Plaintiffs fail to prove claim that Zimmer misrepresented information

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Two pension funds that own shares of Zimmer Holdings Inc. were unable to prove that Zimmer defrauded its investors by suppressing information, the 7th Circuit Court of Appeals ruled.

In Plumbers and Pipefitters Local Union 719 Pension Fund and Carpenters Pension Fund of West Virginia v. Zimmer Holdings, Inc.; David C. Dvorak; and James T. Crines, No. 11-1471, the two pension funds claimed that Zimmer had downplayed difficulties in manufacturing some of its products and the high failure rate one surgeon reported.

Zimmer makes orthopedic reconstructive devices, including the Durom Acetabular Component, better known as the Durom Cup. The device is used to replace the socket in a hip joint.  

One well-known surgeon, Dr. Lawrence Dorr, reported unacceptably high failure rates after using the Durom Cup in his patients. Zimmer attributed that failure rate – which was substantially higher than what other surgeons reported – to improper surgical technique. It stopped selling the device in the United States while preparing new instructions for implantation, but continued to sell the Durom Cup in Europe, where the failure rate was said to be less than 1 percent.

The plaintiffs argue that Zimmer knowingly misrepresented the reasons for the high failure rate Dorr reported, and that the problem stemmed from poor quality or design. The plaintiffs also content that Zimmer delayed revealing quality control problems in its Dover, Ohio, plant by reporting misleading earnings projections.

The 7th Circuit held that Zimmer did not try to hide the failures Dorr had encountered and had announced three months prior to Dorr’s findings that it was aware the Durom Cup was challenging to implant and that changes in labeling or training might be required.

In January 2008, Zimmer projected 10 percent to 11 percent revenue growth for the year and net earnings of $4.20 to $4.25 per share. In July, it cut that projection to 8.5 percent to 9 percent growth and net earnings of $4.05 to $4.10 per share. The plaintiffs maintain that Zimmer committed fraud by not using these lower estimates in January.

The District court dismissed the complaint, finding that it flunked the pleading standards of the Private Securities Litigation Reform Act of 1995. The 7th Circuit affirmed the District court.

“Plaintiffs point to many other supposedly false statements and a host of detail that supposedly shows that one or another statement was knowingly false,” Judge Frank Easterbrook wrote on behalf of the appellate panel. “The district court’s two lengthy opinions address all of these other statements.”



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  1. This is ridiculous. Most JDs not practicing law don't know squat to justify calling themselves a lawyer. Maybe they should try visiting the inside of a courtroom before they go around calling themselves lawyers. This kind of promotional BS just increases the volume of people with JDs that are underqualified thereby dragging all the rest of us down likewise.

  2. I think it is safe to say that those Hoosier's with the most confidence in the Indiana judicial system are those Hoosier's who have never had the displeasure of dealing with the Hoosier court system.

  3. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  4. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  5. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.