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Sultan v. Karl Storz Endoscopy-America, Inc.

Superior Court of New Jersey, Law Division, Bergen

January 18, 2018

ARSHAD SULTAN, Individually and as Executor of the Estate of SUMAIRA KHAN and Trustee of THE SUMAIRA KHAN REVOCABLE LIVING TRUST, and on behalf of all beneficiaries, Plaintiff,
v.
KARL STORZ ENDOSCOPY-AMERICA, INC., KARL STORZ ENDOVISION, INC., KARL STORZ GMBH & CO. KG, HOWARD H. JONES, M.D., NOAH A. GOLDMAN, M.D., THE VALLEY HOSPITAL, INC., and JOHN DOES (1-10) and XYZ CORP (1-10) (such names and corporations being fictitious), Defendant.

          Argued: January 5, 2018

          Kelly McNabb, Esq., appearing for the Plaintiff, Karl Storz, (from the law offices of Lieff Cabraser Heimann & Bernstein).

          Ryan Duffy, Esq., appearing for the Defendants, Karl Storz SE & Co., KG, (from the law offices of Wilson Elser).

          OPINION

          Robert C. Wilson, J.S.C.

         FACTUAL BACKGROUND

         THIS MATTER arises from a products liability and medical malpractice claim brought against Defendants Karl Storz SE & Co. KG ("KST") and Karl Storz Endoscopy-America, Inc ("KSEA"), Drs. Jones and Goldman, Valley Physician Services, Inc., The Valley Hospital, Valley Health System, and Director of Risk Management. Defendant KST filed the instant motion to dismiss for lack of personal jurisdiction pursuant to R. 4:6-2(b), seeking dismissal of claims brought specifically against KST. Having considered the submissions of the parties and oral argument, and for the reasons below, the Defendant's motion is hereby GRANTED.

         Plaintiff Arshad Sultan, Administrator of the Estate of Sumaira Khan, alleges that a defectively designed and fraudulently marketed laparoscopic power morcellator was used during a surgical procedure to remove a uterine fibroid from Mrs. Khan on November 22, 2013. The procedure was performed at the Valley Hospital in Ridgewood, New Jersey. Subsequent to the procedure being performed, pathology reports showed that Mrs. Khan had and aggressive form of uterine cancer called leiomyosarcoma. Plaintffs allege that the use of the Storz brand morcellator resulted in this upstaged form of cancer in Mrs. Khan, requiring painful cancer treatment at Memorial Sloan Kettering in December of 2013. Mrs. Khan's battle with cancer led to her eventual death on June 5, 2016 at the age of forty-five.

         Defendant KST designed, developed, and manufactured the morcellator device used during the surgical procedure performed on Mrs. Khan. KST is a German entity, and sold, marketed, and distributed the morcellator device through Defendant KSEA, which is a wholly owned subsidiary of KST incorporated in the State of California. KSEA markets and sells this morcellator, and other KST surgical instruments in the United States. KSEA operates as part of Karl Storz North America, an unincorporated grouping of KST subsidiaries formed for the North American market. KST itself is incorporated in Germany and has its principle place of business in Tuttlingen, Germany. KST is not incorporated in New Jersey, and has no place of business, employees, or bank accounts in New Jersey. Despite having developed the morcellator, KST did not design, manufacture, or distribute this product in the United States or New Jersey itself, but relied on KSEA.

          KSEA engaged in advertising, employing sales representatives, and distributing KST surgical products, including the morcellator in the instant case, throughout the State of New Jersey. Of KSEA's total sales, ninety-three percent are KST products, while seven percent are third party products. In fact, KSEA maintains a distribution facility in Flanders, New Jersey. Despite this relationship, there are no written agreements between KSEA and KST.

         However, KST and KSEA share the same brand marketing and KST supplied "Brand Identity Guidelines." Additionally, KST drafts and approves all marketing, training, and sales materials for the marketing of morcellators in the United States, which are then reviewed by KSEA to ensure regulatory compliance. Further, KST purchases global insurance policies which cover KSEA, and trains KSEA employees in Germany. KSEA executives travel to Germany twice a year to discuss business operations. These include, product pipeline, focus, revenue objectives, and marketing strategies.

         The structures of both KST and KSEA show a clear parent-subsidiary relationship. KSEA's Vice President of Global Quality Management & Regulatory Affiars was Mr. Serkan Sezer, who held the same position at KST. Dr. Sybil Storz, has at all times been the sole managing director of KST. She was also the President of KSEA from 1996 to 2005, and CEO of KSEA until 2007, when, as acting Chairman of the Board of KSEA she did not reappoint herself. During the relevant time period, KSEA had a three member board. Dr. Sybil Storz held one seat, her son held a second, while the third was vacant.

         Defendant KST now moves this Court to dismiss the claims against it, arguing pursuant to K 4:6-2(b), that this Court lacks personal jurisdiction over the German entity which is not "at home" in New Jersey and does not maintain the requisite minimum contacts with this state. Further, KST argues that KST and KSEA are separate corporate entities and that therefore personal jurisdiction cannot be exercised over KST through its subsidiary KSEA.

         MOTION TO DISMISS STANDARD

         On a motion to dismiss pursuant to K 4:6-2(e), the Court must treat all factual allegations as true and must carefully examine those allegations "to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim. . . ." Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 746 (1989). After a thorough examination, should the Court determine that such ...


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