Alejandro Yeatts v. Zimmer Biomet Holdings, Inc.

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-1269
ALEJANDRO YEATTS,
Plaintiff-Appellant,
v.
ZIMMER BIOMET HOLDINGS, INC.,
Defendant-Appellee.
____________________
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.
____________________
ARGUED SEPTEMBER 12, 2019 — DECIDED OCTOBER 8, 2019
____________________
Before FLAUM, EASTERBROOK, and MANION, Circuit Judges.
FLAUM, Circuit Judge. Alejandro Yeatts became ensnared in
a federal investigation of his employer, Zimmer Biomet Hold-
ings, Inc.1 (“Biomet”), for violations of the Foreign Corrupt
Practices Act because of his contacts with a distributor in
1 In 2015, Zimmer Holdings, Inc. acquired LVB Acquisitions, Inc.,
which owned Biomet, Inc. and its subsidiaries, resulting in the combined
entity Zimmer Biomet Holdings, Inc.
2 No. 19-1269
Latin America who had bribed doctors. To resolve the crimi-
nal 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 regard-
ing his suspension in connection with the corruption investi-
gation of Biomet’s Latin American subsidiary. After Biomet
terminated Yeatts, he sued his former employer for defama-
tion 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 con-
veyed 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 Bi-
omet Argentina, SA employed plaintiff-appellant Alejandro
Yeatts from 2005 to 2015 and, more specifically, as the Busi-
ness 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, af-
ter it learned that Galindo had bribed healthcare providers to
No. 19-1269 3
promote and market Biomet products. Such conduct is pro-
hibited 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 ac-
ceptable for a distributor to bribe doctors.
Despite the termination of Biomet and Prosintese’s distri-
bution arrangement, Prosintese continued to own the govern-
ment 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 Cancella-
tion 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 distrib-
utors 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 communi-
cate with Galindo, now in his new role with Bio2, about prod-
uct 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 prod-
uct 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
4 No. 19-1269
2012 (the “2012 DPA”). 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 DPA] so as to specifically address and re-
duce the risk of any recurrence of Biomet’s misconduct.” The
DPA authorized the Monitor to investigate Biomet’s compli-
ance 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 DPA, Biomet
informed the DOJ and the Monitor of the allegations, and the
DOJ launched a separate investigation into potential corrup-
tion. Yeatts complains that neither Biomet nor the DOJ inter-
viewed 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 con-
cluded 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 in-
teractions 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 recommenda-
tion, 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
No. 19-1269 5
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. Bi-
omet’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 (“Bi-
omet” 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, Bi-
omet has identified several entities that pose
significant and unacceptable compliance risks.
The Company has placed these entities on a Re-
stricted Parties List. All Biomet employees,
agents, third parties and any individual or en-
tity performing services for or on behalf of Bi-
omet, anywhere in the world may not do busi-
ness 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 connec-
tion with corruption-related investigation involving Biomet
Brazil.”
The DOJ concluded its second investigation in 2017, find-
ing Biomet had not complied with the 2012 DPA and resulting
in more criminal charges against Biomet. To resolve the addi-
tional charges, Biomet entered a second DPA (“2017 DPA”)
and paid a criminal penalty of $17.4 million. The 2017 DPA
references several problematic instances of Yeatts’s conduct
in connection to his interactions with Galindo.
6 No. 19-1269
In October 2016, Yeatts filed suit in the Northern District
of Indiana alleging that Biomet defamed him by including his
name on the RPL.2 Specifically, Yeatts challenged as false and
defamatory Biomet’s statement that he “poses a risk to Bi-
omet’s efforts to comply with anti-bribery laws because of im-
proper activity supposedly uncovered by the company’s anti-
corruption investigation in Brazil.” Biomet moved for sum-
mary judgment, and Yeatts moved for partial summary judg-
ment. The district court denied Yeatts’s motion and granted
Biomet’s motion because Biomet’s statement that Yeatts
posed a compliance risk was an opinion that could not be
proven false; as such, it presented no defamatory imputation.
Additionally, the court concluded that because Yeatts could
not establish that Biomet made the statement with malice, Bi-
omet was protected by both the qualified privilege of com-
mon interest and the public interest privilege. Yeatts now ap-
peals.
II. Discussion
We review a district court’s decision on cross-motions for
summary judgment de novo, examining the record and all
reasonable inferences in the light most favorable to the party
against whom the motion was filed. Evans v. Portfolio Recovery
Assocs., LLC, 889 F.3d 337, 343 (7th Cir. 2018). The party op-
posing the motion must make a sufficient showing on every
element of his case on which he bears the burden of proof; if
2 The district court granted, in part, Biomet’s motion to dismiss
Yeatts’s original complaint, dismissing the claims of intentional infliction
of emotional distress and negligent infliction of emotional distress. Those
claims are not at issue on appeal.
No. 19-1269 7
he fails to do so, there is no issue for trial. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986).
Yeatts dives deep into the weeds of his relationship with
Galindo and with his superiors at Biomet, claiming conflict-
ing evidence about his alleged involvement in any miscon-
duct necessitates a trial. “Not all disputed facts, however, are
relevant and material.” Johnson v. Advocate Health & Hosps.
