ILNews

Plaintiffs fail to prove claim that Zimmer misrepresented information

Back to TopCommentsE-mailPrintBookmark and Share

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.”

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
2015 Distinguished Barrister &
Up and Coming Lawyer Reception

Tuesday, May 5, 2015 • 4:30 - 7:00 pm
Learn More


ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Payday loans take advantage of people in many ways. It's great to hear that the courts are using some of their sins to pay money back to the community. Hopefully this will help change the culture of many loan companies, and make lending a much safer endeavor for those in need. http://lawsuitlendingnow.com/lawsuit-loans-post-settlement.html

  2. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  3. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  4. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  5. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

ADVERTISEMENT