In the

United States Court of Appeals

For the Seventh Circuit ____________________ 

No. 22-2529 

THOMAS A. RUSSELL, M.D., et al., 

Plaintiffs-Appellants, 

v.

ZIMMER, INC., 

Defendant-Appellee. 

____________________ 

Appeal from the United States District Court for the

Northern District of Indiana, Hammond Division. 

No. 2:20-cv-00200-TLS-JEM — Theresa L. Springmann, Judge. 

____________________ 

ARGUED FEBRUARY 23, 2023 — DECIDED SEPTEMBER 21, 2023 

____________________ 

Before SYKES, Chief Judge, and ROVNER, and LEE, Circuit 

Judges. 

ROVNER, Circuit Judge. All inventors hope that their inventions will improve the world and be financially successful. 

Thomas Russell certainly had this wish for his inventions, but 

when the financial rewards only came trickling in, Russell 

and others sued the exclusive distributor of his inventions for 

breach of the clauses in the contract that required the distributor to use commercially reasonable efforts to sell the 
2 No. 22-2529 

products. The district court held, however, that given the 

terms of the agreement, the plaintiffs had failed to state a viable claim for relief. We affirm.

I.

Thomas Russell, M.D., is an orthopedic trauma surgeon 

who invented numerous products such as bone substitutes 

and surgical devices to improve outcomes following orthopedic surgery. He, along with Patrick Burke, Gerard Insley, 

Amanda Kiely, Paul Burke, Thomas Madden, and Aideen 

Jennings (collectively, Inventors), were shareholders in CelgenTek Innovations Corporation, a medical device firm. According to the Inventors, Russell’s creations were game 

changers in the field of orthopedics.

On October 7, 2015, the Inventors entered into an agreement with Zimmer, Incorporated, a corporation that designs, 

manufactures, and distributes medical devices. Pursuant to 

this agreement, Zimmer became the exclusive distributor of 

certain CelgenTek products.

In November 2015, CelgenTek was experiencing dire financial problems. The Inventors attributed their financial 

woes to the massive investments, loans, and advances required to fund years of research and development, ensure 

safety and efficacy, and clear regulatory hurdles. In order to 

keep CelgenTek solvent, the parties negotiated an agreement 

in which Zimmer would acquire a 10% ownership of CelgenTek for $2 million, with the Inventors retaining the remaining 90% ownership. After the purchase, CelgenTek’s financial position worsened. In February 2016, Zimmer provided CelgenTek with a purchase order for just under $1 million at Russell’s request, to help keep CelgenTek afloat. 
No. 22-2529 3

Zimmer also loaned the company $2 million in April 2016, 

and in August of that year another approximately $350,000 to 

meet payroll obligations. The two parties also began discussing potential plans for Zimmer to purchase the remaining 

90% of CelgenTek’s stock, which it did in late September, 

2016. 

Under the terms of the September 2016 stock purchase 

agreement, Zimmer received the remaining 90% of the CelgenTek shares for the purchase price of $17,118,560 with 

$2,335,320 of that price used to repay loans that Zimmer had 

previously made to CelgenTek. In addition, according to the 

agreement, through 2033, the Inventors would retain the right 

to a small percent of the net yield on the products it developed 

(the earnout products), of between 1.5% and 6% of net sales, 

depending on the product.

Pursuant to the agreement, Zimmer agreed that it would 

use “Commercially Reasonable Efforts” as defined in the 

agreement to sell the earnout products. R. 56-1 at 19–20. The 

term “Commercially Reasonable Efforts” is explained in two 

places in the agreement. Section 2.05(a) defines “Commercially Reasonable Efforts” as follows:

“Commercially Reasonable Efforts” means, 

with respect to Buyer’s diligence in satisfying an 

obligation with respect to the Earnout Products, 

that Buyer applies the level of efforts, expertise 

and resources that it would apply in the ordinary and usual course of business to satisfaction 

of a comparable obligation with respect to another product or technology that is similar to the 

Earnout Products in terms of commercial potential, development stage and product life. In 
4 No. 22-2529 

determining whether Buyer is applying Commercially Reasonable Efforts, (A) the entire business, financial, commercial, scientific, clinical 

and regulatory context shall be considered, including issues such as product safety and efficacy, the competitive environment, market conditions, the product’s proprietary position, the 

extent to which health care providers would be 

expected to embrace the product as a desirable 

and competitive solution, regulatory hurdles, 

the product’s pricing and potential profitability, 

and similar factors; and (B) decisions and actions with respect to particular Earnout Products are to be evaluated in the context of the 

business, operations and product portfolio of 

Buyer and its Affiliates (which may result in decisions and actions that differ from those that 

the Company Entities have taken historically (or 

would, but for the Transactions, take prospectively) with respect to the Earnout Products).

