Court Opinion

ID: 9916875
Source: CourtListenerOpinion
Date Created: 2024-01-10 20:02:32.193826+00
Date Added: 2024-06-11T13:26:05.331290
License: Public Domain

Filed 1/10/24 (unmodified opn. attached)

                  CERTIFIED FOR PARTIAL PUBLICATION*

       IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FIRST APPELLATE DISTRICT

                                     DIVISION THREE

 In re ESSURE PRODUCT
 CASES.
                                               A166579
 LHC GROUP, INC.,                              (JCCP No. 4887)
         Plaintiff and Appellant,              (Alameda County Super. Ct.
 v.                                            No. RG16804878)

 BAYER CORPORATION,                            ORDER MODIFYING OPINION
        Defendant and Respondent.              AND DENYING REHEARING;
                                               NO CHANGE IN JUDGMENT

THE COURT:
       Respondent’s petition for rehearing is denied. The opinion is modified
as follows:
       The last sentence of the first full paragraph on page 10 is deleted and
replaced with:
       It simply seeks to recover damages that it and its participants
sustained from Bayer’s failure to warn about Essure — claims assigned to
LHC through the subrogation clause to enforce on behalf of Plan participants.

       * Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this

opinion is certified for publication with the exception of parts II and III of the
Discussion section.
                                           1
(LHC Grp., Inc., at ** 2–3; Garbell v. Conejo Hardwoods, Inc. (2011) 193
Cal.App.4th 1563, 1571.)
         Following the penultimate sentence of the first full paragraph on page
14, add:
         (Deck v. Developers Investment Co., Inc. (2023) 89 Cal.App.5th 808, 824
[abuse of discretion exists if the trial court’s decision is based on an error of
law].)

Date___1/10/2024___________ ___               Tucher, P.J._____________P. J.

                                         2
In re Essure (A166579)

Trial Court:     Alameda County

Trial Judge:     Hon. Evelio Grillo

Attorneys:

Law Offices of Jessica A. Schaps, and Jessica A. Schaps; Bienstock, and
Theodore Martin Bienstock; Weisbrod Matteis & Copley, Shane Welch for
Appellants.

DLA Piper, Brooke Kim, Stanley J. Panikowski, Justin R. Sarno, Ilana H.
Eisenstein for Respondents.

Orrick, Herrington & Sutcliffe, Andrew D. Silverman for amicus curiae on
behalf of Respondent.

                                      3
Filed 12/22/23 (unmodified opinion)
                  CERTIFIED FOR PARTIAL PUBLICATION*

       IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FIRST APPELLATE DISTRICT

                                      DIVISION THREE

 In re ESSURE PRODUCT
 CASES.

 LHC GROUP, INC.,                               A166579
         Plaintiff and Appellant,               (JCCP No. 4887)
 v.                                             (Alameda County Super. Ct.
 BAYER CORPORATION,                             No. RG16804878)

        Defendant and Respondent.

       LHC Group, Inc. (LHC) is the administrator of a self-insured employee
welfare benefit plan, LHC Group Benefit Plan (Plan), which is governed by
the Employment Retirement Income Security Act of 1974 (ERISA). (29
U.S.C. § 1001.) LHC — on behalf of itself and as a subrogee of Plan
participants — sued Bayer Corporation (Bayer) seeking damages related to
the manufacture and sale of Essure, an allegedly defective birth control
device. The trial court sustained Bayer’s demurrer without leave to amend,
concluding ERISA preempts LHC’s claims because they relate to an employee
benefit plan. (29 U.S.C. § 1144(a).) It further concluded that, due to

       * Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this

opinion is certified for publication with the exception of parts II and III of the
Discussion section.
                                            1
differences in implanting the devices and injuries, LHC misjoined
participants’ claims into a single case. Finally, the court struck LHC’s claims
for punitive damages because they are not authorized under the Plan’s
subrogation clause. LHC appealed.
      In the published portion of our opinion, we hold LHC’s state law claims
do not “relate to” an ERISA plan and are therefore not preempted by ERISA.
We reverse the order dismissing the complaint but affirm the order striking
the request for punitive damages.
                              BACKGROUND1
      In April 2021, LHC filed a complaint against Bayer alleging tort claims
such as negligence, strict products liability, concealment, and negligent
misrepresentation, as well as quasi-contract and unjust enrichment claims
related to Essure, a permanent female birth control implanted into the
patient’s fallopian tubes through a disposable delivery system. According to
LHC, Bayer failed to comply with its responsibilities to warn about apparent
serious health risks after the device was approved for sale. Specifically,
Bayer received — but did not disclose — thousands of complaints of serious
injuries, such as perforation of the uterus or fallopian tubes, device migration
or fracture, prolonged bleeding, and unintended pregnancies. In addition,
Bayer failed to disclose to the U.S. Food and Drug Administration (FDA) that
the frequency and severity of these complications were greater than expected,
and Essure must be removed through major surgery.
      Upon becoming aware of this information, the FDA categorized Essure
as a restricted device. In 2016, it required Essure to include a “black box

