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  • ERICA JOHNSON VS. ALYSON FRIEDENSOHN ET AL BUSINESS TORT document preview
  • ERICA JOHNSON VS. ALYSON FRIEDENSOHN ET AL BUSINESS TORT document preview
  • ERICA JOHNSON VS. ALYSON FRIEDENSOHN ET AL BUSINESS TORT document preview
  • ERICA JOHNSON VS. ALYSON FRIEDENSOHN ET AL BUSINESS TORT document preview
  • ERICA JOHNSON VS. ALYSON FRIEDENSOHN ET AL BUSINESS TORT document preview
  • ERICA JOHNSON VS. ALYSON FRIEDENSOHN ET AL BUSINESS TORT document preview
  • ERICA JOHNSON VS. ALYSON FRIEDENSOHN ET AL BUSINESS TORT document preview
  • ERICA JOHNSON VS. ALYSON FRIEDENSOHN ET AL BUSINESS TORT document preview
						
                                

Preview

1 DAVID J. BERGER, STATE BAR NO. 147645 REBECCA L. STUART, STATE BAR NO. 254348 2 WILSON SONSINI GOODRICH & ROSATI Professional Corporation ELECTRONICALLY 3 650 Page Mill Road F I L E D Palo Alto, CA 94304-1050 Superior Court of California, 4 Telephone: (650) 493-9300 County of San Francisco Facsimile: (650) 565-5100 05/07/2020 5 Email: dberger@wsgr.com; rstuart@wsgr.com Clerk of the Court BY: ERNALYN BURA 6 Attorneys for Defendants Deputy Clerk ALYSON FRIEDENSOHN and 7 MODERN HEALTHCARE INC. 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SAN FRANCISCO 10 ERICA JOHNSON, an individual, on her ) CASE NO.: CGC-19-580960 own behalf and derivatively on behalf of Modern ) 11 Healthcare Inc., a Delaware corporation, ) DECLARATION OF REBECCA ) STUART IN SUPPORT OF 12 Plaintiff, ) DEFENDANTS’ DEMURRER TO ) PLAINTIFF’S COMPLAINT; 13 v. ) INDEX OF EXHIBIT AND EXHIBIT ) 14 ALYSON FRIEDENSOHN, an individual; ) RESERVATION NO: None Received MODERN HEALTHCARE INC., a Delaware ) 15 corporation; and DOES 1-10, ) ) Date: July 8, 2020 16 Defendants. ) Time: 9:30 a.m. ) Dept: 302 17 ) Judge: Hon. Ethan P. Schulman ) 18 ) Complaint Filed: November 22, 2019 ) Trial Date: None Set 19 ) ) 20 ) ) 21 22 23 24 25 26 27 28 11379650_2.docx DECLARATION OF REBECCA STUART IN SUPPORT OF DEFENDANTS’ DEMURRER TO PLAINTIFF’S COMPLAINT; INDEX OF EXHIBIT AND EXHIBIT CASE NO. CGC-19-580960 1 I, Rebecca Stuart, declare as follows: 2 1. I am duly admitted to practice law in the State of California and I am an attorney 3 at the law firm of Wilson Sonsini Goodrich & Rosati, P.C., counsel for Defendants Alyson 4 Friedensohn and Modern Healthcare Inc. (“Defendants”). I have personal knowledge of the facts 5 described below and, if called as a witness, could and would testify competently thereto. 6 2. Pursuant to Section 430.41 of the California Code of Civil Procedure, on April 7 16, 2020, co-counsel, David J. Berger, and I met and conferred telephonically with counsel for 8 Plaintiff Erica Johnson (“Plaintiff”) regarding the bases for a demurrer to the Complaint and the 9 deficiencies therein. We informed counsel that Defendant identified the specific causes of action 10 subject to demurrer and deficiencies with those causes of action in the Complaint in a similar 11 manner as Defendant had done in Defendant’s mediation brief, which Plaintiffs had previously 12 received and to which Plaintiffs had previously responded. The parties have not reached an 13 agreement resolving the objections raised in the Demurrer. 14 3. I received a letter from counsel for the Plaintiff dated October 10, 2019, which is 15 attached as Exhibit A to this Declaration. The letter attached as Exhibit A is a true and correct 16 copy of the letter I received. 17 I declare under penalty of perjury that the foregoing is true and correct. Executed on 18 May 7, 2020 in San Carlos, California. 