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Vungle founder Zain Jaffer was removed from his role as CEO of the video adtech company in 2017, and today he sued for wrongful termination.
Jaffer said he was wrongfully removed from the position on October 17, 2017, in the wake of his arrest for felony assault, lewd act upon a child, and other related charges. Those charges were dismissed in July 2018, but Jaffer was not reinstated as CEO. By that time, the company had replaced him with Rick Tallman. VentureBeat has reached out to Vungle for comment.
Attorneys for Jaffer filed the lawsuit today in San Francisco County Superior Court, alleging a violation of California labor laws. Jaffer was CEO for seven years, but he was removed by the Vungle board after he was arrested. At the time, sheriff’s deputies went to his home following reports that he was unresponsive and acting bizarrely. Within 24 hours, the board fired Jaffer. At first, the board described the dismissal as an “indefinite leave of absence.”
Following the incident, the District Attorney’s Office ultimately dismissed all charges and took the very unusual step of releasing a statement saying the facts did not support the case and that the incident resulted from Mr. Jaffer “being in a state of unconsciousness caused by prescription medication.”
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A former Vungle board member, Anne-Marie Roussel, publicly stated that she resigned from the board due to ethical concerns related to the way Jaffer was terminated, complaining that the board dismissed Jaffer “based on presumption of guilt” and ignoring that “we live in a democracy where [a] key legal right is presumption of innocence” and a defendant is innocent until proven guilty, Jaffer said in an announcement.
Jaffer’s lawsuit alleges that Vungle violated California Labor Code Section 432.7, which prohibits employers from terminating employees because of an arrest that did not result in a conviction. He further claims that Vungle seized ownership of Company shares due him, amounting to tens of millions of dollars, and refused to pay substantial bonuses due him. Jaffer alleged Vungle has continued to disregard his rights as an employee and shareholder.
“Once I was absolved of any wrongdoing, I was looking forward to a friendly relationship with the company,” Jaffer said in a statement today. “Instead, Vungle unfairly and unlawfully sought to destroy my career, blocked my efforts to sell my own shares or transfer shares to family members, and tried to prevent me from purchasing shares in the company.”
Jaffer is represented by Louis “Chip” Edleson and Joann Rezzo of Edleson & Rezzo, a San Diego law firm that routinely represents high level executives in employment disputes.
“The law is very clear: employers cannot fire employees because of an arrest that does not result in a conviction,” Rezzo said, in a statement. “Vungle did exactly that, and then the Company announced what it had done to the press. With this clear supporting evidence, this is one of the strongest employment cases we have ever seen. And, based on Mr. Jaffer’s compensation package and loss of valuable stock, his case has the potential to be one of the largest cases ever for wrongful termination of employment.”
Mr. Jaffer founded Vungle in 2011. Under his leadership as CEO, the Company grew beyond $300 million in annual revenue, set up eight international offices, and hired more than 200 employees. He was the largest shareholder of Vungle prior to the firing and remains the company’s second-largest shareholder. However, he still retains the largest voting powers of any shareholder, Jaffer said in a press release.
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