Robin Zinser v. Accufix Research Institute, Inc.

The opinion of the court was delivered by: Gould, Circuit Judge

Opinion by Judge Gould; Dissent by Judge B. Fletcher

This is a products liability action involving pacemakers containing the allegedly defective ENCOR Bipolar Passive Fixation Pacing Lead Model 330-854 ("854 lead"). Plaintiff-Appellant Robin Zinser ("Zinser") filed a class action complaint alleging negligence, products liability, negligent misrepresentation, fraud and deceit, breach of express warranty, breach of implied warranty, and infliction of emotional distress against defendant Accufix Research Institute ("ARI"), formerly Telectronics Pacing Systems. Zinser also alleged that defendants Pacific Dunlop Limited ("Pacific Dunlop") and Nucleus Limited ("Nucleus") were derivatively liable for damages caused by ARI.

The district court denied class certification, holding that Zinser failed to meet her burden of proving that a class should be certified pursuant to Federal Rule of Civil Procedure 23 ("Rule 23") (b)(1)(A), (b)(1)(B), (b)(2), or (b)(3). Zinser appeals, and we affirm.

Pacemakers containing the 854 lead were implanted in a population of 10,549 patients in 48 states throughout the United States. Approximately 8,200 of these patients were still alive and implanted with an 854 lead when the district court considered class certification.

ARI designed, manufactured, and distributed the 854 lead. Pacific Dunlop is an Australian company and the ultimate parent and beneficial owner of ARI. Nucleus, another Australian company, is a wholly-owned subsidiary of Pacific Dunlop and also holds an indirect beneficial ownership interest in ARI.

A pacemaker consists of two parts: a pulse generator and one or two atrial leads. Because most atrial leads included in pacing systems are placed in the upper portion of the atrium, which is difficult to reach, many atrial leads are manufactured with a pre-existing "J" shape to help physicians stabilize the lead. The 854 lead consists of a polyurethane insulated conductor coil formed into its "J" shape through the use of a flat metal retention wire, which runs through the inside of a conductor coil. While implanted, the lead flexes and bends each time the heart beats, approximately 100,000 to 150,000 times per day.

Because of metal fatigue, the "J" retention wire may fracture over time. Whether a "J" wire in an 854 lead will fracture depends, in part, on whether the wire has suffered bends or kinks in the interelectrode region. Injury from a"J" wire in an 854 lead has been reported only when the wire fractures and protrudes through a small section of the tip of the lead in the interelectrode region.

On September 11, 1995, ARI published a "Dear Doctor" letter announcing its withdrawal of all models of passive fixation atrial "J" leads. The letter also advised physicians of new safety information related to its ENCOR 330-854 and ENCOR DEC 033-856 leads.1 To date, ARI has issued a total of five "Dear Doctor" letters setting forth relevant clinical information and patient management guidelines. Individuals from the worldwide implant population have reported a total of five injuries related to fracture and protrusion of the 854 lead "J" wire, two of which occurred in the United States. Additionally, four patients in the United States have reported non-specific chest pain with an unconfirmed relationship to "J" wire fracture or protrusion.

ARI communicated the current lead patient management guidelines to the medical community on August 14, 1998. ARI recommended: (1) annual fluoroscopic screening for all patients implanted with 854 leads; (2) fluoroscopic screening every six months if a physician finds that a lead is fractured proximal to the anode band; (3) fluoroscopic screening every six months or consideration of extraction if fluoroscopic screening reveals that a lead is fractured or kinked within the interelectrode region; and (4) consideration of extraction if fluoroscopic evidence indicates that the "J" wire is protruded or severed within the interelectrode region. ARI maintains that the risk of extraction is greater than the risk of injury from a "J" wire protrusion.

