NINA MICHAEL, Appellant v. SHILEY, INC.; HOSPITAL PRODUCTS GROUP, INC., (FORMERLY HOWMEDICA, INC.); PFIZER, INC.
No. 94-1496
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
February 7, 1995
Argued Monday, October 24, 1994
BEFORE: STAPLETON, HUTCHINSON and GARTH, Circuit Judges
Sidkoff, Pincus & Green
530 Walnut Street
Philadelphia, Pennsylvania 19106
Morton B. Wapner
David Kuritz
Wapner, Newman & Wigrizer
115 South 21st Street
Philadelphia, Pennsylvania 19103
Maris Veidemanis
Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022
John W. Frazier, IV
James A. Willhite, Jr.
Montgomery, McCracken, Walker & Rhoads
Three Parkway, 20th Floor
Philadelphia, Pennsylvania 19102
Attorneys for Appellees
OPINION OF THE COURT
GARTH, Circuit Judge:
This appeal requires that we determine how the Medical Devices Amendments of 1976 which amended the Food, Drug and Cosmetics Act of 1938,
Applying the express pre-emption analysis defined by Cipollone v. Liggett Group Inc., 112 S. Ct. 2608 (1992), we conclude that
Accordingly, while we will affirm the district court‘s pre-emption rulings as to Michael‘s negligence, strict product liability, and implied warranty claims, we will reverse the district court‘s summary judgment to the extent that it entered judgment against Michael on her express warranty and fraud claims.
I
A.
Nina Michael‘s claims arise from the discovery in the past fifteen years that the outlet strut of the Bjork-Shiley 60 Degree Convexo-Concave Disc Heart Valve (“Shiley valve“), which was designed and manufactured by Shiley Inc., fractures in approximately one percent of the patients who received a Shiley implant. App. 200. These failures result from a weak strut mechanism and from poor manufacturing standards at Shiley‘s facilities. A strut failure leads inevitably to death or serious injury.
The Shiley valve was one of the first medical devices to be approved under the 1976 Medical Device Amendments to the Food Drug and Cosmetics Act of 1938 (the “MDA“), a comprehensive extension of the FDA‘s authority beyond medical drug manufacturers to medical device manufacturers.
Class I devices, such as tongue depressors, are devices which generally pose little or no threat to public health and are subject only to general controls on manufacturing. See
Class III devices may not be marketed or sold until the sponsoring company obtains Premarket Approval (PMA) from the FDA.
The FDA retains continuing oversight over approved Class III devices. It requires manufacturers to report any deaths or serious injuries which result from the use of the product. See
C.
Shortly after the passage of the MDA, Shiley applied for Premarket Approval (PMA) to market the Shiley valve. At the time, the FDA‘s procedures for PMA applications had not been finalized, see 51 Fed. Reg. 26364 (July 22, 1986) (defining PMA procedures), and thus the Shiley application did not receive the same organized and comprehensive evaluation that might be expected today. Sen. Comm. on Energy & Commerce, 101st Cong., 2d Sess., The Bjork-Shiley Valve: Earn as You Learn 20-22 (Comm. Print 1990) [hereinafter Energy & Commerce Report]. For example, evidence of the first strut fracture was belatedly brought to the FDA‘s attention and explained as an “isolated incident” even though it was unexplained at the time of the application. Id. at 21. Further, Shiley made claims, based on unsubstantiated data, that reduced heart complications would result from Shiley valve implants.2 Id. at 22-24. Despite these deficiencies, the FDA
Between 1979 and 1983, the struts which hold the mechanical valves in place in 73 Shiley valves fractured, id at 28, leading to the death of most of the implanted individuals. These fractures were the result of both the valve‘s design and poor manufacturing processes. In particular, the valves suffered from poor welding and poor quality control. See id. at 5-14; App. 461, 615-16, 623-25. During this period, Shiley sent a set of letters to doctors and to the FDA reassuring them that these incidents did not compromise the integrity, safety, or effectiveness of the device. Energy & Commerce Report at 14-17. Despite a redesign of the manufacturing process, continuing strut fractures forced Shiley to recall those valves which had not been implanted in 1980, 1982, and 1983. Because of continuing problems with valve failures, Shiley recalled its larger size valves and ceased production of those sizes in October 1985. Finally, on November 24, 1986, Shiley withdrew all its remaining valves from the market and ceased production of any heart valves. On March 21, 1990, Shiley asked the FDA to withdraw its Premarket Approval. To date, approximately 501 Shiley valves have fractured, resulting in 347 deaths. App. 691.
