WALTER SHUKER; VIVIAN SHUKER, Appellants v. SMITH & NEPHEW, PLC; SMITH & NEPHEW, INC.
No. 16-3785
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
Opinion Filed: March 1, 2018
PRECEDENTIAL
On Appeal from the United States District Court for the Eastern District of Pennsylvania (E.D. Pa. No. 5-13-cv-06158) Honorable Juan R. Sanchez
Argued: June 16, 2017
Before: JORDAN, GREENAWAY, JR., and KRAUSE, Circuit Judges
Robert Astrachan [Argued]
Eric G. Zajac
Zajac & Arias
1835 Market Street, Suite 2626
Philadelphia, PA 19103
Counsel for Appellants
Sara J. Gourley [Argued]
Eugene A. Schoon
Jana D. Wozniak
Sidley Austin
One South Dearborn Street
Chicago, IL 60603
Counsel Appellee Smith & Nephew PLC
Edward W. Gerecke
Joseph H. Lang, Jr. [Argued]
David J. Walz
Carlton Fields Jorden Burt
4221 West Boy Scout Boulevard, Suite 1000
Tampa, FL 33607
David W. O‘Quinn
Irwin Fritchie Urquhart & Moore
400 Poydras Street
Texaco Center, Suite 2700
New Orleans, LA 70130
Counsel for Appellee Smith & Nephew, Inc.
Lindsay Powell
United States Department of Justice
Appellate Section
950 Pennsylvania Avenue, N.W., Room 7259
Washington, DC 20530
OPINION OF THE COURT
KRAUSE, Circuit Judge.
With the Medical Device Amendments of 1976, Congress added comprehensive medical device approval processes to the Federal Food, Drug, and Cosmetic Act, prescribing tiers of federal requirements for certain devices corresponding to the device‘s inherent risk level. In exchange for compliance with the strictest federal mandates, Congress afforded manufacturers express preemption from state laws imposing different or additional “safety or effectiveness” requirements for those devices.
Because the plaintiffs’ negligence, strict liability, and breach of implied warranty claims in their Second Amended Complaint are expressly preempted, we will affirm the District Court‘s ruling in that respect. But because the plaintiffs adequately pleaded other, non-preempted claims, and because jurisdictional discovery is warranted with respect to personal jurisdiction over one of the defendants, we will reverse the District Court‘s dismissal of some of the plaintiffs’ claims in their Third Amended
I. Background
After Walter Shuker underwent a hip replacement surgery that resulted in unexpected complications, he and his wife, Vivian Shuker, brought tort claims against Smith & Nephew, Inc. (“Smith & Nephew“), the manufacturer of his hip replacement system, and Smith & Nephew, PLC (“PLC“), the manufacturer‘s parent company. Before turning to the details of Mr. and Mrs. Shuker‘s dispute with Smith & Nephew and with PLC, we review the relevant statutory and regulatory scheme for context.
A. Statutory and Regulatory Context
For purposes of federal statutes governing medical devices, the term “device” is a broad one, encompassing instruments, machines, implants, and “other similar or related” articles, and “including any component, part, or accessory” of those articles.
The Federal Food, Drug, and Cosmetic Act did not originally authorize federal regulation in connection with the introduction of new medical devices, but, over time, consumers and the U.S. Food and Drug Administration (“FDA“) began voicing “mounting ... concern” about the unexamined health risks of devices being introduced to the public. Lohr, 518 U.S. at 475-76. Several states responded to those concerns by adopting regulatory measures, but Congress “stepped in” by enacting the Medical Device Amendments of 1976, “which swept back some state obligations and imposed a regime of detailed federal oversight.” Riegel, 552 U.S. at 315-16. As explained in more detail below, Congress‘s approach here, as in other regulatory contexts,1 was twofold: first, it established a system of federal rеgulation over the introduction of new devices, instituting tiered federal requirements calibrated to each device‘s risk level, and, second, it enacted a provision stating that federal medical device requirements supersede any different or additional state safety or effectiveness requirements. See Medical Device Amendments of 1976, Pub. L. No. 94-295, sec. 2, §§ 513-516, 521, 90 Stat. 539, 540-60, 562 (codified as amended at
1. Medical Device Approval Procedures
Approval procedures for new medical devices under the Medical Device Amendments vary depending on a device‘s class designation. The statute divides devices into three classes “based on the risk that they pose to the public” and applies more rigorous prerequisites to devices that pose greater risks. Lohr, 518 U.S. at 476-77; see
a. Class III Devices: Premarket Approval
Before becoming available to the public, a Class III device must receive “premarket approval” through a process by which the device‘s manufacturer “provide[s] reasonable assurance of [the device‘s] safety and effectiveness.”
