Securities — securities fraud

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United States Court of Appeals For the Seventh Circuit

Civil

Securities — securities fraud

A complaint alleging securities fraud by a medical device manufacturer was properly dismissed where the manufacturer claimed the high failure rate was due to surgeon error rather than product defect.

“Corporate executives who know that one group of surgeons experiences success, and another group failure, with the very same medical device could believe that the different outcomes had been caused by differences in the way the surgeons had implanted the device. That’s what Zimmer’s executives said they had concluded. The complaint does not establish an inference of scienter that is ‘at least as compelling as any opposing inference of nonfraudulent intent.’ Indeed, even today plaintiffs have not supplied a cogent reason to think that Zimmer’s statements were false, let alone knowingly false. The Food and Drug Administration has never concluded that the Durom Cup was defectively designed or made, indeed never even issued a warning or caution concerning the Durom Cup.”

Affirmed.

11-1471 Plumbers and Pipefitters Local Union 719 Pension Fund v. Zimmer Holdings, Inc.

Appeal from the United States District Court for the Southern District of Indiana, Barker, J., Easterbrook, J.