19 Rebecca Stuart 20 21 22 23 24 25 26 27 28 -2- DECLARATION OF REBECCA STUART IN SUPPORT OF DEFENDANTS’ DEMURRER TO PLAINTIFF’S COMPLAINT; INDEX OF EXHIBIT AND EXHIBIT CASE NO. CGC-19-580960 1 INDEX OF EXHIBIT (pursuant to CRC 3.1110(f)) 2 3 EXHIBIT DESCRIPTION DATE PAGE NO. NO. 4 Letter from Harmeet Dhillon to Rebecca October 10, 4-11 5 A Stuart and Damien Weiss 2019 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3- DECLARATION OF REBECCA STUART IN SUPPORT OF DEFENDANTS’ DEMURRER TO PLAINTIFF’S COMPLAINT; INDEX OF EXHIBIT AND EXHIBIT CASE NO. CGC-19-580960 EXHIBIT A Nitoj P. Singh NSingh@DhillonLaw.com Confidential Settlement Communication FRE Rule 408 Cal. Evid. Code §§ 1152 & 1154 October 10, 2019 VIA EMAIL Rebecca L. Stuart, Esq. Damien M. Weiss, Esq. Wilson Sonsini Goodrich & Rosati Wilson Sonsini Goodrich & Rosati 650 Page Mill Road 139 Townsend Street, Suite 150 Palo Alto, California 94304 San Francisco, California 94107 rstuart@wsgr.com dweiss@wsgr.com Re: Modern Health / Erica Johnson / Alyson Friedensohn Dear Ms. Stuart and Mr. Weiss: We write in an attempt to resolve the parties’ disputes before moving forward with litigation. We are in the process of preparing a complaint now that reflects the below facts and causes of action. We do not take lightly the possibility of litigation, and the impact on our respective clients, and urge you to communicate the same to your clients. Given the urgency, if we are not convinced that this matter is moving towards an amicable resolution by early next week, we will have no choice but to move forward with litigation to protect the interests of Modern Health and its patients. As demonstrated below, this is yet another installment of the media’s favorite topic—the cult of the Silicon Valley founder. Ms. Friedensohn, who initially seemed to be a reasonable entrepreneur, quickly let the hype and increasing valuations of Modern Health get to her. As a result, she has abused her authority as CEO, and in a desperate attempt to gain greater control Modern Health, while cashing out on Modern Health’s Series B, attempted to force Ms. Johnson out of the Company. In keeping with what has become a caricature of Silicon Valley CEO’s, Ms. Friedensohn has grossly misrepresented Modern Health’s offerings and success to customers and investors; has engaged in misconduct in the firing of employees; has subjected the Company to serious liability; and endangered the lives and health of patients. Background Ms. Johnson has long been on the leading edge of neuroscience and behavioral research. She graduated with degrees in neurobiology and molecular biology from the University of California at Berkeley, and later held a research position with the Helen Wills Neuroscience Institute at Berkeley. She followed her time at Berkeley with lead engineering, product manager, and research positions, with an emphasis on neurobehavioral sciences, at the University of California at San Francisco, and the Stanford University School of Medicine—premier 177 POST STREET, SUITE 700 | SAN FRANCISCO, CA 94108 | 415.433.1700 | 415.520.6593 (F) EXHIBIT_A_PAGE_04 Rebecca L. Stuart, Esq. CONFIDENTIAL SETTLEMENT COMMUNICATION Damien M. Weiss, Esq. Wilson Sonsini Goodrich & Rosati October 10, 2019 Page 2 of 8 institutions in the field. Ms. Johnson helped develop the Brain Health Assessment, a screening tool that is used to detect and diagnose cognitive disorders globally. It is unsurprising that Ms. Friedensohn sought to partner with Ms. Johnson given Ms. Johnson’s instant engineering and product development credibility in the mind and brain health space. Ms. Johnson did join Ms. Friedensohn to work towards developing what would become Modern Health. Ms. Friedensohn already had a working relationship with Alice Tzou and Gloria Tzou by the time Ms. Johnson joined her. However, once Ms. Johnson began working with Ms. Friedensohn, it appeared that Ms. Friedensohn determined she no longer needed the Tzou sisters, and forced them out. Two cofounders instead of four would mean a bigger piece of the pie for Ms. Friedensohn. It is unclear the circumstances with which the Tzou sisters ended their engagement with Ms. Friedensohn, and whether they hold any claims against Ms. Friedensohn for any product they