Dr. Schmalzried was one of the surgeons who helped design the DePuy Pinnacle, and DePuy ASR, hips. He initially started the project back in the nineties and was paid for his services in connection with helping design the Pinnacle and then eventually he received a royalty agreement with DePuy where he would receive a percentage of all the sales of Pinnacles that occurred anywhere in the world.
The testimony from Dr. Schmalzried was unusual and unique because he was not present in the courtroom. In this case, the judge adopted a procedure that I have not seen before in any trial. The judge allowed the testimony of Dr. Schmalzried to be taken by satellite transmission almost like a Skype type of process where there was a camera and a television in Los Angeles, where Dr. Schmalzried lives. His testimony was broadcast to the courtroom in Dallas, Texas where he was questioned by lawyers that were actually in the courtroom. Under the federal rules of civil procedure, normally you cannot require a witness to travel more than a hundred miles from where they live.
So, most of the time in cases like this you have to take a deposition and videotape it. Deposition is a process where the lawyers ask questions outside of the courtroom and you videotape that and then you show the videotape to the jury. Having someone live in the courtroom is a more effective way to present testimony. The judge required Dr. Schmalzried to travel to a conference room that was less than a hundred miles from where he lived and then his testimony was broadcast into the courtroom. This is rarely done but it is being done with a lot of witnesses in this case. Actually, this is so unusual that at one point the defendants filed a writ with the Fifth Circuit Court of Appeals seeking to have this process declared impermissible and the appellate court refused to take action on the appeal. The testimony is going forward.
In the course of developing the Pinnacle and some other hips for DePuy, Dr. Schmalzried has made over $30 million. Under the agreement he has with DePuy, any type of liability associated with hips that he’s helped develop is on DePuy. He has been named as a defendant in a lot of cases but if he loses and there’s a judgment against him, DePuy has agreed to pay that judgment. DePuy also agreed to pay for his attorneys. At this testimony, where he was in a conference room in Los Angeles, he had two attorneys present with him.
Much of Dr. Schmalzried’s testimony centered around whether he was truly a design surgeon or whether he was actually somebody who was paid by DePuy to help sell this product. Dr. Schmalzried is a well-respected surgeon and he was brought in to help with this product. After he received the royalty agreement, which is after the Pinnacle was released on the market, he engaged in conduct that arguably could be considered sales conduct. Dr. Schmalzried didn’t want to admit that he had anything to do with sales but the plaintiffs pushed hard on trying to get him to admit that he was really a salesman more than he was a design surgeon. There were lots of documents that were presented during the trial that were Dr. Schmalzried’s PowerPoint presentations that were presented to salesman at national meetings where he was telling the salesman how to sell the Pinnacle and what they should be doing to increased their sales.
The point the plaintiffs were trying to get across is that this is someone who was out there really pushing this product more as a salesman than as a surgeon pushing it to his colleagues.