The final lawsuit in a multi-district litigation case involving Employee Retirement Income Security Act (ERISA) claims against Indiana-based Zimmer Holdings has been resolved, with U.S. Judge Sarah Evans Barker in the Southern District of Indiana dismissing with prejudice the suit against the company on Dec. 23.
Combined into the MDL case of Zimmer Holdings Inc. Securities, Derivative & ERISA, 1:09-MDL-06000, the litigation involved claims that Zimmer allowed participants in an employee investment plan to continue buying company stock even after quality and safety complaints about its orthopedic surgical products and hip resurfacing system impacted the company’s financial infrastructure and essentially led to artificially inflated stock prices that weren’t accurate based on the product issues.
Three cases were consolidated in the Southern District, and after Barker ruled on two suits, the only remaining case was Jonathan M. DeWald v. Zimmer Holdings, et al., No. 1:09-CV-00745.
Relying on precedent from the 7th Circuit Court of Appeals issued earlier in 2011 as the analytical template for this Zimmer Holdings case, Barker determined that the stock declines as alleged were insufficient to hold that the defendants acted imprudently. Specifically, she stated that each plan participant had several months to divert contributions into 28 other investment options. The Zimmer Holdings plan document established that the participants had independent control over their investments, so the judge determined the ERISA Section 404(c) safe harbor provision applies and bars the plaintiffs’ claim about failure to disclose. Barker also dismissed the plaintiffs’ failure to monitor and derivative claims regarding conflict of interest, co-fiduciary and liability issues.
An appeal is before the 7th Circuit on the two other cases, with a combined cause number of 11-1471.•
Rehearing "In the news, and onto the docket" IL Feb. 2-15, 2011