co-developed, but it is not uncommon for these types of issues to arise once a company gains some traction. This is of particular concern given the manner in which Ms. Friedensohn terminates her or the Company’s business relationships. Ms. Johnson and Ms. Friedensohn submitted an application for, and were admitted into, the Winter 2018 cycle for Y Combinator (“YC”). Ms. Friedensohn pushed Ms. Johnson to develop a tool to assess the mental health of employees to serve as Modern Health’s first product. Ms. Friedensohn claimed that she knew that this was what companies were looking for given her previous experience at Collective Health, a health benefits technology company. She made these claims without actually reaching out to potential clients and gauging interest. Ms. Friedensohn also demanded that the tool be built prior to Modern Health starting at YC, and coincidentally while Ms. Friedensohn herself took a vacation to the East Coast for two plus weeks. Ms. Friedensohn’s initial idea, based on her experience in the industry, but without any input from potential customers, was a failure. Fifteen to twenty potential customers passed on the product, with many calling the tool “creepy.” The tool had to be scrapped. This made clear that Ms. Friedensohn had no specialized or valuable insight into the industry. As YC started, Ms. Friedensohn and Ms. Johnson had to start from scratch. Xye Dagun, Julia Maggioncalda, and Dr. Sarah Selig were added to the Modern Health team prior to, or during YC. After extensive surveys, Modern Health was able to focus on their current line of business. Ms. Johnson managed engineering and operations as Chief Science Officer, while Ms. Friedensohn managed business development and sales. While Ms. Friedensohn assumed the CEO title, Ms. Johnson and Ms. Friedensohn treated each other as equal co-founders, with the same number of shares, and each having seats on the Board. After Ms. Johnson’s tireless efforts to get Modern Health’s new product off the ground, Modern Health was able to get some early traction with customers. This was partly due to Ms. Friedensohn offering equity in Modern Health to customers’ agents as an incentive for the DHILLON LAW GROUP INC. 177 POST STREET, SUITE 700 | SAN FRANCISCO, CA 94108 | 415.433.1700 | 415.520.6593 (F) EXHIBIT_A_PAGE_05 Rebecca L. Stuart, Esq. CONFIDENTIAL SETTLEMENT COMMUNICATION Damien M. Weiss, Esq. Wilson Sonsini Goodrich & Rosati October 10, 2019 Page 3 of 8 agents’ company agreeing to use Modern Health’s products. 1 When Ms. Johnson confronted Ms. Friedensohn about this issue, and made clear that the Company’s equity needed to be guarded and carefully meted out, Ms. Friedensohn responded that this was a common business practice (it is not) and was unapologetic. Ms. Friedensohn also did not believe that Modern Health needed to disclose to its subsequent investors that its sales were bolstered by the Company handing out equity as an incentive—an inherently unsustainable practice. That Ms. Friedensohn failed to disclose this issue to investors may have constituted fraud. Ms. Friedensohn also showed a lack of business judgment or ethics early in Modern Health’s life. For example, Modern Health, while at YC, received a pre-Demo Day investment offer from Afore Capital, which contained an $8 million valuation cap. Rather than attempt to negotiate with Afore Capital, or wait for Demo Day and the thousand or so investors that would be present, Ms. Friedensohn sought to immediately accept Afore Capital’s offer. Ultimately, Ms. Johnson was able to convince Ms. Friedensohn to try to negotiate with Afore Capital, and it ultimately invested on terms with a $10 million valuation cap. Modern Health did have a successful Demo Day, and was able to raise respectable seed money. However, Modern Health’s sales struggled immediately following YC. It was during this time that Ms. Friedensohn, desperate to save face given she