Roe v. CNTP MCB Inc.

Background

The plaintiffs alleged that they bought sperm from CNTP MCB Inc., using it to conceive twin boys born in February 2018. The complaint alleged that Baby A has autism and gastro-esophageal reflux disease, while Baby B has delayed speech, anemia, and gastro-esophageal reflux disease. The plaintiffs claimed that the defendant’s predecessor, Manhattan Cryobank, promised in a sperm purchase agreement to conduct complete and thorough screening for certain inheritable birth defects, serious illnesses, and infectious diseases.

The plaintiffs asserted breach of contract and fraud. They alleged that an employee of a California sperm bank with a working relationship with the defendant said that Donor 121 had not received sufficient testing and that another child conceived with the donor’s sperm had a speech delay. The plaintiffs also alleged that the donor’s profile showed a history of anemia. The defendant did not appear after service, and the Clerk issued a certificate of default. The plaintiffs then moved for a default judgment.

The contract also required arbitration. The plaintiffs had started an arbitration before JAMS in May 2020, but discontinued it in November 2020 and filed this federal lawsuit instead. The opinion noted that JAMS, like the court, would require evidence before entering an award based on a default.

Default-judgment standard

The court explained that default judgment is discretionary and is generally disfavored because courts prefer resolving disputes on their merits. A plaintiff seeking default judgment must first show that the defendant was properly served and failed to defend. The plaintiff must then show that the pleaded facts establish liability as a matter of law. If liability is established, the court must separately determine damages with reasonable certainty.

The court concluded that the defendant appeared to have been properly served, although it was uncertain whether the defendant actually received notice. The court therefore considered whether the complaint’s unchallenged allegations entitled the plaintiffs to judgment.

Why the motion was denied

The court held that the complaint’s facts were insufficient to establish liability without additional evidence. Two important allegations—statements from the California sperm-bank manager about the donor’s testing and another child’s speech delay—were hearsay as pleaded. The court stated that those statements could not establish the truth of the matters asserted without further evidentiary support.

Even assuming those statements were considered, the court found that the complaint did not establish causation. The plaintiffs’ theory was that because the children were conceived with Donor 121’s sperm and later developed medical or developmental conditions, the sperm must have caused those conditions. The court rejected that inference as unsupported by the pleaded facts. The complaint did not allege, among other things, that Baby A carried autism-associated genes or that the genetic mother did not carry them. The court also noted that maternal and environmental factors could be relevant and that the twins’ type and other medical facts were not established in the complaint.

The court further found that the meaning and scope of the contract’s testing obligations were not self-evident. It was unclear whether conditions such as autism, delayed speech, anemia, or gastro-esophageal reflux disease fell within the contract’s terms, or whether those conditions could have been detected through available sperm screening. Expert testimony might be needed to address causation, medical inheritance, the meaning of the contract’s terms, and the testing that was possible.

Disposition

Judge Colleen McMahon denied the motion for a default judgment and directed the Clerk to remove the motion from the list of open motions. The court did not enter judgment for the plaintiffs or decide that the defendant was free of liability. Instead, it stated that the plaintiffs would need to prove their claims with additional evidence if they wished to recover.