D.
The surgery was successful and the valve functioned properly. The valve implanted in Michael came with the following disclosure under the heading “Disclaimer of Warranties“:
Shiley warrants that reasonable care has been used in the manufacture of this device. This warranty is exclusive and in lieu of all other warranties, whether express, implied, written or oral.
App. 680.
In the late 1980s and early 1990s, Michael became aware of the strut fracture problem through media sources and her doctor. Research disclosed that her class of valves was among the Shiley valves with the highest rate of failure. It was estimated that there was a two percent chance per year that a catastrophic valve failure would occur in the Shiley valve implanted in Michael. These disclosures caused Michael significant anxiety, which resulted in sleeplessness and other emotional and physical symptoms.
After consultations with her physicians, Michael had the Shiley valve surgically removed and replaced with a different valve in June 1992. The surgeon visually examined her explanted
In March 1993, Michael filed a complaint in the Philadelphia Court of Common Pleas, alleging state law claims of negligence, strict product liability, breach of implied warranties, breach of express warranties, and fraud. App. 10-29. Her complaint named Shiley Inc., the maker of the Shiley valve; Pfizer Inc., Shiley‘s corporate parent; and Hospital Products Group Inc., another corporate owner of Shiley. Shiley removed the case to the Eastern District of Pennsylvania on the basis of diversity jurisdiction. App. 31. On August 16, 1993, Shiley filed two summary judgment motions. One motion alleged that all claims except the express warranty claim were pre-empted. The second motion alleged that Michael had failed to raise a genuine issue of material fact to support her claims.
Through orders dated February 25, 1994, March 31, 1994, and April 7, 1994, the district court granted judgment on all the claims against Michael and in favor of Shiley. It granted judgment on the negligence, strict product liability, and implied warranty claims on both pre-emption and traditional
Michael filed a timely notice of appeal.
II.
III
A.
The parties’ core dispute is whether, or to what extent, the MDA pre-empts Michael‘s state common law causes of action. Article VI of the Constitution provides that the laws of the United States “shall be the supreme Law of the Land; . . . any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”
Pre-emption may arise explicitly from the statute‘s language or implicitly from the statute‘s structure and purpose. Morales v. Trans World Airlines, Inc., 112 S. Ct. 2031, 2036 (1992). Nonetheless, “[w]hen Congress has considered the issue of pre-emption and has included in the enacted legislation a provision explicitly addressing that issue, and when that provision provides a reliable indicium of congressional intent with respect to state authority, there is no need to infer congressional intent to pre-empt state laws from the substantive provisions of legislation.” Cipollone, 112 S. Ct. at 2618 (quotations and citations omitted).
Cipollone illustrates the manner in which we are to apply these doctrines. In Cipollone, the Supreme Court considered whether the Cigarette Labeling and Advertising Act of 1965 or the Public Health Cigarette Smoking Act of 1969 pre-empted Rose Cipollone‘s state common law causes of action for failure to warn, breach of express warranty, fraudulent misrepresentation, and conspiracy claims. The Court concluded that the limited language of the 1965 act did not prevent a state claimant from recovering damages in a state common law cause of action not otherwise pre-empted. 112 S. Ct. at 2619.
The Court turned to the broader pre-emption provision of the 1965 Act which stated “[n]o requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of cigarettes . . . .” Id. at 2617. Applying a “fair but narrow” reading of this provision, the Court held that Cipollone could not maintain a failure to warn claim because the statute prevented states from requiring any warning beyond the federally mandated statement “CAUTION: CIGARETTE SMOKING IS DANGEROUS TO YOUR HEALTH.” Id. at 2621-22. In contrast, the Court concluded that Cipollone‘s express warranty and fraud claims could proceed. The contract claim was
B.
Statutory interpretation begins with an analysis of the statute‘s language. Section 360k(a) provides:
Except as provided in subsection (b) of this section, no State or political subdivision of a State may establish or continue in effect with respect to a device intended for human use any requirement --
(1) which is different from, or in addition to, any requirement applicable under this chapter to the device, and
(2) which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to the device under this chapter.