Submissions are typically “multivolume application[s],” and thus the time devoted by the FDA to reviewing manufacturers’ premarket approval submissions is, unsurprisingly, substantial. Riegel, 552 U.S. at 317-18. Pursuant to the Medical Device Amendments, premarket approval applications must include, among other things, “a full statement of the device‘s components, ingredients, and properties,” id. at 318 (internal quotation marks omitted); see
After reviewing an application, the FDA grants premarket approval only if, based on a weighing of “any probable benefit to health from the use of the device against any probable risk of injury or illness from such use,” it finds “there is a ‘reasonable assurance’ of the device‘s ‘safety and effectiveness.‘” Riegel, 552 U.S. at 318 (quoting
Notwithstanding the strictures imposed on manufacturers, the Act allows more leeway to health care providers. Even after the FDA grants premarket approval to a medical device or to any supplements, it does not “limit or interfere with the authority of a health care practitioner to prescribe or administer any legally marketed device to a patient....”
b. Class I and Class II Devices: § 510(k) Approval
In contrast to the rigorous premarket approval process for Class III devices, Class I and Class II devices are subject to “a limited form of review” set forth at
2. Express Preemption Provision
The Medical Device Amendments’ comprehensive and tiered approval procedures for medical devices leave only limited room for additional state regulation, especially considering the statute contains a broad express preemption provision. This provision proclaims that “no State ... may establish or continue in effect with respect to a device ... any requirement” that “is different from, or in addition to,” any federal requirement and that relates either “to the safety or effectiveness of the device” or “to any other matter” included in a federal requirement applicable to the device.
effectiveness, or “any other matter” that forms a federal requirement, so long as the state requirement is “different from, or in addition to,” the federal mandate. Lohr, 518 U.S. at 499-500 (quoting
Application of the express preemption provision tracks the Medical Device Amendments’ tiered statutory scheme for medical device approvals. Because manufacturers of Class I and Class II devices receive only § 510(k) approval and emerge from the approval process with no safety review specific to those devices, manufacturers do not receive the benefit of express preemption, see Lohr, 518 U.S. at 492-94. In contrast, because a manufacturer of a Class III device must receive premarket approval, clear “federal safety review” that “is specific to [the] individual device[],” and thereby satisfy federal requirements applicable to the device, the manufacturer of that Class III device receives express preemption protections from state requirements that are “different from, or in addition to,” the federal requirements imposed on the device through the premarket approval process. Riegel, 552 U.S. at 322-23 (quoting
But state laws are not shut out entirely. Even for Class III devices, the Medical Device Amendments’ express preemption provision does not reach “parallel” claims, i.e., claims premised on state requirements that merely incorporate applicable federal requirements and therefore are not “different from, or in addition to,” federal requirements. Lohr, 518 U.S. at 494-95 (citing
The question of first impression we confront today3 arises at the intersection of these different classes of devices with their different approval schemes: How do we apply the Medical Device Amendments’ express preemption provision to a “hybrid system,” i.e., a system that is itself a “device” but that is comprised of Class II components in addition to one or more Class III components?4 We recount the facts of the parties’ dispute before turning to our answer.