R. 56-1 at 19. 

In section 2.05(e), the agreement explains Zimmer’s obligation to use “Commercially Reasonable Efforts” in the following way:

Commercially Reasonable Efforts. Following the 

Closing Date, Buyer shall use Commercially 

Reasonable Efforts, directly and/or indirectly 

through its Affiliates and any licensees, to sell 

the Earnout Products during each Earnout 

Quarter, but such obligation shall not be construed to create any fiduciary or similar 
No. 22-2529 5

relationship between Buyer or any of its Affiliates, on one hand, and Sellers or the Seller Representative, on the other hand. Sellers 

acknowledge that Buyer and its Affiliates shall 

have the right to operate their businesses in accordance with their own commercially reasonable discretion and Buyer is under no obligation 

to provide any specific level of investment or financial assistance to the Company Entities. 

Sellers further acknowledge that the payment of 

any Earnout Payments is speculative and subject to, among other things, the future performance of the Company Entities, which cannot 

be predicted with accuracy. Accordingly, Buyer 

makes no representations, warranties, covenants or guaranties as to the future performance 

of the Company Entities or the likelihood of any 

Earnout Payments.

R. 56-1 at 20. 

From the date the agreement was executed, until December 31, 2019, Zimmer paid the Inventors approximately 

$130,000 in earnout payments. The Inventors, however, believed that if Zimmer had used commercially reasonable efforts to sell the Earnout Products, those products would have 

earned earnout payments in the millions. The Inventors alleged specifically that Zimmer:

a) Failed to retain the members of the CelgenTek 

commercial team involved in market development in Europe; 
6 No. 22-2529 

b) Failed to engage with the CelgenTek Medical 

Advisory Boards in Europe and North America;

c) Sent a field notification to customers stating 

that the product supply was to be terminated 

based on “strictly a business decision;”

d) Terminated the clinical trial at the Leeds, 

United Kingdom, General Infirmary;

e) Failed to initiate a global clinical trial in hip 

fractures with Professor Mohit Bhandari as 

promised by Randy Sessler;

f) Allowed the CE Mark regulatory approval for 

the N-Force products and the iN3 Cement to expire;

g) Terminated key individuals who were involved with and were knowledgeable about the 

product;

h) Ceased N-Force product manufacturing activity at the Memphis facility;

i) Terminated the Supply and Exclusive Distribution Agreement with Innotere GmbH in 

Radebeul, Germany, for calcium phosphate 

paste;

j) Failed to transfer the manufacturing of the iN3 

cement from CelgenTek Shannon to any Zimmer Biomet facility;

k) Failed to secure manufacturing capability for 

the N-Force Fixation System by dismantling all 

equipment and facilities and regulatory approvals;
No. 22-2529 7

l) Failed to meet customer orders in Europe;

m) Removed instrumentation sets for N-Force 

Fixation System application from customer locations;

n) Failed to commercialize the product in Australia despite the fact that the product was registered and granted reimbursement status in 

Australia in 2016; 

o) Failed to ship the products to Australia despite multiple staff training and registration 

fees;

p) Failed to support new European sales with 

existing and new customers despite multiple 

product training sessions;

q) Failed to develop and provide appropriate 

marketing materials, strategy or sales incentive 

programs;

r) Failed to schedule promised leadership team 

meetings to discuss developments with the 

N-Force Fixation System e.g., integration of the 

technology to the A.L.P.S. plating system;

s) Failed to make a good faith effort to commercialize the Russell Frame technology;

t) Failed to schedule promised leadership team 

meetings to discuss developments with the 

N-Force Fixation System and the iN3 cement; 

and
8 No. 22-2529 

u) Terminated meaningful communication with 

Plaintiffs regarding the Earnout Products.

