2002 Decisions

Opinions of the United

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Precedential or Non-Precedential: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.

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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. 

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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). 

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 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 

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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. 

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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 

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 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 nonrepresentative 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 

 9