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May 16

Laid-off Biotech employees sue board members and venture firms

The Daily Journal

May 16, 2014 – Brian Kabateck was quoted in a May 16, 2014 Daily Journal article about a proposed class action he filed on behalf of laid-off employees against Merck & Co. Inc. and two venture capital firms. The suit seeks unpaid wages and other damages and is unusual in that it attempts to hold venture firms accountable for employment law violations at a company they funded. Filed in Los Angeles County Superior Court, it accuses the firms, New Leaf Venture Partners and Bay City Capitol Management IV LLC, of participating in fraud by transferring the assets of Aviir Inc. to another company prior to it filing for bankruptcy and laying off 85 employees.

Kabateck told the paper that the layoffs violated the WARN Act – which requires a 60-day notice for mass layoffs at companies Merck’s size – and that the situation “smelled.”

He said that two board members also named in the suit were involved in the fraud, noting that “either they weren’t keeping a watchful eye on what they were doing or were aware of it and were part of it.”

Although the damages are not expected to be large – $500,000 for violations of the law, plus attorney fees and other costs, Kabateck said “the circumstances were crying out for the lawsuit.”