      1 The following facts are based on the allegations in LHC’s complaint

because this appeal follows a ruling on a demurrer. (Doe v. Google, Inc.
(2020) 54 Cal.App.5th 948, 952.)
                                       2
warning and Patient Decision Checklist” — to notify patients and physicians
of serious health risks — and additional warnings regarding long-term risks
— device removal could require surgery, removal of fallopian tubes, or
hysterectomy. In July 2018, Bayer notified the FDA it would no longer sell or
distribute Essure in the United States after December 2018.
      LHC brought its claims both as its participants’ subrogee and in its
own right. Relevant here, the Plan included a subrogation clause noting
“each Covered Person agrees that the Plan will have the right of subrogation
with respect to the full amount of benefits paid to or on behalf of a Covered
Person as the result of an injury, illness, disability or death that is or may be
the responsibility of any Third Party.” LHC sought medical expenses it
actually paid for injured Plan participants, damages LHC itself suffered, and
punitive damages. Attached to the complaint were participant identification
numbers and the associated total costs resulting from Essure injuries. It did
not seek any declaratory or injunctive relief, or any relief from or against
Plan participants.
      Bayer filed a demurrer, which the trial court sustained without leave to
amend. The court concluded ERISA preempted LHC’s claims because they
“relate to” the Plan — the subrogation clause — and the court would need to
interpret the Plan to determine LHC’s ability to sue Bayer on behalf of Plan
participants. The court also found LHC’s claims had an impermissible
connection with the Plan because they interfere both with the ability of Plan
participants to assert claims on their own behalf and uniform plan
administration. In addition, the court determined LHC’s claims on behalf of
231 injured women were misjoined into a single case. LHC’s ability to
recover on behalf of each Plan participant “would depend on whether each
plan participant had a meritorious claim against Bayer.” Finally, the court

                                        3
struck LHC’s request for punitive damages, noting LHC, as a subrogee, could
only recover as damages actual payments for medical expenses it made to
Plan participants related to their injuries.
                                DISCUSSION
      LHC contends the trial court erred in sustaining the demurrer.
Rulings on a demurrer are reviewed de novo, assuming the truth of the
factual allegations and those reasonably inferred from the pleadings.
(Regents of University of California v. Superior Court (2013) 220 Cal.App.4th
549, 558.) We also review de novo whether ERISA preempts state law — an
issue of statutory construction and an affirmative defense that would entirely
bar the state claims. (Morris B. Silver M.D., Inc. v. International Longshore
& Warehouse etc. (2016) 2 Cal.App.5th 793, 805 (Silver); Port Medical
Wellness Inc. v. Connecticut General Life Insurance Co. (2018) 24 Cal.App.5th
153, 171–172.) LHC bears the burden of demonstrating the court erroneously
sustained the demurrer. (Keyes v. Bowen (2010) 189 Cal.App.4th 647, 655.)
                                       I.
      LHC argues the trial court erred by concluding ERISA preempts its
claims because they “relate to” — have a “reference to” or “connection with”
— an ERISA plan. We agree.
      “ERISA is a comprehensive statute designed to promote the interests of
employees and their beneficiaries in employee benefit plans.” (Shaw v. Delta
Air Lines, Inc. (1983) 463 U.S. 85, 90 (Shaw).) It contains expansive
preemption provisions, designed to ensure employee benefit plan regulation
is an exclusively federal concern. (29 U.S.C. § 1144; Marshall v. Bankers Life
& Casualty Co. (1992) 2 Cal.4th 1045, 1050; Ingersoll-Rand Co. v. McClendon
(1990) 498 U.S. 133, 138 (Ingersoll-Rand).) At issue here, ERISA preempts
“any and all State laws insofar as they . . . relate to any employee benefit