R. 56 at 13–14. 

The Inventors invoked diversity jurisdiction (Russell is 

from Tennessee and the other plaintiffs from Ireland) to sue 

Zimmer (a Delaware corporation headquartered in Indiana) 

in the United States District Court for the Western District of 

Tennessee, alleging claims of fraudulent inducement, breach 

of contract, breach of implied covenant of good faith and fair 

dealing, and declaratory judgment. Although the Inventors 

sued in Tennessee, the agreement included a forum selection 

clause which required the parties to assert any claims in Indiana. Consequently, on May 18, 2020, the district court in the 

Western District of Tennessee granted Zimmer’s motion to 

transfer the case to the Northern District of Indiana.

Once there, the district court granted the Inventors’ unopposed motion to amend the complaint. The Inventors’ 

amended complaint set forth a single claim for breach of contract, claiming that Zimmer failed to use commercially reasonable efforts to sell the earnout products, and reserving for 

trial the determination of damages. The Inventors alleged that 

Zimmer failed to fulfill its obligations in order to “protect its 

existing business segments and prevent[] access to the technology by other medical device companies.” R. 56 at 17. Zimmer filed a motion to dismiss, which the district court 

granted, and we now review de novo. See Stant USA Corp. v. 

Factory Mut. Ins. Co., 61 F.4th 524, 525 (7th Cir. 2023). 
No. 22-2529 9

II.

A. Breach of the stock purchase agreement 

To thwart Zimmer’s motion to dismiss, the Inventors must 

show that they have stated a claim upon which relief may be 

granted. Fed. R. Civ. P. 12(b)(6). And in this case, that means 

that the Inventors must have alleged a plausible claim that 

Zimmer breached the agreement by failing to use commercially reasonable efforts to sell the earnout products. In evaluating whether the Inventors have successfully made such a 

claim, we construe their complaint in the light most favorable 

to them, accepting their factual allegations as true and drawing all reasonable inferences in their favor. See Burke v. Boeing 

Co., 42 F.4th 716, 723 (7th Cir. 2022). 

The Inventors argue that the complaint’s list of twenty-one 

actions that Zimmer either took or failed to take more than 

sufficiently sets forth a claim that Zimmer breached the agreement by failing to use commercially reasonable efforts. According to Zimmer, on the other hand, the Inventors have 

failed to demonstrate any breach at all, as their complaint 

merely second guesses business decisions that Zimmer was 

entitled to make under the terms of the agreement.

Under Indiana law, a plaintiff alleging a breach of contract 

must show the existence of a contract, a breach, and damages. 

Berg v. Berg, 170 N.E.3d 224, 231 (Ind. 2021). Of course, the 

essence of the breach claim in this case is whether the defendants used commercially reasonable efforts to sell the earnout 

products. As set forth above, commercially reasonable efforts 

means that Zimmer must “appl[y] the level of efforts, expertise and resources that it would apply in the ordinary and 

usual course of business to satisfaction of a comparable 
10 No. 22-2529 

obligation with respect to another product or technology that 

is similar to the Earnout Products in terms of commercial potential, development stage and product life.” R. 56-1 at 19. 

This evaluation is done holistically, looking at “the entire 

business, financial, commercial, scientific, clinical and regulatory context ... including issues such as product safety and 

efficacy, the competitive environment, market conditions, the 

product’s proprietary position, the extent to which health care 

providers would be expected to embrace the product as a desirable and competitive solution, regulatory hurdles, the 

product’s pricing and potential profitability, and similar factors.” R.56-1 at 19. 

In other words, to analyze whether Zimmer was using 

commercially reasonable measures, one would have to look 

to Zimmer’s diligence in selling the earnout products against 

its diligence in selling other similar products or technology in 

the course of its regular business operations. In doing so, the 

agreement requires that such an assessment considers all the 

factors that might affect how Zimmer conducts business—

regulatory, market, profitability, et cetera.

The district court described this comparison as an “’inward facing definition’ of ’commercially reasonable efforts’, 

namely one that ’applies the buyer’s own standard for undertaking ... sales and marketing efforts.’” D. Ct. Op. at 8 (citing

Kristian Werling et al., “Commercially Reasonable Efforts” Diligence Obligations in Life Science M&A, 18 No. 6 M & A Lawyer

16 (2014); Banas v. Volcano Corp., 47 F. Supp. 3d 941, 946–47 

(N.D. Cal. 2014)). The district court contrasted that with the 

more objective “outward facing” definition of commercially 

reasonable efforts—one that compares a buyer’s efforts to industry standards or to those of other similarly situated 
No. 22-2529 11

businesses. Id. (citing Neurvana Med., LLC v. Balt USA, LLC., 

No. 2019-0034, 2020 WL 949917, at *16 (Del. Ch. Feb. 27, 

2020)). Agreements that look to the buyers’ own practices are 

inherently more friendly to the buyer, as the only standard of 

comparison is the buyer’s subjective intent, as opposed to an 

objective industry standard. Of course, the Inventors could 

have bargained for either type of standard.

