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BIOMET, INC. v. STRYKER HOWMEDICA OSTEONICS CORP.

April 8, 2004.

BIOMET, INC. Plaintiff,
v.
STRYKER HOWMEDICA OSTEONICS CORPORATION, Defendant



The opinion of the court was delivered by: AMY J. ST. EVE, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Biomet, Inc. ("Biomet") filed an eight-count complaint against Defendant Stryker Howmedica Osteonics Corporation ("Stryker"), alleging unlawful monopolization under Section 2 of the Sherman Act (Count I), attempt to monopolize under Section 2 of the Sherman Act (Count 2), violation of the Lanham Act (Count 3), tortious interference with contract (Count 4), tortious interference with prospective business relations (Count 5), trade libel (Count 6), commercial disparagement (Count 7), and violation of the Uniform Deceptive Trade Practices Act (Count 8). Jurisdiction is predicated upon both the action arising under a federal question pursuant to 28 U.S.C. § 1331, as well as the diversity of citizenship of the parties, pursuant to 28 U.S.C. § 1332. Stryker has moved this Court to transfer the action to the District of New Jersey pursuant to 28 U.S.C. § 1404(a), as well as to dismiss the Sherman Act claims of Biomet, pursuant to Rule 12(b)(6) for failure to state a claim. For the reasons set forth below, Stryker's motion to transfer is granted, and, accordingly, the Court declines to rule on the motion to dismiss. FACTUAL BACKGROUND

Biomet, an Indiana corporation with its principal place of business in Warsaw, Indiana, and Stryker, a New Jersey corporation with its principal place of business in Allendale, New Jersey, are direct competitors in the medical supply business. (R.1-1, Complaint, at ¶¶ 1-2, 5-6.) Both companies maintain corporate offices in New Jersey, while neither maintains an office in Chicago. (R.13-1, Def. Reply Br. In Supp. of Mot. to Dismiss & Transfer, at 6.) Biomet and Stryker both develop, manufacture, market, and distribute products, such as joint implants, trauma products, surgical instruments, and bone cement, which are used primarily by orthopedic specialists. (R.1-1, Complaint, at ¶¶ 5-6.) Both companies sell then — products nationwide, through networks of authorized sales representatives. (Id.)

  According to Biomet's Complaint, sales representatives from Biomet and Stryker maintain close relationships with the physicians, surgeons, and healthcare practitioners to whom they sell their orthopedic products. (Id. at 9.) Healthcare professionals rely on sales representatives to provide technical information about the products, as well as to make recommendations as to which products they should use. (Id.)

  Biomet alleges that Stryker's sales representatives, at Stryker's behest, abused the trust that healthcare professionals repose in them by making harmful misrepresentations about one of Biomet's products — Palacos(r) Bone Cement ("Palacos"). (Id. at 17-38.) Specifically, Biomet alleges that Stryker's sales representatives told customers around the country that Palacos contains peanut oil with allergenic properties.

  Palacos is an acrylic cement-like substance which is used to fix orthopedic implants in place. (Id. at 10.) Though Biomet has only sold Palaces for the past three years, Palacos has been sold throughout the United States since 1967. (Id. at ¶¶ 10, 14.) Unlike other bone cements, Palacos is green is color. The green color enables physicians to identify the area of the surgery when cleaning or performing revisions. (Id. at ¶ 11.) Palacos's green color is due to its containing chlorophyll. (Id.) The chlorophyll in Palacos contains a trace amount of refined peanut oil, necessary as a solvent for the chlorophyll. (Id. at ¶ 12.) Biomet contends that refined peanut oil does not exhibit the same allergenic properties as "crude" or "cold-pressed" peanut oil, and no reported incidents of an allergic reaction to the refined peanut oil in Palacos have occurred. (Id. at ¶¶ 12-13.)