                                        4
plan,” with exceptions not relevant here.2 (29 U.S.C. § 1144(a), (b)(2)(A).)
Any state-law claim that falls within the scope of ERISA’s remedies “is
preempted as conflicting with the intended exclusivity of the ERISA remedial
scheme.” (Paulsen v. CNF Inc. (9th Cir. 2009) 559 F.3d 1061, 1084
(Paulsen).) There are two categories of state laws conflict-preempted under
ERISA: if it has a “reference to” an ERISA plan, or “if it has a connection
with” such a plan. (Shaw, at pp. 96–97.) Bayer must overcome “the starting
presumption that Congress does not intend to supplant state law.” (New
York State Conference of Blue Cross & Blue Shield Plans v. Travelers
Insurance Co. (1995) 514 U.S. 645, 654 (Travelers).)
      First, relying entirely on the Plan’s subrogation clause, Bayer argues
ERISA preempts LHC’s tort claims, such as negligence, strict products
liability, concealment, and negligent misrepresentation, and quasi-contract
and unjust enrichment claims on behalf of its members because they
reference an ERISA plan. Not so. “ERISA’s preemptive scope is broad, but
not all-encompassing.” (Nevill v. Shell Oil Co. (9th Cir. 1987) 835 F.2d 209,
212; Travelers, supra, 514 U.S. at pp. 655–656 [counseling against extending
the phrase “relate to” to “the furthest stretch of its indeterminacy”].) A state
law has a “reference to” ERISA plans where it “acts immediately and

      2 This is one of ERISA’s two preemption provisions.   (Cleghorn v. Blue
Shield of California (9th Cir. 2005) 408 F.3d 1222, 1225.) The second — not
at issue in this appeal — is the complete preemption provision in section 502,
subdivision (a) of ERISA. (29 U.S.C. § 1132(a).) The sole purpose of section
502 “is to ensure that federal courts remain the sole forum and the sole
vehicle for adjudicating claims for benefits under ERISA.” (Rudel v. Haw.
Mgmt. All. Ass’n. (9th Cir. 2019) 937 F.3d 1262, 1269.) “Therefore, any state-
law cause of action that duplicates, supplements, or supplants the ERISA
civil enforcement remedy [in section 502] conflicts with the clear
congressional intent to make the ERISA remedy exclusive and is therefore
pre-empted.” (Aetna Health Inc. v. Davila (2004) 542 U.S. 200, 209.)
                                        5
exclusively upon ERISA plans” or “where the existence of ERISA plans is
essential to the law’s operation.’ ” (Gobeille v. Liberty Mutual Insurance Co.
(2016) 577 U.S. 312, 319–320 (Gobeille).) Claims affecting an ERISA plan in
at most, a tenuous, remote, or peripheral manner do not “relate to” an ERISA
plan. (Silver, supra, 2 Cal.App.5th at p. 805.)
      Generally, claims based on common law negligence principles, such as
the ones at issue here, do not act “ ‘immediately and exclusively’ on ERISA
plans.” (Paulsen, supra, 559 F.3d at pp. 1066, 1082.) Indeed, LHC’s tort
claims — based on Bayer’s failure to warn about Essure’s alleged defects —
make “no reference to” and “indeed function[] irrespective of, the existence of
an ERISA plan.” (Ingersoll-Rand, supra, 498 U.S. at p. 139.) Negligence law
in failure-to-warn cases requires plaintiffs “to prove that a manufacturer or
distributor did not warn of a particular risk for reasons which fell below the
acceptable standard of care.” (Anderson v. Owens-Corning Fiberglas Corp.
(1991) 53 Cal.3d 987, 1002.) Strict liability claims require a plaintiff to prove
“the defendant did not adequately warn of a particular risk that was known
or knowable in light of the generally recognized and prevailing best scientific
and medical knowledge available at the time of manufacture and
distribution.” (Ibid.) Nothing suggests the existence of an ERISA plan is a
critical factor in establishing Bayer’s liability under any of the traditional
state laws of general application. (Contra Ingersoll-Rand, at pp. 139–140
[ERISA preempted claim employer principally terminated employee to avoid
contributing to pension fund since “the existence of a pension plan is a critical
factor in establishing liability under the State’s wrongful discharge law”].)
      True, LHC could not allege its claims in the absence of the Plan’s
subrogation clause. (Silver, supra, 2 Cal.App.5th at p. 807.) By itself,
however, this is insufficient to demonstrate the existence of the Plan is