was in charge of sales, began materially misrepresenting the nature of Modern Health’s offerings to potential customers. John Jersin, a Modern Health investor and company adviser, and VP of Product Management at LinkedIn, who had been coaching Ms. Friedensohn on sales, attempted to rein in Ms. Friedensohn’s misconduct with limited success. When asking Mr. Jersin how to handle customers asking for international support, Ms. Friedensohn repeatedly suggested she simply lie to say such support existed. Mr. Jersin repeatedly cautioned her against such action stating explicitly that it was illegal as well as unethical. As set forth below, Ms. Friedensohn apparently employed this tactic irrespective of liability and ethics. At least one employee, Rebecca O’Kusky, who joined after the Series A, quit because Ms. Friedensohn repeatedly asked her to lie to customers. When Ms. Johnson offered to help Ms. Friedensohn with sales, Ms. Friedensohn was dismissive and condescending. This is the same response Ms. Johnson faced when she discussed helping with the Series B financing before being frozen out of those discussions by Ms. Friedensohn. This type of bullying behavior, while common for Ms. Friedensohn, had no place in a company focused on mental health. Ms. Friedensohn seemingly sought to create a culture of fear within the Company, by engaging in sudden firings of employees, and bullying employees 1 To be clear, the equity was not going to the customer company, but to the individual representing the customer in his or her individual capacity. To provide cover, the individuals were labeled as “advisors,” but, in reality, this was purely an incentive to sign an agreement. Examples of individuals who received equity include: Adrian Aoun (Forward) and Ron Storn (Zume Inc.). Ms. Johnson later prevented Ms. Friedensohn from granting equity to decision makers at Credit Karma and Netflix. DHILLON LAW GROUP INC. 177 POST STREET, SUITE 700 | SAN FRANCISCO, CA 94108 | 415.433.1700 | 415.520.6593 (F) EXHIBIT_A_PAGE_06 Rebecca L. Stuart, Esq. CONFIDENTIAL SETTLEMENT COMMUNICATION Damien M. Weiss, Esq. Wilson Sonsini Goodrich & Rosati October 10, 2019 Page 4 of 8 that remained at Modern Health. As an example, Ms. Friedensohn would routinely chastise employees for taking vacations, but would regularly take vacations herself and not record her time off in the company’s HR system. This includes a two-week vacation in July 2018 to celebrate Ms. Friedensohn’s engagement (not wedding or honeymoon, but engagement), and many other trips. Dr. Selig was terminated by Ms. Friedensohn when she sought actual cash compensation and a formal position in connection with the seed financing. Ms. Friedensohn immediately terminated Dr. Selig, without considering a transition plan for the patients (including suicidal patients) and doctors Dr. Selig was responsible for. After Dr. Selig raised transition concerns (after she was already fired), Ms. Friedensohn expected Dr. Selig to stay on for the transition without additional compensation of any form. Ms. Friedensohn thereafter did not follow up with Dr. Selig and the transition, and was instead focused solely on seed funding. Ms. Friedensohn pressured employees to provide proprietary information from their previous employers, and made clear she kept and used proprietary information from her previous employer, Collective Health (including sensitive pricing information). She also instructed employees to copy articles and material from other companies, including Headspace, and pass it off as Modern Health work, subjecting the Company to copyright claims. Ms. Friedensohn was also known to secretly record conversations with team members without their consent, in violation of Cal. Penal Code § 632. She would make misrepresentations about other employees as a tactic of control, including spreading defamatory statements. She would often swoop in at the end of projects in an