ARI has previously faced litigation involving three different pacemaker leads, known as ACCUFIX atrial "J " lead models 330-801, 329-701, and 088-812 ("Telectronics litigation"). The Telectronics litigation's procedural history includes certification, decertification, and recertification by the district court of a class against ARI. See In re Telectronics Pacing Systems, Inc., 164 F.R.D. 222 (S.D. Ohio 1995) (certifying class pursuant to Rule 23(b)(3)); 168 F.R.D. 203 (S.D. Ohio 1996) (on reconsideration, decertifying class); 953 F. Supp. 909 (S.D. Ohio 1997) (denying Pacific Dunlop and Nucleus' motion to dismiss for lack of jurisdiction); 172 F.R.D. 271 (S.D. Ohio 1997) (recertifying class). After the parties to the Telectronics litigation reached a settlement agreement, Zinser moved to intervene, arguing that she might make a claim against monies allocated to the settlement class on behalf of the putative class in this case. The district court presiding over the Telectronics litigation denied the motion as untimely.2

On August 11, 1997, Zinser filed a putative class action complaint against ARI alleging negligence, products liability, negligent misrepresentation, fraud and deceit, breach of express warranty, breach of implied warranty, and infliction of emotional distress. Zinser also alleged that Pacific Dunlop and Nucleus, as parent corporations, were derivatively liable for damages caused by ARI.

Zinser sought class certification only for claims of negligence, products liability, and medical monitoring pursuant to Rule 23. Zinser defined the proposed class as:

All persons domiciled or residing in the United States of America and its territories, possessions, and the District of Columbia, who had implanted in their bodies, an ENCOR Bipolar Passive Fixation Pacing Lead Model 330-854. Excluded from the class are the defendant's officers and employees.

Zinser also sought certification of two subclasses:

The first subclass (the "Medical Monitoring Subclass") is composed of those individuals who are currently implanted with a model 330-854 pacing lead. The second subclass (the "Explantation Subclass") is composed of those individuals who have had a model 330-854 lead removed because of an actual injury or risk of injury.

The district court denied Zinser's request for class certification pursuant to Rule 23(b)(1)(A), (b)(1)(B), (b)(2), and (b)(3). Because of the procedural complexity of trying a class action under the laws of multiple jurisdictions, the district court refused to certify the class pursuant to Rule 23(b)(3). The district court denied certification of the proposed Rule 23(b)(1)(A) medical monitoring subclass, finding that individual adjudications of the medical monitoring claim would not expose ARI to conflicting obligations. The court also rejected certification of the subclass pursuant to Rule 23(b)(2), finding that the nature of the relief sought was primarily legal, not equitable, in nature. And the court refused to certify the class pursuant to Rule 23(b)(1)(B) as a limited fund. Because the Rule 23(b) requirements were dispositive, the district court declined to consider whether Zinser met the requirements of Rule 23(a).

On September 27, 1999, we exercised our discretion pursuant to Rule 23(f) and granted Zinser permission to appeal the district court's order denying class certification. Pursuant to 28 U.S.C. §§ 1292(e) and Rule 23(f), we have jurisdiction over Zinser's appeal.

Class actions are governed by Federal Rule of Civil Procedure 23. As the party seeking class certification, Zinser bears the burden of demonstrating that she has met each of the four requirements of Rule 23(a) and at least one of the requirements of Rule 23(b). Hanon v. Dataproducts Corp. , 976 F.2d 497, 508 (9th Cir. 1992).3

Before certifying a class, the trial court must conduct a "rigorous analysis" to determine whether the party seeking certification has met the prerequisites of Rule 23. Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1233 (9th Cir. 1996). While the trial court has broad discretion to certify a class, its discretion must be exercised within the framework of Rule 23. Doninger v. Pacific Northwest Bell, Inc., 564 F.2d 1304, 1309 (9th Cir. 1977). "We review a district court's denial of class certification for abuse of discretion." Knight v. Kenai Peninsula Borough Sch. Dist., 131 F.3d 807, 816 (9th Cir. 1997).

Our circuit has recognized the potential difficulties of "commonality" and "management" inherent in certifying products liability class actions. In re N. Dist. of Cal., Dalkon Shield IUD Prods. Liab. Litig., 693 F.2d 847, 854-55 (9th Cir. 1982). However, some products liability cases may satisfy Rule 23 and proceed as class actions, and we have not prohibited class certification of products liability actions per se. Valentino, 97 F.3d at 1230-33; see also In re Am. Med. Sys., Inc., 75 F.3d 1069, 1084 (6th Cir. 1996) (courts must exercise great care before certifying products liability class, because such cases usually involve factual and legal issues that vary dramatically from individual to individual).