B. Factual and Procedural History5
Mr. Shuker underwent total hip replacemеnt surgery in 2009. The hip replacement system “implant[ed]” was regulated as a “device” under the Federal Food, Drug, and Cosmetic Act,
Class III device, the Birmingham Hip Resurfacing System. Shuker v. Smith & Nephew PLC, No. 13-6158, 2015 WL 1475368, at *2-3 (E.D. Pa. Mar. 31, 2015). Together with
As is customary, the FDA‘s premarket approval requirements for the liner extended to the liner‘s accompanying labeling, which was required to state that “the R3 metal liner [was] intended for use as part of the [Birmingham Hip Resurfacing System] only” and that “the R3 metal liner must be replaced with an R3 poly[ethylene] liner” if the Birmingham Hip Resurfacing System were abandoned or later revised in favor of a total hip replacement system. Id. at *2. Thus, as the parties agree, see Appellant‘s Br. 6-7; Appellee Smith & Nephew‘s Br. 6, because the R3 metal liner‘s labeling reflected that the FDA had not approved the liner for use outside of the Birmingham Hip Resurfacing System or in a total hip replacement system, Smith & Nephew‘s promotional materials marketing the R3 metal liner as an “option for its R3 Acetabular System,” a separate hip system, App. 14, constituted “off-label promotion,” Shuker, 2015 WL 1475368, at *13, and the liner‘s use in Mr. Shuker‘s total hip replacement system constituted an “off-label” use, Buckman Co., 531 U.S. at 350.
About twenty-one months after his hip replacement surgery, Mr. Shuker “began developing increasing pain and discomfort in his buttocks, groin, and thigh, limiting his daily activities.” Shuker, 2015 WL 1475368, at *3. His surgeon performed an aspiration procedure that revealed “metallic debris” within Mr. Shuker‘s body, indicating that “Mr. Shuker‘s pain was caused by metal sensitivity due to the degeneration of the metal-on-metal articulation,” which needed to be replaced to relieve his pain. Id. Mr. Shuker then underwent revision surgery to replace the R3 metal liner, followed by additional surgeries to remove and replace his entire hip replacement system when the first revision surgery did not relieve his pain.
Seeking to hold Smith & Nephew and its parent company PLC liable for Mr. Shuker‘s hip replacement complications and for Mrs. Shuker‘s loss of consortium, the Shukers filed suit, bringing various common law claims, and later adding claims based on violations of federal law.6 PLC moved for dismissal from the case for lack of personal jurisdiction, and Smith & Nephew moved for summary judgment on some of the Shukers’ claims, asserting that the Medical Device Amendments expressly preempted those claims.
Without an opinion but with a lengthy explanatory footnote accompanying its order, the District Court granted PLC‘s motion to dismiss. In a separate order and opinion, the District Court granted summary judgment in favor of Smith & Nephew, holding as relevant to this appeal that the negligence, striсt liability, and breach of implied warranty claims in the Shukers’ Second Amended Complaint were
preempted because “the heart of each of [the Shukers‘] claims” challenged the safety and effectiveness of the R3 metal liner, which had received premarket approval, was therefore subject to federal requirements, and, hence, gave Smith & Nephew the benefit of express preemption. Shuker, 2015 WL 1475368, at *6-11, *17. The District Court also granted the Shukers the opportunity to amend their complaint against Smith & Nephew as to their non-preempted claims alleging off-label promotion in violation of federal law, and the Shukers proceeded to file a Third Amended
This appeal followed.7
II. Discussion
We resolve the questions presented by this case in three parts. First, we consider whether the negligence, strict liability, and breach of implied warranty claims in the Shukers’ Second Amended Complaint are expressly preempted. See Section II.A, infra. Second, we review the District Court‘s decision to dismiss the claims in the Shukers’ Third Amended Complaint with prejudice. See Section II.B, infra. Finally, we consider personal jurisdiction as to PLC and whether jurisdictional discоvery is warranted. See Section II.C, infra.