effort to steal credit, as she did when Ms. Johnson was working on a 409A valuation for the Company. Ms. Friedensohn would make offensive comments at Company get-togethers. For example, Ms. Friedensohn commented that San Francisco’s homeless population should be euthanized, and that they no longer had souls. As a result of Ms. Friedensohn’s bullying and abrasive management style, the Company suffered from significant turnover 2, yet Ms. Friedensohn refused to conduct exit interviews to understand or correct the issue. Ms. Johnson did what she could to counter and offset Ms. Friedensohn’s erratic behavior, which is the only reason the Company has not yet had to actually deal with her misconduct. Recent Issues In late-Summer 2019, Dr. Myra Altman, Modern Health’s Head of Clinical Care, approached Ms. Johnson with a serious concern. The Company was pitching Cisco, and Dr. Altman was concerned that the Company was misrepresenting its product. Ms. Johnson advised Dr. Altman to tell the truth, and she believed the strength of the product was itself enough to close a deal without embellishment. At the same time, Ms. Johnson decided to conduct an investigation. This included reviewing Company presentation materials, both to potential customers and investors. 2 All of Modern Health’s YC founding team, excluding Ms. Friedensohn and Ms. Johnson, are no longer with the company. DHILLON LAW GROUP INC. 177 POST STREET, SUITE 700 | SAN FRANCISCO, CA 94108 | 415.433.1700 | 415.520.6593 (F) EXHIBIT_A_PAGE_07 Rebecca L. Stuart, Esq. CONFIDENTIAL SETTLEMENT COMMUNICATION Damien M. Weiss, Esq. Wilson Sonsini Goodrich & Rosati October 10, 2019 Page 5 of 8 Over the course of the investigation, it appeared that Ms. Friedensohn was advising its potential Series B investors (it was a surprise to Ms. Johnson that Ms. Friedensohn was even meeting with Series B investors) that ithad 5,372 therapists and 18,900 coaches, globally. In reality, the total number of therapists and coaches is closer to 180. Ms. Friedensohn also claimed to customers that it provided support in 50 languages, in reality, it was 3 languages. The danger in misrepresenting this information is threefold, and potentially catastrophic: 1) itresults in clear breach of contract; 2) customers who abandon their current mental health service providers for Modern Health may jeopardize the lives of their employees should those employees expect to receive services Modern Health promised but could not deliver; and 3) investors fraudulently induced to invest in Modern Health may bring a suit for fraud, rendering Modern Health’s shares toxic. Around the same time, on September 17, 2019, Ms. Friedensohn asked to meet with Ms. Johnson. Ms. Friedensohn did not share an agenda for the meeting with Ms. Johnson prior to their meeting. Instead of having a discussion with Ms. Johnson, Ms. Friedensohn read out loud a statement she had prepared from her phone. Ms. Friedensohn questioned Ms. Johnson’s commitment to the Company because of Ms. Johnson’s upcoming approximately two-week vacation for her wedding and honeymoon, and asked for a restructuring of equity amongst them. She mentioned that she had discussed this proposal with her fiancé, and Company advisor, Mathew Watson. 3 While Ms. Friedensohn and Ms. Johnson currently were on equal footing in terms of the number of shares, Ms. Friedensohn wanted a 65:35 split in her favor. While questioning Ms. Johnson’s commitment to the Company, she conveniently left off her own two- week vacation to celebrate her engagement in 2018, her pre-YC two week vacation in 2017, and trips to Colorado, Ibiza, Mexico, etc., which were not documented in the Company’s HR system, but simply on her calendar as “Out of Office.” Ms. Johnson, shocked at the request, only could tell Ms. Friedensohn that she would consider the request. This was a radical departure from their previous relationship. In fact, Ms. Friedensohn was