Wanke v. Invasix, Inc., 2021 WL 325923 (M.D. Tenn. Feb. 1, 2021) is an interesting and somewhat long story, so we're just going to give it to you straight.

In June 2017, plaintiff underwent a medical procedure on her face in which defendant's medical device was used. Her counsel entered into a tolling agreement with defendant in January 2019 and a day before the agreement was to expire, plaintiff filed her lawsuit, which included two other plaintiffs, in federal court in California, the home state of the defendant. Defendant moved to sever the claims of the unrelated plaintiffs and to transfer them to plaintiff's home states. The California court granted that motion and plaintiff's case was transferred to Tennessee. Id. at *1-2.

Now for the details that make this case interesting. In plaintiff's original and first amended complaints, she alleged that she "knew something had gone terribly wrong" within days of her surgery; that her doctor shared her concern; that she became inconsolable at her doctor's appointment; and that her doctor told her she would need "multiple additional treatments to address the injuries sustained." Id. So, defendant moved to dismiss the complaint as barred by Tennessee's one-year statute of limitations. Plaintiff was given an opportunity to file a second amended complaint. This time the complaint alleged that she "was told by her treating physician that her procedure had gone normally," and that another physician told her her healing could take up to one year before they would know if there was any injury. Id. at *2. Also, the new complaint omitted the prior description of plaintiff's early post-surgical knowledge and tearful complaints to a doctor who shared her concerns. Id. at *3. The court concluded the new allegations raised a factual issue that prevented dismissal on the pleadings, but also expressed its "serous concern that [plaintff's] actions . . . could amount to bad faith." Id. Afterall, plaintiff wasn't seeking to add a newly learned fact, but rather to "arguably contradict a factual claim that she made in her two earlier complaints and could not plausibly have been innocently mistaken about." Id. ("She has, moreover, offered little by way of a persuasive explanation for why she would seemingly change her story, other than her counsel's having now realized the dangers posed by her earlier statements.").

Next, defendant filed a motion for summary judgment pointing to plaintiff's prior allegations as well as a letter sent from plaintiff's counsel to defendant's counsel in October 2018, again pre-tolling agreement, that sets out an account nearly identical to what was in the prior complaints including that plaintiff's treater voluntarily refunded her the cost of the procedure. That letter was a settlement demand and also included hundreds of pages of exhibits, including medical records. Id. at *4. Plaintiff's primary opposition to the motion was that the prior pleadings were hearsay and had been superseded and the settlement demand letter was inadmissible for the purpose of establishing a contested issue of liability. Id.

Before the court got to the statute of limitations ruling, it conducted a thorough choice of law analysis. The discussion is elongated by the fact that this is a diversity case transferred between district courts. In such situations, federal law mandates that "the substantive law governing the jurisdiction of the transferor court controls." Id. at *7. Plaintiff argued that meant the Tennessee court had to apply California's statute of limitations. What it actually means is that Tennessee had to apply California's choice of law principles to determine which statute of limitations applies. Unlike many states that apply a substantive/procedural distinction in deciding statute of limitations issues, California applies a governmental interest test. But before even getting that far, the court had to decide whether California's borrowing statute applied. Under the borrowing statute if a cause of action brought by a non-California resident arises in a foreign state and would be barred by that state's statute of limitations, California will also bar the claim. Id. at *8-9. So that raises the question of where each of plaintiff's causes of action arose. To answer that, the court divided plaintiff's claims into three groups:

  • fraud/warranty claims: which arise in Tennessee because they involve the particular transaction involving the particular device used in plaintiff's surgery at a particular clinic in Tennessee;
  • product claims: arise in the state of injury, which is Tennessee; and
  • marketing/advertising claims: defendant's marketing/advertising activities most likely were directed out of California, but because plaintiff's claims are not about marketing to the general public (marketing in the air claims), that is not enough to answer the question.

Id. at *10.

[Plaintiff]'s causes of action do not arise out of some general grievance that the defendants advertised and marketed inappropriately. That general wrongdoing, if performed in California, would be the basis for a California-based enforcement action by the California state government or a California local government, not for a Tennessee-based private cause of action by an individual. . . . Indeed, if any jurisdiction gave [plaintiff] a cause of action arising merely out of the defendants' general wrongdoing, that cause of action would be outside this court's jurisdiction, due to lack of a particularized injury. For [plaintiff]'s cause of action to arise, it had to have some connection to her.

Id. at *11 (citations omitted). Because plaintiff's claims must necessarily arise out of particular instances of advertising and marketing that potentially influenced the use of the product in her surgery in Tennessee, the court thought it likely California's borrowing statute would apply here as well. But the court also went on to conclude that California would apply Tennessee's shorter statute of limitations under the governmental interest analysis. Tennessee's one-year statute reflects its governmental interest in providing a "hospitable environment for companies to sell their medical products." Id.

That brings us finally to the application of the statute to the facts of this case. Plaintiff's first objection to the motion was based on Federal Rule of Evidence 408's restriction on the admissibility of settlement communications. But plaintiff's reading of that rule is overly broad because many of the documents she seeks to exclude were not evidence of her offer or statements made during negotiations. In other words, the inadmissibility of settlement offers does not prevent the use of documents initially provided during a settlement discussion where those documents would be otherwise discoverable. Id. at *13.

That left plaintiff's hearsay objection to the statements made in her prior complaints which plaintiff argued were her attorney's words, not hers. But that overlooks Federal Rule of Civil Procedure 801(d)(2)(c) which "designates as the equivalent of a statement of a party opponent, any statement that was made by a person whom the party authorized to make a statement on the subject." Id. Plaintiff did not dispute that her attorney was authorized to make those statements about what she knew and when. Therefore, defendant had admissible evidence to support its factual assertion that plaintiff's claim is time barred. Id. at *14.

As the court summed it up - this was a case of "unusual" procedural and evidentiary issues, but the underlying facts are "fairly simple." Plaintiff knew shortly after her surgery that something was wrong and that triggered her obligation to look further into what that something was. Therefore, the statute started running in the summer of 2017 and was long expired before the tolling agreement was ever entered. Id. at *16.

Note: these "unusual" circumstances were also present in Jones v. Invasix, Inc., 2021 WL 325925 (M.D. Tenn. Feb. 1, 2021) - one of the sister cases of Wanke severed and transferred from California.