Corp., 892 F.3d 887, 893 (7th Cir. 2018). Summary judgment is
appropriate “if the movant shows that there is no genuine dis-
pute as to any material fact and the movant is entitled to judg-
ment as a matter of law.” Fed. R. Civ. P. 56(a). We may affirm
on any alternative ground that is supported in the record and
was adequately presented in the trial court. S.E.C. v. Bauer,
723 F.3d 758, 771 (7th Cir. 2013).
A statement is defamatory if it “tends to harm a person’s
reputation by lowering the person in the community’s estima-
tion or deterring third persons from dealing or associating
with the person.” Baker v. Tremco Inc., 917 N.E.2d 650, 657
(Ind. 2009). To prove defamation, a plaintiff must demon-
strate: “(1) a communication with defamatory imputation;
(2) malice; (3) publication; and (4) damages.” Kelley v. Tanoos,
865 N.E.2d 593, 596–97 (Ind. 2007). Indiana law separates def-
amation into two categories, depending on what is required
to show damages. Defamation per quod involves words that
“are not defamatory in themselves, but become so only when
understood in the context of extrinsic evidence.” Dugan v.
Mittal Steel USA Inc., 929 N.E.2d 184, 186 (Ind. 2010). Con-
versely, defamation per se imputes criminal conduct, loath-
some disease, or professional or sexual misconduct without
reference to extrinsic evidence. Id. To succeed on Yeatts’s
8 No. 19-1269
claim of defamation per se, the statement must contain an “ob-
jectively verifiable fact regarding the plaintiff. If the speaker
is merely expressing his subjective view, interpretation, or
theory, then the statement is not actionable.” Meyer v. Beta Tau
House Corp., 31 N.E.3d 501, 515 (Ind. Ct. App. 2015) (internal
citation omitted).
Yeatts alleges Biomet’s statements—that he was sus-
pended in connection with the corruption investigation and
that he posed a “significant and unacceptable compliance
risk[]”—falsely suggest he engaged in criminal conduct and
misconduct. He believes these statements imply false facts
that are objectively verifiable. Biomet counters that the state-
ment about Yeatts posing a risk cannot be proven false or ver-
ified by a factfinder because it is merely Biomet’s opinion.
The statement that Yeatts was suspended in connection
with the corruption investigation is true. Yeatts does not con-
test the accuracy of the statement; rather, he disputes the im-
plication of his suspension—i.e., that he engaged in miscon-
duct or criminal behavior. Truth, however, is a total defense
to a defamation claim. West v. J. Greg Allen Builder, Inc., 92
N.E.3d 634, 646 (Ind. Ct. App. 2017). The statement is accu-
rate, and none of the facts Yeatts attempts to raise as disputed
(i.e., whether he actually engaged in misconduct) would dis-
prove the fact of his suspension. As such, that statement is not
actionable defamation.
Next, as to Biomet’s expressed concern that Yeatts posed
a compliance risk, the Supreme Court has addressed the dif-
ference between statements of opinion and statements of fact.
In Milkovich v. Lorain Journal Co., the Court compared the fol-
lowing examples: “in my opinion John Jones is a liar” and
“Jones shows his abysmal ignorance.” 497 U.S. 1, 18–20 (1990).
No. 19-1269 9
In the first example, despite the qualifier that it is “my opin-
ion,” the Court explained the statement is defamatory be-
cause the speaker “implies a knowledge of facts which lead to
the conclusion that Jones told an untruth.” Id. at 18. The latter
example about Jones’s ignorance, however, is not defamatory
because there is no “provably false factual connotation.” Id. at
20.
Likewise, in Sullivan v. Conway, we considered whether
the statement “Sullivan is a very poor lawyer” defamed the
plaintiff. 157 F.3d 1092, 1097–98 (7th Cir. 1998). We contrasted
hypothetical assertions that a lawyer is dishonest, forged his
credentials, or lost all his cases—all verifiable statements of
fact. “But to say that he is a very poor lawyer is to express an
opinion that is so difficult to verify or refute that it cannot fea-
sibly be made a subject of inquiry by a jury.” Id. at 1097. We
thus concluded the statement was not defamatory.
The statement that Yeatts posed a “significant and unac-
ceptable compliance risk[]” is like the “abysmal ignorance” or
“very poor lawyer” statements. There is no provably false fac-
tual connotation. Though Yeatts claims a factfinder could de-
termine the precise limits Biomet placed on his interactions
with Galindo and whether he violated those limits, those fac-
tual resolutions would not be dispositive of whether Yeatts
posed a compliance risk. Even if Yeatts proved to a jury that
he did not violate the specific limits Biomet imposed on his
interactions with Galindo, that does not mean Biomet was in-
correct or unreasonable in considering Yeatts a compliance
risk. As the district court noted, for a company twice investi-
gated by the DOJ for FCPA violations, it is reasonable to “take
a hypersensitive view” of potential compliance risks. Like in
Sullivan, where we determined it would be unmanageable to
10 No. 19-1269
ask the court “whether ‘in fact’ Sullivan is a poor lawyer,” it
is equally unmanageable to ask a court “to determine whether
‘in fact’” Yeatts posed a compliance risk. Id.; see also Wynn v.
Chanos, 75 F. Supp. 3d 1228, 1236 (N.D. Cal. 2014) (considering
similar claim and concluding that “even definitive proof that
[the plaintiff] did not commit any acts in violation of the
FCPA would not [] alter the tenor of [the defendant]’s state-
ments” that he was concerned about FCPA risks “or render
them false. It is possible for companies to comply entirely
with the law and yet conduct business in a way that poses an
investment risk.”).
Yeatts’s focus on the alleged lack of evidence that he en-
gaged in criminal conduct misses the point. Even if there were
zero evidence he engaged in criminal conduct, that would not
prove false Biomet’s concern that Yeatts posed a compliance
risk. The inability to prove the statement false demonstrates
that it is a statement of opinion, beyond the reach of defama-
tion law.3
III. Conclusion
For the foregoing reasons, we AFFIRM the judgment of the
district court.
3Because the statements in question carried no defamatory imputa-
tion, we need not address the application of privileges.