Olshan Represents Former Orthofix CEO, CFO & CLO in $135 Million Defamation Lawsuit Against Directors

Corporate Counsel (subscription required) reported on the $135 million defamation lawsuit filed by the former CEO, CFO and CLO of public-orthopedic medical device company Orthofix (Nasdaq: OFIX) against certain directors stemming from their September 11, 2023 firing for allegedly “offensive conduct” arising from text messages sent privately to one another. The lawsuit, filed against the company’s former board chair and a director who oversaw an internal investigation where false representations were made to the executives that gave Orthofix access to the executives’ private texts. Orthofix, then, cited the text messages to fire the executives “for cause” and subsequently published them in a public litigation pleading filed in San Diego court. Many of the text messages predated the executives’ employment at Orthofix. There were no parties to the text messages other than the executives. The article notes that the executives are pursuing parallel arbitration claims against Orthofix including claims for breach of their employment / severance agreements. “The company now tries to falsely frame plaintiffs’ private sense of humor as somehow nefarious,” Olshan Litigation partner Kyle Bisceglie said in the article, “but there is zero conduct involving any third party. There are no material acts of moral turpitude involved that justify a ‘for cause’ termination, and the company’s public statements were defamatory and calculated to inflict maximum damage on our clients' successful careers.” Furthermore, the suit says the executives tried to sway the board not to fire them abruptly, saying doing so would cause the company’s stock to tank, a prediction that proved right. On the day of the announcement, Orthofix shares fell 30.2%, the biggest one-day percentage drop in the company's stock in nearly 30 years. “These executives worked hard to drive execution and deliver value for company shareholders,” Kyle explained. “The evidence will show they were fired for sending private text messages that offended the defendants’ sensibilities, and the company shareholders paid the price as a direct result.” The Olshan team serving as counsel to the executives is led by Litigation partner Kyle Bisceglie and associate Stephen Ross. Olshan’s co-counsel is William (“Buz”) White from Hill, Farrer & Burrill LLP in Los Angeles, CA.