Zinser argues that the district court erroneously concluded that the law of multiple jurisdictions applies. Instead, Zinser asserts that Colorado and Delaware law properly applies to all class members' claims. On this central issue, we disagree.

We review de novo a district court's choice of law determination. Contact Lumber Co. v. P.T. Moges Shipping Co., Ltd., 918 F.2d 1446, 1450 (9th Cir. 1990). We review factual findings underlying a choice of law determination pursuant to the "clearly erroneous" standard. Id.

A federal court sitting in diversity must look to the forum state's choice of law rules to determine the controlling substantive law. Klaxon Co. v. Stentor Elec. Mfg. Co. Inc., 313 U.S. 487, 496 (1941). California, the forum state here, applies the governmental interest approach to conflict of law questions, which is characterized as a three step process:

Under the first step of the governmental interest approach, the foreign law proponent must identify the applicable rule of law in each potentially concerned state and must show it materially differs from the law of California . . . . If . . . the trial court finds the laws are materially different, it must proceed to the second step and determine what interest, if any, each state has in having its own law applied to the case . . . . Only if the trial court determines that the laws are materially different and that each state has an interest in having its own law applied, thus reflecting an actual conflict, must the court take the final step and select the law of the state whose interests would be `more impaired' if its law were not applied.

Wash. Mut. Bank v. Superior Court, 15 P.3d 1071, 1080-81 (Cal. 2001) (citations omitted) (emphasis in original); see also In re Pizza Time Theatre Sec. Litig., 112 F.R.D. 15, 19 (N.D. Cal. 1986).

Zinser initially argued that California law should apply to the claims of all putative class members. However, the district court correctly noted that "[p]laintiff does not show how application of California law satisfies constitutional due process requirements in this case." On appeal, Zinser concedes that under Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), California law cannot be constitutionally applied to all putative class members. Zinser now argues that the law of Colorado should apply to the negligence, products liability, and medical monitoring claims, while the law of Delaware and Colorado should apply to the derivative claims.4 Because Zinser seeks to invoke the law of a jurisdiction other than California, she bears the burden of proof. Wash. Mut., 15 P.3d at 1080-81 (under California choice of law rules, foreign law proponent bears burden of establishing true conflict). We conclude that Zinser fails to meet her burden of showing Colorado law applies to the designated claims of negligence, products liability, and medical monitoring.

Although Zinser acknowledges that every state has an interest in having its law applied to its resident claimants, she nevertheless asserts that Colorado law should apply to all putative class members. To support this assertion, Zinser argues: (1) that ARI is headquartered in Colorado;5 (2) that Colorado's government has expressed an interest in ensuring the manufacture and distribution of safe products from its state;6 and (3) that the application of a single state's law will allow claims to be adjudicated on a class basis.

Zinser misconstrues California choice of law rules. As the district court explained, "the three-part California choice of law inquiry requires comparison of each non-forum state's law and interest with California's law and interest separately." (Citing Pizza Time, 112 F.R.D. at 20). As required by California law, Zinser thus must apply California's three-part conflict test to each non-forum state with an interest in the application of its law. Pizza Time, 112 F.R.D. at 20; Liew v. Official Receiver & Liquidator, 685 F.2d 1191, 1196-97 (9th Cir. 1982). Also, because Zinser seeks certification of three separate claims -negligence, products liability, and medical monitoring -this conflicts test must be applied to each claim upon which certification is sought. Wash. Mut. , 15 P.3d at 1081 ("These rules apply whether the dispute arises out of contract or tort . . . and a separate conflict of laws inquiry must be made with respect to each issue in the case."); see also Castano v. Am. Tobacco Co., 84 F.3d 734, 743 n.15 (5th Cir. 1996) (" `[B]ecause we must apply an individualized choice of law analysis to each plaintiff's claims, the proliferation of disparate factual and legal issues is compounded exponentially . . . .' ") (quoting Georgine v. Amchem Prods., Inc., 83 F.3d 610, 626 (3d Cir. 1996)).