                                        6
“essential” to LHC’s claims. (See, e.g., Ingersoll-Rand, supra, 498 U.S. at
p. 139 [the “fact that collection might burden the administration of a plan did
not, by itself, compel pre-emption”].) ERISA does not preempt “run-of-the-
mill state-law claims” such as “torts committed by an ERISA plan,” even
though those claims may obviously affect and involve ERISA plans as well as
their trustees. (Mackey v. Lanier Collection Agency & Service, Inc. (1988) 486
U.S. 825, 833, 841 [ERISA did not preempt the state’s statutory general
garnishment procedures despite being used to collect judgments against
ERISA plan participants].) Subrogation simply “places the insurer in the
shoes of its insured to the extent of its payment.” (Progressive West Ins. Co.
v. Superior Court (2005) 135 Cal.App.4th 263, 272.) Neither party disputes
the terms of the Plan, nor do LHC’s claims turn on an analysis of those
terms. Without more, the subrogation clause does not warrant preemption.3
(Cf. Silver, supra, 2 Cal.App.5th at p. 807 [that “ERISA plan is an initial step
in the causation chain, without more, is too remote of a relationship with the
covered plan to support a finding of preemption”].)
      Central States, Southeast and Southwest Areas Health and Welfare
Fund v. Health Special Risk, Inc. (N.D. Tex., June 13, 2013, Civ. A. No. 3:11-
cv-2910-D) 2013 U.S. Dist. LEXIS 83400 (Central States) — holding a state-
law subrogation claim is conflict-preempted under ERISA because it
addresses the right to receive plan benefits — does not alter our conclusion.
We are not bound by lower federal court decisions, even on federal questions.
(Barrett v. Rosenthal (2006) 40 Cal.4th 33, 58.) Nor is Central States
persuasive. (Central States, supra, * 14.) The court relied entirely on Arana

      3 At oral argument, Bayer argued for the first time that California law

regarding subrogation bars LHC’s claims against third party tortfeasors. We
express no opinion on this issue.
                                       7
v. Ochsner Health Plan (5th Cir. 2003) 338 F.3d 433 (Arana), a case
addressing whether “ERISA completely preempted the state-law claim of a
plan beneficiary seeking a declaratory judgment that he was not obligated to
reimburse his ERISA plan from proceeds of a tort action settlement for health
benefits paid by the plan.” (Central States, supra, * 16, italics added.)
      Bayer’s attempt to extract preemption principles from Arana is inapt —
no comparable dispute exists here. LHC alleges it was liable for its injured
members’ medical treatment and hospital expenses due to Essure — that is,
LHC bore the costs of Essure. Unlike the ERISA plan in Arana, LHC does
not seek plan benefits, or any declaratory or injunctive relief from or against
any Plan participants. (LHC Grp., Inc. v. Bayer Corp. (N.D. Cal., Mar. 14,
2022, No. 21-cv-03877-HSG) 2022 U.S. Dist. 44929 (LHC Grp., Inc.).) Rather,
LHC seeks damages from a third party in the amount of the health care costs
incurred by injured members, to which LHC was subrogated. Where the
state-law claims do not entail interpreting an ERISA plan, dictate any
distribution of benefits, and the claimant has “already paid ERISA benefits”
and does not dispute “the correctness of the benefits paid,” the claim is not
preempted. (Providence Health Plan v. McDowell (9th Cir. 2004) 385 F.3d
1168, 1172.)
      Second, LHC’s claims do not have an impermissible connection with an
ERISA plan. In reaching this conclusion, we presume Congress did “not
intend to supplant” state laws “regulating a subject of traditional state
power” unless they result in direct regulation of a fundamental ERISA
function. (Gobeille, supra, 577 U.S. at p. 325.) An impermissible connection
exists where the state law governs a “ ‘central matter of plan
administration,’ ” “ ‘interferes with nationally uniform plan administration,’ ”
(id. at p. 320) forces “an ERISA plan to adopt a certain scheme of substantive

