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Stryker Corp. v. United States Department of Justice

February 9, 2009


The opinion of the court was delivered by: William J. Martini Judge


Dear Counsel:

This is a case involving an investigation by the United States Department of Justice ("DOJ") and the United States Department of Health and Human Services-- Office of the Inspector General ("HHS") into the business operations of Stryker Corporation ("Stryker"). Plaintiff Stryker seeks judicial relief from an administrative subpoena issued by Defendants DOJ and HHS. Defendants move to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(1), (b)(3), and (b)(6) for lack of jurisdiction, failure to state a claim for which relief can be granted, and lack of venue. Plaintiff has filed a cross-motion for leave to file a second amended complaint. For the reasons stated below, Defendants' motion to dismiss is GRANTED and Plaintiff's cross motion for leave to amend is DENIED.


Plaintiff Stryker is a manufacturer of medical devices incorporated in Michigan. (Pl.'s Am. Compl. ¶¶ 2, 7). The federal government is presently investigating Stryker for possible violations of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7(b)(2), and the False Claims Act, 31 U.S.C. § 3729 et seq. (Dft.'s Br. 1, 7). Pursuant to their investigation, Defendants DOJ and HHS issued Stryker a subpoena on February 22, 2008. The subpoena sought documents related to Stryker's sales, corporate structure, and relationships with healthcare providers. (Pl.'s Am. Compl. ¶ 9). It required production of all responsive documents by April 28, 2008. (Dft.'s Br. 1) Prior to the deadline, Stryker requested that Defendants narrow the scope of the subpoena. On March 14, 2008, Defendants sent Stryker a letter purporting to do so but which Stryker claims only broadened the scope. (Pl.'s Am. Compl. ¶ 11.) Since the subpoena's issuance, Stryker has produced some responsive documents to Defendants but has not complied in full. (Pl.'s Am. Compl. ¶ 9).

On August 8, 2008, Defendants informed Stryker that if an agreement could not be reached regarding a production schedule or the possibility of tolling certain statutes of limitations in the government's favor, the government would seek judicial enforcement of the subpoena. But before Defendants did so, Stryker on August 15, 2008 filed a complaint and jury demand with this Court. Stryker amended its complaint the following month. The complaint and amended complaint sought judicial relief from the administrative subpoena and also alleged that the subpoena constituted abuse of process by the government. (Dft.'s Br. 8) Defendants responded with a motion to dismiss the amended complaint. Plaintiffs opposed the motion to dismiss and filed a cross-motion for leave to submit a second amended complaint. Defendants replied in further support of their motion to dismiss and in opposition to Plaintiff's motion to further amend.

On August 26, 2008, after Plaintiff filed its complaint, Defendants filed an action in the Western District of Michigan to enforce the subpoena. This was the first Defendants had sought judicial enforcement of their subpoena. (Dft.'s Br. 8)

Prior to Defendants' investigation into Stryker, the U.S. Attorney's Office for the District of New Jersey ("USAO") from 2005-2007 conducted its own investigation into medical device manufacturers. As a result of that investigation, in 2007 the U.S. Attorney's Office entered into a non-prosecution agreement with Stryker, providing that the USAO would not prosecute Stryker's N.J. subsidiary Howmedica Osteonics Corp., more commonly referred to as Stryker Orthopaedics ("Stryker Orthopaedics"). (Pl.'s Am. Compl. ¶ 8). In exchange, Stryker Orthopaedics agreed to comply with specific remedial measures. This agreement applied to Stryker Orthopaedics only, not Stryker as a whole. (Pl.'s Rep. Br. 3-4).


There are two motions presently before the Court: (1) Defendants' motion to dismiss Plaintiff's amended complaint; and (2) Plaintiff's motion for leave to file a second amended complaint. They will be addressed in turn.

A. Defendants' Motion to Dismiss

1. Legal Standard-Standard of Review for a Motion to Dismiss For Lack of Subject Matter Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(1)

Federal courts only have authority to adjudicate cases over which they have subject-matter jurisdiction. Brown v. Francis, 75 F.3d 860, 866 (3d Cir. 1996). Indeed, even after a court has proceeded completely through a case to a final judgment, if the court lacked subject-matter jurisdiction, the judgment must be vacated. Caterpillar Inc. v. Lewis, 519 U.S. 61, 76--77 (1996) ("[I]f, at the end of the day and case, a jurisdictional defect remains uncured, the judgment must be vacated."). A court without subject-matter jurisdiction has no choice but to decline to entertain the suit. Bender v. Williamsport Area School District, 475 U.S. 534, 541 (1986).

A district court lacks subject-matter jurisdiction to review administrative orders that are not yet final. See 3-21 Administrative Law § 21.01; see also Shea v. Office of Thrift Supervision, 934 F.2d 41, 45 (3d Cir. 1991). As the Third Circuit has explained, administrative subpoenas are not self-enforcing and thus cannot be considered final until the issuing agency has sought and obtained judicial enforcement. See Shea, 934 F.2d at 45. The Supreme Court has upheld this basic tenet of administrative law, refusing to consider pre-enforcement disputes arising out of agency subpoenas on the grounds that such claims are not yet ripe. See Reisman v. Caplin, 375 U.S. 440, 450 (1964) (declining to grant equitable relief to the recipient of an administrative summons that had not been judicially enforced). Because an agency subpoena does not become final until judicial ...

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