Zinser does not explain how each non-forum state's law differs from California law, whether each non-forum state has an interest in having its law applied, or whether each nonforum state has an interest outweighing California's interest. The district court made this point clearly, reasoning:

Colorado law could be applied to a nationwide class under California choice of law rules only if Colorado law were the sole non-forum law to conflict with California law and if Colorado were the sole state with an interest that outweighed California's interest.

Because, as the district court noted, "the laws of negligence, product[s] liability, and medical monitoring all differ in some respects from state to state," In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1300-01 (7th Cir. 1995); In re Telectronics, 168 F.R.D. at 215-17, Zinser has not established that Colorado is the only non-forum law to conflict with California law. Further, Zinser has not persuaded us that Colorado's interest in this litigation outweighs California's.

We hold that Zinser has not met her burden to establish that Colorado law applies to the negligence, products liability, and medical monitoring claims of each putative class member. The district court correctly rejected the contention that the law of a single state -either California or Colorado --applies to this action.

Zinser next argues that even if the law of multiple jurisdictions applies, Rule 23(b)(3) class certification is appropriate because common questions of law and fact predominate over individual issues and because a class action is the superior method of resolving the claims. Zinser, as the party seeking class certification, bears the burden of showing that common questions of law or fact predominate. Hanon, 976 F.2d at 508.

Pursuant to Rule 23(b)(3), a court may certify a class only if it first determines that "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." Fed. R. Civ. P. 23(b)(3). Although interrelated, we address these issues independently. See, e.g., Valentino, 97 F.3d at 1234-35.

"Implicit in the satisfaction of the predominance test is the notion that the adjudication of common issues will help achieve judicial economy." Valentino, 97 F.3d at 1234.

Zinser argues that the district court abused its discretion by holding that variances in state laws overwhelm common issues of fact. Citing Telectronics, 172 F.R.D. at 290-94, Zinser maintains predominance is not destroyed and the case is still manageable as a class action despite the application of the law of multiple jurisdictions. We disagree.

Understanding which law will apply before making a predominance determination is important when there are variations in applicable state law. "[W]here the applicable law derives from the law of the 50 states, as opposed to a unitary federal cause of action, differences in state law will `compound the [ ] disparities' among class members from the different states." Chin v. Chrysler Corp., 182 F.R.D. 448, 453 (D. N.J. 1998) (quoting Amchem Prods., Inc., v. Windsor, 521 U.S. 591, 624 (1997)) (second alteration in original). Because Zinser seeks certification of a nationwide class for which the law of forty-eight states potentially applies, she bears the burden of demonstrating "a suitable and realistic plan for trial of the class claims." Chin, 182 F.R.D. at 454; see also Valentino, 97 F.3d at 1234 (district court abused its discretion certifying class because plaintiffs did not show how class trial could be conducted); Castano, 84 F.3d at 742 (court cannot rely merely on assurances of counsel that any problems with predominance or superiority can be overcome); Am. Med. Sys., 75 F.3d at 1085 (when more than a few state laws differ, court would be faced with impossible task of instructing jury on relevant law).

Certainly, there may be common issues in this case, such as those relating to liability to the extent that any alleged defect in the 854 lead may have been caused by ARI's alleged negligence. But to determine causation and damages for each of the three claims asserted here, it is inescapable that many triable individualized issues may be presented. For example, was the alleged defect in the 854 lead caused by negligent manufacture? Was it caused by negligent shipping or handling? Was it caused by improper handling of the lead by physicians or medical staff? Or was it caused by some combination of these or other factors? As cogently explained by a leading commentator:

[I]f the main issues in a case require the separate adjudication of each class member's individual claim or defense, a Rule 23(b)(3) action would be inappropriate . . . . Moreover, when individual rather than common issues predominate, the economy and efficiency of class action treatment are lost and the need for judicial supervision and the risk of confusion are magnified.

7A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, Federal Practice and Procedure§§ 1778 at 535-39 (2d ed. 1986) (footnotes omitted).