A. Preemption
The District Court granted summary judgment to Smith & Nephew on express preemption grounds with respect to the negligence, strict liability, and breach of implied warranty claims in the Shukers’ Second Amended Complaint. We review that grant de novo, Steele v. Cicchi, 855 F.3d 494, 500 (3d Cir. 2017), and will affirm if Smith & Nephew has established that “there is no genuine dispute as to any material fact” and, viewing the facts in the light most favorable to plaintiffs, Smith & Nephew “is entitled to judgment as a matter of law,”
Here, that decision turns on whether the Medical Device Amendments expressly preempt the Shukers’ negligence, strict liability, and breach of implied warranty claims in their Second Amended Complaint—the primary issue addressed in the parties’ original briefing, as well as their supplemental briefing and an amicus brief filed by the FDA at the request of the Court.8 We undertake this analysis
by (1) reviewing the two-step framework for determining whether a claim concerning a “device” is preempted under the Amendments’ express preemption provision, (2) determining what constitutes the “device” when a system is comprised of components with mixed-class designations, and (3) applying the framework applicable to that “device” to the facts of this case.
1. Principles Governing Express Preemption Under the Medical Device Amendments
In products liability actions like this one, the Supreme Court has specified
police power regulations.” Lohr, 518 U.S. at 485 (quoting Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 518 (1992)); accord Wyeth v. Levine, 555 U.S. 555, 565 & n.3 (2009). We therefore begin with the principle that “the historic police powers of the States,” such as their power to regulate “matters of health and safety,” are “not to be superseded” unless preemption “was the clear and manifest purpose of Congress.” Lohr, 518 U.S. at 485 (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). Congress‘s intent is our “ultimate touchstone,” and “we look to the language, structure, and purpose of the relevant statutory and rеgulatory scheme to develop a reasoned understanding of the way in which Congress intended the statute and its surrounding9
regulatory scheme to affect business, consumers, and the law.” Sikkelee v. Precision Airmotive Corp., 822 F.3d 680, 687 (3d Cir. 2016) (internal quotation marks omitted) (quoting Wyeth, 555 U.S. at 565; Lohr, 518 U.S. at 486).
The express preemption provision of the Medical Device Amendments states that “no State or political subdivision of a State may establish or continue in effect with respect to a device... any requirement” that “is different from, or in addition to, any requirement applicable under [the Federal Food, Drug, and Cosmetic Act]” and that relates either “to the safety or effectiveness of the device” or “to any other matter included in a requirement applicable to the device under [the Act].”
The
2. Determining the Device at Issue
The Shukers urge on appeal that the “device” at issue is the entire hybrid system itself. Any other determination, they argue, would produce unfairness and incongruity by according preemption even when a component is used off-label in a manner “THAT WAS NEVER STUDIED OR APPROVED BY THE FDA,” Appellant‘s Br. 23 (capitalization omitted), merely because that component part was pre-approved for use with another system. Appellees, seconded by the FDA, counter that analysis at the component level is the only way to harmonize various provisions of the statute. We agree with Appellees for three reasons.
First, analysis at the component level finds support in the text of the statute and regulations. The Federal Food, Drug, and Cosmetic Act defines “device” to mean not simply a finished “instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or
related article,” but also “any component, part, or accessory” of that article.
Second, the Act’s provision for off-label use supports a component-level analysis. While the premarket approval process requires strict manufacturer compliance with respect to a device’s labeling and advertising, see
Third, the FDA, “the federal agency to which Congress has delegated its authority to implement provisions of the Act,” Lohr, 518 U.S. at 496, also takes the position that becausе “the definition of ‘device’ encompasses premarket-approved . . . system[s], and each of the ‘component[s], part[s], [and] accessor[ies]’ of these devices,” the relevant device for preemption purposes must be evaluated at the component level. FDA Amicus Br. 7 (all but first alteration in original) (quoting
And, contrary to the Shukers’ argument that “[t]he FDA reviews . . . systems, not individual . . . components,” Appellant’s Br. 17, the Medical Device Amendments direct the FDA, “where necessary to provide reasonable assurance of . . . safe and effective performance,” to establish performance standards for device components,
3. Application to the Shukers’ Claims
We turn next to the application of this test to the Shukers’ claims and conclude that both prongs of Riegel are satisfied. At Step One, the R3 metal liner is a Class III component thаt received premarket approval as part of the Birmingham Hip Resurfacing System; and that premarket approval “imposed requirements on the liner with respect to its composition, dimensions, and labeling, among other specifications.” FDA Amicus Br. 7. See also App. 470-473; Shuker, 2015 WL 1475368, at *2-3.
