Deloitte wants a New York judge to dismiss a lawsuit in which Zimmer Biomet seeks more than $172 million in damages for what it called a disaster of an enterprise resource planning software project.
The British accounting and consulting firm filed a motion to dismiss on Nov. 7 in the Supreme Court of the State of New York in Manhattan. ZB filed the suit in September.
An accompanying memorandum of law evoked some 19th-century British children’s literature:
“Zimmer’s complaint reads like a ‘through the looking glass’ version of its relationship with Deloitte. Far from shirking its obligations as Zimmer alleges, Deloitte served Zimmer diligently and ably throughout its engagement. Through Deloitte’s skill and hard work, Zimmer managed to replace its outdated and inefficient software systems with a new, state-of-the-art system that has yielded significant, tangible benefits to Zimmer’s operations and bottom line. Outside of the complaint and prior to its filing, Zimmer itself acknowledged the value of Deloitte’s services on multiple occasions. For years, Zimmer not only described the project as a ‘success,’ it also expressly approved Deloitte’s deliverables and repeatedly praised Deloitte’s work in effusive terms. The few issues Zimmer — and its lawyers — now depict as catastrophic, Zimmer previously described as ‘short term’ and ‘contained.’ Now that it must pay for Deloitte’s valuable services, however, Zimmer has changed its tune. It decries and demeans Deloitte’s work — even brazenly alleging fraud — in an effort to avoid its obligations. Zimmer even seeks to blame Deloitte for problems that Zimmer itself caused and Deloitte then fixed. Zimmer’s allegations have no factual merit, as discovery would demonstrate. But this case should end now because, for many reasons, Zimmer’s complaint fails under the law.”
Deloitte claims Zimmer Biomet failed to properly notify it of a breach of contract under the terms of their agreement.
ZB’s lawsuit, according to Deloitte, falls short on its fraud claims and doesn’t demonstrate a special relationship between the two companies that included fiduciary responsibility. According to Deloitte and its lawyers, ZB’s claim under the New York General Business Law fails because a private contract between two parties is not “consumer-oriented” conduct.
ZB cited the mounting challenges from what it described as a botched ERP system implementation when it released Q3 earnings and reduced its full-year 2024 guidance in October 2024. ZB said in its lawsuit that the device manufacturer was barely operational through the third quarter of 2024, unable to ship or receive products, issue invoices, or generate basic sales reporting.
Filed Sept. 4, Zimmer Biomet’s complaint accuses the Deloitte team of being incompetent and unqualified. The new ERP was supposed to save hundreds of millions of dollars for Zimmer Biomet’s operations in North America and Latin America, but ZB says it was instead a severely flawed system limited to North America.
ZB is claiming at least $173 million in damages, including the $94 million in fees paid to Deloitte, an additional $15 million invoiced as Deloitte unsuccessfully sought to fix its own mistakes, and ZB’s own $72 million in additional post-go-live costs.
Only through an extraordinary internal effort was Zimmer Biomet able to prevent even more extensive damage to its business and customer relationships,” Zimmer Biomet said in its complaint. “… Deloitte’s implementation of S/4 for Zimmer Biomet was a disaster.”
