Racz v. I-Flow Corporation, 2:10-cv-00133

Background

Plaintiff Melanie Racz underwent arthroscopic right shoulder surgery in April 2003, during which a PainBuster pain pump catheter was implanted as directed.
Post-surgery, Racz developed extensive cartilage degeneration in the glenohumeral joint, prompting ongoing investigation into possible causes with healthcare professionals.
Racz alleges Defendants were involved in all stages of the PainBuster device's design, manufacture, and marketing, knowing it was unsafe and not FDA-cleared for joint use.
Plaintiff contends Defendants advertised the pump as safe and effective despite knowledge of safety concerns and FDA rejection of similar orthopedic indications.
Racz asserts a civil conspiracy claim alleging an agreement to promote the pump for orthopedic use in violation of FDA regulations, with reliance on implied conspiracy theories.
The court grants dismissal of the conspiracy claim without prejudice and denies DJO’s motion to dismiss the rest, allowing an amended complaint; limitations arguments are addressed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the conspiracy claim viable under Arizona law?	Conspiracy may be inferred from tortious conduct; underlying torts exist.	Arizona lacks a standalone conspiracy tort; need underlying tort and proper theory.	Conspiracy claim dismissed without prejudice; may amend to plead a viable underlying tort theory.
Are the claims time-barred by the statute of limitations?	Discovery tolling until 2008 renders filing timely within two-year limit.	Claims accrued earlier; filing after seven years bars them.	Court determines, for purposes of motion, that tolling may keep claims timely; no dismissal on statute of limitations at this stage.
Do the complaint and claims survive Rule 12(b)(6) framework?	Allegations plausibly suggest liability from Defendants' conduct.	Counts lack plausible factual support beyond conjecture and legal conclusions.	Third cause dismissed without prejudice; other claims survive for answer.

Key Cases Cited

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state plausible claims, not mere speculation)
Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008) (pleading must contain plausible facts, not just conclusory statements)
Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (plausibility standard; rejects bare legal conclusions)
Smith v. Jackson, 84 F.3d 1213 (9th Cir. 1996) (allegations treated as true for Rule 12(b)(6) only if factual)
Pareto v. FDIC, 139 F.3d 696 (9th Cir. 1998) (conclusory law and unwarranted inferences insufficient)
Estate of Hernandez v. Flavio, 187 Ariz. 506, 930 P.2d 1309 (Arizona Supreme Court, 1997) (Arizona recognizes no independent tort of conspiracy; requires underlying tort)
Baker ex rel. Hall Brake Supply, Inc. v. Stewart Title & Trust of Phoenix, Inc., 197 Ariz. 535, 5 P.3d 249 (Ct. App. 2000) (conspiracy requires an underlying tort; mere agreement to do wrong is insufficient)
Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 38 P.3d 12 (Ariz. 2002) (conspiratorial liability requires underlying wrongful act and tort-based theory)
Taylor v. State Farm Mut. Auto. Ins. Co., 185 Ariz. 174, 913 P.2d 1092 (Ariz. 1996) (accrual when plaintiff discovers or should discover injury and wrongful conduct)
Sato v. Van Denburgh, 123 Ariz. 225, 599 P.2d 181 (Ariz. 1979) (rule on accrual and discovery of injury)
Lawhon v. L.B.J. Inst. Supply, Inc., 159 Ariz. 179, 765 P.2d 1003 (Ct. App. 1988) (claims accrue upon discovery of injury and its cause)
Doe v. Garcia, 5 F. Supp. 2d 767 (D. Ariz. 1998) (statute-of-limitations inquiry for timely filing)