERRULED.

I. Prayer for Punitive Damages

Medtronic states that they concurrently filed a Motion to Strike punitive damages. However, no motion has been filed. Punitive damages are not a “cause of action,” and a demurrer may not be sustained as to a prayer for punitive damages. (Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1036; Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 163.)

Regardless, the Townes’ fraud claims are a legitimate basis for punitive damages. (Civ. Code § 3294, subd. (a) [“In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”].)

The demurrer to the prayer for punitive damages is OVERRULED.

Dated: August 4, 2015

__________________________________________
Hon. Gail Ruderman Feuer
Judge of the Superior Court