The Inventors argue that the discussion of “inward” and 

“outward” facing agreements came late to the game in this 

litigation—raised in the defendant’s reply brief following its 

motion to dismiss. But whatever label we put to it, the question as to what entity or entities a court must look to for comparison was, from the beginning, central to and part of determining whether Zimmer undertook commercially reasonable 

efforts. And it is clear from the plain language that the agreement contemplated that commercially reasonable efforts 

would be evaluated by looking to Zimmer’s own business 

practices. See Hartman v. BigInch Fabricators & Constr. Holding 

Co., Inc., 161 N.E.3d 1218, 1223 (Ind. 2021) (noting that when 

a contract is unambiguous a court must apply the plain and 

ordinary meaning of the language).

The agreement emphasizes several times that it is Zimmer’s ordinary commercial practices to which we must look. 

It requires that we look at the “level of efforts, expertise and 

resources that it [Zimmer] would apply in the ordinary and 

usual course of business.” R. 56-1 at 19 (emphasis added). 

And “decisions and actions with respect to particular Earnout 

Products are to be evaluated in the context of the business, 

operations and product portfolio of Buyer [Zimmer] and its 

Affiliates.” R. 56-1 at 19. The agreement makes clear that Zimmer “shall have the right to operate their business in 
12 No. 22-2529 

accordance with their own commercially reasonable discretion.” R. 56-1 at 20 (emphasis added). And it notes that the 

decisions made by Zimmer “may result in decisions and actions that differ from those that the [CelgenTek] Entities have 

taken historically” or would take in the future if they still 

owned the rights to the products. R. 56-1 at 19. In short, everything in the agreement demands that we look not at what 

CelgenTek may have done, or what the standard is in the industry, but rather those efforts that Zimmer would use in its 

own course of business.

It is also important to note what the agreement does not 

do. It does not create a fiduciary relationship between Zimmer and the Inventors. It does not require Zimmer to provide 

any level of investment or financial assistance to the Inventors. It does not promise any particular amount of payment, 

but rather emphasizes that earnout payments are “speculative and subject to, among other things, the future performance of the [CelgenTek] Entities, which cannot be predicted 

with accuracy.” R. 56-1 at 20. And it “makes no representations, warranties, covenants or guaranties as to the future performance of the [CelgenTek] Entities or the likelihood of any 

Earnout Payments.” R. 56-1 at 20. 

The Inventors argue that the district court erred by subjecting them to far more rigorous pleading requirements than 

the Federal Rules of Civil Procedure require for notice pleading. Rule 8, they note, requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Inventors are correct that they 

need only show through their allegations “that it is plausible, 

rather than merely speculative, that [they are] entitled to relief.” Brant v. Schneider Nat’l, Inc., 43 F.4th 656, 664 (7th Cir. 
No. 22-2529 13

2022). And they need have just enough details about the subject matter of the case to present a story that holds together. 

Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010). This 

low bar asks that plaintiffs allege “‘only enough facts’ to 

‘nudge[ ] their claims across the line from conceivable to plausible.’” G.G. v. Salesforce.com, Inc., 76 F.4th 544, 551 (7th Cir. 

2023) (quoting Twombly, 550 U.S. at 570). As the Inventors see 

it, they provided a seventeen-page, sixty-seven-paragraph 

pleading with twenty-one examples of actions that Zimmer 

failed to take to sell the earnout products. They pointed out 

the specific provisions of the agreement that they allege Zimmer breached, and even provided a motive. “This should 

have been more than enough,” they conclude. Inventors’ Brief 

at 14. For a motion to dismiss, however, the key is not the 

quantity of the allegations or even the level of specificity of 

them—because, of course, only a short plain statement is required. What matters instead is how well the “pegs” of the 

factual allegations fit the “holes” of the legal theory.

