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

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. "Am I bugging you? I don't mean to bug ya." If what I wrote below is too much social philosophy for Indiana attorneys, just take ten this vacay to watch The Lego Movie with kiddies and sing along where appropriate: https://www.youtube.com/watch?v=etzMjoH0rJw

  2. I've got some free speech to share here about who is at work via the cat's paw of the ACLU stamping out Christian observances.... 2 Thessalonians chap 2: "And we also thank God continually because, when you received the word of God, which you heard from us, you accepted it not as a human word, but as it actually is, the word of God, which is indeed at work in you who believe. For you, brothers and sisters, became imitators of God’s churches in Judea, which are in Christ Jesus: You suffered from your own people the same things those churches suffered from the Jews who killed the Lord Jesus and the prophets and also drove us out. They displease God and are hostile to everyone in their effort to keep us from speaking to the Gentiles so that they may be saved. In this way they always heap up their sins to the limit. The wrath of God has come upon them at last."

  3. Did someone not tell people who have access to the Chevy Volts that it has a gas engine and will run just like a normal car? The batteries give the Volt approximately a 40 mile range, but after that the gas engine will propel the vehicle either directly through the transmission like any other car, or gas engine recharges the batteries depending on the conditions.

  4. Catholic, Lutheran, even the Baptists nuzzling the wolf! http://www.judicialwatch.org/press-room/press-releases/judicial-watch-documents-reveal-obama-hhs-paid-baptist-children-family-services-182129786-four-months-housing-illegal-alien-children/ YET where is the Progressivist outcry? Silent. I wonder why?

  5. Thank you, Honorable Ladies, and thank you, TIL, for this interesting interview. The most interesting question was the last one, which drew the least response. Could it be that NFP stamps are a threat to the very foundation of our common law American legal tradition, a throwback to the continental system that facilitated differing standards of justice? A throwback to Star Chamber’s protection of the landed gentry? If TIL ever again interviews this same panel, I would recommend inviting one known for voicing socio-legal dissent for the masses, maybe Welch, maybe Ogden, maybe our own John Smith? As demographics shift and our social cohesion precipitously drops, a consistent judicial core will become more and more important so that Justice and Equal Protection and Due Process are yet guiding stars. If those stars fall from our collective social horizon (and can they be seen even now through the haze of NFP opinions?) then what glue other than more NFP decisions and TRO’s and executive orders -- all backed by more and more lethally armed praetorians – will prop up our government institutions? And if and when we do arrive at such an end … will any then dare call that tyranny? Or will the cost of such dissent be too high to justify?

ADVERTISEMENT