Shareholder Sues Castlight Health over Vera Whole Health Acquisition

On Tuesday, Deven Shah filed a complaint in the Northern District of California against Castlight Health, Inc., and nine individual defendants alleging violations of the Securities and Exchange Act of 1934 in connection with a newly announced merger

According to the complaint, Deven Shah is a citizen of California and a Castlight Health, Inc. stockholder. The complaint further states that Castlight is a Delaware corporation that provides health navigation solutions for employers and health plan customers and is publicly traded. The remaining defendants are Castlight’s board of directors. 

The complaint states that on January 4, Castlight filed a merger agreement with the Securities and Exchange Commission (SEC) stating that Vera Whole Health, Inc. would acquire Castlight through the merger vehicle Carbon Merger Sub, Inc.. The terms of the merger agreement state Vera will acquire all of Castlight’s remaining outstanding shares at $2.05 a share resulting in Castlight becoming an indirect wholly-owned subsidiary of Vera. Additionally, the complaint states on January 19, Castlight filed a Solicitation/Recommendation Statement with the SEC in support of the proposed transaction and to solicit stockholders, including the plaintiff, to tender their Castlight shares in favor of the Proposed Transaction.  

However, Shah alleges that the sale process of Castlight to Vera was flawed and was conducted out of the self-interest of the board of directors. Specifically, Shah alleges that the Recommendation Statement describes an insufficient process in which the board of directors failed to create a committee of independent and disinterested directors to run the sales process. Further, Saha argues that the Recommendation Statement is materially deficient and deprives him of the information necessary to make an intelligent, informed and rational decision whether to tender in favor of the proposed transaction. 

Due to the flawed sales process and deficient recommendation statement, Salah brings the present lawsuit alleging violations of Section 14(e), 14(d)(4) and 20(a) of the Securities and Exchange Act of 1934. The plaintiff’s requested relief for these violations are enjoining the proposed transaction, rescission of the transaction if it is consummated, directing the board of director defendants to comply with the Securities and Exchange Act, attorneys fees and costs. The plaintiff is represented by Brodsky & Smith.