The opinion of the court was delivered by: Karen E. Schreier Chief Judge
MEMORANDUM OPINION AND ORDER
Defendant Laser Vision Centers, Inc. (LVCI) moves for summary judgment. Docket 203. Plaintiff, Craig Kendall, opposes the motion. For the reasons stated below, the motion for summary judgment is denied in part and granted in part.
Following are the relevant facts construed in the light most favorable to Kendall, the non-moving party:
On December 1, 1998, LVCI entered into a Refractive Laser Access Agreement with Ophthalmology Associates (OA) in Aberdeen, South Dakota. See Docket 226-2. The contract provides that "LVCI will agree to provide refractive laser access and other related services to OA." Id. at 5. Among LVCI's duties are providing OA with "refractive laser services," including access to a refractive laser and other refractive equipment and maintenance and repair of all refractive equipment. Id. at 6. The "other refractive equipment" specified in the agreement is limited to a VISX Star laser and the related supplies of "[o]ne PRK or one PTK Card per procedure/eye," calibration cards, and gasses. Docket 226-2, page 12 (Exhibit A to the contract). The agreement also states that LVCI will "employ and provide fully trained and appropriately certified personnel necessary to assist OA in the operation of the laser and other refractive equipment provided by LVCI." Id. "In short, LVCI provided certain portable LASIK surgical services and incidental items or access," including "the laser, the laser technician/operator, microkeratome and microkeratome technician, and certain disposable supplies including the surgical blades." Docket 205, Defendant's Statement of Undisputed Material Facts (DSUMF) ¶ 7.
The Refractive Laser Access Agreement requires OA to use only certified ophthalmologists while performing all patient care and treatment with the laser. Docket 226-2 at 6-7. It also states that "OA shall provide all pre, intra and post-operative supplies, all refractive surgical instrumentation, and sterilization capability necessary for the care of patients receiving refractive laser procedures." Id. at 7. Further, "OA agrees not to perform laser refractive surgery utilizing equipment provided by any vendor of refractive laser services . . . other than LVCI." Id. Finally, fees are paid from OA to LVCI on a per procedure basis, and it appears that the procedure fee includes the cost of any supplies provided to operate the refractive laser equipment. Id. at 13.
During LASIK surgery, a device called a microkeratome applies suction to the patient's cornea while a motorized blade cuts a flap of the corneal tissue.
DSUMF ¶¶ 18, 21. The surgeon then uses a laser to remove corneal tissue, after which the flap is replaced. On December 10, 2002, Kendall underwent LASIK surgery to correct his vision at OA's clinic in Aberdeen, and Dr. John Bormes performed Kendall's surgery. LVCI microkeratome technician Elaine Shotwell assisted Dr. Bormes during Kendall's surgery. For the surgery, Dr. Bormes used a microkeratome with an AccuGlide blade from manufacturing lot #517984. Id. ¶ 19. The microkeratome blade was provided to OA by LVCI, who had purchased it from Bausch & Lomb (B&L). B&L designed, manufactured, and packaged the blade and sold it to LVCI. Id. ¶ 2. At the time, LVCI was one of B&L's largest customers of blades, and it was contractually obligated to purchase at least 90 percent of its microkeratome and keratome blades from B&L. Id.
No complications arose during the surgery. Docket 228, Plaintiff's Statement of Material Facts (PSMF) ¶ 3. It is Shotwell's normal practice to inspect the AccuGlide blade under a microscope to ensure that there are no visible defects and to reject the blade if it appears abnormal or defective. DSUMF ¶ 24.
After the surgery, Kendall developed diffuse lamellar keratitis (DLK) in both eyes. Id. ¶ 27. DLK is an inflammatory condition of the interface of the corneal flap that may be a complication of LASIK surgery. Id. ¶ 28. While the causes of DLK are not completely understood in the medical community, it is generally understood to be multifactorial in origin. Id. ¶ 15. One LVCI employee estimated that she can identify the cause of a DLK outbreak in 60 percent of cases. Docket 227, Plaintiff's Response to DSUMF ¶ 61.
OA performed eleven LASIK surgeries on December 10, 2002, and all surgeries utilized equipment and staff provided by LVCI. All of Dr. Bormes' patients from that day whose surgery involved a blade from lot #517984 developed DLK. PSMF ¶ 20. Prior to this date, none of Dr. Bormes' LASIK patients had contracted DLK. Id. ¶ 5. As a result of his DLK, Kendall required a further procedure called a flap lift, after which he developed further complications, including striae, epithelial ingrowth, and irregular astigmatism. PSMF ¶ 23. Kendall has undergone additional surgeries to address these complications, and he has sustained permanent injury that he claims stems from the DLK. Id. at ¶ 24.