  Biomet alleges that, beginning in 2002, Stryker engaged in a campaign to disseminate false information about Palacos, in order to bolster the market position of its own bone cement, Surgical Simplex P. (Id. at ¶¶ 15, 17.) Specifically, Stryker distributed a memorandum to its sale force that stated that the peanut oil in Palacos could cause, and had caused, allergic reactions in patients, and encouraged its representatives to discuss the danger with their customers and to "use [the] information to help ensure Simplex P Bone Cement remains the number one cement on the market." (Id. at ¶ 17; Exh. A & B.) Throughout the summer and early fall of 2002, Stryker representatives around the country relayed the misinformation to their customers at four different hospital — one in Fairfax, Virginia; one in Raleigh, North Carolina; one in San Diego, California; and one in Findlay, Ohio. (Id. at ¶¶ 20, 22-25.) In addition, Biomet alleges that a Stryker sales representative relayed the misinformation to a sales representative for Biomet's independent distributor, T.L. Weiss & Associates, in Chicago, Illinois. (Id. at ¶ 21.)

  Biomet became aware of Stryker's misrepresentations regarding Palacos in September of 2002, and attempted to persuade Stryker to stop disseminating the misinformation and to provide a retraction, (Id. at ¶ 26.) Stryker agreed to do so, but some of its sales representatives continued to tell their customers that Palacos had allergenic properties. (Id. at ¶¶ 28-36.) Over the next year, Biomet alleges that Stryker's sales representatives misinformed customers from six more hospitals — one in Canton, Ohio; one in St. Louis, Missouri; one in Lubbock, Texas; one in an unspecified city in Ohio; one in an unspecified city in Maryland; and one in Sacramento, California. (Id.) 8iomet alleges that Stryker's campaign of misinformation resulted in a decline in sales of Biomet bone cement and disrupted Biomet's existing and prospective business relationships. (Id. at ¶ 39.)

  ANALYSIS

 I. Legal Standard

  Assuming that venue is proper in a federal district court, "for the convenience of parties and witnesses, [and] in the interest of justice, [that] district court may transfer the civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). Transfer is appropriate where the moving party demonstrates that (1) venue is proper in the transferor district; (2) venue and jurisdiction are proper in the transferee district; and (3) the transfer will serve the convenience of the parties, the convenience of the witnesses, and the interests of justice. Vandeveld v. Christoph, 877 F. Supp. 1160, 1167 (N.D. Ill. 1995). The movant bears the burden of establishing, by reference to particular circumstances, that the transferee forum is clearly more convenient. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986). In assessing a motion to transfer, the Court must consider the statutory factors in light of all of the circumstances of the case. Id. at 219. The weight accorded to each factor is committed to the sound discretion of the Court. Id.

 II. Venue Is Appropriate in Both the Transferee and Transferor Districts

  When jurisdiction is not founded solely on diversity of citizenship, as is the case here, then venue is appropriate in "a judicial district where any defendant resides, if all defendants reside in the same State." 28 U.S.C. § 1391. For purposes of venue, "a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." Id.

  Here, venue is proper in both the Northern District of Illinois and the District of New Jersey because both courts have personal jurisdiction over Defendant Stryker. Stryker is a corporation that is incorporated in New Jersey and does business in Illinois. New Jersey's long-arm statute provides for personal jurisdiction co-extensive with the limits of federal due process, and Illinois's long-arm statute authorizes general jurisdiction over corporations that do business in Illinois on a regular basis. IMO Industries, Inc. v. Kiekert AG, 155 F.3d 254, 259 (3rd Cir. 1998); Asset Allocation and Management Co. v. Western Employees Ins. Co., 892 F.2d 566, 570 (7th Cir. 1989). Since the exercise of personal jurisdiction in either district does not violate federal due process principles, both courts have personal jurisdiction over Stryker. See RAR, Inc. v. Turner Diesel. Ltd., 107 F.3d 1272, 1277 (7th Cir. 1997) ("[G]eneral jurisdiction . . . is permitted . . . where the defendant has `continuous and systematic general business contacts' with the forum.") (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984)). Because both courts ...


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