This section pre-empts only state imposed requirements. Further, it pre-empts those requirements only when they differ from or add to a previously established FDA requirement and relate to the safety or efficacy of the regulated device. When a state law differs from or adds to a FDA requirement and when a state law relates to the safety or effectiveness of a device approved by the FDA, the state law is pre-empted. Conversely, when a state law neither imposes requirements nor differs from or adds to a FDA requirement nor relates to the safety or effectiveness of the device or to any other matter included in a FDA requirement, the state law is not pre-empted by
We first consider Michael‘s two threshold arguments: (1) that state common law does not impose “requirements” and (2) that the FDA imposed no “requirements” on Shiley. Either would prevent the MDA from pre-empting any of her claims.
An extended discussion of whether the state common law imposes requirements under the MDA is unnecessary.4 We have already determined that the term “requirements” as used in
D.
Michael next argues that, while we could normally conclude that the FDA had imposed requirements on a manufacturer, the unique facts of this case preclude such a determination. Michael‘s argument is based on failings in the Premarket Approval and oversight process which arose because Shiley‘s heart valve was among the first mechanical devices approved under the MDA. According to Michael, these failings kept the FDA from imposing any requirements on Shiley.
Michael claims that the lack of FDA requirements is proved by the absence of any specific regulations which govern heart valves as compared with the other medical devices. Cf.
The absence of regulations relating specifically to heart valves is not dispositive as long as the Shiley valve was subject to “any requirement applicable under [the MDA] to the device.”
IV
Having disposed of Michael‘s general allegations, we consider whether
Breach of Implied Warranties -- Pre-empted
Michael brings a claim for breach of the implied warranties of merchantability and fitness for a particular purpose.
This conclusion by necessity depends upon the accepted standards for the design and manufacture of products in the state of Pennsylvania. These standards may deviate from the FDA‘s determinations in the PMA process or from the FDA‘s “good manufacturing practices,” which represent the agency‘s expert evaluation regarding the design and production of the Shiley valve. Section 360k does not permit this conflict. Accord King v. Collagen Corp., 983 F.2d 1130, 1135 (1st Cir.), cert. denied, 114 S. Ct. 84 (1993).
Express Warranty Based on Shiley‘s Label -- Not Pre-empted
Michael also brought an express warranty claim based on Shiley‘s statement on its packaging that it “warrants that reasonable care has been used in the manufacture of this device.” App. 680.
Before we address this issue, we must consider, as a threshold issue, whether the district court ruled that this claim was pre-empted. The district court‘s February 25, 1994 order granted Shiley‘s motion for partial summary judgment based on pre-emption. Shiley‘s motion had sought the entry of summary judgment on Michael‘s claims of negligence, strict product liability, breach of implied warranties, and fraud claims, but not on Michael‘s breach of express warranty claim. App. 48. However, in ruling on Shiley’ motion, the district court stated, “[w]e have held that the MDA has wholly pre-empted plaintiff‘s state law claims against defendants.” App. 1362. On appeal, Shiley has argued that we can reach the question of pre-emption because the district court granted summary judgment on Michael‘s express warranty claim for failure to raise a genuine issue of material fact and we can affirm on any appropriate ground. Shiley‘s Br. at 28. Because “[t]he prevailing party may, of course, assert in a reviewing court any ground in support of his judgment, whether or not that ground was relied upon or even considered by the trial court,” we will address that issue. Dandridge v. Williams, 397 U.S. 471, 475 n.6 (1970).
1.
Express warranties arise from the representations of the parties which are made the basis of the bargain and do not result from the independent operation of state law. See
The underlying foundation of contract law is the objectively manifested intentions of the parties. E. Allan Farnsworth, Contracts §§ 1.1 - 1.3 (2d ed. 1990). Shiley, in the representation which appears on the Shiley valve label, clearly manifested an intent to be bound by its one unequivocal promise and to disclaim any other implied warranties. Shiley represented:
Shiley warrants that reasonable care has been used in the manufacture of this device. This warranty is exclusive and in lieu of all other warranties, whether express, implied, written or oral.
App. 680.
2.
The Supreme Court has twice recognized this same distinction between state-imposed and state-enforced common law remedies. In American Airlines, Inc. v. Wolens, 1995 WL 15047 (U.S. 1995), the
We do not read the ADA‘s preemption clause, however, to shelter airlines from suits alleging no violation of state-imposed obligations, but seeking recovery solely for the airline‘s alleged breach of its own, self-imposed undertakings. As persuasively argued by the United States, terms and conditions airlines offer and passengers accept are privately ordered obligations “and thus do not amount to a state‘s enact[ment] or enforce[ment] [of] any law rule, regulation, standard, or other provision having the force and effect of law’ within the meaning of
§ 1305(a)(1) .” Brief for the United States as Amicus Curiae 9. . . . A remedy confined to a contract‘s terms simply holds the parties to their agreements -- in this instance to business judgments an airline made public about its rates and services.
