Former Employee Can’t Sue Employer for Defamation

When an employee of a medical parts manufacturer was caught up in a foreign corrupt practices investigation of his employer and subsequently fired, the employee could not sue the employer for defamation. The employer included the former employee on a list of prohibited parties that the employer claimed posed an unacceptable compliance risk for the company. The appellate panel found that these statements were not defamatory because they were expressions of opinion or were the truth.

Biomet is a global corporation that manufactures and sells medical devices. Biomet is headquartered in Warsaw, Indiana. Biomet subsidiary Biomet Argentina, SA employed Alejandro Yeatts from 2005 to 2015. Yeatts worked in the position of Business Manager for South America from 2008 through 2014. Yeatts responsibilities included implementing Biomet’s compliance policies.

Biomet had a distribution agreement with Prosintese, a Brazillian company run by Sergio Galindo. In 2008, Biomet terminated that agreement after it learned that Galindo had bribed healthcare providers to promote and market Biomet products. This conduct is prohibited by the Foreign Corrupt Practices Act. Yeatts was informed after the fact that Galindo had paid bribes. Yeatts had also attended FCPA training sessions explaining prohibited conduct.

Despite the termination, Prosintese continued to own the government registrations for Biomet’s products in Brazil. In June 2009, Biomet entered an agreement with Prosintese and Galindo which prohibited Prosintese and Galindo from importing or distributing Biomet products in Brazil. Bio2, one of the distributors that replaced Prosintese in Brazil hired Galindo as a consultant. Yeatts continued to communicate with Galindo about product registrations but also about Galindo’s advice on products, the market, and prices.

The U.S. Department of Justice investigated Biomet for FCPA compliance relating to the bribery payments. This led Biomet to enter into a Deferred Prosecution Agreement in 2012. The DOJ assessed over $17 million in penalties and required that Biomet engage and independent corporate compliance monitor for 18 months. The DPA authorized the monitor to investigate Biomet’s compliance program and prepare a report of recommendations to improve the program.

In October 2013, Biomet received an anonymous whistleblower email claiming that Biomet continued to work with Galindo as a Brazillian distributor. Biomet informed the DOJ and the monitor of the allegations. The DOJ launched a new investigation. Biomet eventually concluded that Yeatts acted improperly in continuing to deal with Galindo. Biomet suspended Yeatts in April 2014 and eventually terminated him in September 2015.

In October 2016, Yeatts sued Biomet in the Northern District of Indiana alleging that Biomet defamed him by including his name on a list of prohibited individuals after it suspended him. Biomet moved for summary judgment and Yeatts moved for partial summary judgment. The district court denied Yeatts’ motion and granted Biomet’s motion. Yeatts then appealed.

The appellate panel began by finding that the statement Biomet made in its report that Yeatts was suspended in connection with the corruption investigation was true. Citing West v. J. Greg Allen Builder, Inc., the panel noted that truth is an absolute defense to a claim of defamation. The panel stated that because the statement regarding Yeatts was accurate, it was not actionable defamation. Next, the panel stated that Biomet’s statement that Yeatts posed an unacceptable compliance risk was an opinion with no provably false factual connotation. The panel stated that it was unmanageable to ask a court to determine whether in fact, Yeatts posed a compliance risk. The panel concluded by stating that Yeatts’s focus on the alleged lack of evidence that he engaged in criminal conduct missed the point. The panel found that even if there was zero evidence that Yeatts engaged in criminal conduct, that would not prove false Biomet’s concern that Yeatts posed a compliance risk. The panel determined therefore that Biomet’s statements were beyond the reach of defamation and affirmed the decision of the district court.

You can view the Court’s decision here.

Lubin Austermuehle’s Cook County defamation and slander lawyers near Evanston and Winnetka have more than three decades of experience helping business clients unravel the complexities of Illinois and out-of-state business laws. Our Chicago business, commercial, class-action, and consumer litigation lawyers represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Elmhurst and Deerfield near Northbrook and Highland Park, we serve clients throughout Illinois and the Midwest. You can call us for a free consultation at 630-333-033 or toll-free at 833-306-4933 or contact us online here.

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