Alejandro Yeatts v. Zimmer Biomet Holdings, Inc. ( 2019 )


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  •                                  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.