United States District Court, W.D. Virginia, Charlottesville Division
K. Moon Judge.
Court now considers Defendant General Electric
Company’s (“GE”) motion to dismiss for lack
of personal jurisdiction (docket no. 4), motion to stay
litigation and compel arbitration (docket no. 5), and motion
to dismiss for failure to state a claim (docket no. 11).
are PBM Technologies AB (“PBM Technologies”) and
PBM Capital Investments, LLC (“PBM Capital”)
(collectively, “PBM” or
“Plaintiffs”). PBM Technologies is a private
limited liability company registered in Sweden with its
principal place of business in Mölnlycke, Sweden. PBM
Capital is a Delaware limited liability company with its
principal place of business in Charlottesville, Virginia.
Plaintiffs filed this suit after they purchased a
life-support ventilator company from one of GE’s
subsidiaries, and they allege that GE defrauded them in
connection with the sale.
the Court lacks personal jurisdiction over GE, its motion to
dismiss will be granted.
Facts as Alleged
case arises from the purchase of Breas Medical AB
(“Breas”) by PBM from one of GE’s
subsidiaries. Breas is a Swedish company that manufactures
home respiratory ventilators and sleep apnea products for the
global home healthcare market.
flagship product is the Vivo 50 Life-Support Ventilator
(“Vivo 50”). The Vivo 50 is operated by actions
performed on a front panel where buttons and a screen are
located. On August 6, 2013, while Breas was still owned and
operated by GE or GE’s subsidiaries, a Vivo 50 being
used by a patient in Germany unexpectedly stopped working and
shut down without triggering a warning alarm.
investigators determined that the incident was caused by
silver migration- “essentially corrosion that bleeds
from one printed circuit channel to another in the
product’s circuit board.” Docket No. 26, at 3.
They concluded that silver migration took place at the on/off
button and created a short circuit that mimicked an
intentional user-inputted shutdown sequence. Breas presented
this initial report to GE, along with the initial assessment
that the Vivo 50’s risk level was not as low as
reasonably possible (“ALARP”). The investigators
found that a recall would, therefore, likely be necessary.
prospect of a recall alarmed GE. At the time, GE was
considering whether to sell Breas, and it believed that a
recall of the Vivo 50 would make the company unsellable.
Moreover, it determined that, should it fail to sell Breas,
it would have to close the company. GE executive Neal Sandy
resolved to “use this new complaint to articulate the
real risk and why we must sell [Breas].” Compl. ¶
58. Sandy nevertheless urged Breas’ executives to tell
potential buyers about “how great your business is
☺.” Id. at ¶ 3.
order to make Breas as marketable as possible, GE allegedly
censored and distorted the August 6th incident’s
investigation report. GE removed references to silver
migration as the cause of the incident, attributing the
shutdown instead to user error through use of excessive
cleaning fluid. GE ordered the incident report to find that
the Vivo 50 was, contrary to the initial report, at ALARP,
and thus that a recall would not be necessary. GE also
ordered Breas engineers to scrub any mention of
“additional mitigation(s)” that might be
necessary to fix the Vivo 50. Id. at ¶ 72.
thereafter, GE employees began meeting with PBM about the
possibility of purchasing Breas. GE made various
representations to PBM about Breas, but downplayed the
significance of the August 6th incident. GE did not disclose
that the malfunction had been caused by silver migration, or
that silver migration could cause Vivo 50s to unexpectedly
shut down without alarm. GE allegedly mischaracterized the
incident in a desperate attempt to sell Breas. As GE
executive Akel Akel allegedly stated to the Breas CEO,
“[I]f we do not get this done nothing else
matters.” Id. at ¶ 77.
these meetings ended and PBM reviewed the due diligence, PBM
signed an irrevocable offer letter in Charlottesville,
Virginia, on November 22, 2013. An Agreement closing the
transaction was, finalizing the sale of Breas to PBM.
October 2014, silver migration caused two more unexpected
shutdowns of the Vivo 50. Breas, now owned by PBM, took
corrective action through a recall. To PBM’s surprise,
Breas engineers informed them that the same problem occurred
under GE’s ownership. Moreover, PBM learned that GE had
identified a solution to the problem, but that no field
action had been implemented. The fix-which PBM implemented to
the tune of several million dollars-changed the Vivo
50’s firmware to require two buttons to turn off the
device instead of one.