Riegel Step Two is also met, given the different requirements that would follow from imposing liability for the tort claims at issue; that is, the negligence, strict liability, and breach of implied warranty claims of the Second Amended Complaint.13 The express preemption provision forecloses claims based on “violations of common-law duties” to the extent that they impose more than “parallel federal requirements,” Lohr, 518 U.S. at 495. The Shukers’ claims, however, would impose requirements “with respect to” the R3 metal liner that are “different from, or in addition to,” federal ones,
Neither in the District Court nor on appeal have the Shukers identified any freestanding defect with the Class II device or the R3 Acetabular System per se. To the contrary, dеspite conclusory allegations
Even the failure-to-warn allegations embedded in the Shukers’ negligence claim would impose different requirements on the R3 metal liner, as the Shukers seek to impose liability because defendants did not accompany their product with proper warnings regarding the risks associated with a premarket-approved device, the R3 metal liner. But the FDA already imposed device-specific labeling requirements on the liner, and thus, as the FDA itself points out in its amicus submission, “a state warning requirement that applie[s] specifically to the use of the R3 system’s components with the R3 metal liner in particular” is preempted. FDA Amicus Br. 11 n. 3.15
In sum, the negligence, strict liability, and breach of implied warranty claims asserted in the Second Amended Complaint, would impose non-parallel state law requirements and are therefore expressly preempted. We will affirm the District Court’s order in that respect.
B. Claims in the Third Amended Complaint
We turn next to the Shukers’ contention that the District Court erred in holding that their off-label promotion claims in the Third Amended Complaint failed to state a claim. We exercise plenary review over the District Court’s dismissal of those claims,
The Shukers’ Third Amended Complaint included three state law tort claims based on Smith & Nephew’s alleged off-label promotion in violation of federal law: negligence, loss of consortium, and fraud. We assess each claim in turn, first acknowledging “the elements [the Shukers] must plead to state a claim,” then accepting “all of the complaint’s well-pleaded facts as true” while disregarding “any legal conсlusions,” and finally determining whether the well-pleaded factual allegations “plausibly give rise to an entitlement to relief.” Santiago, 629 F.3d at 129-31 (brackets and internal quotation marks omitted). We view the factual allegations in the light most favorable to the Shukers and construe all reasonable inferences in their favor. See United States ex rel. Customs Fraud Investigations, LLC v. Victaulic Co., 839 F.3d 242, 257 (3d Cir. 2016); Connelly v. Lane Constr. Corp., 809 F.3d 780, 790, 793 (3d Cir. 2016). If the Shukers have specified “the means through which” Smith & Nephew acted unlawfully, included “details” confirming those means, and alleged facts connecting those means to their own injuries, then we must conclude that they have plausibly stated a claim for relief. Schuchardt v. President of the U.S., 839 F.3d 336, 349-50 (3d Cir. 2016).
Applying these principles, we hold that the Shukers have met their pleading burden with respect to their negligence and loss of consortium claims. Although they did not adequately plead their fraud claim, which they were required to plead with particularity, see
1. Negligence Based on Off-Label Promotion
The elements of negligence under Pennsylvania law are: (1) “a legally recognized duty or obligation of the defendant,” (2) “the breach thereof,” and (3) a “causal connection” between the breach and the plaintiffs’ damages. Green v. Pa. Hosp., 123 A.3d 310, 315-16 (Pa. 2015).16 We modify these elements somewhat because, for the negligence claim alleged here to escape express preemption as a parallel claim, the “duty” element must arise from federal requirements applicable to a medical device. Id. at 316; see Riegel, 552 U.S. at 330; Lohr, 518 U.S. at 495. To state a parallel negligence claim, then, the Shukers were required to plead (1) a duty arising from federal requirements applicable to a medical device, (2) a breach of that duty, and (3) a causal connection between the breach and the Shukers’ injuries.