                                        8
coverage,” or restricts “its choice of insurers.” (Travelers, supra, 514 U.S. at
p. 668.) Critical to this determination is whether the state law bears on an
ERISA-regulated relationship — that is, a relationship between the plan and
plan member, plan and employer, and employer and employee. (WSB Elec. v.
Curry (9th Cir. 1996) 88 F.3d 788, 794.)
      As a preliminary matter, LHC’s tort and quasi-contract claims involve
areas traditionally regulated by the state. (Geweke Ford v. St. Joseph’s Omni
Preferred Care Inc. (9th Cir. 1997) 130 F.3d 1355, 1359 [contract law
traditionally regulated by states]; Keams v. Tempe Technical Inst., Inc. (9th
Cir. 1994) 39 F.3d 222, 226 [negligence and negligent misrepresentation
traditionally regulated by states].) Bayer must accordingly overcome the
considerable presumption that Congress did not intend to supplant those
laws. (Gobeille, supra, 577 U.S. at p. 325.) It fails to do so.
      To begin, LHC’s claims against Bayer, a third-party pharmaceutical
company rather than Plan participants, do not bear on any of these ERISA-
regulated relationships. (Bafford v. Northrop Grumman Corp. (9th Cir. 2021)
994 F.3d 1020, 1031 [plan beneficiaries’ professional negligence claims
against outside administrator for grossly overestimating monthly benefits not
conflict preempted under ERISA].) Indeed, state-law negligence claims
generally do “not encroach on any actuary-participant relationship governed
by ERISA when asserted against a non-fiduciary actuary.” (Paulsen, supra,
559 F.3d at p. 1083.) Rather, state-law claims that arise from ordinary
relationships with an ERISA-regulated entity and “do not touch on [ERISA]
status,” as is the case here, are not preempted. (Abraham v. Norcal Waste
Systems, Inc. (9th Cir. 2001) 265 F.3d 811, 822 [ERISA does not “regulate
those relationships where a plan operates like any other commercial entity,”
such as “the plan and the landlords from whom it leases its office space”],

                                        9
abrogated on other grounds by Fossen v. Blue Cross & Blue Shield of Mont.,
Inc. (9th Cir. 2011) 660 F.3d 1102, 1112.)
      While LHC’s claims depend in part on its subrogation rights, this does
not directly affect the relationship between the Plan and its participants, as
Bayer contends. Although the trial court may be required to review the
subrogation clause, LHC’s claims do not address an area of exclusive federal
concern, such as seeking plan benefits. (LHC Grp., Inc., supra, at * 2; Silver,
supra, 2 Cal.App.5th at p. 804.) It simply seeks to recover damages that it
and its participants sustained from Bayer’s failure to warn about Essure —
claims assigned to LHC to enforce on behalf of Plan participants. (LHC Grp.,
Inc., at ** 2–3.)
      Nor does the possibility that the trial court may need to consider the
Plan’s relationship to its participants — specifically, how to address
competing privacy interests of participants in different states — render
LHC’s claims a matter of federal concern. Leaving aside Bayer’s failure to
support this assertion with any case law or statutory authority, LHC’s claims
have “ ‘a tenuous, remote, or peripheral connection with” the Plan and its
participants’ privacy rights, “as is the case with many laws of general
applicability.” (Travelers, supra, 514 U.S. at p. 661.) The claims do not
threaten to impose different regulatory requirements on the Plan’s operation,
such as by requiring it to maintain different sets of records in different states,
making different sets of benefits available, or complying with different
fiduciary standards. (Fort Halifax Packing Co. v. Coyne (1987) 482 U.S. 1, 9.)
Nor do they bind the Plan to do anything. (Howard Jarvis Taxpayers
Association v. Cal. Secure Choice Ret. Sav. Program (9th Cir. 2021) 997 F.3d
848, 858 [“ERISA applies to ‘plans, rather than simply to benefits,’ ” thus
indicating the distinction between state laws that are beyond ERISA’s

