Indiana State and Federal Courts Rule That Manufacturing Defect Claims May Survive Preemption in PMA Context

Indiana courts have recently addressed preemption issues in matters involving devices approved by the Food and Drug Administration (FDA) through the premarket approval (PMA) process. First, the Indiana Court of Appeals affirmed a trial court’s denial of a motion for judgment on the pleadings, holding that the plaintiffs had pled at least one viable claim: the manufacturing defect claim. The opinion did not address the remaining claims and thus the defendants sought transfer to the Indiana Supreme Court. The Indiana Supreme Court accepted transfer and ordered the Indiana Court of Appeals to specifically address the preemption issue as to the remaining claims. On remand, the Indiana Court of Appeals reversed the trial court’s denial of judgment on the pleadings in several claims. Second, the Northern District of Indiana issued an order permitting a PMA device case to proceed on a manufacturing defect claim but dismissing the plaintiff’s design defect and failure to warn claims. While the outcome in these two cases is similar and rooted in reliance on the same Seventh Circuit case, the courts differ markedly in how they approached the analysis. The cases reinforce important points about litigating cases involving FDA-approved devices in Indiana.

Indiana Court of Appeals Holds That Certain Claims May Survive Preemption

More than 30 female plaintiffs have filed lawsuits in Marion County, Indiana, alleging that a contraceptive device is defective and caused them various injuries. See Bayer Corp. v. Leach, ___N.E3d___, 2019 WL 734265 (Ind. Ct. App. 2019). Because the device was brought to market through the FDA’s premarket approval (PMA) process, the defendants filed a motion for judgment on the pleadings, arguing that all the plaintiffs’ claims were preempted by the Medical Device Amendments (MDA) to the Federal Food, Drug, and Cosmetic Act (FDCA) and related case law. The trial court denied the motion in its entirety, and the ruling came under appellate review in short order through the interlocutory appeal procedure.

In a relatively brief and unanimous opinion, the Indiana Court of Appeals held:

1. That the Indiana Product Liability Act (IPLA) recognizes a manufacturing defect claim and that the manufacturing defect claim here was not expressly preempted because it was premised on a violation of federal law.
2. It was not impliedly preempted because it was premised on traditional Indiana tort law. The court found support for its decision in Bausch — a preemption case where the Seventh Circuit held that a manufacturing defect claim could survive preemption when premised on violation of federal regulations regarding device adulteration. See id. (discussing Bausch v. Stryker Corp., 630 F.3d 546, 557 (7th Cir. 2010)).

Perhaps the most intriguing aspect of the court’s opinion is what the court left unsaid. The plaintiffs had argued that they had viable claims premised on allegations of failure to warn and misrepresentations, negligent training, failure to report adverse events and other issues, and the defendants had argued that all these claims were preempted under federal law and that some also failed for separate reasons under Indiana law. The Indiana Court of Appeals, however, declined to undertake a claim-by-claim analysis, instead relying on precedents holding that a complaint could be found sufficient and need not be dismissed so long as it states some set of circumstances upon which relief could be granted to the plaintiff. Having found the manufacturing defect claim to be viable, the court declined to address the preemption question as to the other claims

The defendants sought transfer to the Indiana Supreme Court, asking the Court to address the procedural issue of whether an intermediate appellate court could affirm the denial of a motion to dismiss on the basis of a single viable claim without ruling on the defendants’ challenge to the other claims in the case. In a per curiam order issued on June 12, 2020, the Indiana Supreme Court ruled in the defendants’ favor and remanded the case back to the Indiana Court of Appeals to consider the viability of the other claims in the case. Specifically, the Indiana Supreme Court explained that when addressing a motion for judgment on the pleadings, “Indiana courts are required to address the viability of each claim presented, disposing of only unviable ones.” Bayer Corp., et al. v. Leach et al., 20S-CT-354, Per Curiam Order, June 12, 2020, p. 4. As the Indiana Court of Appeals had not done so here, the Indiana Supreme Court remanded the case back “to the Court of Appeals to consider the viability of each of the plaintiffs’ claims.” Id.

On August 19, 2020, the Indiana Court of Appeals issued its opinion analyzing preemption on a claim-by-claim basis. See Bayer Corp., et al. v. Leach et al., 19A-CT-625, August 19, 2020 Order. The Indiana Court of Appeals held that failure to warn claims were preempted because there was no allegation that the defendants had deviated from the label approved by the FDA. Notably, the Indiana Court of Appeals also held that the plaintiffs’ claims that the defendants should have voluntarily strengthened the device’s label were preempted, because plaintiffs cannot impose state law obligations that a manufacturer is permitted, but not required to perform under federal law. Further, the Court of Appeals held that all other tort-based claims such as the plaintiffs’ claims sounding in negligent failure to test and fraudulent inducement and representations were not cognizable because they are not recognized by the IPLA, which is limited to three theories: design defect, manufacturing defect, and failure to warn or instruct.

