                                                                                                                           Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


4-3-2002

Balderston v. Medtronic Sofamor
Precedential or Non-Precedential:

Docket No. 01-2589




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Recommended Citation
"Balderston v. Medtronic Sofamor" (2002). 2002 Decisions. Paper 241.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/241


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PRECEDENTIAL

       Filed April 3, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 01-2589

RICHARD A. BALDERSTON, M.D.,
       Appellant

v.

MEDTRONIC SOFAMOR DANEK, INC.;
ACROMED CORPORATION

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
D.C. Civil Action No. 00-cv-01760
(Honorable R. Barclay Surrick)

Argued January 16, 2002

Before: SCIRICA, GREENBERG and BRIGHT*,
Circuit Judges

(Filed: April 3, 2002)
_________________________________________________________________

*The Honorable Myron H. Bright, United States Circuit Judge for the
       Eighth Judicial Circuit, sitting by designation.


       PAUL R. ROSEN, ESQUIRE
        (ARGUED)
       DAVID B. PICKER, ESQUIRE
       NANCY ABRAMS, ESQUIRE
       MICHAEL C. WAGNER, ESQUIRE
       Spector Gadon & Rosen
       Seven Penn Center, 7th Floor
       1635 Market Street
       Philadelphia, Pennsylvania 19103

        Attorneys for Appellant

       PHILIP H. LEBOWITZ, ESQUIRE
       Pepper Hamilton
       3000 Two Logan Square
       18th and Arch Streets
       Philadelphia, Pennsylvania 19103

        Attorney for Appellee,
       Medtronic Sofamor Danek, Inc.

       MARK HERRMANN, ESQUIRE
        (ARGUED)
       JOHN Q. LEWIS, ESQUIRE
       Jones Day Reavis & Pogue
       North Point
       901 Lakeside Avenue
       Cleveland, Ohio 44114

       LOUIS A. BOVE, ESQUIRE
       Bodell Bove Grace & Van Horn
       One Penn Square West, 6th Floor
       30 South 15th Street
       Philadelphia, Pennsylvania 19102

        Attorneys for Appellee,
       Acromed Corporation

OPINION OF THE COURT

SCIRICA, Circuit Judge.

This is an appeal in a diversity case from an order
dismissing a physician’s deceptive marketing claim under

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the Pennsylvania Unfair Trade Practices and Consumer
Protection Law (CPL) for lack of standing. We will affirm.

I.

Richard Balderston is a Philadelphia orthopedic surgeon
who specializes in spinal surgery. Medtronic Sofamor
Danek, Inc. and Acromed Corp. manufacture a device
commonly known as a "bone screw" or "pedicle screw."1
From 1985, Dr. Balderston began employing these screws
in spinal fusion surgeries, believing that pedicle screws
were safe and appropriate for this use.

Dr. Balderston brought suit under the CPL in the
Pennsylvania Court of Common Pleas, claiming Medtronic
and Acromed intentionally concealed and misrepresented
the Food and Drug Administration approval status of their
pedicle screws. As evidence of wrongdoing, Dr. Balderston
alleged defendants promoted their screws through teaching
seminars and literature, leading him and other orthopedic
surgeons to believe they were FDA approved. Because the
screws were not FDA approved for spinal fusion surgeries,
Dr. Balderston alleged he was exposed to lawsuits by
patients claiming they did not give informed consent.2

Dr. Balderston contends these lawsuits forced him to
provide uncompensated deposition and trial testimony,
both as a defendant and an expert witness on Medtronic’s
or Acromed’s behalf. He seeks damages in excess of
$50,000, trebled under the CPL, with attorneys’ fees and
prejudgment interest.

Dr. Balderston’s complaint solely alleges a violation of the
CPL, which has a six-year statute of limitations. Cf. Gabriel
_________________________________________________________________

1. The products are officially labeled as "bone screws." Because they are
inserted into spinal bones called "pedicles," they are sometimes, as in
the complaint, called "pedicle screws."

2. Dr. Balderston’s complaint alleged his unwitting failure to inform
patients of the FDA status for pedicle screws exposed him to potential
liability. Recently, in Southard v. Temple University Hospital, 781 A.2d
101 (Pa. 2001), the Pennsylvania Supreme Court held a physician has
no legal duty to inform patients of the FDA classification of medical
devices used in surgeries. Id. at 108-09.

                                3


v. O’Hara, 534 A.2d 488 (Pa. Super. Ct. 1987). Although
Dr. Balderston might have asserted claims against
defendants for common law fraud, he declined to file suit
until February 28, 2000, several years beyond the two-year
statute of limitations. His complaint asserts he learned the
screws were not FDA approved for spinal surgeries in
November 1993.3

After removal to the Eastern District of Pennsylvania on
the basis of diversity,4 the District Court granted
defendants’ motion to dismiss under Fed. R. Civ. P.
12(b)(6). Balderston v. Medtronic Sofamor Danek, Inc., 152
F. Supp. 2d 772, 776-80 (E.D. Pa. 2001). Because Dr.
Balderston’s patients, not Dr. Balderston, "purchased" the
screws, the Court found Dr. Balderston lacked standing
under the CPL. Alternatively, the Court held Dr. Balderston
could not qualify as a "purchaser" under the statute,
because any "purchase" was for business, not"personal,
family or household" use. Id. This appeal followed.