Previously, in Cipollone, the Court concluded that
A manufacturer‘s liability for breach of an express warranty derives from, and is measured by, the terms of that warranty. Accordingly, the “requirements” imposed by an express warranty claim are not “imposed under State law,” but rather imposed by the warrantor. . . . In short, a common law remedy for a contractual commitment voluntarily undertaken should not be regarded as a “requirement . . . imposed under State law” within the meaning of
§ 5(b) .
Cipollone, 112 S. Ct. at 2622 (emphasis in original).
Moreover, our conclusion complies with the Supreme Court‘s admonition that courts should be “reluctant” to find pre-emption when “interpreting a federal statute pertaining to a subject traditionally governed by state law.” CSX Trans. Inc. v. Easterwood, 113 S. Ct. 1732, 1737 (1993). This is especially true here where Congress remained silent as to whether the MDA pre-empted common law contract claims. The elimination of those claims might result in the elimination of all legal remedies to the purchaser. “It is difficult to believe that Congress would, without comment, remove all means of judicial recourse for those injured by illegal conduct.” Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 251 (1984).
In this case, Congress has not only remained silent as to whether it intended to prevent states from enforcing the contractual representations of medical device manufacturers, it gave indications in
Compliance with an order issued under this section shall not relieve any person of liability under Federal or State law. In awarding damages for economic loss in an action brought for the enforcement of any such liability, the value to the plaintiff in such action of any remedy provided him under such order shall be taken into account.
While this provision does not delineate the scope of the state law remedies that remain after the MDA‘s passage, it contemplates that injured persons will be able to pursue a category of claims for economic loss under some circumstances. We conclude that express warranty claims are included in that category.
Shiley points to previous cases that have concluded that the same or similar federal regulatory schemes do pre-empt contract claims because the contract claims conflict with the FDA‘s supervision over medical device labeling. Worm v. American Cyanamid Co., 5 F.3d 744, 747 (4th Cir. 1993)7; King v. Collagen Corp., 983 F.2d 1130 (1st Cir.), cert. denied, 114 S. Ct. 84 (1993)8; Kemp v. Pfizer, Inc., 851 F. Supp. 269 (E.D. Mich. 1994).9 These courts have held that pre-emption was appropriate because the state law causes of action arose from representations made by manufacturers on labels approved by the FDA or EPA. The courts reasoned that because these labels were approved by the relevant regulatory authority, they could not give rise to voluntary obligations undertaken by agreement and so would conflict with federal regulation.
King and Kemp are less easily distinguished. The court in King did not indicate the type of language or warning upon which the plaintiff relied in the case before it and so we cannot know if it is distinguishable from Michael‘s claims. Kemp dealt with the same product and the same warranty as is at issue in the present case.
Neither King nor Kemp are binding on this court and we conclude that the concern expressed in those cases, that warranty obligations would arise from and therefore be in conflict with statements that are required on a regulated label, does not make pre-emption appropriate. First, the fact that third parties dictate or define the terms of a contract does not undermine the doctrine that contractual duties arise from the mutual assent of parties to agreed upon language. For example, organizations that receive government grants to operate social programs frequently agree to include specified language in agreements with contractors and beneficiaries. See, e.g.,
Further, King and Kemp did not adequately consider the extent to which Shiley‘s label was ultimately a product of its voluntary actions. The FDA does not devise a label of its own making. Rather, Shiley submitted its proposed label to the FDA, which label was then reviewed with the company. Shiley itself drafted the initial language of the label. If Shiley disagreed with FDA recommendations, it could have engaged in negotiation over what statement was proper or, if it did not wish to be bound by the required statement, it could have chosen not to market its device. Despite indications in King and Kemp to the contrary, we believe that Shiley participated actively and meaningfully in the
4.
Even if this were not the case, the enforcement of an express warranty that arises from approved packaging does not establish a requirement that “is different from, or in addition to, . . . any requirement applicable under this chapter to the device.”
If any person, other than Shiley, “established” the warranty, it was the FDA, not the state. Because the obligations imposed arise directly from the FDA‘s own approved language, the resulting liability does not differ from or add to FDA regulation. Rather it supports the FDA‘s approval regulation by giving it effect.
