IMO, here’s the “meat” of lawsuit filed yesterday by RC/TK — they seem to claim that BOD firing was hostile and in retaliation of WhistleBlower Complaint filed against BOD members.
1. This lawsuit seeks redress against five members of the Board of Directors who hijacked control of a company to commit securities fraud and enrich themselves personally at their fiduciaries’ expense, then retaliated against two executives who blew the whistle on their misconduct. Plaintiffs Robert Chioini (“Chioini”) and Thomas Klema (“Klema,” and collectively, “Plaintiffs”) served, respectively, as the long-time Chief Executive Officer, President, founder, and Director of, and the Chief Financial Officer of, Rockwell Medical, Inc. (“Rockwell” or the “Company”). Rockwell is a pharmaceutical company that has long sought the development, production, marketing, and profitable distribution of a particular proprietary drug, Triferic. Defendants Benjamin Wolin (“Wolin”), Mark Ravich (“Ravich”), John Cooper (“Cooper”), Robin Smith (“Smith”), and Lisa Colleran (“Colleran,” and collectively, the “Defendants” or “Conflicted Directors”) are five of the eight members of Rockwell’s Board of Directors. Over the past eighteen months, the five Defendants, in concert with David Richmond (“Richmond”), a registered investment advisor who, together with his approximately 600 clients, controls a large stake in Rockwell, have pursued a strategy designed to enrich themselves at the expense and detriment of Rockwell and its shareholders. Plaintiffs, together with non-party Directors Ronald Boyd ”) and Patrick Bagley (“Bagley”), have acted to protect Rockwell and its shareholders from Defendants’ misconduct.
(Skipped Point 2, mostly legal jargon)
3.Chioini and Klema were suspicious of the Defendants, and came into possession of evidence which tended to show that the Defendants were acting in concert with Richmond to enrich themselves, waste corporate assets, and defraud the Company and its shareholders at the expense of Rockwell, in part through the aforementioned breaches of securities laws, Company policies and procedures, and fiduciary duties. Plaintiffs reported these matters internally to certain Board members and outside legal counsel to Rockwell to no avail.
4.Seeking to protect Rockwell and put an end to Defendants’ unlawful and unethical conduct, on Thursday, May 17, 2018, Chioini and Klema filed, through counsel, a whistleblower complaint with the SEC (the “Whistleblower Complaint”).
5. On Monday, May 21, 2018, Chioini and Klema received a shareholder demand letter (the “Demand Letter”), and promptly informed Rockwell’s outside SEC counsel. The Demand Letter made serious allegations of wrongdoing against Richmond, and of wrongdoing and/or mismanagement against most of the Defendants to this suit. The Demand Letter served to further confirm Chioini’s and Klema’s suspicions that a majority of the Board was acting in concert with Richmond to fraudulently enrich themselves at the expense of Rockwell and its shareholders, in violation of federal securities laws, Michigan law, and their fiduciary duties. Plaintiffs promptly disclosed the Demand Letter to Rockwell’s auditors and other counsel, who advised that it would be both customary and best practice for the two Directors not implicated by the allegations, Boyd and Bagley, to conduct and supervise an independent investigation.
6. Upon information and belief, the very next day, the five Defendants met in secret and held a separate, secret conference call. Upon further information and belief, during these two discussions, from which two independent directors, Bagley and Boyd, were excluded, Defendants determined to terminate Chioini immediately and to terminate Klema soon thereafter, in retaliation for the Whistleblower Complaint and completely hijack the Board and the Company.
7.Chioini and Klema also informed the Board on May 21 that they had received the Demand Letter. Pursuant to Rockwell’s Bylaws (the “Bylaws”), Chioini called for an emergency meeting to be held that same evening of May 21 to discuss the Demand Letter. Plaintiffs also intended to notify the Board of the Whistleblower Complaint. All eight Directors, including Chioini, accepted a calendar invitation to the Emergency Meeting, but shortly thereafter, several Defendants began attempting to delay the call, many doing so on the basis that there was no rush to meet. When the scheduled time came, all five Defendants, most without excuse or prior notice, failed to join the conference call; only Chioini, Klema, Boyd, Bagley, outside counsel, and the firm’s general counsel attended. During this Meeting, Bagley and Boyd agreed to conduct and supervise the independent investigation, for which Dickinson Wright would be retained, into the Demand Letter’s allegations of wrongdoing. At 5:45 PM on May 21, Klema called for a second Special Meeting of the Board to take place the next day, Tuesday, May 22, 2018, at 6:00 PM pursuant to the Bylaws. In that email, Klema disclosed to the Board that he and Chioini had filed the Whistleblower Complaint with the SEC for the first time.
8.Barely twenty-four hours after that disclosure, the Conflicted Directors, without prior notice to or the consent of Bagley, Boyd, or Chioini, usurped the May 22, 2018 Special Meeting, purported to summarily fire Chioini, thereby violating Chioini’s Employment Agreement and the company’s Bylaws. The two non-conflicted directors, Bagley and Boyd, were not permitted to speak before the vote to fire Chioini was called, and one of the two non-conflicted directors was not permitted to cast a vote. Defendants then issued a materially false and misleading press release and an 8-K, purportedly on behalf of the Board, but giving no prior notice of them to Boyd, Bagley, or Chioini, both of which falsely stated that Chioini had been terminated and had resigned from the Board. When Klema refused to abet Defendants’ actions and instead followed the directives of the sole two non-conflicted Directors, he too was purportedly terminated by Defendants, again violating Klema’s Employment Agreement and the Bylaws, again without the consent of or prior notice to Bagley or Boyd, and again followed by the issuance of a materially false and misleading 8-K.
9.Plaintiffs now respectfully request that this Court find that Defendants violated, inter alia, 15 U.S.C. § 78u-6(h) (“Dodd-Frank Whistleblower Protection”), the Michigan Whistleblowers’ Protection Act, and Michigan public policy, and grant Plaintiffs relief, including, but not limited to, damages, reinstatement in those positions they were purportedly terminated from in retaliation for filing the Whistleblower Complaint, attorney’s fees, costs, and whatever other relief this Court finds is just and proper.