The opinion of the court was delivered by: LEWIS KAPLAN, District Judge
This is an action principally for alleged breach of defendants'
obligation to indemnify plaintiffs for losses incurred as a
result of products liability claims arising from the sale of knee
implants following the transfer by plaintiffs to defendants of
plaintiffs' knee implant business. The Court previously granted
summary judgment for plaintiffs as to liability on the principal
claims. Plaintiffs' damage case was tried to a jury, which
returned a verdict aggregating more than $13 million. The matter
now is before the Court on defendants' post-verdict motion for
judgment as a matter of law dismissing certain of plaintiffs' damage claims.
The broad contours of this dispute have been outlined in a
number of opinions and orders,*fn1 and only a few facts need
be repeated here.
In 1998, Pfizer*fn2 sold its prosthetic joint and implant
business to Stryker for $1.6 billion. The Stock and Asset
Purchase Agreement ("Purchase Agreement") provided, in pertinent
part, that Pfizer would retain responsibility for third party
product liability claims arising in respect of prosthetic joints
sold on or prior to the closing, while Stryker would be
responsible for claims relating to joints sold after the closing.
After the deal closed, the parties were sued on a number of
claims arising from the sale of the Duracon Uni-Compartmental
Knee ("DUK"), one of the products of the acquired business.
Pfizer brought this action against Stryker for a declaratory
judgment and breach of contract for failing to indemnify it for
expenses incurred from third party product liability suits
brought in respect of DUKs sold after the closing. Stryker
countersued principally for misrepresentation, breach of warranty
and fraud. This Court granted Pfizer's motion for summary judgment to the extent of declaring that it is entitled to
indemnification by Stryker for all Losses, other than punitive
damages, incurred in respect of DUKs sold after the
closing.*fn3 Stryker's cross-motion for summary judgment was
denied in all respects. Pfizer's damage claim was tried to a jury
on March 22, 23 and 24, 2005.
By the time the case was submitted to the jury, there were
three issues,*fn4 only two of which are disputed
The first concerned the so-called Orrik litigation, which
involved forty plaintiffs, twenty-nine of whom received DUKs sold
after the closing. On the second day of the Orrik trial, Pfizer
and Stryker settled with all forty plaintiffs for a lump sum of
$13.25 million. Stryker contributed $3.25 million, which the
parties agreed would go only to the post-closing claimants, toward the global settlement. Pfizer contributed the remaining
$10 million. It here claimed that $6.275 million of that amount
went to post-closing plaintiffs and therefore is recoverable from
Stryker under the Purchase Agreement.
Pfizer's evidence concerning this issue at the damages trial
consisted principally of the testimony of its counsel in the
Orrik case and the individual releases executed by the Orrik
plaintiffs, which showed the amount that each received as
consideration for dismissing his or her claim.*fn6 This
evidence showed that the post-closing claimants had received
$9,525,000 from the global settlement, $3.25 million of which had
been contributed by Stryker.
Stryker offered testimony that it had approved only a lump sum
settlement of $13.25 million to the plaintiffs and had not agreed
to whatever allocation the Orrik plaintiffs made among
themselves.*fn7 It offered an e-mail that purported to
reserve Stryker's rights to resolve the allocation among the
twenty-nine post-closing plaintiffs.*fn8 It offered also
various letters between the Pfizer and Stryker trial ...