Michael‘s contract claim is not a product of state action; hence, it is not state imposed -- the sine qua non of pre-emption under
V
A.
Fraud on the FDA -- Pre-empted
Michael produced substantial evidence that Shiley misled the FDA with false or misleading information when it applied for Premarket Approval. She claims that these fraudulent submissions led to the FDA‘s approval of the Shiley valve and thus led eventually to the necessity of removing the heart valve implanted in her. Alternatively, she argues that these fraudulent submissions estop Shiley from claiming that the MDA pre-empts its common law claims. Because of the conflict with the FDA‘s own efforts to monitor and control its PMA application process, we conclude that Michael‘s claims for Shiley‘s knowing misrepresentation to the FDA, even if provable, are pre-empted.
A state law cause of action for fraud is a state imposed requirement. By means of its recognized cause of action in fraud, the Commonwealth of Pennsylvania imposes a duty on anyone who sells products. That duty requires the seller to avoid any
Michael seeks to use this general prohibition on deception to encourage the district court to review the PMA application Shiley submitted to the FDA. This inquiry could ultimately require that a court determine whether the information Shiley submitted was truthful, whether it was complete, whether FDA procedures sufficed to avoid a material misrepresentation, and whether the FDA should have or would have approved the device despite the misrepresentations. In sum, this claim requires a court, applying state law, to perform the same functions initially entrusted to the FDA.
Further, permitting a fraud claim based on false representations to the FDA would conflict with our precedent that plaintiffs may not bring implied causes of action for violations of the
Nor can Michael revive the pre-empted fraud claim by characterizing it as a defense to pre-emption. Michael argues that, though her fraud claim might be pre-empted, her allegations of Shiley‘s fraud in obtaining its PMA, if proven, should deprive Shiley of the defense of pre-emption. In essence, Michael argues that we should not permit Shiley to invoke the cloak of federal pre-emption when it obtained that cloak through the fraudulent manipulation of the regulatory process.
While we do not condone misconduct by medical device manufacturers, we cannot agree with Michael‘s theory. If a medical device manufacturer‘s claim that the MDA pre-empts a plaintiff‘s cause of action depends in the first instance upon proof that its Premarket Approval was not fraudulently obtained, courts would have to engage in the intrusive inquiry, which we have just demonstrated is forbidden. Only the timing, and not the inquiry itself, would differ from a claim for fraud on the FDA. This argument thus presents not less, but greater
B.
Fraud Based on Shiley‘s Advertisements -- Not Pre-empted
Michael‘s second fraud claim differs from the first in that it does not rely on conduct which was directly regulated by the FDA. Michael alleges that Shiley sent cardiac surgeons and cardiologists a series of letters and other promotional materials which knowingly misrepresented the extent of the valve fracture problem and knowingly overstated the reduction in serious side effects achieved by the Shiley valve. See FDA and the Medical Device Industry, Hearing Before the House Committee on Energy and Commerce, 101st Cong., 2d Sess. 15-21 (1990) (providing samples of these letters); App. 393-95. Michael alleges that the company‘s misinformation resulted in the eventual harm she suffered when her valve was explanted.
1.
Having already concluded that state law fraud claims create state-imposed requirements and, when combined with other
The FDA had not imposed specific requirements related to advertising and promotion of the Shiley valve. Accordingly, we find that, as applied to Michael‘s circumstances, a state law fraud claim based on Shiley‘s advertising and promotional activities does not impose a requirement that “is different from, or in addition to” a FDA requirement and “which relates to the safety or effectiveness of the device or to any matter included in a requirement applicable to the device under this chapter.”
Unlike Michael‘s strict liability claims which are based on a duty to produce safe products, Michael‘s fraud claims are based “on a more general obligation -- the duty not to deceive.” Cipollone, 112 S. Ct. at 2624. Thus, Michael‘s fraud claim does not relate to the safety or effectiveness of the Shiley valve. Michael argues that because this duty to avoid deceit does not “relate to the safety or effectiveness of the [Shiley valve],” her claims are not pre-empted.
She relies on Cipollone for this argument. In Cipollone, the Supreme Court concluded that the Cipollone‘s fraud claims against cigarette manufacturers were only pre-empted to the
If
2.
