Former Steep Hill Labs CEO and Chairman Jmichaele Keller is suing the company and its investors to block the sale of certain assets to competitor EVIO, Inc., alleging that the transaction would “dismantle Steep Hill and strip shareholders of value,” according to a press release issued by PryorCashman LLP, a Los Angeles-based law firm representing Keller.
The deal “includes a series of internal transactions that would dilute existing shareholders from 100% of Steep Hill’s equity down to just 4%,” Keller’s attorney, PryorCashman’s Thomas Vidal, said in a public statement.
Keller initially filed the suit earlier this year in San Francisco Superior court, accusing Steep Hill and various stakeholders—including Merida Capital Partners, Mitch Bryan Baruchowitz, Jeffrey Monat, Gotham Green, Richard Jacinto II, Stephen Joseph Finfer, Randy Slifka, Jane Wright-Mitchell and Dr. Andrew Rosenstein—of abuse of fiduciary duty, abuse of control, corporate waste, fraud and concealment, misrepresentation of stock ownership and proxy voting, and more.
Keller alleges that Steep Hill’s board and management “ran the company into the ground” and “squandered between $75 million and $200 million of shareholder value” after ousting him from the company in August 2018, according to PryorCashman’s announcement.
Keller’s complaint and the subsequent PryorCashman press release made public the previously confidential details of the transaction between Steep Hill and EVIO, according to a press release issued by Steep Hill this week.
Under the deal, Steep Hill plans to sell its genetics-related intellectual property and genetics team to EVIO, and Keller’s lawsuit alleges that he was terminated because he resisted “efforts by a ‘cabal’ of investors seeking to enrich themselves at the expense of shareholders,” according to PryorCashman’s release.
“It is the company’s position that the claims laid out in the complaint are without merit and appear to be motivated by Keller’s attempts to blame innocent shareholders for enforcing their rights and attempting to seek recovery for his alleged malfeasance, breaches of shareholder trust and other actions as detailed in the company’s arbitration complaint,“ Jeff Monat, Chairman of the Board of Steep Hill, said in a public statement.
Steep Hill has an ongoing lawsuit against Keller and his management company, Delft Blue Horizons, for corporate malfeasance, among other allegations, which was filed in January 2019.
Both parties are awaiting their lawsuits to be heard, and as Steep Hill prepares its arguments, it is considering seeking restitution from PryorCashman, as well as the disqualification of the law firm as Keller’s counsel.