Superior Court of Massachusetts, Suffolk, Business Litigation Session
VERTICAL BIOMETRICS, LLC et al.
PLEX RESEARCH, INC. et al.
Date: January 3, 2019
DECISION AND ORDER REGARDING DEFENDANTSâ MOTIONS TO
DISMISS (DOCKET ENTRY NOS. 16.0-20.0)
A. Davis, Associate Justice of the Superior Court
Plaintiff Alex Sukharevsky ("Dr. Sukharevsky"), a
founder and former Chief Technology Officer ("CTO")
of defendant Plex Research, Inc. ("Plex" or the
"Company"), filed this action in February 2018
claiming, among other things, that he was fraudulently
induced into assigning certain intellectual property rights
to Plex, and that he was wrongfully terminated by Plex from
his position as CTO. Dr. Sukharevsky makes claims on behalf
of himself and two of his companies, plaintiffs Vertical
Biometric, LLC ("Vertical") and Lhasa, LLC
("Lhasa" or, collectively, "Plaintiffs"),
not only against Plex, but also against defendants Douglas
Selinger ("Mr. Selinger"), Marc F. Dupré
("Mr. Dupré "), Gunderson, Dettmer, Stough,
Villenueve, Franklin & Hachigan, LLP ("Gunderson
Dettmer"), Andrew Volpe ("Mr. Volpe"), First
Star Ventures, LLC ("First Star"), First Star
Ventures Fund II, LP ("First Star II"), Rajeev
Surati ("Mr. Surati"), and Timothy Wall ("Mr.
Wall" or, collectively, "Defendants"), all of
whom are either officers, financiers, or employees of, or
legal counsel to, Plex. The following additional background
facts are alleged in Plaintiffsâ Complaint:
2004, Dr. Sukharevsky founded Lhasa, a software company that
serves as a "consulting partner and provider of
discovery software solutions for academic, government and
industrial clients." Complaint (Docket Entry No. 1.0), Â¶
17. Eleven years later, Dr. Sukharevsky founded a second
company, Vertical, that develops "data-driven biometric
solutions for medical applications." Id. As a
result of his work at both companies, Dr. Sukharevsky
purportedly "developed extensive know-how in scientific
data search engines, and, in particular, a significant volume
of proprietary code for drug discovery applications, as well
as for network analysis and data integration."
Selinger, then an employee at Novartis Pharmaceuticals
("Novartis"), met Dr. Sukharevsky in 2013 while Dr.
Sukharevsky was performing contract work at Novartis. The two
struck up a friendship and they continued to stay in touch
after Dr. Sukharevskyâs work for Novartis ended.
late 2016, Mr. Selinger contacted Dr. Sukharevsky and asked
him to help Mr. Selinger with his efforts to develop a new
business based on a Novartis-owned scientific search engine
known as "MOA Central." Dr. Sukharevsky accepted
the offer and, as a result, turned down other business
opportunities. Mr. Selinger and Dr. Sukharevskyâs business
venture involving MOA Central was short-lived. They remained
undeterred, however, and later decided to form another
venture that would "develop[ ] from scratch" and
commercialize a scientific search engine technology similar
to MOA Central. Id., Â¶ 24. As part of this new
effort, Dr. Sukharevsky agreed to utilize the software,
know-how, and intellectual property that he had developed at
Lhasa and Vertical, as well as his professional network
connections. In particular, Dr. Sukharevsky agreed to
contribute the know-how and source code he had acquired in
developing two scientific search engines known as
"LHASA" and "SciGlass." Id., Â¶
deciding how to structure their new venture, Mr. Selinger and
Dr. Sukharevsky orally agreed that the Company, which they
named "Plex," would be authorized to issue a total
of 5 million shares of common stock. They also agreed that
all important operational decisions would be made jointly.
Both founders were to take full-time positions at Plex and to
dedicate their work to the new Company. For Dr. Sukharevsky,
this meant suspending the operations of Vertical and Lhasa.
