7th Circuit: Corruption concerns regarding ex-Biomet employee not defamation 

A former Biomet employee has lost his argument before the 7th Circuit Court of Appeals that he was defamed by his former employer when it included his name in a list for the Department of Justice as part of a corruption investigation.

Zimmer Biomet Holdings, a global medical device manufacturer and seller based in Warsaw, Indiana, hired Alejandro Yeatts at its Argentina subsidiary. Yeatts worked for several years as the company’s South America business manager, tasked with implementing Biomet’s compliance policies.

In 2012, Biomet entered into two deferred prosecution agreements with the U.S. Department of Justice to resolve criminal and civil charges against it stemming from bribery payments. Years prior, Biomet had terminated its partnership with a Brazilian distributor run by Sergio Galindo, who had been bribing healthcare providers to promote and market Biomet products in violation of the Foreign Corrupt Practices Act.

Although the partnership with Galindo had ended and he was aware of the corruption, Yeatts continued to sell and market Biomet products with the distributor. Biomet ultimately fired Yeatts, and created a restricted parties list for the DOJ, which included Yeatts’ name due to his connection to the corruption investigation.

Yeatts filed suit in the Northern District Court of Indiana, alleging Biomet defamed him by including his name on the restricted parties list. He challenged as false and defamatory Biomet’s statement that he “poses a risk to Biomet’s efforts to comply with anti-bribery laws because of improper activity supposedly uncovered by the company’s anticorruption investigation in Brazil.” The district court denied Yeatts’ motion for partial summary judgment, and the 7th Circuit Court of Appeals affirmed in Alejandro Yeatts v. Zimmer Biomet Holdings, Inc. 19-1269.

The 7th Circuit agreed with the district court on its first finding that Biomet’s statement regarding Yeatts’ misconduct was accurate, and therefore not actionable defamation. It likewise concluded that the statement had no provably false factual connotation.

“Though Yeatts claims a factfinder could determine the precise limits Biomet placed on his interactions with Galindo and whether he violated those limits, those factual resolutions would not be dispositive of whether Yeatts posed a compliance risk,” Circuit Judge Joel Flaum wrote for the 7th Circuit. “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 incorrect or unreasonable in considering Yeatts a compliance risk.

“Yeatts’s focus on the alleged lack of evidence that he engaged 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 7th Circuit concluded. “The inability to prove the statement false demonstrates that it is a statement of opinion, beyond the reach of defamation law.”