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Yeatts v. Zimmer Biomet Holdings, Inc.

United States District Court, N.D. Indiana, South Bend Division

April 17, 2017



          Michael G. Gotsch, Sr. United States Magistrate Judge

         On November 7, 2016, Defendants, Zimmer Biomet Holdings, Inc. (“Zimmer Biomet”), filed its Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6). [DE 4]. On November 25, 2016, Plaintiff, Alejandro Yeatts (“Yeatts”), filed his response in opposition to Zimmer Biomet's motion. [DE 12]. Zimmer Biomet's motion became ripe on December 4, 2016, when it filed a reply brief. [DE 13]. The undersigned may enter a ruling on this motion based on the parties' consent and 28 U.S.C. § 636(c).

         I. Relevant Background

         On October 13, 2016, Yeatts filed his complaint raising three claims - defamation (Count I), intentional infliction of emotional distress (Count II), and negligent infliction of emotional distress (Count III). Yeatts's claims are based on allegations that he was injured as a result of a defamatory email sent by Zimmer Biomet. Yeatts alleges that Zimmer Biomet's email caused him to suffer emotional stress.

         According to his complaint, Alejandro Yeatts is a resident of Argentina, who from 2005 to September 4, 2015 was employed by Biomet Argentina, SA, a subsidiary of the Defendant, Zimmer Biomet. In July 2007, Yeatts attended a presentation by Biomet's Compliance Officer regarding the Foreign Corrupt Practices Act (“FCPA”). Yeatts alleges that after witnessing this presentation, he reported to the Compliance Officer that Biomet Argentina employees had paid commissions to induce government-employed doctors to use Biomet products. After hearing nothing further from the Compliance Officer, Yeatts approached an in-house attorney for Biomet International at a meeting of the American Academy of Orthopedic surgeons and reported the alleged payments to her.

         Until 2008, Zimmer Biomet was a party to a distribution agreement between Biomet International and Prosintese, a Brazilian company owned by Sergio Galindo. Prosintese made payments to doctors employed by the government who used Biomet products. In May 2008, Zimmer Biomet General Counsel Bradley Tandy wrote Galindo a termination letter, which stated that Biomet has learned of Prosintese's business practices and that Zimmer Biomet was terminating its relationship to Prosintese. [DE 1 at 3, ¶ 11].

         On March 26, 2012, Zimmer Biomet and the United States Department of Justice (“DOJ”) entered into a deferred prosecution agreement (“DPA”), pursuant to which the DOJ agreed to defer prosecution of a criminal information charging the company with five felonies, which include violations of the FCPA based on payments made by the company to government doctors. Zimmer Biomet agreed to pay a penalty of $17, 280, 000. In the DPA, Zimmer Biomet admitted to having knowledge of Prosintese's payments to doctors in Brazil since at least 2001.

         In his complaint, Yeatts alleges that Zimmer Biomet breached the 2012 DPA by continuing to maintain a relationship with Galindo and Prosintese. [Id. at 7, ¶ 22]. Yeatts further alleges that when Zimmer Biomet became aware that he knew about the breach of the DPA, a company attorney met with him and accused him of continuing to deal with Galindo and Prosintese and concealing this to his superiors. In April 2014, Biomet Argentina suspended Yeatts's employment and ultimately terminated him on September 4, 2015.

         Zimmer Biomet asserts in its memorandum in support of its instant motion to dismiss that on the same day Yeatts was terminated, he entered a settlement agreement with Zimmer Biomet. [DE 5 at 6]. Zimmer Biomet states that both parties were represented by counsel during negotiations, which concluded with Zimmer Biomet paying Yeatts approximately $350, 000 in exchange for his release of “'any and all claims' against Biomet Argentina, SA, and any ‘associated or continuing companies'-without limitation.” [Id.] Zimmer Biomet attached a copy of the settlement agreement to its memorandum filed on November 7, 2016. [DE 5-2; see also id. at 23-24, ¶ THIRD].

         Yeatts's complaint also alleges that on October 24, 2014, while he was suspended but before he was terminated, Antje Petersen-Schmalnauer, Chief Compliance Officer, Vice President and General Counsel of Zimmer Biomet, sent an email, addressed to “CPWAR DueDiligence (Mailbox)” that informed its readers that Yeatts engaged in criminal activity. [DE 1 at 7, ¶ 24]. Yeatts quoted the email as follows:

Biomet Inc. and its worldwide subsidiaries (“Biomet” or the “Company”) are committed to complying with the anti-corruption and anti-bribery laws in all countries in which Biomet operates. In furtherance of that commitment, Biomet has identified several entities that pose significant and unacceptable compliance risks. The Company has placed these entities on a Restricted Parties List. All Biomet employees, agents, third parties, and any individual or entity performing services for or on behalf of Biomet, anywhere in the world may not do business with any entity on the Restricted Parties List.

[Id.]. Yeatts further alleges in his complaint that the “Restricted Parties List” that was attached to the email included Yeatts's name and stated that he had been suspended in connection with a corruption-related investigation involving Brazil. [Id.].

         Yeatts's defamation claim (Count I) alleges that the message in the October 24, 2014, email-that Yeats had engaged in this criminal activity-was false and constituted defamation per se. Further, Yeatts alleges that Zimmer Biomet published the email with malice, knowing that the statements regarding Yeatts were false, or with reckless disregard of their falsity. Also, Yeatts alleges that the publication of the defamatory material damaged his reputation for honesty, integrity, morality and law-abidingness; exposed him to harassment, public contempt and ridicule; caused him to lose professional stature; impaired his employment and earnings opportunities for the rest of his life; and caused him to suffer great pain and mental anguish. [Id. at 8, ¶¶ 25-39].

         In his intentional infliction of emotional distress claim (Count II), Yeatts alleges that Zimmer Biomet engaged in extreme and outrageous conduct by knowingly publishing false information in the October 24, 2014, email. Furthermore, Yeatts alleges that he suffered severe emotional distress as a result of Zimmer Biomet's extreme and outrageous conduct. Lastly, Yeatts's negligent infliction of emotional distress claim (Count III) alleges that he suffered severe emotional distress as result of Zimmer Biomet's negligence in publishing the email containing false information.

         In the instant motion to dismiss, Zimmer Biomet argues that Yeatts has failed to state any claim for which relief can be granted. Specifically, Zimmer Biomet contends that (1) on September 4, 2015, Yeatts entered into a binding settlement and release agreement (“settlement agreement” pursuant to which he released “any and all claims” he had against Zimmer Biomet [DE 4 at 1, ¶¶ 1-2]; (2) Count I is inadequately pleaded because Yeatts did not sufficiently plead either a false statement or actual malice [Id., ΒΆ 4]; (3) Count II fails to state a claim because Yeatts did not allege either outrageous conduct or that Zimmer ...

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