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North Carolina Governed Breast Implant Claim; Michigan Venue for Manufacturer’s Bankruptcy Did Not


A Virginia resident had her breasts augmented with silicone implants in a surgical procedure in North Carolina. The silicone-based filling in the implants was produced by a manufacturer, whose corporate headquarters was in Michigan. After the surgery, the woman began to suffer from a number of health problems: vomiting, tinnitus, balance problems, swelling of her uterus and gallbladder, edema, skin rashes, the appearance of painful knots on her body, and chronic pain. Over the years she was apparently diagnosed with lupus, atypical connective tissue disease (which is similar to lupus), and Reynaud's disease. Her doctors eventually diagnosed her with silicone-induced autoimmune dysfunction. It was not clear when that diagnosis was first made.

 

Five years after the surgery, the woman filed suit against the manufacturer of the silicone-based in the Middle District of North Carolina under diversity jurisdiction. The complaint alleged that the silicone in her implants was causing a wide range of serious health problems. Two years after she filed suit, the manufacturer filed for bankruptcy in the Eastern District of Michigan. The woman’s claim was transferred to that district as “related to” the bankruptcy, pursuant to 28 U.S.C. § 157(b)(5). The manufacturer filed motions for summary judgment on the grounds that the claim was time-barred by the relevant statute of limitations. The United States District Court for the Eastern District of Michigan granted summary judgment for the manufacturer applying Michigan law. The district court found that the woman’s claims accrued shortly after the surgery, yet she waited five years to file the initial complaint, thus the claim was time barred. Specifically, the court found that the woman knew the implants were causing her health problems shortly after the surgery because during her deposition the woman was asked why she was hospitalized later in the same year she received the implants and the woman answered, that, “I was sick with those implants.”

 

The Sixth Circuit United States Court of Appeals reversed and remanded. The court held that the woman's action was “related to” the manufacturer's subsequent bankruptcy; on a question of first impression, North Carolina's choice of law rules governed the woman's state law personal injury claim under North Carolina law even after the claim had been transferred to Michigan due to the manufacturer's subsequent bankruptcy; North Carolina's statute of limitations applied to the woman's personal injury claim; and a factual issue existed as to when the woman first discovered that her symptoms could be linked to her breast implants.

 

The woman's action was “related to” the manufacturer's subsequent bankruptcy. The Eastern District of Michigan originally obtained jurisdiction over this case pursuant to 28 U.S.C. § 1334(b), which granted “the district courts ... original but not exclusive jurisdiction of all civil proceedings ... related to cases under title 11.” The woman’s claim was transferred to the Eastern District of Michigan pursuant to 28 U.S.C. § 157(b)(5), which allows the district court “to fix the venue for the trial of personal injury tort and wrongful death claims asserted in non-bankruptcy forums.” This provision does not grant jurisdiction, but rather its purpose is to centralize the administration of the estate and to eliminate the multiplicity of forums for the adjudication of parts of a bankruptcy case. The woman’s claim conceivably could have had an effect on the estate of the bankrupt manufacturer.

 

On a question of first impression, a change of venue under the federal statute that allows cases related to a bankruptcy to be consolidated into one jurisdiction has no impact on which state law applied to the claims. Therefore, North Carolina's choice of law rules governed the woman's state law personal injury claim under North Carolina law even after the claim had been transferred to Michigan due to the manufacturer's subsequent bankruptcy. The court reasoned that Congress did not intend the provision that allows a district court “to fix the venue for the trial of personal injury tort and wrongful death claims asserted in non-bankruptcy forums” to be used to alter the substantive law governing the state-law cases transferred under it. Additionally, the court relied on the same three reasons that support the rule that in a diversity case whose venue was transferred pursuant to the multidistrict litigation statute, 28 U.S.C. § 1407, or general change-of-venue statute, 28 U.S.C. § 1404, the district court would be bound to apply the choice of law rules of the state where the claim was filed. First, a change of venue should not deprive the parties of state-law advantages that exist absent diversity jurisdiction. Second, a change of venue should not create or multiply opportunities for forum shopping. Third, whether to transfer venue should turn on considerations of convenience and the interest of justice rather than on the possible prejudice resulting from a change of law.

 

North Carolina's statute of limitations applied to the woman's personal injury claim. In bankruptcy, just as in diversity, state substantive law defines the parties' underlying rights and obligations. Although the claim had been transferred to Michigan due to the manufacturer's subsequent bankruptcy, the woman's operation occurred in North Carolina and North Carolina was the forum state and remained so regardless of the change of venue. Under North Carolina’s choice of law rules, the statute of limitations of the jurisdiction where the suit is brought applied. Under North Carolina law, a plaintiff has three years to file for personal injury after the claim accrued. In the case of diseases, the limitations period for personal injury under North Carolina law did not begin until a medical diagnosis revealed the nature of plaintiff's disease.

 

A genuine issue of material fact existed as to when the woman first discovered that her symptoms could be linked to her breast implants. The woman’s many symptoms emerged over several years and were given several different diagnoses. The woman’s statement during her deposition testimony was not an admission that she knew at the time she was hospitalized the same year as the implant surgery that the implants were making her sick. The court explained that the woman simply stated her present conclusion about the cause of her hospitalization and said nothing about her knowledge or state of mind as to her hospitalization. As North Carolina law stated that the limitations period for personal injury did not begin until a medical diagnosis revealed the nature of the plaintiff’s disease, this question of fact determined whether her personal injury claims under North Carolina law were time-barred, precluding summary judgment.

 

The Sixth Circuit United States Court of Appeals reversed the district court’s grant of summary judgment in favor of the manufacturer.

 

See: In re Dow Corning Corp., 2015 WL 716299 (C.A.6 (Mich.), February 20, 2015) (not designated for publication).

 

See also Medical Law Perspectives, September 2012 Report: Cosmetic Surgery Gone Wrong: High Hopes Meet Unexpected Results

 

 

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