For Mr. Selinger, it meant leaving his position at Novartis.
It was further agreed that both Mr. Selinger and Dr.
Sukharevsky would receive a "standard C-level
compensation package" at Plex, which included base
salaries of $ 200, 000 per year, a six percent (6%)
one-to-one match on 401K plan contributions, and other
benefits typical in the industry. Id., Â¶ 37. These
benefits, however, were contingent on securing funding for
the new Company from investors.
March 3, 2017, Mr. Dupré, an attorney with Gunderson
Dettmer and Plexâs legal counsel, incorporated Plex in
Delaware. Three days later, Plex was registered
to do business in Massachusetts. Dr. Sukharevsky learned at
or around this time (allegedly to his surprise) that Plexâs
Articles of Incorporation authorized the Company to issue 10
million shares of common stock, rather than the 5 million
shares he and Mr. Selinger previously had agreed upon.
Plexâs incorporation, Mr. Selinger became the Companyâs Chief
Executive Officer ("CEO"), Dr. Sukharevsky became
CTO, and Mr. Duprébecame Plexâs
Secretary. Both Mr. Selinger and Dr. Sukharevsky
also became Directors of the Company. At or around the same
time, Dr. Sukharevsky formalized his intellectual property
contribution to the Company by executing a "Technology
Assignment Agreement" (the "Assignment
Agreement"), a "Stock Purchase Agreement" (the
"SPA"), and a "Proprietary Information and
Inventions Agreement" (the "Inventions
Agreement"). In the Assignment Agreement, which is
dated as of March 3, 2017, Dr. Sukharevsky assigned all of
his intellectual property rights "applicable to [the]
development and commercialization of a scientific search
engine" to Plex in return for 2, 125, 000 shares of
common stock in the Company. Id., Exhibit
about April 1, 2017, Mr. Volpe invested in Plex through his
companies, First Star and First Star II, as part of an
initial $ 1.5 million seed round of financing. Mr. Volpe
thereafter began acting like a third member of Plexâs Board
of Directors, although he never officially held the position
planned search engine was "fundamentally different"
from MOA Central and required significant additional
development work, which was led by Dr. Sukharevsky.
Id., Â¶Â¶ 40-45. While Plexâs technology development
effort was underway, Mr. Selinger conducted weekly
"investor" meetings. Initially, the meetings were
attended by Dr. Sukharevsky, Mr. Selinger, and Mr. Volpe, as
well as Mr. Surati, another investor in Plex, and Vadim
Alexandrov ("Mr. Alexandrov"), Plexâs Chief
Scientific Officer. Mr. Selinger, however, eventually asked
Dr. Sukharevsky and Mr. Alexandrov to stop participating so
they could focus on their development work. Mr. Selinger
agreed to give Dr. Sukharevsky updates as to what occurred at
the investor meetings. It is during the investor meetings Dr.
Sukharevsky did not attend that Mr. Selinger, Mr. Surati, and
Mr. Volpe allegedly "developed a conspiracy to remove
[Dr.] Sukharevsky from any control at Plex."
Id., Â¶ 50.
some point after Dr. Sukharevsky stopped attending the
investor meetings, Plex, relying upon the advice of Mr. Volpe
and Mr. Surati, hired Mr. Wall, who was Mr. Suratiâs former
MIT roommate, as the Companyâs lead system architect.
Although Dr. Sukharevsky was Mr. Wallâs immediate supervisor,
Mr. Wall purportedly exhibited adversarial and insubordinate
behavior towards Dr. Sukharevsky soon after he was hired. Mr.