The complexity of the trial would be further exacerbated to the extent that the laws of forty-eight states must be consulted to answer such questions. See Castano, 84 F.3d at 741 ("proliferation of disparate factual and legal issues is compounded exponentially" when law of multiple jurisdictions apply).

The case relied upon by Zinser, Telectronics, is distinguishable. There, the district court initially declined to certify the class pursuant to Rule 23(b)(3), reasoning:

The Plaintiffs simply assert that any nuances or differences in state law that do exist "can be handled by the creation of subclasses and separate jury interrogatories." The Plaintiffs, however, bear the burden of establishing appropriate subclasses and demonstrating that each subclass meets the Rule 23 requirements . . . . The Plaintiffs must come forward with the exact definition of each subclass, its representatives, and the reasons each subclass meets the prerequisites of Rule 23(a) and (b).

Telectronics, 168 F.R.D. at 221. Following this directive, the plaintiffs filed a renewed motion for class certification, proposing ten subclasses and three sub-subclasses with proper representatives for each. The court granted the renewed motion for certification only after the plaintiffs created subclasses with proper representatives for each. Telectronics, 172 F.R.D. at 278.

Here, the district court declined certification for precisely the same reasons originally advanced by the Telectronics court. The district court held:

Plaintiff raises the alternative argument that even if neither California nor Colorado law applies to all claims of the nationwide class, the proposed subclasses can be further divided into manageable subclasses which take into account conflicts in state laws. However, Plaintiff has not presented representative plaintiffs for those subclasses, nor has she demonstrated that each subclass meets the Rule 23 requirements.

The district court thus concluded that there was no manageable trial plan adequate to deal with individualized issues and variances in state law. We find no abuse of discretion in this respect.

Zinser also argues that class adjudication is superior to other methods of adjudication because "classwide litigation of common issues will reduce litigation costs and promote greater efficiency." Valentino, 97 F.3d at 1234. In determining superiority, courts must consider the four factors of Rule 23(b)(3). "A consideration of these factors requires the court to focus on the efficiency and economy elements of the class action so that cases allowed under subdivision (b)(3) are those that can be adjudicated most profitably on a representative basis." 7A CHARLES ALANWRIGHT, ARTHUR R. MILLER & MARY KAY KANE, Federal Practice and Procedure §§ 1780 at 562 (2d ed. 1986). The application of each factor here demonstrates that the district court did not abuse its discretion when it held that class action treatment was not appropriate.

The first factor is the interest of each member in"individually controlling the prosecution or defense of separate actions." Fed. R. Civ. P. 23(b)(3)(A). Where damages suffered by each putative class member are not large, this factor weighs in favor of certifying a class action. See, e.g., Dalkon Shield, 693 F.2d at 856.

Here, Zinser's amended class action complaint states: "Without reference to punitive damages, which are sought as well as compensatory damages, the amount in controversy in compensatory damages alone for each plaintiff/class members [sic] exceeds the sum of $50,000.00 exclusive of interest and costs." (emphasis added). To a degree, this statement undermines Zinser's assertion that the claims have a relatively small value.7 We recognize that a party with a claim of $50,000 might have a difficult time alone pursuing a complex products liability case. However, the minimum amount alleged to be in controversy for each putative class member does not argue persuasively for class certification. See 7A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, Federal Practice and Procedure§§ 1779 at 557 (2d ed. 1986) ("For example, a group composed of consumers or small investors typically will be unable to pursue their claims on an individual basis because the cost of doing so exceeds any recovery they might secure. When this is the case it seems appropriate to conclude that the class action is superior to other available methods for the fair and efficient adjudication of the controversy.") (internal quotation marks omitted).

The second factor is "the extent and nature of any litigation concerning the controversy already commenced by or against members of the class." Fed. R. Civ. P. 23(b)(3)(B).