                                       10
preemptive scope].) Rather, the claims are remote from that with which
ERISA is concerned — “reporting, disclosure, fiduciary responsibility, and the
like.” (Shaw, supra, 463 U.S. at p. 98.)
      Because regulating the negligent behavior of third parties does not
target any aspect of an ERISA-occupied field or impede ERISA’s objectives,
LHC’s claims do not have an impermissible “connection with” ERISA plans.
None of Bayer’s cited authorities — which address disputes between ERISA-
related parties or ERISA-centric issues — persuade us otherwise. (See, e.g.,
Oregon Teamster Employers Trust v. Hillsboro Garbage Disposal, Inc. (9th
Cir. 2015) 800 F.3d 1151, 1156 [ERISA preempted plan’s claims that
defendant breached terms of the ERISA plan and court was required to
analyze the plan to establish whether beneficiaries were eligible plan
participants]; Wise v. Verizon Communications, Inc. (9th Cir. 2010) 600 F.3d
1180, 1191 [preemption applied to beneficiary’s state claims against employer
resulting in loss of insurance benefits, as claims depended on the existence of
an ERISA-covered plan to demonstrate damages].)
      In sum, ERISA does not preempt LHC’s claims.
                                        II.
      LHC next contends the trial court erred by sustaining the demurrer on
the basis that the complaint misjoined Plan participants into a single action.
Joinder of plaintiffs is permitted if they assert a right to relief arising out of
the same transaction or occurrence, and if there is a common question of law
or fact. (Code Civ. Proc., § 378, subd. (a)(1).) The statute is liberally
construed in favor of joinder. (Petersen v. Bank of America Corp. (2014) 232
Cal.App.4th 238, 249 (Petersen) [permissive joinder promotes trial
convenience, administrative efficiency, and expediting a final

                                        11
determination].) Based on the statute’s language and its broad construction,
we agree the court erred in sustaining the demurrer on this basis.
      Relevant here, courts broadly construe the requirement that relief arise
from the same transaction or series of transaction — the element satisfied if
there is any factual relationship among the joined claims.4 (Petersen, supra,
232 Cal.App.4th at p. 249.) A right to relief arising out of the same
transaction or series of transactions exists where plaintiffs’ causes of action
allege a common scheme leading to a series of transactions similar in kind
and manner of operation. (Anaya v. Superior Court (1984) 160 Cal.App.3d
228, 232–233 (Anaya) [claims of over 200 employees and employees’ family
members properly joined despite claiming injuries from exposure to
hazardous chemicals at place of employment over the course of 20 to 30
years]; State Farm Fire & Cas. Co. v. Superior Court (1996) 45 Cal.App.4th
1093, 1113 (State Farm) [joinder authorized for 165 individual homeowners
whose homes were damaged in an earthquake in an action against their
insurer], abrogated on another point as stated in Cel-Tech Communications,
Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 183.)
      Applying the liberal rule permitting joinder, allegations regarding a
common scheme exist here. (Anaya, supra, 160 Cal.App.3d at p. 232.) LHC
alleged Essure was defective and unreasonably dangerous due to inadequate
warnings and instructions. Specifically, Bayer failed to comply with federal
regulations requiring adequate investigations and handling of complaints

      4 There does not appear to be any dispute LHC’s complaint raises

common questions of law regarding the Plan participants’ claims. We also
find no issue with this factor. (David v. Medtronic, Inc. (2015) 237
Cal.App.4th 734, 737–738 [common questions of law or fact exist in case
where plaintiffs allege defendant is liable for injuries when it was aware of
dangers of a particular use of a medical device, but nonetheless widely
promoted its use].)
                                       12
related to Essure. It failed to timely report adverse events or serious health
risks of the device to the FDA and physicians. The FDA repeatedly cited
Bayer for failure to report complications, demonstrating “ongoing, systematic,
and widespread conduct by Defendants that signified problems with the
device started before” participants received Essure. Moreover, it alleged
Bayer willfully deceived the public — including injured Plan participants —
by concealing material information. Timely and adequate reporting of
adverse events to the FDA, LHC alleged, would have effectively warned
physicians. These allegations “reflect a claim containing common facts
central” (State Farm, supra, 45 Cal.App.4th at p. 1113) to Bayer’s alleged
duties and failures — a systematic failure to warn and misrepresentation
that invaded the rights of Plan participants. (Aldrich v. Transcontinental
Land & Water Co. (1955) 131 Cal.App.2d 788, 791–792 [joinder proper where
plaintiffs purchased property in same subdivision based on identical
misrepresentations about the property]; compare with David v. Medtronic,
Inc., supra, 237 Cal.App.4th at p. 741 [joinder improper where plaintiffs
failed to allege, for example, surgery occurred based at “least in part on the
same representation”].) This satisfies the requirement of the same
transaction or series of transactions. (State Farm, at p. 1113.)
      Differences in dates of device implantation or the resulting injuries do
not render joinder inappropriate. (Anaya, supra, 160 Cal.App.3d at p. 233
[noting community of interest linking petitioners not destroyed because
employees were exposed on different occasions].) Joinder is permissible when
based on commonality regarding liability rather than damages. (Petersen,
supra, 232 Cal.App.4th at p. 252.) In those circumstances, while the
damages among Plan participants may vary widely, “that is not the salient
point.” (Id. at p. 253.) Rather, it is that “liability is amenable to mass action

