When Orthofix Medical abruptly fired its then CEO, CFO, and chief legal officer in 2023, the company said it did so “for cause” after an investigation conducted by outside legal counsel found the three executives had “engaged in repeated inappropriate and offensive conduct that violated multiple code of conduct requirements.”
The medical device maker’s ousting of its then-CEO Keith Valentine, then-CFO John Bostjancic and then-CLO Patrick Keran rattled investors, with the stock plummeting 30% on the day of the announcement, even as the Lewisville, Texas-based company did not specify what those violations entailed.
Now the details behind what drove the firings — including a trove of off-color and at times lewd and racist private texts shared privately between the trio — are coming to light in litigation stemming from a lawsuit filed in a California court by the terminated executives.
The executives filed the suit in September against Catherine Burzik, who served as the company’s board chair from June 2023 until July 2024 and as interim CEO from the time Valentine was fired until January of last year, when Massimo Calafiore became CEO. It also named Wayne Burris, who currently serves on the board, as a defendant.
The lawsuit alleges, among other causes for the action, defamation, invasion of privacy and misrepresentation related to being told their personal mobile phones were being collected and “imaged” within the scope of an ongoing investigation. The suit also says that private texts were not “relevant.”
Further, in the original complaint filing, the complaint said the text exchanges were mostly from 2022, before they were employees of Orthofix. They also said the texts originally provided to them as a result of the investigation were exchanges between colleagues who had worked together since 2015, lived close to one another, were friends and had “a shared sense of humor” and that no one who received a text “objected to its content or expressed that the text was unwanted,” according to the complaint filed Sept. 10, 2024.
In defending their actions, the suit also asserts that the company’s code of conduct’s guidance on workplace conduct and diversity, equity and inclusion is “aimed at outward unwanted conduct involving and witnessed by other employees. Its applicability to private text messages not involving outward conduct with other nonconsenting employees is, at best, entirely unclear.”
In January, attorneys for the defendants filed a motion to strike some of the suit’s claims including defamation, taking a strong stand against the behaviors and asserting Orthofix fired the former executives after uncovering proof that each made “gross and improper sexist, homophobic, racist, and other vulgar and demeaning comments” about co-workers at work that “more than justified” their firing.
“Graphic commentary was often made during meetings and calls while the very individuals that the former executives demeaned were speaking,” the filing states. “If that were not sufficient cause for their terminations (and it is), Orthofix also discovered evidence that the former executives engaged in significant and repeated bullying and other mistreatment of Orthofix’s employees, that the culture the three managed demeaned and devalued the contributions of female employees, and that the three executives acted frequently with aggression, and accepted and promoted vulgarity and personal attacks. None of this is permissible in the workplace.”
Among some of the more moderately-worded text exchanges cited in the filing, during a call between Orthofix executives and market makers, Valentine texted with Bostjancic and Keran that he “‘is always so patient and happy to answer any and all questions in these investor meetings with cute chicks!” Mr. Keran replied, “I would like to get more involved in IR activities!” Mr. Bostjancic replied that, “This one may not be of the drinking age yet! And seems fanatically over-interested in Orthobiologics.”
And on Aug. 5, 2023, Valentine used profanity in a text in expressing frustration with auditors. They “have more questions, so I have another 1-2 hours with [Orthofix’s] counsel,” he said. The filing states that Bostjancic shot back: “Insist on the hot one to interview you.”
Attorneys for both the plaintiff and defendants did not immediately respond to requests for comment. The complaint states Orthofix itself is not a party in the suit, although the complaint said it has claims against the company in a pending arbitration matter.
A spokesperson for Orthofix said that the company does not comment on pending litigation. However, in its February 10-K filing, the company asserts that several litigation and arbitration matters are pending in connection with the terminations of Valentine, Bostjancic and Keran.
“The company disagrees with the allegations contained in the arbitration demands and in the action against Ms. Burzik and Mr. Burris, and intends to vigorously defend the asserted claims. Due in part to the preliminary nature of this matter, the Company currently cannot reasonably estimate a possible loss, or range of loss, that may arise from these claims,” the filing reads.
Orthofix completed a merger with SeaSpine Holdings in January of 2023, creating a company that, according to a company release at the time, had 1,600 employees and a product portfolio of biologics, spinal hardware solutions and growth therapies distributed in 68 countries.