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Opko, Frost Group Ask Court to Dismiss Conspiracy Charges in Suit Filed by Rival

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Opko Health last week, responding to a lawsuit charging it with conspiring with a former employee to interfere with the business activities of rival ophthalmic technology firm Ophthalmic Imaging Systems, told a California Superior Court that its activities were not wrongful but rather part of standard business practices.
 
Further, Opko asked the court to dismiss the plaintiff’s claims because OIS’ suit “describes no wrongful acts by Opko,” but rather “relies on secondary theories of liability” such as conspiracy and aiding and abetting.
 
Meanwhile, the Frost Group, an investment firm headed by Opko Chairman and CEO Phillip Frost and one of Opko’s biggest shareholders, took steps last week to extricate itself as a defendant in the legal row, arguing to the court that it played no part in the events at the heart of the litigation.
 
As reported by RNAi News (see RNAi News, 5/22/2008), the legal battle began last May and centers around OIS’ claims that its negotiations with a third ocular imaging systems firm, Ophthalmic Technologies, about an undisclosed business arrangement broke down when OIS President Steven Verdooner left the company to join Opko as executive vice president of instrumentation. Subsequently, OTI was acquired by Opko (see RNAi News, 11/29/2007).
 
OIS said in its suit that as it held confidential talks with OTI, Verdooner began meeting with Frost about joining Opko. During the course of these meetings, Frost informed Verdooner that he knew of OIS’ negotiations with OTI and that Opko was interested in striking its own business relationship with OTI.
 
OIS charges in its suit that Verdooner, while he was its president, failed to inform other company officials about Frost’s intentions and instead “commenced a series of negotiations with Frost, Opko, and the Frost Group to take an executive position with Opko.”
 
The suit also alleges that Opko persuaded Verdooner with the promise of future employment to sign a confidentiality agreement not to disclose confidential information about OTI with other parties even though he was still president of OIS and even though OIS was engaged in its own negotiations with OTI.
 

“Opko may, of course, share its information with whomever it chooses. Opko is permitted to interview and extend job offers to whomever it pleases … [and] Opko has the absolute right to enter into non-disclosure agreements with prospective employees.”

Opko hired Verdooner in June 2007, but terminated his employment in January, according to an Opko filing with the US Securities and Exchange Commission.

Although OIS had originally only sued Verdooner for allegedly breaching his fiduciary duty to the company, in April it amended the suit to allege that Opko and the Frost Group intentionally interfered with its contractual relations and prospective economic advantage; aided and abetted Verdooner’s alleged breach of fiduciary duty; and conspired to cause breach of fiduciary duty, among other things.
 
But in court documents submitted this month and obtained by RNAi News, Opko contended that it had done nothing wrong in holding talks with and ultimately hiring Verdooner, and argued that confidentiality agreements are a normal part of such activities.
 
“None of these acts are wrongful,” Opko said in a request for dismissal of OIS’ suit. “Even if true, they cannot support [the legal] action [since] … Opko may, of course, share its information with whomever it chooses. Opko is permitted to interview and extend job offers to whomever it pleases … [and] Opko has the absolute right to enter into non-disclosure agreements with prospective employees.”
 
Additionally, Opko argues that it has “the absolute right to pursue business opportunities with whomever it pleases — there is no prohibition against pursing a business opportunity with a third party simply because another company is also pursuing that third party where there is no written agreement to the contrary.”
 
According to Opko, the claims against it hinge on the allegation that it induced Verdooner to sign a non-disclosure agreement in order to hide from OIS the fact that Opko was interested in OTI and knew of the OIS/OTI negotiations.
 
“In truth, the [agreement between Verdooner and Opko] is a standard form NDA designed to protect truly proprietary information,” Opko said in the court filing. “The NDA does not mention or refer to OIS, OTI, or Opko’s pursuit of OTI — not expressly nor impliedly.
 
“Moreover, the NDA was signed four months after … Frost first disclosed Opko’s interest in OTI to Verdooner,” the company added. “The facts complained of [by OIS] are simply outside the NDA’s provisions and are neither confidential nor proprietary.”
 
For its part, the Frost Group asked the court to dismiss claims against it because it “owed no duty to OIS and breached no duty to OIS.
 
“The Frost Group was never Verdooner’s employer, never engaged in negotiations with OTI, and never hired any former OIS employees,” the investment group said in a court filing. OIS’ complaint “makes clear that the Frost Group played no part in Verdooner’s employment after he left OIS,” and indicates that it was Opko that signed the confidentiality agreement, hired Verdooner, and negotiated to acquire OTI.

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