This latter inquiry turns on whether the FDA imposed any requirements on Shiley‘s efforts to promote its heart valve. The record reflects that it did not. Shiley prepared and sent the letters which tout the valve‘s reliability and superiority as compared to competitors’ valves to doctors without the FDA‘s approval. App. 393-94. The FDA, at that time, was not supervising medical device manufacturers’ efforts to promote
To be sure, the FDA did regulate the information Shiley placed on its labels. As required by the MDA, Shiley submitted its labels to the FDA and the FDA approved them. (See section IV. B. supra). A deviation from the content of the label approved by the FDA violates the MDA.
Mindful that the Supreme Court has observed in a slightly different context that “Congress offered no sign that it wished to insulate . . . manufacturers from longstanding rules governing fraud,” Cipollone, 112 S. Ct. at 2624, we conclude that Michael‘s second theory of fraud is not precluded by
Our conclusion does not conflict with First Circuit‘s determination in King that
VI
Summary Judgment -- Sufficient Evidence
Although the district court granted summary judgment on the majority of Michael‘s claims because it believed they were pre-empted, it also analyzed the claims using the traditional standard for summary judgment. We have concluded that Michael‘s express warranty claim and her fraud claim are not pre-empted. However, our holding in this regard does not address the district court‘s ruling that Michael had failed to present sufficient evidence to proceed to trial. We address that issue here and hold that, on this record, it was error to grant summary judgment for Shiley.
A.
Our consideration of Michael‘s contract claims originates with an examination of the contract. The label attached to the heart valve, which was implanted in Michael, included the statement “Shiley warrants that reasonable care has been used in
We agree that there is no evidence in the record that Michael‘s valve was defective. That does not, however, defeat Michael‘s cause of action. Shiley‘s warranty does not simply warrant that the valve which was implanted in Michael was defect-free. The language is less specific, warranting instead that “reasonable care has been taken in the manufacture of this device.” App. 680.
We are satisfied that the representation made by the language on this label reaches beyond the valve explanted from Michael to encompass the manufacture of Shiley valves generally. While most consumers of most products have little reason to seek assurances in a contract that any device, other than the product purchased by them, is safe and effective, heart valve purchasers, as perhaps other purchasers of implanted devices, have salient and compelling reasons to seek such assurances.
Shiley‘s customers rely on Shiley‘s mechanical heart valves in a manner that differs entirely from the normal buyer‘s reliance on a consumer product. The Shiley valve sustains customer‘s lives. Malfunction will result in serious harm, or most likely, death. In this context, the purchaser has reason to
Shiley‘s warranty afforded its patient-purchasers those assurances. Michael proceeded with her implant operation with a justifiable belief that the valve implanted in her heart would not fracture or fail due to deficiencies in the manufacturing process. Because any latent defect in an implanted device may be undetectable after it has entered medical supply channels, the representations made by the manufacturer, which here form the basis of Shiley‘s warranty, requires an examination, not just of the specific heart valve implanted in Michael, but rather of Shiley‘s valve production generally.
The evidence in the record suggests that Shiley did not exercise due care in the fabrication of the Bjork-Shiley valve. A number of Shiley valves failed as a result of welding cracks that were not prevented or eliminated at Shiley‘s factories. Michael also submitted to the court the findings of a House Committee report on the manufacture of Shiley‘s valves. That report stated that Shiley trained welders inadequately, repaired valves which had previously been deemed not repairable by
Michael has also shown that Shiley‘s alleged manufacturing breaches caused her damage. Shiley‘s failure to manufacture its heart valves using proper care resulted in a risk that any of its heart valves could fail. Indeed, the weak or improper strut construction has resulted in over 500 documented strut failures. Nor, as we have pointed out, could it be determined without explantation whether the valve implanted in Michael suffered from any of the same defects that affected other valves. Accordingly, Michael‘s doctors concluded that it was reasonable to explant her Shiley valve and replace it surgically. App. 499-501, 526-29; see also app. 471 (Shiley document sent to doctors noting an investigative article which recommended replacement of heart valves in young patients). Michael understandably took the advice of her medical advisors. The cost, inconvenience, risk, and pain of the surgery to explant and replace the valve occurred because of Shiley‘s alleged general manufacturing deficiencies
Contrary to Shiley‘s arguments, our conclusion does not conflict with our recent decision in Angus v. Shiley, Inc., 989 F.2d 142 (3d Cir. 1993).11 In Angus, we concluded that a recipient of a Shiley valve could not recover for intentional infliction of emotional distress and a failure to warn claim where the implanted valve had neither failed nor been explanted. Id. at 147 & n.5. Angus had failed to allege that the valve implanted in Angus was defective. Id. In the absence of a valve failure or explantation surgery, she could not maintain a product liability action. Id. In footnote 5, we explicitly held open the question of whether relief would be appropriate following surgery to explant the valve. Id. at 147 n.5.
