Israel-based Teva faces age and 'anti-American' bias claims from former U.S. staffer

Legal and regulatory issues
A U.S. district court found sufficient evidence that Teva's behavior leading up to the firing of an employee that filed suit against the company violated its own internal policies. (iStock/seb_ra)

It’s not uncommon for employees fired as they approach their 60s to file age-discrimination lawsuits, but allegations of anti-American bias are rare. Now, Israel-based Teva is facing both those claims—and a U.S. district court in Pennsylvania denied the company’s request to throw out the case.  

Stephen Middlebrooks joined Teva Pharmaceuticals’ Pennsylvania office in 2001 and made his way up the ranks, eventually snagging a role as senior director of facility management for a new North American division in late 2014.

But not before his Israeli manager asked him his age—57 at the time—and when he planned to retire, the lawsuit alleges. Two years later, after a string of negative performance reviews that Middlebrooks now disputes, he was fired, prompting him to sue the company, alleging both age discrimination and anti-American bias.

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Now, Teva's bid for an early exit has failed. The court denied its request to toss out the lawsuit, saying Middlebrooks had offered up evidence adequate to justify a jury trial.

A spokesperson for Teva told FiercePharma the company does not comment on litigation. Middlebrooks’ attorneys declined to comment.

RELATED: Teva eases debt burden with $400M tender offer as turnaround effort escalates

Middlebrooks’ problems started shortly after his 2014 promotion, the lawsuit alleges. His manager, who was 13 years his junior, gave him a negative performance review. A few months later, two Israel-based managers came to Teva’s Pennsylvania office for a meeting with his team—after which one employee filed a complaint of age discrimination and another griped about a hostile work environment, the court filing says.

An internal investigation ensued, which resulted in a 32-page report listing several “areas of concern,” including "ongoing requests made by Israel for age and demographic information," according to the filing. Teva’s U.S. director of human resources, who led the investigation, recommended that the Israel-based managers receive “cultural and sensitivity training,” including instruction on U.S. employment law, which prohibits discrimination based on age or nationality.

One week after the report was completed, in October of 2015, Middlebrooks received a negative performance review, he alleges. He filed a complaint with the Equal Employment Opportunity Commission and Pennsylvania Human Relations Commission. Four months later, he was fired and replaced by a 38-year-old manager, according to the court document.

RELATED: With clock ticking on Teva migraine drug, analyst expresses doubt for approval

The court found several reasons to examine Teva for its behavior in the Middlebrooks case. “We find there are genuine issues of material fact" on whether the company had a legitimate reason to fire him, "including the lack of any performance-related documentation” to justify the negative performance review, the filing says. Furthermore, Middlebrooks’ manager placed him on a “performance improvement plan” rather than a less punitive “performance consistency plan,” despite the fact that doing so violated the company’s own human-resources guidelines. And the court was disturbed by the reports of questions from Israel-based managers about age and retirement plans.

As for the claims of anti-Americanism, the court sided with Middlebrooks on those, too. Middlebrooks reported that his manager had made several derogatory comments, including suggesting that Americans "did a poor job of supporting Israel in its military actions in the Middle East," and they have a "narrow-minded perception of Israelis." The evidence in favor of a national-origin claim is “not overwhelming compared to evidence on age,” the court concluded, but it's nonetheless compelling enough to go to a jury.

The case—and the court’s decision to let it go to a jury trial—“serves as caution that international employers with American operations must abide by American employment law,” wrote employment lawyer Sid Steinberg in a column in the Legal Intelligencer, adding that Teva is also a clear case of an employer losing a motion for summary judgment because of its own failure to abide by its internal policies. “Training international managers on workplace harassment and discrimination issues similarly to American managers may help to curb such claims,” Steinberg wrote.

The case will no doubt be a distraction for Teva, which has been engaged in an arduous turnaround effort. Last week, the company announced a $400 million tender offer to help lower its debt burden. Teva did beat earnings expectations in the second quarter and it upped its profit expectations for the year, but top-line growth continues to be challenged by pricing pressure on Copaxone, its blockbuster multiple sclerosis drug, which is facing generic competition.

Investors have been counting on a revenue boost from fremanezumab, Teva’s migraine drug, which the FDA is slated to rule on by Sept. 16. But Credit Suisse analyst Vamil Divan, M.D., warned investors last week that ongoing issues at the Celltrion biologics plant that’s manufacturing the drug may not be resolved in time for the FDA to make a decision. That could delay the approval and launch to the second half of 2019, Divan warned.