Prior to November 2002, LVCI was aware of a DLK incidence rate of less than one percent. Id. ¶ 25. During this time, Denice Gerstenberger worked at LVCI as an assistant to Stacy Lerum, the Director of Clinical Services and Quality Assurance. On November 18, 2002, Gerstenberger received a phone call notifying her of several occurrences of DLK at one of LVCI's facilities. Id. ¶ 34. Thereafter, LVCI continued to receive reports of DLK occurrences, and it attempted to determine the cause of the DLK. DSUMF ¶ 32. On November 28, 2002, Lerum received a call from a Michigan surgeon that his facility had several DLK cases, and she reviewed the cleaning protocol, tested the autoclave for bacteria, and talked with the technician. PSMF ¶¶ 37, 38. On December 3, 2002, Lerum received another report of DLK occurrences at another facility.
Id. ¶ 45. Prior to this time, LVCI had not experienced concentrated outbreaks of DLK at multiple sites that were ultimately associated with a certain blade lot. DSUMF ¶ 45. On December 4, Lerum told Gerstenberger to examine the lot numbers of all disposable supplies used in the surgeries which resulted in DLK. PSMF ¶¶ 45, 47. It does not appear that Gerstenberger investigated the lot numbers of the disposable supplies, as Lerum had directed. Gerstenberger attempted to contact B&L staff on December 6 and December 9 regarding the DLK incidences, to no avail. DSUMF ¶ 33.
On December 9, 2002, LVCI received another report of a DLK outbreak at a fourth facility. PSMF ¶ 48. The next day, Gerstenberger contacted Julie Moore, Products Surveillance Officer at the St. Louis B&L facility, to ask about testing a keratome for potential contaminants which could cause DLK. DSUMF ¶ 34. Moore asked Gerstenberger which blade lot numbers were associated with the DLK occurrences, suggesting that it could be lot #517984. Id. ¶¶ 34, 35. Gerstenberger checked and confirmed that this blade lot was a common element in the surgeries that resulted in DLK. Id. ¶ 37. Upon learning about the DLK incidences in surgeries using blades from lot #517984, LVCI ordered an immediate recall of the blades from lot #517984. Id. ¶ 38. That same day, Lerum and Gerstenberger made phone calls to all facilities which possessed blades from that lot. Lerum called OA at the end of the day, after Dr. Bormes had performed Kendall's surgery, to notify them of the blade recall. Id. ¶ 39.
Lerum spoke with Dr. Bormes and other OA staff about DLK identification and treatment protocols and sent the office information about the diagnosis and treatment of DLK. Id. ¶¶ 39, 40.
On December 13, 2002, B&L voluntarily recalled blades from lot #517984. Prior to this date, B&L had received many complaints of DLK occurrences in surgeries involving this blade lot and other closely-affiliated lots. Id. ¶ 46. Until it issued the recall, however, B&L did not contact LVCI or any other customer regarding the DLK complaints affiliated with blade lot #517984. Id. ¶ 50. LVCI's first contact with B&L regarding these complaints was on December 10, 2002, at the initiation of LVCI staff person Gerstenberger. If he had known about the increased DLK occurrences with blades from lot #517984, Dr. Bormes would have refused to use a blade from that lot number in any surgery, including Kendall's. PSMF ¶ 27.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Id.; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed. 2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists. Fed. R. Civ. P. 56(e)(2). In determining whether a genuine issue of material fact exists, the court views the evidence presented based upon which party has the burden of proof under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed. 2d 202 (1986).
LVCI contends that Kendall's strict liability claim must be dismissed because, under the law in South Dakota, only sellers are strictly liable for physical harm caused by a defective product. Docket 204, pages 10-13. In the alternative, LVCI argues that it is immune from products liability claims under SDCL 20-9-9.*fn1 Id. at 13.
1. LVCI's Liability as a Seller or Distributor
LVCI first argues that the relevant law is Restatement (Second) Torts § 402A, as adopted by South Dakota courts. Docket 204, page 10. That provision imposes liability on "sellers," and LVCI argues that it is not engaged in the business of selling AccuGlide surgical blades. Id. at 10-12. Instead, contends LVCI, it is a "provider of professional services," and it therefore cannot be strictly liable under § 402A. Id. at 12-13.
In response, Kendall states that his strict liability claim is based on LVCI's failure to warn of a dangerous product. Docket 225, page 9. Kendall argues that the applicable law is found in Restatement (Third) Torts, Products Liability § 10 which discusses the liability of a "distributor for harm caused by a post-sale failure to warn." Id. Kendall contends that LVCI is a distributor under this provision, and that the true nature ...