                                        13
treatment.” (Ibid.) To the extent there may be difficulties in tracking the
damages of the 231 Plan participants, that may be addressed in proceedings
under Code of Civil Procedure section 379.5 — authorizing courts to make
orders as appear just, including ordering separate trials. (Anaya, pp. 233–
234.) But it does “not furnish grounds for finding a misjoinder of plaintiffs.”
(Id. at p. 234.)
      For that reason, we reject Bayer’s additional argument that dismissal
was proper because the complaint — joining many injured participants in a
single action — violated the trial court’s case management order. The order
stated each plaintiff must file a separate case because joining multiple
plaintiffs in a single complaint is misjoinder based on the facts of Essure
cases. As a preliminary matter, Bayer concedes LHC is a single plaintiff.
Thus, LHC was authorized under the case management order to file its
claims against Bayer in a single action. To the extent the case management
order prohibited a single plaintiff from bringing multiple claims against a
single defendant based on misjoinder, this was improper. Trial courts no
doubt have broad discretion to create suitable methods of practice to manage
complex litigation, such as using a case management order. (Rutherford v.
Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 967; Lu v. Superior Court (1997)
55 Cal.App.4th 1264, 1267.) But the orders must not conflict with any
statewide statute, rule of law, or rules of court. (Rutherford, at p. 967.) As
explained, the court’s justification for requiring plaintiffs to file separate
cases was based on an erroneous reading of the joinder provisions. The case
management order is not a sufficient basis for dismissing LHC’s complaint.
                                        III.
      Finally, LHC contends the trial court erred by striking its claims for
punitive damages. On this point, we disagree.

                                        14
      Resolving whether punitive damages are authorized for LHC’s various
tort and quasi-contract claims is unnecessary. As the trial court concluded,
the subrogation clause upon which LHC bases its claims states “the Plan will
have the right of subrogation with respect to the full amount of benefits paid
to or on behalf of a Covered Person as the result of an injury, illness,
disability or death that is or may be the responsibility of any Third Party.”
(Italics added.) Under the plain terms of the Plan agreement, LHC cannot
recover damages in subrogation greater than those it paid to cover Plan
participant benefits. (Johnson v. Oliver (1968) 266 Cal.App.2d 178, 181, 182
[“the subrogation rights of the insurer are limited in extent to the amount
paid by it to its insured and do not encompass the whole cause of action”].)
      Punitive damages do not compensate injured parties. (Ferguson v.
Lieff, Cabraser, Heimann & Bernstein (2003) 30 Cal.4th 1037, 1046.) They
“ ‘punish the tortfeasor whose wrongful action was intentional or malicious,
and to deter him and others from similar extreme conduct.’ ” (Ibid.) Indeed,
consistent with these principles, LHC expressly states it is entitled to
punitive damages in an appropriate amount “to punish Defendants and deter
them from similar conduct in the future” based on conduct that disregarded
the rights of the Plan’s members. LHC does not allege that the amount the
Plan paid to the insured included punitive damages. Nor does LHC allege it
is itself entitled to punitive damages. Therefore, LHC cannot recover such
damages.
                                DISPOSITION
      The judgment dismissing the complaint is reversed. The order striking
LHC’s request for punitive damages is affirmed. LHC is entitled to costs on
appeal. (Cal. Rules of Court, rule 8.278(a)(5).

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                     RODRÍGUEZ, J.

WE CONCUR:

TUCHER, P. J.

FUJISAKI, J.

A166579

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In re Essure (A166579)

Trial Court:     Alameda County

Trial Judge:     Hon. Evelio Grillo

Attorneys:

Law Offices of Jessica A. Schaps, and Jessica A. Schaps; Bienstock, and
Theodore Martin Bienstock; Weisbrod Matteis & Copley, Shane Welch for
Appellants.

DLA Piper, Brooke Kim, Stanley J. Panikowski, Justin R. Sarno, Ilana H.
Eisenstein for Respondents.

Orrick, Herrington & Sutcliffe, Andrew D. Silverman for amicus curiae on
behalf of Respondent.

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