Construing all reasonable inferences in the Shukers’ favor, see Victaulic Co., 839 F.3d at 257, the Shukers’ Third Amended Complaint plausibly alleges each of these three required elements. First, as to duty, the complaint alleges that the R3 metal liner received premarket approval as part
Second, as to breach, the complaint asserts that, even though the FDA did not approve the R3 metal liner for use with any hip system other than the Birmingham Hip Resurfacing System, Smith & Nephew “actively marketed the [R3] metal liner as ‘optional’ for the [separate] R3 Acetabular System,” App. 479. The complaint also cites to Smith & Nephew’s February 2009 press release, which explicitly announces “the introduction of a metal liner option for [Smith & Nephew’s] R3 Acetabular System.” App. 14.17 These factual allegations give rise to the reasonable inference that Smith & Nephew’s marketing was “misleading” regarding the FDA-approved uses of the R3 metal liner,
Finally, as to causation, the Shukers’ Third Amended Complaint alleges that Mr. Shuker’s surgeon “either read” or “was aware” of the information in Smith & Nephew’s press release, that the surgeon proceeded to find the R3 metal liner “appropriаte” for Mr. Shuker, “given his body habitus and his activity level,” and that Mr. Shuker endured pain “caused by metal sensitivity due to the degeneration of the metal on metal articulation” in his hip replacement system. App. 480, 483. Together these factual allegations lead to the reasonable inference that Smith & Nephew’s marketing materials caused Mr. Shuker’s surgeon to recommend the R3 metal liner and to install it within Mr. Shuker’s hip replacement system, a course of action which in turn caused Mr. Shuker’s subsequent injuries.
Because the factual allegations in the Shukers’ Third Amended Complaint allow us reasonably to infer each of the three legal elements of the Shukers’ parallel negligence claim, the complaint contains sufficient facts to “nudg[e]” that claim “across the line from conceivable to plausible,” Iqbal, 556 U.S. at 683, and hence the District Court’s dismissal of that claim was in error.
2. Loss of Consortium
Loss of consortium is an injury referring to “the impact of one spouse’s physical injuries upon the other spouse’s marital privileges and amenities,” and, while remaining “a . . . distinct cause of action” for “loss of services, society, and conjugal affection of one’s spouse,” is a claim “derivative” of a spouse’s separate
The Third Amended Complaint alleges that, after Mr. Shuker’s hip replacement surgery and “due to the degeneration of the metal on metal articulation,” he experienced “buttocks, groin and thigh discomfort” that “caused him pain and extremely limited his daily activities.” App. 483. Thus, we can reasonably infer that, because of Smith & Nephew’s misleading marketing in violation of federal law, the R3 metal liner’s subsequent use in Mr. Shuker’s hip replacement surgery, and Mr. Shuker’s ensuing “physical injuries,” Mrs. Shuker suffered a loss of her husband’s “services, society, and conjugal affection.” Darr Constr., 715 A.2d at 1080. The Shukers’ loss of consortium claim therefore states a facially plausible entitlement to relief arising from state requirements that are “parallel” to federal ones, Lohr, 518 U.S. at 495; see Iqbal, 556 U.S. at 678, and the District Court erred in dismissing it.
3. Fraud
In contrast to the Shukers’ pleading of their other claims, the Shukers’ pleading of their fraud claim is not adequate because it does not satisfy Rule 9(b)’s requirement that, though “intent . . . and other conditions of a person’s mind may be alleged generally,” plaintiffs “must state with particularity the circumstances constituting fraud.”
To plead fraud under Pennsylvania law, a plaintiff must allege (1) “a representation” which is (2) “material to the transaction at hand,” (3) “made falsely, with knowledge of its falsity or recklessness as to whether it is true or false,” and (4) made “with the intent of misleading another into relying on it”; (5) “justifiable reliance on the misrepresentation”; and (6) that “the resulting injury was proximately caused by the reliance.” Gibbs v. Ernst, 647 A.2d 882, 889 (Pa. 1994). But in addition, a plaintiff in federal court, to comply with Rule 9(b), must allege “the date, time and place of the alleged fraud or otherwise inject precision or some measure of substantiation into a fraud allegation” and must state “the circumstances of the alleged fraud with sufficient particularity to place the defendant on notice of the precise misconduct with which it is charged.” Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (brackets and internal quotation marks omitted).
