Labarge v. Elutia, Inc.

District Court, S.D. California·Decided July 21, 2025·No. 3:24-cv-01857·Unknown

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 WILLIAM LABARGE, et al. Case No. 24-cv-1857-MMA-DEB

11 Plaintiffs, ORDER GRANTING PLAINTIFFS’ 12 v. MOTION TO AMEND THE COMPLAINT 13 ELUTIA, INC., formerly known as 14 Aziyo Biologics, Inc., et al., [Doc. No. 75] Defendants. 15 16 17 On May 9, 2025, Plaintiffs William and Carol Labarge (collectively “Plaintiffs”) 18 filed a motion to amend their complaint against Defendants Elutia, Inc. f/k/a Aziyo 19 Biologics, Inc. (“Aziyo”) and DCI Donor Services, Inc. d/b/a Tennessee Donor Services 20 (“DCI”; collectively “Defendants”). Doc. No. 75. DCI filed a response in opposition, 21 with which Aziyo joined and to which Plaintiffs replied.1 Doc. Nos. 88–90. On 22 June 30, 2025, The Court found this matter suitable for determination on the papers and 23 without oral argument pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local 24 Rule 7.1.d.1 and took the hearing off calendar accordingly. Doc. No. 91. For the 25 following reasons, the Court GRANTS Plaintiffs’ motion to amend the complaint. 26

27 1 Because Aziyo filed a notice of joinder to DCI’s opposition, see CivLR 7.1.j, the Court refers to the 28 1 I. BACKGROUND 2 Plaintiffs filed their initial complaint on October 15, 2024, asserting claims for: 3 negligence, strict liability, breach of implied warranty, and breach of express warranty 4 against Aziyo; negligence against DCI; and loss of consortium against both Aziyo and 5 DCI. Doc. No. 1 (“Compl.”) ¶¶ 56–97. These claims arise from allegations that, in 6 summary, Plaintiff William LaBarge received a defective spinal implant, manufactured 7 by Aziyo and DCI, that exposed him to tuberculosis and caused him illness, injury, and 8 continued pain.2 Id. ¶¶ 16–55. Plaintiffs now seek to amend the complaint to reflect: (1) 9 amended causes of action;3 and (2) a prayer for punitive damages supported by new 10 allegations that both Aziyo and DCI accepted “donors with diagnoses of sepsis during 11 their terminal hospitalization . . . for harvesting in willful and conscious disregard for the 12 safety of others.” See Doc. No. 75-1 (“PFAC”) ¶¶ 68, 77. 13 As to the new allegations, Plaintiffs assert that Defendants both used Aziyo’s 14 “SOP-0006”4 to determine donor eligibility. Id. ¶ 29. During inspections of Aziyo in or 15 around September 2023, the FDA purportedly noted: 16 17 (1) . . . that between June 1, 2022[,] and January 31, 2023, multiple donors with sepsis diagnoses were deemed eligible for 18 donation[;] (2) that [Aziyo’s] SOP-0006 was not designed to 19 ensure compliance with donor eligibility requirements[;] (3) complete set of medical records were not made available to the 20 medical director prior to donor eligibility determination when 21 multiple donors had a recent diagnosis of sepsis[;] and (4) personnel authorization to perform designated function related to 22 donor eligibility determinations were not qualified through 23 appropriate medical treating to review clinical evidence consistent with risks for sepsis. 24

25 26 2 Plaintiffs allege, specifically, that Aziyo manufactures the implant, and “retained DCI to, among other things, procure and provide the cadaveric tissue it used . . . .” Compl. ¶¶ 16–23. 27 3 The proposed amended causes of action are: (1) negligence against Aziyo; (2) negligence against DCI; and (3) loss of consortium, which Plaintiffs appear to bring against both Defendants. PFAC ¶¶ 63–81. 28 1 Id. ¶ 31. Plaintiffs further plead that after inspecting DCI during the same timeframe: 2 the FDA made multiple observations including: (1) DCI failed to 3 verify that the donor screening procedures it was utilizing were 4 consistent with current donor eligibility requirements pertaining to donor diagnosed with sepsis or clinical evidence of infection[;] 5 and (2) Between January 2, 2022[,] and September 5, 2023, DCI 6 screened, determined to be suitable for recovery, recovered[,] and released for shipment under quarantine approximately 99 7 donors diagnosed with sepsis in medical records during a 8 hospital stay immediately preceding death.

9 Id. ¶ 32. “Neither Aziyo or DCI expressly warned users, customers, physicians or the 10 medical community that its Donor Selection Standard Operating Procedures were in 11 violation of AATB[5] standards and FDA Guidelines[]” or that that they “accepted donors 12 with evidence of Sepsis during terminal hospitalization.” Id. ¶¶ 33–34. Plaintiffs allege 13 that the donor for William LaBarge’s implant had active tuberculosis and “sepsis during 14 his hospital stay immediately preceding death . . . .” Id. ¶ 39–40. Despite this, “the 15 donor was cleared and accepted for harvesting by both DCI and [Aziyo].” Id. ¶ 40. 16 II. LEGAL STANDARD 17 Federal Rule of Civil Procedure 15 generally governs amendments to pleadings. 18 Fed. R. Civ. P. 15. However, once a district court has issued a scheduling order under 19 Rule 166 establishing a timetable for amending pleadings, Rule 15’s standards no longer 20 govern should a party seek amendment after the scheduling order’s deadline to do so. 21 See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–09 (9th Cir. 1992); Sharp 22 v. Balboa Islands, LLC, No. 11-CV-427, 2012 WL 13176036 *2–3 (S.D. Cal. Jun. 20, 23 2012). Instead, the moving party must meet Rule 16’s requirement to modify the 24 schedule. Id. Under Rule 16, “[a] schedule may be modified only for good cause and 25 with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). In this context, good cause is 26

27 5 American Association of Tissue Banks Standards. See Doc. No. 75 at 4. 28 1 measured by the diligence of the party seeking the amendment. Johnson, 975 F.2d at 2 609. “Although the existence or degree of prejudice to the party opposing the 3 modification might supply additional reasons to deny a motion, the focus of the inquiry is 4 upon the moving party’s reasons for seeking modification.” Id. at 609. 5 In ruling on matters that involve the supervision of the pretrial phase of litigation, 6 “[t]he district court is given broad discretion.” Miller v. Safeco Title Ins. Co., 758 F.2d 7 364, 369 (9th Cir. 1985). If the district court finds a lack of diligence, “the inquiry 8 should end.” Johnson, 975 F.2d at 609. If, however, the movant meets the Rule 16 9 burden, the Court considers the motion under the usual Rule 15 standard. See id. at 608; 10 Cervantes v. Zimmerman, No. 17-CV-1230-BAS-NLS, 2019 WL 1129154 *3 (S.D. Cal. 11 Mar. 12, 2019); Starship, LLC v. Ghacham, Inc., et al., No. LACV2104665JAKJEMX, 12 2023 WL 5670793 *3 (C.D. Cal. July 10, 2023). 13 “Rule 15(a) is very liberal and leave to amend ‘shall be freely given when justice so 14 requires.’” AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953 (9th Cir. 15 2006) (quoting Fed. R. Civ. P. 15(a)). Courts consider “undue delay, bad faith, dilatory 16 motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to 17 the opposing party, and futility of the proposed amendment” in deciding whether justice 18 requires granting leave to amend under Rule 15. Moore v. Kayport Package Express, 19 Inc.,

Labarge v. Elutia, Inc., (S.D. Cal. 2025).

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