ASEA/AFSCME Local 52 Health Benefits Trust v. St. Jude Medical, LLC

Background

ASEA/AFSCME Local 52 Health Benefits Trust sued St. Jude Medical, LLC and Abbott Laboratories individually and on behalf of proposed classes of third-party payors. The trust provides healthcare benefits to employees of the State of Alaska and eligible family members. It alleged that it paid for the implantation of certain St. Jude implantable cardiac defibrillators and might have to pay to remove and replace them.

The Food and Drug Administration (FDA) recalled 251,346 St. Jude devices on October 10, 2016, after a battery defect was identified. According to the complaint, the defect could cause the lithium batteries to fail suddenly and prematurely, potentially resulting in serious health complications or death. The trust alleged that St. Jude knew about the defect years earlier, failed to report or investigate it promptly, and concealed information from the FDA and the public. Abbott acquired St. Jude on January 4, 2017.

The trust previously brought proposed nationwide and Alaska class actions in the Northern District of Illinois. That court dismissed the case after concluding that it lacked jurisdiction over St. Jude and that venue was improper. The trust then refiled in Minnesota, asserting the same claims except for strict liability. The claims included breach of express and implied warranty, negligence, failure to warn, manufacturing-defect product liability, violation of the Minnesota Prevention of Consumer Fraud Act, misrepresentation by omission, unjust enrichment, and violation of the Alaska Consumer Protection Act.

Standing and Ripeness

The defendants first argued that the trust lacked standing, meaning a sufficient personal injury to invoke the federal court’s authority. They contended that the alleged financial injury was not fairly traceable to their conduct because several events would have had to occur between the alleged concealment and the trust’s payments.

The court rejected that argument. It held that the alleged connection was straightforward: St. Jude allegedly placed a defective product on the market, the trust paid for the product, and the trust would have to pay replacement-related costs. The court also rejected the argument that the trust lacked a legally protected injury because it did not deal directly with the defendants. The alleged financial harm to the third-party payor was sufficient for standing.

The defendants also argued that the claims were not ripe, meaning not sufficiently developed for judicial decision, because no determination had established that patients were harmed. The court rejected that argument as well. It found the claims ready for decision because the trust alleged that it had already paid for defective devices and would pay for their removal and replacement.

Federal Preemption

The defendants argued that the Medical Device Amendments to the Federal Food, Drug, and Cosmetic Act preempted all of the trust’s state-law claims. Federal preemption means that federal law displaces or prevents certain state-law requirements. The court explained that federal law expressly preempts state requirements concerning the safety or effectiveness of a federally approved medical device when those requirements differ from or add to federal requirements. It also explained that a private plaintiff generally cannot bring a claim that simply seeks to enforce federal medical-device requirements.

The trust argued that its claims fit within the narrow category of state-law claims that parallel federal requirements without adding to them. The court disagreed. It concluded that the claims were based on allegations that St. Jude and Abbott knew the devices did not meet federal requirements, concealed that information, and sold the devices anyway. Relying on similar decisions involving allegedly defective cardiac devices, the court held that the claims were preempted.

The court reasoned that claims based on additional warnings would impose requirements beyond those approved by the FDA; claims based on failing to report information to the FDA would improperly seek private enforcement of federal law; and warranty or misrepresentation claims concerning device safety would require a finding inconsistent with FDA approval. The court found this case legally and factually similar to the prior cases it discussed and concluded that all of the trust’s claims were preempted.

Disposition

The court granted the defendants’ motion to dismiss and dismissed the case with prejudice. Because it found the claims preempted, it did not decide whether the complaint was adequately pleaded and did not address Abbott’s jurisdictional arguments. Judge David S. Doty directed that judgment be entered accordingly.