Update: Spokeo issued the following statement.
Ray Chen is one of the original founders of Spokeo and was instrumental in the company’s growth. On May 21, 2015, Spokeo’s board of directors made the difficult decision to end the employment relationship with Mr. Chen due to differences of opinion about the strategic direction of the business. However Mr. Chen remains actively involved with Spokeo as a member of its board of directors.
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A co-founder of the search engine Spokeo Inc. is suing the website along with two of his fellow co-founders, alleging he was wrongfully fired as CFO despite his role in developing the organization into a multimillion-dollar entity.
Ray Chen filed the lawsuit Tuesday in Los Angeles Superior Court against Spokeo co-founders Eric Liang and Harrison Tang, as well as Michael Daly, who the suit states is a Spokeo director and stakeholder.
The suit alleges wrongful discharge, retaliation and intentional infliction of emotional distress. Chen, who remains a member of Spokeo’s directors, seeks unspecified compensatory and punitive damages.
A Spokeo representative could not be immediately reached.
According to the lawsuit, Chen met Daly and Tang in 2003 when all were Stanford University undergraduates. Tang introduced Liang to Chen three years later and by June 2014, Chen, Daly, Liang and Tang were all Spokeo directors, according to the lawsuit.
But in June 2014, Chen, who had been Spokeo’s CEO since 2008, was removed in a “surprise coup” by three directors because of their personal animosity toward him and their desire to consolidate power under Tang, the suit alleges.
During six years as CEO Chen transformed Spokeo from a $1 million enterprise with less than 10 employees to an organization worth more than $50 million that employed more than 100 workers, the suit states.
Chen was relegated to CFO after his ouster as CEO, the suit states.
Chen also was marginalized by being excluded from important company decisions and wrongfully censured for an error that had minor financial impact on Spokeo, the suit states. The censure was “spearheaded by Daly,” according to the complaint.
Chen was fired May 21 as CFO “a day after the parties had begun discussing an amicable departure for Mr. Chen,” the suit states.
The suit alleges Chen was ousted because he questioned the three directors about what he perceived to be “a number of instances of misconduct and breaches of their fiduciary duty to Spokeo and its stockholders,” including the “waste of at least $12.6 million in Spokeo assets in connection with the pursuit of a personal project of the three directors called Family.me, a family tree website,” according to the complaint.
“Despite his termination, Mr. Chen continues to be an active director at Spokeo, attending meetings, seeking information to fulfill his fiduciary duties and asking pointed and uncomfortable questions about company decisions,” the suit states.