This factor is intended to serve the purpose of assuring judicial economy and reducing the possibility of multiple lawsuits . . . . If the court finds that several other actions already are pending and that a clear threat of multiplicity and a risk of inconsistent adjudications actually exist, a class action may not be appropriate since, unless the other suits can be enjoined, . . . a Rule 23 proceeding only might create one more action . . . . Moreover, the existence of litigation indicates that some of the interested parties have decided that individual actions are an acceptable way to proceed, and even may consider them preferable to a class action. Rather than allowing the class action to go forward, the court may encourage the class members who have instituted the Rule 23(b)(3) action to intervene in the other proceedings.

7A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, Federal Practice and Procedure§§ 1780 at 568-70 (2d ed. 1986) (footnotes omitted).

Here, the district court noted that "[a]lthough thousands of patients were implanted with the ENCOR lead, only nine lawsuits are pending; this indicates that individual litigation may be sufficient to satisfy potential claims." Further, although Zinser relies upon the Telectronics litigation as support for certification, there ARI faced claims filed on behalf of over 900 individual implantees, and joinder might have been impractical.

The third factor is "the desirability or undesireablity of concentrating the litigation of the claims in the particular forum." Fed. R. Civ. P. 23(b)(3)(C).

We are persuaded by the reasoning of Haley v. Medtronic, Inc., 169 F.R.D. 643 (N.D. Cal. 1996):

In this case, where the potential plaintiffs are located across the country and where the witnesses and the particular evidence will also be found across the country, plaintiffs have failed to establish any particular reason why it would be especially efficient for this Court to hear such a massive class action lawsuit.

Id. at 653. Similarly, Zinser offers no adequate justification for the concentration of the litigation in this particular forum.

The fourth factor is "the difficulties likely to be encountered in the management of a class action." Fed. R. Civ. P. 23(b)(3)(D). We have previously held that when the complexities of class action treatment outweigh the benefits of considering common issues in one trial, class action treatment is not the "superior" method of adjudication. Valentino, 97 F.3d at 1234-35; Dalkon Shield, 693 F.2d at 856; see also Am. Med. Sys., 75 F.3d at 1085; Haley, 169 F.R.D. at 653. This rule applies here, and we conclude that the complexities of class action treatment weigh heavily against class certification.

If each class member has to litigate numerous and substantial separate issues to establish his or her right to recover individually, a class action is not "superior." See, e.g., Dalkon Shield, 693 F.2d at 856; Walsh v. Ford Motor Co., 807 F.2d 1000, 1017 (D.C. Cir. 1986); Haley, 169 F.R.D. at 654. We are persuaded by the logic of Haley, a proposed class action involving allegedly defective pacemaker leads:

Here, the allegedly negligent pacemaker leads were implanted in different individuals in different states by different doctors. As a result, the causes of plaintiffs' injuries are not entirely the same, since the injuries did not occur at the same time, place or under the same conditions. Given the fact that approximately 66,000 individuals had these leads implanted, there are potentially 66,000 different instances that the Court would have to examine to determine if defendant's conduct was the real cause of injury for each potential plaintiff. Under these circumstances, there are just too many individual issues for the Court to manage for class adjudication to be deemed superior, even though there is a common nucleus of facts concerning defendant's conduct. Of course, we do not suggest that the causation difficulties necessarily render class certification impossible.

Id. at 654.

Here, evidence suggests that deformation of the "J" wire decreases its resistance to fatigue. This in turn may result in fracture, causing injury to patients if the wire protrudes through the insulation. ARI argues, and we agree, that it may be difficult to establish a common cause of injury because many factors may contribute to "J" wire deformation, including manufacturing and shipping history and handling of the lead by physicians or staff. See id. at 654 ("Given all of these extremely complicated and individual issues, it would seem unwise -and unmanageable -for the Court to independently attempt to handle this case."). In view of the formidable complexities here inherent in trying claims of negligence, products liability, and medical monitoring with differing state laws, Zinser does not persuade us that class treatment is superior to individual adjudication. See Am. Med. Sys., 75 F.3d at 1085.

Because Zinser fails to demonstrate predominance and superiority, we hold that the district court did not abuse its discretion by refusing to certify the proposed class pursuant to Rule 23(b)(3).8

Zinser next argues that certification of the proposed medical monitoring subclass is appropriate pursuant to Rule 23(b)(1)(A) because separate actions create a risk that ARI