Of particular importance to manufacturers, the Indiana Court of Appeals permitted several claims to proceed further. The court reiterated its original ruling that the plaintiffs had stated a parallel manufacturing defect claim, primarily relying on the Seventh Circuit’s approach in Bausch. In its manufacturing defect analysis, the court explained that Indiana’s notice pleading requirement is lower than the federal plausibility pleading standard, which raises the standard for a plaintiff to plead a parallel claim in federal court. The Indiana Court of Appeals also found that the plaintiffs’ claim for negligent instruction was not preempted because the FDA required the defendants to develop a training program as part of approving the device, and the court read the complaint as not imposing additional requirements to federal law, but rather alleging that the defendants performed negligently what the FDA had required. 

The failure to instruct claim was also permitted to proceed further on a separate theory that the defendants voluntarily adopted training requirements beyond what the FDA had required. The court reasoned that preemption did not apply to voluntarily-created training programs or the defendants could potentially be found in violation of federal law for expanding the training program without obtaining supplemental approval from FDA to do so. Either way, the claim fell under the ambit of IPLA’s failure to instruct prong and was not preempted. 

With respect to the plaintiffs’ non-tort claims, the Indiana Court of Appeals permitted the express warranty claim to move forward because it sounds in contract and is therefore not subsumed by the IPLA. The court held this claim was not preempted because the plaintiffs’ express warranty claims were premised on voluntary promises to consumers, not state-imposed requirements. Further, the court held that the vertical privity requirement did not apply based on an exception to Indiana’s general rule requiring privity when the seller engages in marketing to a downstream indirect user. Manufacturers should carefully consider whether this portion of the court’s opinion is an expansion of traditional interpretations of express warranty law in Indiana. The court also permitted the plaintiffs’ claim under the Indiana Consumer Sales Act to move forward on grounds of appellate waiver because the defendants did not adequately develop that portion of their briefing. 

Federal Court Dismisses Design Defect and Failure to Warn Claims on Federal Preemption Grounds

In Bledsoe v. Medtronic, Inc., 2020 WL 43107 (N.D. Ind. Jan 3, 2020), the plaintiff alleged that an implantable SynchroMed pump malfunctioned multiple times, requiring ER visits and hospitalization. The plaintiff further alleged that the motor on the device failed completely in October 2016, requiring the device to be surgically explanted. The SynchroMed pump is a PMA device and Medtronic filed a Rule 12(b)(6) motion to dismiss on federal preemption grounds at the outset of the case in lieu of answering.

The court began its analysis by noting that irrespective of how the plaintiff styled his claims in the complaint, all claims under Indiana law sounding in product liability are “necessarily brought pursuant to the [IPLA].” The court then conducted a claim-by-claim preemption analysis for each theory cognizable under the IPLA: failure to warn, design defect and manufacturing defect.

The court first addressed the failure to warn claim, noting that the plaintiff premised the claim on alleged failure to “advise healthcare providers and uses … of the numerous recalls and known defects associated with the product.” While this would ordinarily be enough to plead a state law tort claim, federal law only requires manufacturers to report adverse event findings to the FDA. Thus, “the duty on which Plaintiff’s failure to warn claim is based exists only at the state and not the federal level.” Id. at *6. The court held that this “[n]ecessarily means that the state requirement is in addition to the federal requirement and, therefore, is preempted by the MDA.” Id.

With respect to the design defect claim, the court noted that the IPLA requires the plaintiff to demonstrate that a safer alternative design was feasible and “cost effective under general negligence principles.” Id. The court further noted that the SynchroMed device had “already been determined to meet federal requirements” as part of the PMA process and that the plaintiff could only succeed on his IPLA claim by demonstrating that “FDA’s risk/benefit analysis was incorrect and that the medical device should have been safer even if it, overall, resulted in a less effective device.” Id. at *7. As such, the plaintiff sought to “impose[] requirements different from those at the federal level,” and thus the court dismissed the design defect claim “as preempted by the MDA.” 

The court then addressed the manufacturing defect claim, finding that a “manufacturing defect claim does not immediately appear to be preempted” and that some courts, including the Seventh Circuit in Bausch, have held that a manufacturing defect is not expressly preempted by the MDA. Id. Although the court cautioned the plaintiff that he “will ultimately have to specify a violation of a particular federal requirement and will have to prove that his injury was the direct and proximate cause of the violation,” the court held that such a requirement is not imposed at the pleading stage in the proceedings under the framework established by the Seventh Circuit in Bausch.

Conclusion

These cases provide important lessons for parties and counsel litigating in the medical device space. First, the cases confirm, at least for now, that manufacturing defect, negligent instruction and express warranty claims may survive preemption in Indiana. There is some divergence on this issue in comparison to courts from other circuits. For instance, federal courts in North Carolina and California addressing the same contraceptive device litigation have found all claims against the device were preempted. Likewise, Medtronic cited cases in its briefing in Bledsoe where courts had found the manufacturing defect claim to be impliedly preempted. The Northern District of Indiana acknowledged this tension, explaining that Medtronic was relying on an Eighth Circuit case but that “in Bausch the Seventh Circuit declined to interpret Buckman in [that] manner,” and the court was obligated to follow Bausch as binding precedent. See id. at *7-8 & n. 4.

Even if the defendant is not able to obtain full dismissal of the case on preemption grounds in all instances, filing a motion to dismiss in a PMA case can still be beneficial because it may narrow the claims. This narrower focus can potentially provide a natural limit on discovery, which could in turn reduce some costs in litigation due to the more limited scope of the action.