II.

The District Court had diversity jurisdiction under 28
U.S.C. S 1332(a). We have jurisdiction under 28 U.S.C.
S 1291.

III.

The initial question is who "purchased" the pedicle screws.5
Section 201-9.2(a) of the CPL provides a private right of
action and the potential recovery of treble damages:
_________________________________________________________________

3. Several of his patients claiming injuries from their surgeries involving
pedicle screws allegedly sued defendants directly.

4. Dr. Balderston is a citizen of Pennsylvania; Medtronic is an Indiana
corporation with principal offices in Tennessee; Acromed is an Ohio
corporation with principal offices in Massachusetts.

5. We exercise plenary review over the District Court’s dismissal under
Fed. R. Civ. P. 12(b)(6). Brown v. Philip Morris, Inc., 250 F.3d 789, 796
(3d Cir. 2001). We accept Dr. Balderston’s pleaded allegations as true
and draw all reasonable inferences in his favor. Colburn v. Upper Darby
Township, 838 F.2d 663, 665 (3d Cir. 1988).

                                4
       Any person who purchases or leases goods or services
       primarily for personal, family or household purposes
       and thereby suffers any ascertainable loss of money or
       property, real or personal, as a result of the use or
       employment by any person of a method, act or practice
       declared unlawful by section 3 of this act, may bring a
       private action to recover actual damages or one
       hundred dollars ($100), whichever is greater. The court
       may, in its discretion, award up to three times the
       actual damages sustained, but not less than one
       hundred dollars ($100), and may provide such
       additional relief as it deems necessary or proper. The
       court may award to the plaintiff, in addition to other
       relief provided in this section, costs and reasonable
       attorney fees.

73 Pa. Cons. Stat. Ann. S 201-9.2 (West 1993) (emphasis
added). The statute does not define "purchaser."
Pennsylvania courts have declared the CPL is remedial,
protecting consumers from deceptive practices or acts.
Commonwealth, by Creamer v. Monumental Props., Inc. , 329
A.2d 812, 816 (Pa. 1974). To recover, a plaintiff must suffer
an ascertainable loss resulting from an "unfair or deceptive
act" and have made a "purchase . . . primarily for personal,
family or household purposes." Valley Forge Towers S.
Condo. Ass’n v. Ron-Ike Foam Insulators, Inc., 574 A.2d
641, 645 (Pa. Super. Ct. 1990).

Acknowledging he did not purchase the pedicle screws
himself, Dr. Balderston contends he acted as his patients’
"purchasing agent." But the District Court held Dr.
Balderston brought suit not as the "legal representative" of
his patients, but on his own behalf for personal losses.
Balderston, 152 F. Supp. 2d at 778. Because his patients
had "no interest in this litigation whatsoever," the District
Court found Dr. Balderston had no private right of action.
Id. at 779. Therefore, he had no standing under the CPL.
Id.

Dr. Balderston contends the District Court applied an
"unduly tight, artificial and narrow" construction of the
statutory term "purchase," urging that it covers persons
who are "necessarily and intimately involved" in purchasing
transactions. Because the screws could be obtained only by

                                5


prescription, Dr. Balderston maintains he was the
"decisionmaker" in the "purchase transactions," effectively
making him a "purchaser." Yet Dr. Balderston does not
deny that his patients purchased the screws.6

As noted, the CPL does not define "purchaser." But as we
have observed:

       [T]he statute unambiguously permits only persons who
       have purchased or leased goods or services to sue. The
       private cause of action is also limited to unfair or
       deceptive methods, acts, or practices in the conduct of
       any "trade or commerce" . . . . Had the Pennsylvania
       legislature wanted to create a cause of action for those
       not involved in a sale or lease, it would have done so.
       The Pennsylvania Supreme Court has never addressed
       the issue before us. Its only reported decision on the
       CPL supports the conclusion that a private plaintiff
       must at least have purchased or leased goods or
       services.

Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir.
1992) (citations omitted).7 The District Court here relied on
Katz. Dr. Balderston contends Katz is cabined to plaintiffs
who lack commercial dealings with defendants and are not
targeted by defendants’ marketing plans. But we believe
Katz supports the District Court’s conclusion. The plaintiffs
in Katz claimed to be "intended beneficiaries" of the
purchased insurance, a closer relationship than Dr.
Balderston’s alleged relationship to the patients’ purchases
of the defendants’ screws.
_________________________________________________________________

6. Dr. Balderston’s Opening Brief stated, "Defendants mischaracterize
the facts of plaintiff’s complaint by claiming plaintiff purchased the
pedicle screw as part of his medical practice . . . . The purchase is by the
consumer, the patient. Plaintiff merely designates that screw for use by
the consumer after obtaining informed consent prior to surgery. Neither
plaintiff nor his practice are ever billed for the screw and do not pay for
it."