to be a bridesmaid at Ms. Johnson’s October 2019 wedding, and had attended her bachelorette party just the week prior. Mr. Watson had admitted to Mr. Jersin that Ms. Friedensohn wanted to cash out a significant portion of her equity in connection with the Series B financing. Per Mr. Watson, Company had received a verbal offer of $25 million on a $150 million valuation. However, Ms. Friedensohn was apparently concerned about falling below Ms. Johnson on the cap table. Accordingly, Ms. Friedensohn concocted a plan to restructure their respective equity so that she may sell some of her shares, and not end up with fewer shares than Ms. Johnson. Ms. Johnson 3 Ms. Friedensohn likely received inspiration for this demand from Mr. Watson, and has previously stated she runs every decision by him. Mr. Watson was a co-founder at Indio Technologies Inc., and was forced out of the company around the time it raised its Series A. Ms. Friedensohn had repeatedly discussed how unfair Mr. Watson’s removal was, but must have internalized that it could be a weapon employed against Ms. Johnson. DHILLON LAW GROUP INC. 177 POST STREET, SUITE 700 | SAN FRANCISCO, CA 94108 | 415.433.1700 | 415.520.6593 (F) EXHIBIT_A_PAGE_08 Rebecca L. Stuart, Esq. CONFIDENTIAL SETTLEMENT COMMUNICATION Damien M. Weiss, Esq. Wilson Sonsini Goodrich & Rosati October 10, 2019 Page 6 of 8 also suspects that Ms. Friedensohn recorded one or more of their conversations without her consent given how Ms. Friedensohn was behaving and awkwardly positioning her phone in recent conversations, and her statement that she had written down every word Ms. Johnson had said. Ms. Friedensohn and Ms. Johnson met again on September 20, 2019. Ms. Johnson advised Ms. Friedensohn that she had considered her request, but could not agree to it.She suggested that they enter into co-founder therapy so that they could mend their relationship. Ms. Friedensohn responded starkly that it had already been done, that she had spoken to Mamoon Hamid (Modern Health’s third Board Member, and Partner with Kleiner Perkins), and the lawyers, and that there was nothing further to discuss. Ms. Johnson called Mr. Hamid that same day, on September 20, 2019, to discuss. Ironically, Mr. Hamid had just finished recording a podcast with TechCrunch to discuss the cult of the founder and Silicon Valley’s lack of moral authority. Mr. Hamid assured Ms. Johnson that he, Ms. Friedensohn, or the Company would not be taking any of her equity, and the two had an otherwise productive call discussing Company strategy. Mr. Hamid noted that he would call Ms. Friedensohn and recommended co-founder therapy. Ms. Johnson met with Mr. Hamid on September 24 and 26, 2019 to discuss her concerns with Ms. Friedensohn and the Company, including those concerns laid out in this letter. Mr. Hamid was dismissive of Ms. Johnson’s concerns. Of course, Kleiner Perkins had led a $9 million Series A in Modern Health, and the Company was now pursuing a Series B with a valuation of at least $150 million, so Mr. Hamid was incentivized to not rock the boat—the very issue Mr. Hamid raised about investors in WeWork and similar companies in his TechCrunch podcast. Mr. Hamid claimed to have conducted an investigation, which consisted primarily of his interviewing Company employees who reported to Ms. Friedensohn and had recently received stock options or generous refresh grants from Ms. Friedensohn. It was readily apparent that Mr. Hamid had not conducted anything resembling a diligent investigation. Rather than use the meeting as an opportunity to learn more about the Company’s issues and liability, as was his fiduciary obligation as a Board member, Mr. Hamid instead used the opportunity to intimidate Ms. Johnson. In the middle of the September 26, 2019 meeting, Mr. Hamid announced that Damien Weiss had just arrived and would be meeting with Ms. Johnson. Ms. Johnson did not know who Mr. Weiss was, and