Plumbers and Pipefitters Local Union 719 Pension Fund v. Zimmer Holdings, Inc.

Dist. Ct. did not err in dismissing plaintiffs-pension funds' complaint under Private Securities Litigation Reform Act, alleging that defendant delayed revealing problems stemming from poor design and/or quality control of its device used to replace socket in patients' hip joint in order to prop up price of its stock. While record showed that instant device was failing at unacceptably high rate, Dist. Ct. properly found that complaint did not satisfy either materiality or scienter allegation requirements to sustain instant action where: (1) defendant had made public announcement of negative opinion of physician, who indicated that failure rate was related to design and/or manufacturer's problems; (2) defendant had received more positive results with respect to European surgical procedures using said device; and (3) plaintiffs failed to establish that defendant made any false statements with respect to any quality control problems associated with device. Moreover, plaintiffs' allegations of misrepresentation that concerned device that produced less than 10% of defendant's global earnings and affected only 15 cents per share of defendant's stock undermined any inference of scienter on part of defendant.