In this case, even taking all the Inventors’ allegations as 

true, none of those allegations states a claim either alone or in 

the aggregate for a violation of the duty to use commercially 

reasonable efforts to sell the earnout products as defined by 

this agreement. Notably, and most importantly, none of these 

twenty-one complained of actions and inactions compares the 

earnout products to a “comparable obligation with respect to 

another product or technology that is similar to the Earnout 

Products in terms of commercial potential, development stage 

and product life.” R. 56-1 at 19. In other words, there are no 

allegations that Zimmer deviated from its usual standard of 

conduct. In addition, none of those twenty-one items evaluates the earnout products in the context of “the entire 
14 No. 22-2529 

business, financial, commercial, scientific, clinical and regulatory” milieu. R. 56-1 at 19. 

The Inventors argue that the commercially reasonable 

standard is a fact-intensive one that cannot be resolved on a 

motion to dismiss. See Twombly, 550 U.S. 544 at 556 (“[A] wellpleaded complaint may proceed even if it strikes a savvy 

judge that actual proof of those facts is improbable.”); Swanson, 614 F.3d at 404 (“‘Plausibility’ in this context does not imply that the district court should decide whose version to believe, or which version is more likely than not.”). But uncovering the truth or falsity of the Inventors’ allegations would 

not alter our assessment of whether the Inventors had stated 

a claim on which relief can be granted.

Many of the twenty-one items are part of a wish list of how 

the Inventors hoped Zimmer would have marketed and sold 

the earnout products, or a list of what the Inventors would 

have done had they not put Zimmer in charge of sales. Others 

allege broken promises that Zimmer purportedly made before the signing of the agreement and thus would not be actionable due to the agreement’s integration clause. The plain 

language of the agreement makes clear that these types of allegations cannot support a claim for breach of contract.

B. Motion for leave to amend the complaint

While opposing Zimmer’s motion to dismiss, the Inventors argued in the alternative that the district court should allow them to amend the pleading once again to identify “additional ways in which Zimmer failed to use ‘commercially 

reasonable efforts’ to market and sell the technology.” R. 65 at 

24. The Inventors argued that Zimmer would not be prejudiced as it had not yet answered the pleading, disclosures had 
No. 22-2529 15

not yet been served, and discovery had not yet begun. But the 

district court denied the motion to amend, reasoning that the 

Inventors had already had a second opportunity to allege 

facts sufficient to state a claim for breach of contract, and, 

more importantly, because they had not shown that any 

amendment would not be futile. D. Ct. Op. at 16. 

It is true, as the Inventors state, that a court should freely 

grant a leave to amend a pleading when justice requires. Fed. 

R. Civ. P. 15(a)(2). District courts, however, have broad discretion to deny leave to amend a complaint where the amendment would be futile. MAO-MSO Recovery II, LLC v. State 

Farm Mut. Auto. Ins. Co., 935 F.3d 573, 582 (7th Cir. 2019). And 

although we review the denial of a motion to amend for abuse 

of discretion, we look de novo at the legal basis for the futility. 

Nowlin v. Pritzker, 34 F.4th 629, 635 (7th Cir. 2022). 

The Inventors argue that they could offer additional and 

more detailed ways in which Zimmer failed to use commercially reasonable efforts, but as we explained above, stating a 

plausible claim for relief depends not on the quantity of the 

allegations, but rather on the quality of the fit between the allegations and the legal theory. The Inventors have proposed

only general statements that they could offer additional ways 

in which Zimmer failed to use commercially reasonable efforts but have never explained what factual detail they could 

have added or why they did not include that detail in the original complaint. Of course, the complaint itself need only have 

“a short and plain statement of the claim showing that the 

pleader is entitled to relief,” (Fed. R. Civ. P. 8(a)(2)), but after 

two tries, the district court did not abuse its discretion in 

denying the motion to amend where the plaintiffs gave no indication as to how the third try would resolve the 
16 No. 22-2529 

insufficiencies in the complaint. See Nowlin, 34 F.4th at 636 

(noting that it was not an abuse of discretion for the district 

court to refuse to allow an amendment of the complaint 

where the plaintiffs had shown no indication that they were 

able to cure the deficiencies of their complaint). Nor do we 

see, upon our de novo review of futility, any demonstration

that this undefined additional evidence would make the complaint viable. Finally, the district court reasonably determined 

that Zimmer would be prejudiced by having to defend 

against another complaint given the time and resources already spent in responding to the first two.

The Inventors’ complaint did not state a plausible claim 

that Zimmer failed to use commercially reasonable efforts to 

sell the earnout products, and the district court did not abuse 

its discretion in denying the motion to amend the complaint 

a second time. Consequently, we AFFIRM the decision of the 

district court in all respects.