she had not previously discussed meeting with Mr. Weiss. When Ms. Johnson inquired, Mr. Hamid told her that Mr. Weiss was Kleiner Perkins’ outside counsel, with Wilson Sonsini Goodrich & Rosati. Ms. Johnson saw Mr. 4 Hamid’s pressure tactic for what it was, and refused to meet with Mr. Weiss. This aggravated Mr. Hamid, who continued to pressure Ms. Johnson to meet with Mr. Weiss. When she again refused, the meeting concluded. Still shaken by what had happened, Ms. Johnson returned home 4 Mr. Weiss later sent a text message to Ms. Johnson threatening to have her arrested. This is in keeping with Company counsel’s letter threatening arrest as well. DHILLON LAW GROUP INC. 177 POST STREET, SUITE 700 | SAN FRANCISCO, CA 94108 | 415.433.1700 | 415.520.6593 (F) EXHIBIT_A_PAGE_09 Rebecca L. Stuart, Esq. CONFIDENTIAL SETTLEMENT COMMUNICATION Damien M. Weiss, Esq. Wilson Sonsini Goodrich & Rosati October 10, 2019 Page 7 of 8 on September 26, 2019 to find her access to Company accounts being terminated. It had been as if Mr. Hamid had coordinated with the Company, and the Company was instructed to lock Ms. Johnson out of her accounts while she was busy meeting with Mr. Hamid. On September 27, 2019, Ms. Friedensohn called a Company meeting to announce that Ms. Johnson was purportedly no longer with the Company. While Ms. Friedensohn feigned sadness, she was apparently celebrating her pushing Ms. Johnson out of the Company in separate meetings with the sales teams and others. At the same time, Ms. Friedensohn made defamatory statements about Ms. Johnson falsely alleging that she was embezzling Company funds; locking the Company out of its accounts, and downloading Company proprietary information for her personal use. Ms. Friedensohn only sent Ms. Johnson notice on September 28, 2019, purporting to terminate Ms. Johnson as an employee of Modern Health. Indicative of Ms. Friedensohn’s true intentions and mindset, she waited to fire Ms. Johnson until it was Ms. Johnson’s birthday, and Ms. Johnson was not the first Modern Health employee Ms. Friedensohn fired on their birthday. Based on the aforementioned conduct, Ms. Johnson holds claims for breach of fiduciary duty, unlawful termination, hostile work environment, retaliation, and more. As we noted above, we are preparing a complaint now, relying on this fact set. Ms. Johnson Rejects the Company’s Claims The Company’s allegations show a surprising lack of diligence, and are rejected. For example, you have alleged that documents such as the Company’s sales presentations and pitch decks are trade secret or proprietary information. However, as those materials were shared with third parties, they cannot be considered trade secret or confidential materials. More importantly, your allegations ignore that Ms. Johnson is still a Director of Modern Health. Directors of Delaware corporations are entitled to unfettered access to the books and records of a corporation. McGowan v. Empress Entm’t, Inc., 791 A.2d 1, 5 (Del. Ch. 2000). Ms. Johnson is entitled to retain and seek additional documents from the Company so that she may honor her fiduciary obligations to the Company. Your allegations that Ms. Johnson locked the Company out of any accounts are similarly without merit. Ms. Johnson’s mother was serving as the accountant for the Company. The Company elected to terminate her access to Company records without notice. 