7. In Katz, plaintiffs injured in an automobile accident sued the other
driver’s insurer, alleging a misrepresentation of coverage precipitated an
inopportune settlement. We found the plaintiffs, who had not purchased
the policies at issue, had no standing. Id.

                                6


The District Court also relied on Gemini Physical Therapy
& Rehabilitation, Inc. v. State Farm Mutual Auto Insurance
Co., 40 F.3d 63 (3d Cir. 1994). In Gemini , a physical
therapist sued his patients’ insurer for failing to pay his
bills. We found the therapist had no standing under the
CPL:

       The CPL contemplates as the protected class only those
       who purchase goods or services, not those who may
       receive a benefit from the purchase. Although Gemini
       may have been indirectly injured, it is not a purchaser
       or consumer of goods or services under the CPL and
       therefore has no private right of action under the
       statute. . . . Because the CPL focuses narrowly on the
       protection of consumers in the purchase of goods or
       services, we predict that the Pennsylvania Supreme
       Court would not infer an assignment of claims under
       the CPL.

Id. at 65-66 (citations omitted). We see no principled
distinction here.
Dr. Balderston relies on two cases allowing plaintiffs
acting in representative capacities to pursue claims under
the CPL. In Valley Forge Towers, the court held a
condominium corporation, acting in a representative
capacity, could sue for damages under the CPL. 574 A.2d
at 642-43. And in Kane & Son Profit Sharing Trust v. Marine
Midland Bank, No. 95-7058, 1996 WL 325894 (E.D. Pa.
June 13, 1996), the court declared a trust a "purchaser"
under the CPL because it acted for members of an employee
benefit plan. Id. at *8-11.

But the District Court rejected a comparison to Valley
Forge or Kane:

       In both [cases] the court concluded that the plaintiffs
       had standing under the [CPL] because they purchased
       the goods and services at issue primarily for the
       personal, family or household purposes of the
       consumers for whom they were the legal
       representatives. In the instant case, [Dr. Balderston]
       obviously is not bringing this action in a representative
       capacity on behalf of his patients. Moreover, [Dr.
       Balderston] concedes that he was neither the

                                7


       purchaser nor the consumer of the pedicle screws.
       . . . While our research has revealed no case squarely
       on point, other courts have rejected [CPL] claims
       premised on agency theories similar to [Dr.
       Balderston’s]. . . . [Dr. Balderston] did not act as the
       legal representative of his patients and is not pursuing
       this litigation on his patients’ behalf.

Balderston, 152 F. Supp. 2d at 778-79. We agree. The
District Court also cited DiLucido v. Terminix International,
Inc., 676 A.2d 1237 (Pa. Super. Ct. 1996), where the court
rejected a landlord’s attempt to recover under the CPL for
damages caused to her tenants. Id. at 1242. Like the
plaintiff in DiLucido, Dr. Balderston seeks recovery under
the statute only for his own business losses.

No Pennsylvania authority supports Dr. Balderston’s
analysis. We are satisfied that Dr. Balderston’s claims are
not cognizable under the CPL.8 Nor does Pennsylvania
public policy mandate coverage. Balderston, 152 F. Supp.
2d at 779-80. Dr. Balderston is not a "purchaser" under the
CPL. Therefore, he has no standing to sue.

IV.

As an alternative ground for dismissal, the District court
found any "purchase" by Dr. Balderston was"primarily for
business purposes as part of his surgical practice," not for
"personal, family or household use," as required for the
CPL. Id. at 778 n.5 (citing 73 Pa. Cons. Stat. Ann. S 201-9.2
(West 1993)). We review this conclusion of law de novo.
The District Court’s analysis on this point was offered
only in a footnote. Id. Although lacking elaboration, we
agree with its conclusion. In construing claims under the
CPL, Pennsylvania courts have distinguished purchases
made for business reasons, which are not actionable, from
those made for "personal, family or household use." E.g.,
Weinberg v. Sun Co., 777 A.2d 442, 446 (Pa. 2001);
Trackers Raceway, Inc. v. Comstock Agency, Inc., 583 A.2d
_________________________________________________________________

8. Accord Robertson v. Allied Signal, Inc. , 914 F.2d 360, 378 (3d Cir.
1990) (federal courts with diversity jurisdiction must follow existing state
law).

                                8


1193, 1197 (Pa. Super. Ct. 1990). Dr. Balderston suggests
his purchase qualifies, because he "purchased" the screws
for his patients’ "personal use." But we have uncovered no
Pennsylvania decision finding actionable a non-
representative plaintiff’s claim based on others’"personal
uses." Dr. Balderston employed the screws only in his
medical practice. His alleged losses were not "personal," but
affected only his medical practice. Therefore, he lacks
standing under the CPL.

V.

For the foregoing reasons we will affirm the judgment of
the District Court.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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