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Yeatts v. Zimmer Biomet Holdings, Inc.

United States Court of Appeals, Seventh Circuit

October 8, 2019

Alejandro Yeatts, Plaintiff-Appellant,
Zimmer Biomet Holdings, Inc., Defendant-Appellee.

          Argued September 12, 2019

          Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. No. 16-cv-00706 - Michael G. Gotsch, Sr., Magistrate Judge.

          Before Flaum, Easterbrook, and Manion, Circuit Judges.

          Flaum, Circuit Judge.

         Alejandro Yearts became ensnared in a federal investigation of his employer, Zimmer Biomet Holdings, Inc.[1] ("Biomet"), for violations of the Foreign Corrupt Practices Act because of his contacts with a distributor in Latin America who had bribed doctors. To resolve the criminal and civil charges against it, Biomet entered two deferred prosecution agreements with the Department of Justice in 2012 and 2017. Following the 2012 agreement, Biomet had to distribute a Restricted Parties List of individuals who posed a risk to Biomet's compliance with anti-corruption and anti-bribery laws. The list included Yeatts and a notation regarding his suspension in connection with the corruption investigation of Biomet's Latin American subsidiary. After Biomet terminated Yearts, he sued his former employer for defamation based on his inclusion on the Restricted Parties List. The district court entered summary judgment for Biomet. Because Biomet's inclusion of Yeatts on the Restricted Parties List conveyed no defamatory imputation of objectively verifiable or testable fact, we affirm.

         I. Background

         Though the briefs go into significant detail regarding the parties' history and the sequence of events, a general outline of their relationship is sufficient background for resolving this dispute. The parties' accounts vary on many details, but they agree on the basics: Defendant-appellee Biomet is a global corporation that manufactures and sells medical devices and is headquartered in Warsaw, Indiana. Biomet subsidiary Biomet Argentina, SA employed plaintiff-appellant Alejandro Yeatts from 2005 to 2015 and, more specifically, as the Business Manager for South America from 2008 through 2014. His responsibilities in that role included implementing Biomet's compliance policies.

         In 2008, Biomet terminated its distribution agreement with its Brazilian distributor Prosintese, run by Sergio Galindo, after it learned that Galindo had bribed healthcare providers to promote and market Biomet products. Such conduct is prohibited by the Foreign Corrupt Practices Act ("FCPA"), 15 U.S.C. § 78dd-1, et seq. Yeatts acknowledges he was informed after the fact that Galindo had paid bribes and that Yeatts had attended FCPA training sessions explaining it was not acceptable for a distributor to bribe doctors.

         Despite the termination of Biomet and Prosintese's distribution arrangement, Prosintese continued to own the government registrations for Biomet's products in Brazil. Biomet could not obtain new registrations in a timely manner, so in June 2009, Biomet entered a "Private Instrument for Cancellation of Business Relationship" with Prosintese and Galindo. The 2009 document prohibited Prosintese and Galindo from "importing, storing, promoting, distributing, or in any way marketing in Brazil the products made by Biomet." It did, however, permit Biomet to cooperate with Prosintese and Galindo as "necessary to implement the new Biomet distributors in Brazil," until Biomet could acquire new registrations. Bio2, one of the distributors that replaced Prosintese in Brazil, hired Galindo as a consultant. Yeatts continued to communicate with Galindo, now in his new role with Bio2, about product registrations but also about Galindo's advice on products, the market, and prices. Yeatts claims his boss-the president of Biomet's international subsidiary-told him to keep a good relationship with Galindo because he owned Biomet's product registrations and that Biomet's legal department told Yeatts he could have additional contact with Galindo through Bio2.

         The Department of Justice ("DOJ") investigated Biomet for FCPA compliance relating to the bribery payments, which led Biomet to enter into a Deferred Prosecution Agreement in 2012 (the "2012 DP A"). The DOJ assessed over $17 million in penalties and required that Biomet "engage an independent corporate compliance monitor ('the Monitor')" for at least 18 months to "assess and monitor Biomet's compliance with the terms of the [2012 DP A] so as to specifically address and reduce the risk of any recurrence of Biomet's misconduct." The DP A authorized the Monitor to investigate Biomet's compliance program and prepare a report of recommendations to improve the program. It further required that Biomet "adopt all recommendations" in the Monitor's report.

         In October 2013, Biomet received an anonymous whistle-blower email claiming that Biomet continued to work with Galindo as a Brazilian distributor. Per the 2012 DP A, Biomet informed the DOJ and the Monitor of the allegations, and the DOJ launched a separate investigation into potential corruption. Yeatts complains that neither Biomet nor the DOJ interviewed him as part of their investigations, yet they considered his interactions with Galindo and whether those interactions were beyond what the 2009 document permitted. Biomet concluded Yeatts continued to sell and market Biomet products with Galindo despite his knowledge that Galindo had bribed doctors and his knowledge that Galindo and Prosintese were forbidden from marketing Biomet products. Yeatts states that his boss and Biomet's legal department approved all of his interactions with Galindo and that Biomet used him as the "fall guy" in the DOJ investigation. Biomet suspended Yeatts in April 2014 and eventually terminated him in September 2015.

         In October 2014, pursuant to the Monitor's recommendation, Biomet issued a Restricted Parties List ("RPL"), which was considered a best practice. Biomet's leadership team, its outside counsel, and the Monitor worked together to create the list, which included Yeatts. Notably, the Monitor would not have approved the RPL without including Yeatts's name due to his connection to the corruption investigation. Biomet's Chief Compliance Officer, Vice President, and General Counsel distributed the RPL via email to Biomet employees and business partners in Latin America, stating:

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.

         The email attached the RPL, which listed Yeatts as included per the "Brazil Investigation" and as "[s]uspended in connection with corruption-related ...

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