Wilson Sonsini logo. Tech Investor's Relationship With Company Counsel Foils Attempt to Toss Shareholder Derivative Lawsuit
A San Francisco judge allowed a consolidated shareholder derivative suit from Modern Health's co-founder and two shareholders to move forward this week. The litigation alleges that the CEO of the employee mental health platform made false statements to clients such as Cisco and that a Kleiner Perkins investor failed to act on reports of misconduct.
October 29, 2021 at 06:59 PM
7 minute read
A shareholder derivative lawsuit against mental health care startup Modern Health Inc. survived a dismissal attempt in light of possible conflicts of interest from two tech investors who sat on a special litigation committee that reviewed claims of misconduct against the company's CEO.
The consolidated litigation against Modern Health, which was brought by the employee mental health platform's co-founder Erica Johnson and two other shareholders in separate complaints in November 2019, alleges company CEO Alyson Friedensohn made false statements to potential customer Cisco Systems Inc. and failed to implement HIPAA compliance measures for Netflix Inc. The suit also claims Friedensohn failed to disclose a practice of closing deals through "personal kickbacks" in the form of stock shares.
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