Unlike the plaintiff in Angus, Michael has suffered a tangible injury on account of the risks, pain, and emotional trauma associated with explantation of the Shiley valve. Michael‘s case presents the issue left open in Angus -- what relief may be accorded for physical and emotional trauma occasioned by the need for actual explantation surgery. We conclude that, under the terms of Shiley‘s express warranty,
B.
Finally, we consider whether Michael produced sufficient evidence to proceed to trial on her fraud claim.12 In Pennsylvania, the elements of fraud are: (1) a material misrepresentation of fact, (2) which is false and (3) made with knowledge of its falsity, (4) which is intended to induce the receiver to act, and (5) upon which a party justifiably relies. Mellon Bank Corp. v. First Union Real Estate, 951 F.2d 1399, 1409 (3d Cir. 1991).
It is well established that fraud consists of anything calculated to deceive, whether by single act or combination, or by suppression of truth, or suggestion of what is false, whether it be by direct falsehood or by innuendo, by speech or silence, word of mouth, or look or gesture. We have held that “fraud is composed of a misrepresentation fraudulently uttered with the intent to induce the action undertaken in reliance upon
it, to the damage of its victim.” The concealment of a material fact can amount to a culpable misrepresentation no less than does an intentional false statement.
Moser v. DeSetta, 589 A.2d 679, 682 (Pa. 1991) (quoting Thomas v. Seman, 304 A.2d 134, 137 (Pa. 1973)) (other citations omitted).
In support of her claim, Michael points to two sources of fraudulent information: (1) letters written by Shiley to doctors between 1978 and 1983 which attempt to minimize the significance of the prior valve fractures and (2) advertisements and other promotional materials which emphasize a reduction in complications with the Shiley valve that never materialized.
Michael claims that Shiley‘s representations to doctors in letters, which accompanied its recalls and which Shiley otherwise disseminated to boost the Shiley valve‘s image following the disclosure of the outlet strut fractures, misrepresented the extent of the strut fracture problem. These letters state that some fractures had occurred but purportedly withheld information on the actual number of strut fractures known to Shiley. Further, the letters asserted that the Shiley valve‘s original design and the then current manufacturing practices confirm the structural integrity of the Shiley valve.
In contrast to Shiley‘s reports, the record discloses that Shiley had ample reasons to believe both the heart valve‘s design and the manufacturing process rendered the heart valve unsafe. Just a month prior to Shiley‘s distribution of a set of letters to doctors in May 1982, Dr. Bjork, one of the original designers of the Shiley valve, wrote Shiley, “You‘re circling around with
In a prior letter to Dr. Bjork, Shiley had written, “We would prefer that you did not publish the data relative to strut fractures. We expect a few more and until the problem has been corrected, we do not feel comfortable.” App. 548. This disclosure contrasts with Shiley‘s assurances in the letters to doctors that new fractures were very unlikely to occur.
Moreover, Michael has produced affidavits and deposition testimony from employees who worked for Shiley in the late 1970s and early 1980s that state that Shiley supervisors and management ordered them to reweld valves which could not pass inspection, to polish or cover defects in outlet strut welds, and to rework previously scrapped valves in an attempt to hide any defects in the outlet strut welds. App. 555-57, 613-17, 625-29, 635-36. These manufacturing practices likely undermined the structural integrity of the valves and thereby rendered Shiley‘s representations false.
Michael has also produced samples of advertisements, which Shiley placed in medical journals that circulate to cardiac surgeons, claiming a fifty percent reduction in complications with the Shiley valve over prior valves. App. 678. In prior testimony, Dr. Bjork disagreed that this claim fully represented
This record reveals a sufficient pattern of affirmative statements that are contrary to the true information known to Shiley, which, when combined with the withholding of material information as to the integrity and properties of the Shiley valve, is more than sufficient to permit a jury to conclude that Shiley intentionally misrepresented the Shiley valve‘s performance and the importance of the strut fractures.
Having adduced evidence of the first three elements of a cause of action sounding in fraud, we turn to a consideration of the remaining two elements: inducement and justifiable reliance. We conclude that Shiley had ample reason to expect that its advertisements and letters, although directed to physicians, would induce action by heart patients to accept Shiley‘s implants on the basis of their physicians’ recommendations. We also conclude that the patients’ reliance on these recommendations was justifiable.