Here, the Shukers’ Third Amended Complaint pleads many of the elements of a fraud claim: (1) it alleges that Smith & Nephew made “representation[s]” by including and incorporating representations Smith & Nephew made regarding the R3 metal liner; (2) it alleges “material[ity]” by describing those representations’ importance in influencing surgeons, such as Mr. Shuker’s surgeon, to use the R3 metal liner off-label; (3) it alleges “falsity” by stating that, contrary to Smith & Nephew’s representations, the company received FDA approval regarding the R3 metal liner’s use within the Birmingham Hip Resurfacing system only; and (4) it alleges “intent” by contending that Smith & Nephew represented that the R3 metal liner was available for use within other hip systems, even though the company had never sought FDA approval for use within those systems. Gibbs, 647 A.2d at 889.
Their complaint comes up short, however, because it does not plead the element of “justifiable reliance” on Smith & Nephew’s misrepresentation with the particularly required for Rule 9(b). Id. Specifically, because “[i]t is not enough
The complaint does not meet this standard. In asserting that Mr. Shuker’s surgeon “read” or “was aware” of Smith & Nephew’s press release about the R3 metal liner, App. 480, the complaint does not provide any details about how the press release “induced or influenced” the surgeon’s course of conduct, TAP Pharm Prods., 36 A.3d at 1144. The bald assertion that “[the press release’s] claims (or those of equal substance) influenced [the surgeon]” does not suffice, App. 480, because, at least for Rule 9(b) purposes, that statement is merely a “naked assertion[] devoid of further factual enhancement,” amounting to “nothing more than a formulaic recitation of the element[] of a cause of action,” Iqbal, 556 U.S. at 678. As the Shukers have not stated “the circumstances of the alleged [influence on Mr. Shuker’s surgeon] with sufficient particularity to place [Smith & Nephew] on notice of the precise misconduct with which it is charged,” Frederico, 507 F.3d at 200 (brackets and internal quotation marks omitted), we conclude that the Shukers’ fraud claim was insufficiently pleaded under Rule 9(b), and we will therefore affirm the District Court’s dismissal.
We hold, however, that the District Court erred in dismissing the Shukers’ fraud claim with prejudice. In most instances where plaintiffs fail to plead fraud with particularity—and especially in cases where plaintiffs may be able to supplement their complaints with additional factual content after discovery—district courts should dismiss the fraud claim “with leave to amend the deficient pleading.” 5A Charles Alan Wright et al., Federal Practice & Procedure § 1300 (3d ed. 2017); accord Warden v. McLelland, 288 F.3d 105, 115 (3d Cir. 2002). Accordingly, given that we will reverse the District Court’s dismissal of the negligence and loss of consortium claims and allow those claims to proceed to discovery, we will vacate the dismissal of the fraud claim to the extent that it was with prejudice and without leave to amend.19
C. Personal Jurisdiction
Because two of the Shukers’ claims will proceed to discovery, we turn now to the Shukers’ challenge to the District Court’s denial of jurisdictional discovery as to Smith & Nephew’s parent company, PLC, and to the District Court’s dismissal of PLC for lack of personal jurisdiction. We review the District Court’s decision to deny jurisdictional discovery for abuse of discretion, see Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 455 (3d Cir. 2003), and we exercise plenary review over the District Court’s ultimate personal jurisdiction determination, see D’Jamoos ex rel. Estate of Weingeroff v. Pilatus Aircraft Ltd., 566 F.3d 94, 101 (3d Cir. 2009). As the District Court did not hold an evidentiary hearing on personal jurisdiction in this case, we take the Shukers’ allegations as true, resolve all factual disputes in the Shukers’ favor, and require them merely to “establish a prima facie case of personal jurisdiction . . . .” O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316 (3d Cir. 2007) (quoting Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004)). We separately consider the Shukers’ two theories of personal jurisdiction: specific personal jurisdiction premised on a “stream-of-commerce” theory, and general personal jurisdiction premised on an “alter ego” theory. Appellant’s Br. 14.
