A New York appeals court has reinstated a lawsuit against Zocdoc from its co-founder and former chief executive officer Cyrus Massoumi, reversing a previous dismissal.
Here are five things to know about the lawsuit:
1. The appellate division’s first judicial department of the Supreme Court of the State of New York reversed the dismissal late last month, according to a decision and order reviewed by Modern Healthcare. It reinstates a complaint from Massoumi, originally filed in September 2020, in which he accused several company executives of forcing him out of his leadership role in 2015.
Zocdoc is a privately held company that lets patients schedule appointments with participating providers online.
2. A New York state judge had dismissed Massoumi’s lawsuit in December 2020, after deciding that the complaint must be filed in Delaware. While Zocdoc’s principal place of business is New York, it’s incorporated in Delaware.
The judge cited a confidentiality and non-disclosure agreement that Massoumi signed as a stockholder in 2018 and that requires complaints based on “confidential inspection material” to be brought in Delaware. The company’s bylaws also require claims related to internal affairs be filed in Delaware, according to the judge’s decision and order.
3. The appeals court in April determined the NDA clause requiring the complaint be filed in Delaware does not apply, since the complaint doesn’t involve confidential inspection material.”This is an important victory, as it will allow me to have my day in court to show how my company was fraudulently taken from me and how that has negatively affected our valued patients,” Massoumi wrote in an emailed statement.
4. Massoumi in September 2020 sued three company leaders—Oliver Kharraz, co-founder, CEO and member of the board; Netta Samroengraja, chief corporate development officer; and Nikhil Ganju, co-founder and member of the board—accusing them of fraud, conspiracy to commit fraud and organizing an “elaborate, multistep scheme” to oust him. Massoumi in the complaint also argued that he should be reinstalled as the company’s CEO.
5. Zocdoc has denied claims in the lawsuit. “This procedural ruling is not a decision on the merits of Mr. Massoumi’s case or the validity of his claims,” a Zocdoc spokesperson wrote in an emailed statement. “We are confident that the facts and the law will indeed show this lawsuit is meritless. We intend to vigorously defend against these claims and look forward to presenting our case. Zocdoc has a bright future ahead, and we remain focused on giving power to the patient and growing our business.”