Pennsylvania has held that “the persons or class of persons whom [a fraudulent declarant] intends or has reason to expect to
In Woodward, the Pennsylvania Superior Court held that a subsequent transferee of a home could sue the prior owner‘s plumbing contractor, when the plumber had fraudulently misrepresented to the prior owner that his work met the relevant municipal codes. The plumber fraudulently concealed an improper link to the city‘s sewer system after being hired by the Dietrichs, the former owners of the house, to bring the house up to code. After the Dietrichs sold the home to the Woodwards, the sewer line backed up into the house‘s basement. The Woodwards brought a cause of action sounding in fraud against the plumber.
The Pennsylvania Superior Court adopted the rule of the Restatement (Second) of Torts § 531 (1976), which reads:
One who makes a fraudulent misrepresentation is subject to liability to the persons or class of persons whom he intends or has reason to expect to act or refrain from action in reliance upon the misrepresentation, for pecuniary loss suffered by them through their justifiable reliance in the type of transaction in which he intends or has reason to expect their conduct to be influenced.
This provision extends liability beyond those to whom the declarant directs his fraudulent misrepresentation to those whom the declarant has special reason to anticipate will be induced to act. Woodward, 548 F.2d at 313, 315. As comment “e” of the Restatement makes clear, the declarant need not know the identity
After adopting this standard, the court found that the plumber had reason to expect that any subsequent purchaser, such as the Woodwards, would rely on his fraudulent statement that the sewer connection was acceptable, and thus, the court permitted the Woodwards to proceed with their fraud action.13
The Superior Court‘s decision mirrors § 533 of the Restatement (Second) of Torts. Section 533 makes a declarant liable when the declarant “has reason to expect that [the
Michael fits within the rule of Woodward and Restatement § 533. Shiley had ample reason to expect that the patients and eventual recipients of the Shiley valve implants would be affected by the information it published and distributed to doctors. Indeed, that was Shiley‘s intent. Shiley had to anticipate that its letters and advertisements would lead doctors to recommend, and the physician‘s patients to choose, the Shiley valve. As § 533 makes clear, the fact that Shiley initially made its representations to Michael‘s doctors, rather than directly to Michael, does not undermine Michael‘s claim.
By the same token, Michael‘s doctors were justified in relying on the medical claims Shiley provided in its promotional materials to determine the proper course of treatment for
The information provided by Shiley was intended to affect a doctor‘s choice of a heart valve for Michael. Shiley distributed its literature containing heart valve information for that very purpose -- to encourage doctors to continue implanting the Shiley valve. The record, read in the light most favorable to Michael,
We conclude that Michael has produced sufficient evidence to raise a genuine issue of fact on her claim of fraud and we will reverse the district court‘s February 25, 1994 orders of summary judgment on that claim.
Having considered the record and the arguments of the parties, we will affirm the district court‘s grant of summary judgment on Michael‘s claims of negligence (both manufacturing and design), strict product liability, and breach of implied warranties -- all of which we hold are pre-empted by
We will reverse the district court‘s February 25, 1994 order granting summary judgment to Shiley on Michael‘s breach of express warranty claim (see section IV. B. & VI. A. supra) and her fraud claim insofar as she proceeds on the basis of Shiley‘s representations in its advertising and promotional materials. (See section V. B. & VI. B. supra).
We will remand the case to the district court for further proceedings consistent with the foregoing opinion.
Notes
[Section 360k(a)] does not preempt State or local requirements of general applicability where the purpose of the requirement relates either to other products in addition to devices (e.g. requirements such as general electrical codes, and the Uniform Commercial Code (warranty of fitness)), or to unfair trade practices in which the requirements are not limited to devices.
Despite the reference in
We express no view on the validity of
(a) Notification
If the Secretary determines that--
(1) a device intended for human use which is introduced or delivered for introduction into interstate commerce for commercial distribution presents an unreasonable risk of substantial harm to the public health, and
(2) notification under this subsection is necessary to eliminate the unreasonable risk of such harm and no more practicable means is available under the provisions of this chapter (other than this section) to eliminate such risk,
the Secretary may issue such order as may be necessary to assure that adequate notification is provided in an appropriate form, by the persons and means best suited under the circumstances involved, to all health professionals who prescribe or use the device and to any other person (including manufacturer, importers, distributors, retailers, and device users) who should properly receive such notification in order to eliminate such risk.