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PFIZER, INC. v. STRYKER CORPORATION

September 7, 2005.

PFIZER, INC., et ano., Plaintiffs,
v.
STRYKER CORPORATION, et ano., Defendants.



The opinion of the court was delivered by: LEWIS KAPLAN, District Judge

MEMORANDUM OPINION

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.

  Background

  A. The Dispute

  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.

  B. The Damages Trial

  By the time the case was submitted to the jury, there were three issues,*fn4 only two of which are disputed here.*fn5

  1. Orrik Claims

  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 ...


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