Wall ignored Dr. Sukharevskyâs direct assignments and did not
follow Dr. Sukharevskyâs outlined plans, which derailed the
development process and led to project delays. According to
Dr. Sukharevsky, "[Mr.] Wallâs conduct and actions were
consistent with a conscious sabotage." Id., Â¶
Sukharevsky took a vacation from Plex during the period from
December 15, 2017 to January 3, 2018. When he returned, he
learned that Plex had decided at one of the investor meetings
to engage in another round of seed financing without his
consent. Dr. Sukharevsky "disagreed" with the
decision to obtain more seed financing based, at least in
part, on his fear that it would further dilute his stake in
the Company. Id., Â¶ 62. Dr. Sukharevsky also made
multiple requests to Mr. Selinger at or around the same time
to have the Company finally set up a corporate 401K plan and
to fire Mr. Wall. These requests were repeatedly ignored by
Finally, on February 6, 2018, Mr. Selinger agreed to fire Mr.
Wall and arrangements were made with Mr. Dupréto
terminate Mr. Wallâs employment effective February 9, 2018.
Mr. Selinger notified Dr. Sukharevsky on that date, however,
that he had changed his mind and that Mr. Wall would remain
employed by Plex. Then, three days later (i.e., on February
12, 2018), Mr. Selinger terminated Dr. Sukharevsky as CTO.
Mr. Selinger initially told Dr. Sukharevsky that his
termination was due to Dr. Sukharevskyâs inability to
"create a team," but he later acknowledged that he
"simply did not want to hear [Dr.] Sukharevskyâs
objections to [his] decisions." Id., Â¶ 72.
Sukharevsky called Mr. Dupréthe following day "to
seek legal advice" and to find out if Mr. Selinger had
consulted with Mr. Duprébefore terminating him.
Id., Â¶ 73. According to Dr. Sukharevsky, Mr.
Dupréfalsely denied that Mr. Selinger had discussed
Dr. Sukharevskyâs firing with him. Dr. Sukharevsky later
learned from Mr. Selinger that he had spoken with Mr.
Dupréabout Dr. Sukharevskyâs termination in order to
confirm that he could fire Dr. Sukharevsky without the
approval of Plexâs Board of Directors. Dr. Sukharevsky
alleges that Mr. Dupré âs "self-serving"
statements constitute proof that Mr. Dupréwas
"involved in what appeared to be a conspiracy to remove
[Dr.] Sukharevsky from Plex." Id., Â¶ 74.
Board of Directors held an emergency meeting, at Dr.
Sukharevskyâs request, on February 15, 2018, at Mr. Volpeâs
office in Boston to discuss Dr. Sukharevskyâs termination.
Dr. Sukharevsky offered at the meeting to transition from CTO
into a role as an "individual contributor writing
software code," but his proposal was rejected by the
Board. Id., Â¶Â¶ 75-77. The next day, Dr. Sukharevsky
received a written separation agreement drafted by Mr.
Dupré, which was followed by a formal termination
letter. Dr. Sukharevsky left the Company on or about February
Sukharevsky commenced this Superior Court action less than
one week later on February 26, 2018. His Complaint contains
eleven counts on his own behalf and on behalf of Vertical and
Lhasa. They are:
Count I against all Defendants, except Mr. Wall and
Mr. Surati, seeking the "judicial dissolution" of
Count II against Plex, Mr. Selinger, and Mr.
Dupréseeking "restitution, annulment" of the
Assignment Agreement; 
Count III against all Defendants, except Mr. Wall
and Mr. Surati, seeking a judicial declaration that Dr.
Sukharevsky remains the "legal holder" of the
intellectual property referenced in the Assignment Agreement;
Count IV against Mr. Selinger, Mr. Dupré, Mr.
Volpe, First Star, and First Star II alleging that Dr.
Sukharevsky was fraudulently induced to enter into the
Count V against Mr. Selinger, Mr. Dupré, and
Mr. Volpe alleging misrepresentation "regarding their
goals" as to Plex;
Count VI against Mr. Selinger, Mr. Dupré, and
Mr. Volpe alleging their participation in a "fraudulent
scheme with regard to [Dr.] Sukharevsky";
Count VII against Mr. Selinger, Mr. Dupré,
and Gunderson Dettmer alleging breach of their fiduciary