5 Not knowing what was going on, and with the aim to protect the financial records of the Company, the accountant cut off access to everyone but herself. When it was made clear to the accountant what had transpired, the accountant transferred access back to the Company the following business day. 5 As with Dr. Selig, the accountant was terminated without any apparent transition plan by the Company. DHILLON LAW GROUP INC. 177 POST STREET, SUITE 700 | SAN FRANCISCO, CA 94108 | 415.433.1700 | 415.520.6593 (F) EXHIBIT_A_PAGE_10 Rebecca L. Stuart, Esq. CONFIDENTIAL SETTLEMENT COMMUNICATION Damien M. Weiss, Esq. Wilson Sonsini Goodrich & Rosati October 10, 2019 Page 8 of 8 The allegation that Ms. Johnson threatened a fellow parent and Modern Health employee at a preschool drop-off is particularly frivolous. Ms. Johnson does not have any children, has not been dropping off other people’s children at any preschool, nor has she been around any preschools. Finally, the Company’s allegations that Ms. Johnson or others have engaged in any defamation or tortious interference are similarly baseless. Ms. Johnson has not advised any Company employee to quit their jobs. Ms. Johnson is a significant shareholder in the Company, a Director, and wants to see the Company succeed. She has strong relationships with many of the Company’s employees, and would never arbitrarily place them in an uncomfortable situation. In fact, certain Company employees proposed quitting, and she cautioned them against taking such immediate action. Many Company employees were rightfully concerned with what had happened, so Ms. Johnson did invite some of them over to her house for dinner to assuage their concerns. Ms. Johnson did not make any defamatory statements. While you have alleged that statements she has made are provably false, I have not seen any such detail. Resolution Given the risk to the Company, and its patients’ health, it is important to Ms. Johnson that the parties reach a resolution quickly. Any resolution will require that there be increased oversight by the Board and other interested stakeholders to ensure further misrepresentations are not made. The Company will also need to engage in corrective and compensatory action given its misconduct, which will include at minimum, agreed upon public statements and non- disparagement commitments. We look forward to discussing with you how my client’s concerns can be addressed, and the Company protected. It is clear that Ms. Friedensohn cannot serve as the CEO of Modern Health, and she must step down immediately. The Company should begin the search for a replacement interim and long-term CEO immediately and Ms. Johnson is prepared to assist in the transition. We look forward to discussing this matter with you. As we noted above, should we not feel confident by early next week that these issues will be resolved amicably, we will move forward with a suit. Our preference remains that we are able to reach a private resolution, but will not hesitate to file suit. Ms. Johnson reserves all rights. Regards, Nitoj P. Singh DHILLON LAW GROUP INC. 177 POST STREET, SUITE 700 | SAN FRANCISCO, CA 94108 | 415.433.1700 | 415.520.6593 (F) EXHIBIT_A_PAGE_11 1 PROOF OF SERVICE 2 3 I, Heather L. Hunt, declare: 4 I am employed in Santa Clara County, State of California. I am over the age of 18 years 5 and not a party to the within action. My business address is Wilson Sonsini Goodrich & Rosati, 6 650 Page Mill Road, Palo Alto, California 94304-1050. 7 On this date, I served: 8 1. DECLARATION OF REBECCA STUART IN SUPPORT OF DEFENDANTS’ DEMURRER TO PLAINTIFF’S COMPLAINT; INDEX 9 OF EXHIBIT AND EXHIBIT 10 By serving the document(s) by electronic transmission via One Legal to the parties listed below: 11 Harmeet K. Dhillon 12 harmeet@dhillonlaw.com Nitoj P. Singh 13 nsingh@dhillonlaw.com John-Paul S. Deol 14 jpdeol@dhillonlaw.com DHILLON LAW GROUP INC. 15 177 Post Street, Suite 700 San Francisco, CA 94108 16 Telephone: (415) 433-1700 Facsimile: (415) 520-6593 17 18 I am readily familiar with Wilson Sonsini Goodrich & Rosati’s practice for collection and 19 processing of documents for delivery according to instructions indicated above. In the ordinary 20 course of business, documents would be handled accordingly. 21 I declare under penalty of perjury under the laws of the State of California that the 22 foregoing is true and correct. Executed at San Jose, California on May 7, 2020. 23 24 Heather L. Hunt 25 26 27