Zocdoc co-founder and former CEO Cyrus Massoumi wants to be reinstalled as the company’s CEO, alleging a set of executives organized an “elaborate, multi-step scheme” to oust him from his leadership role in 2015, according to a lawsuit filed Tuesday.
Massoumi is suing Oliver Kharraz, the company’s co-founder, CEO and a member of the board; Netta Samroengraja, chief business officer; and Nikhil Ganju, co-founder and a member of the board for alleged fraud and conspiracy to commit fraud. The complaint was filed Tuesday in New York state court.
Massoumi, who served as Zocdoc’s CEO for eight years after the company’s founding in 2007, in the complaint alleges that the three executives executed a fraudulent “coup” at a November 2015 board of directors meeting to shut him out of his CEO and chairman roles.
That included falsely telling Massoumi that the meeting would cover routine matters so that he was unable to prepare, allegedly creating a “fake” agenda and other materials that the executives didn’t actually plan to deliver at the meeting, according to the complaint.
During the meeting, the Kharraz and Ganju assumed voting control for shares previously held by Massoumi, providing them with majority control of Zocdoc, according to the complaint.
Kharraz, Ganju and a board member elected by Khosla Ventures allegedly voted to remove Massoumi from his role as CEO, replacing him with Kharraz. A month later, in December, Kharraz then told Massoumi he had been removed from the company’s board of directors, which Massoumi argues is invalid since minority shareholders weren’t notified of his removal.
The complaint alleges that if Massoumi had known the executives’ plans for the meeting, he could have exercised stock options to take majority control of the company, preventing his ouster.
“Mr. Massoumi was in a position to prevent the coup, but the lies and deceptive façade perpetrated by the defendants robbed him of the opportunity to do so,” the complaint reads.
Zocdoc, a privately held company that lets patients book appointments with participating providers online, has denied claims in the lawsuit.
“The claims in this lawsuit are without merit,” a Zocdoc spokesperson told Modern Healthcare via email. “We will not comment further on this pending litigation at this time.”
The complaint alleges that in the months leading up to the board of directors meeting, the executives had not expressed objection to Massoumi’s management or reasons to remove him as CEO.
However, Massoumi had been actively searching to hire replacements for Kharraz, who then served as COO, and Samroengraja, who then served as CFO, due to “consistently sub-par performance,” according to the complaint. He reportedly had planned to keep them employed in other roles at the company,
Massoumi had been considering asking Ganju to leave the company.
“Recognizing that their futures with the company were in doubt, Mr. Ganju, Mr. Kharraz, and Ms. Samroengraja orchestrated an elaborate, multi-step scheme to remove Mr. Massoumi from his positions at Zocdoc and permanently shut him out of management of the company,” reads the complaint, alleging the defendants secured and advanced their positions by ousting Massoumi.
The complaint alleges Zocdoc’s success has fallen since Massoumi’s departure, noting that, based on public information, Zocdoc since 2015 has not raised new venture capital funding. Fourteen executives have left the company since 2015, according to the complaint.
In addition to monetary damages, Massoumi is seeking declarations that his removal as Zocdoc CEO and chairman of the board of directors was invalid, and that he should therefore remain in those roles, according to the complaint. The complaint also alleges that all actions taken by Zocdoc’s board since at least December 2015 are invalid and void.
“While Mr. Massoumi is entitled to monetary damages, such damages for past harm would not suffice to compensate him for the ongoing harm of exclusion from any role at Zocdoc,” the complaint reads. “The court should exercise its discretion to grant declaratory relief to address the particular harms at issue.”