We perceive no merit in the Shukers’ stream-of-commerce theory of personal jurisdiction. That theory sounds in specific personal jurisdiction, which exists when alleged injuries “arise out of or relate to” activities “purposefully directed” by a defendant toward residents of the forum state. Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 334 (3d Cir. 2009). The stream-of-commerce theory contends, essentially, that specific personal jurisdiсtion exists over a non-resident defendant when that defendant “has injected its goods into the forum state indirectly via the so-called stream of commerce,” rendering it foreseeable that one of the defendant’s goods could cause injury in the forum state. D’Jamoos, 566 F.3d at 104-05.
A plurality of Supreme Court Justices has twice rejected the stream-of-commerce theory, see J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 877-85 (2011) (plurality opinion); Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 108-13 (1987) (plurality opinion), stating, in a manner consistent with our own case law, that plaintiffs must instead rely on “some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws,” Asahi, 480 U.S. at 109; see D’Jamoos, 566 F.3d at 102-03. Indeed, the Supreme Court has recently held that “[t]he bare fact that [a non-resident defendant] contracted with a [resident] distributor is not enough to establish personal jurisdiction in the State.” Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1783 (2017). We thus have no cause to revisit our Court’s precedent on this issue, and we decline to adopt the Shukers’ stream-of-commerce theory of specific personal jurisdiction. See D’Jamoos, 566 F.3d at 102-06.
To the extent the Shukers seek to establish specific personal jurisdiction over PLC without reference to the stream-of-commerce theory, their allegations do not meet our Circuit’s requirement of purposeful availment: “what is necessary is a deliberate targeting of the forum,” O’Connor, 496 F.3d at 317, so efforts “to exploit a national market” that “necessarily included Pennsylvania” are insufficient, D’Jamoos, 566 F.3d at 104. Yet, nationally directed efforts are all that the Shukers alleged here, for their factual allegations state only that PLC sold its products through Smith & Nephew in Pennsylvania as part of its efforts to sell products in the United States generally—not in Pennsylvania specifically. We therefore agree with the District Court’s decision to reject the Shukers’ arguments regarding specific personal jurisdiction over PLC.
We hold, however, that the Shukers are entitled to limited jurisdictional discovery to explore their alter ego theory
Under the alter ego theory, the Shukers’ factual allegations regarding PLC, if viewed in isolation, suffice to make a prima facie showing of personal jurisdiction, which is all they must do at this juncture. See D’Jamoos, 566 F.3d at 102. Their allegations paint a plausible picture of control by PLC over Smith & Nephew: the two companies’ decisionmaking is integrated, PLC has authority over Smith & Nephew’s strategic business decisions, PLC pays for the development of Smith & Nephew’s products, and executives from both companies work together to make decisions regarding Smith & Nephew’s hip systems, as shown in a 2012 Smith & Nephew press release that directed investor and media inquiries not to Smith & Nephew employees, but to PLC executives. Given that no party disputes that personal jurisdiction exists over Smith & Nephew as PLC’s subsidiary in Pennsylvania, the Shukers’ allegations, taken as true and in isolation, would suffice to show that PLC controlled Smith & Nephew, that Smith & Nephew was PLC’s agent, and that personal jurisdiction must exist over both Smith & Nephew and PLC in Pennsylvania. See Kehm Oil, 537 F.3d at 300-01.
Our record, though, is not limited to the Shukers’ allegations about personal jurisdiction over PLC; it includes declarations from PLC and Smith & Nephew executives that contradict many of the Shukers’ assertions. For instance, the executives assert that PLC had “no involvement” in the design, manufacture, or distribution of Smith & Nephew’s R3 Acetabular System for hip replacements in the United States and, moreover, that PLC had never approved any business decision regarding that system. App. 320. Because the executives’ declarations create a factual dispute regarding the basis for personal jurisdiction over PLC, it is appropriate here to allow the parties and the District Court to “revisit[]” the factual issues by means of limited jurisdictional discovery, which we “ordinarily allow” when a plaintiff’s claim to personal jurisdiction “is not clearly frivolous.”20 Metcalfe, 566 F.3d at 331, 336.
III. Conclusion
For the foregoing reasons, we will affirm in part, reverse in part, and remand to the District Court for proceedings consistent with this opinion.