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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. Unlike the federal judge who refused to protect me, the Virginia State Bar gave me a hearing. After the hearing, the Virginia State Bar refused to discipline me. VSB said that attacking me with the court ADA coordinator had, " all the grace and charm of a drive-by shooting." One does wonder why the VSB was able to have a hearing and come to that conclusion, but the federal judge in Indiana slammed the door of the courthouse in my face.

  2. I agree. My husband has almost the exact same situation. Age states and all.

  3. Thanks Jim. We surprised ourselves with the first album, so we did a second one. We are releasing it 6/30/17 at the HiFi. The reviews so far are amazing! www.itsjustcraig.com Skope Mag: It’s Just Craig offers a warm intimacy with the tender folk of “Dark Corners”. Rather lovely in execution, It’s Just Craig opts for a full, rich sound. Quite ornate instrumentally, the songs unfurl with such grace and style. Everything about the album feels real and fully lived. By far the highlight of the album are the soft smooth reassuring vocals whose highly articulate lyrics have a dreamy quality to them. Stories emerge out of these small snapshots of reflective moments.... A wide variety of styles are utilized, with folk anchoring it but allowing for chamber pop, soundtrack work, and found electronics filtering their way into the mix. Without a word, It’s Just Craig sets the tone of the album with the warble of “Intro”. From there things get truly started with the hush of “Go”. Building up into a great structure, “Go” has a kindness to it. Organs glisten in the distance on the fragile textures of “Alone” whose light melody adds to the song’s gorgeousness. A wonderful bloom of color defines the spaciousness of “Captain”. Infectious grooves take hold on the otherworldly origins of “Goodnight” with precise drum work giving the song a jazzy feeling. Hazy to its very core is the tragedy of “Leaving Now”. By far the highlight of the album comes with the closing impassioned “Thirty-Nine” where many layers of sound work together possessing a poetic quality.

  4. Andrew, if what you report is true, then it certainly is newsworthy. If what you report is false, then it certainly is newsworthy. Any journalists reading along??? And that same Coordinator blew me up real good as well, even destroying evidence to get the ordered wetwork done. There is a story here, if any have the moxie to go for it. Search ADA here for just some of my experiences with the court's junk yard dog. https://www.scribd.com/document/299040062/Brown-ind-Bar-memo-Pet-cert Yep, drive by shootings. The lawyers of the Old Dominion got that right. Career executions lacking any real semblance of due process. It is the ISC way ... under the bad shepard's leadership ... and a compliant, silent, boot-licking fifth estate.

  5. Journalism may just be asleep. I pray this editorial is more than just a passing toss and turn. Indiana's old boy system of ruling over attorneys is cultish. Unmask them oh guardians of democracy.

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