Bakotic / Bako Litigation

Bako Diagnostics’ Open Letter
to the Podiatry Medical Community

Dear Podiatric Medical Community,

In light of our steadfast commitment to the podiatry community and ongoing support of education in our industry, we are reaching out as Bako Diagnostics has been made aware of continued disparaging, misleading and inaccurate comments being made by our former CEO, Dr. Bradley Bakotic. Based upon these inaccuracies and in the spirit of full transparency, we are providing the legal documents that we’ve filed and the facts related to this situation.

Just two months ago, we informed the public that we hoped to set the record straight about the behavior that led to Dr. Bakotic’s termination from the company and the actions he has since taken to degrade the sterling reputation of Bako Diagnostics as well as reiterating our continued focus on delivering the highest quality laboratory services and products and educational outreach that our valued clients and the podiatric profession have come to expect.

It is therefore under unfortunate circumstances that we feel compelled to provide a further update. As we’ve stated before, at Bako Diagnostics, our highest priorities include upholding the quality and integrity of our work, maintaining the utmost professional standards, ensuring that our company provides a safe workplace for our employees and supporting the next generation of podiatric medical professionals. Given these values, we are incredibly saddened by the events that have transpired over the last year. No leadership team or corporate board wants to be in a position to make a difficult decision about whether the company’s CEO is fit to continue to lead, particularly when faced with pointed questions about if the company tolerates a culture where professional standards can be breached and employee welfare is jeopardized.

After receiving an explicit and disturbing letter complete with graphic images from the legal counsel of a Bako employee alleging that Dr. Bakotic pursued a sexual relationship with and later physically struck her and claiming that he created a hostile work environment fraught with violence and sexual harassment, a special committee of the company’s board saw no other option but to investigate the allegations of misconduct. Immediately, the committee hired outside counsel, Latham & Watkins, to conduct a comprehensive, independent investigation, during which Dr. Bakotic admitted, with his lawyer present, to instances of misconduct, including sexual relationships with subordinate female employees, as well as physically striking one of the female employees with whom he was having an ongoing relationship. Latham & Watkins also received multiple allegations of illegal drug use by Dr. Bakotic, which they found to be credible. While Dr. Bakotic has since stated he did not settle with the female employee, his statements are in direct contrast to what her legal counsel publicly confirmed in February 2018 when her lawyer told Delaware Law Weekly affiliate Daily Report that his client reached confidential agreements with Dr. Bakotic and the company.

At the conclusion of the investigation, Latham & Watkins provided a recommendation to the committee that Dr. Bakotic be terminated. The committee notified Dr. Bakotic of his termination on September 8, 2017 but did not rule out a future role for Dr. Bakotic to serve in an advisory capacity to Bako, if he successfully completed counseling and demonstrated that he could be a good corporate citizen. At the time, the committee was hopeful that Dr. Bakotic would recognize his digressions and seek the appropriate help he needed to rejoin the Bako community. In fact, many of us were not only deeply troubled by Dr. Bakotic’s behavior uncovered in the investigation but were puzzled by his actions, which seemed to contradict the man we all thought we knew. Just a few years ago, we looked to Dr. Bakotic as one of the most impressive leaders and innovators in our industry.

It is with further disappointment that we have witnessed Dr. Bakotic’s unprofessional and erratic behavior since his termination from the company. Rather than reflecting on his actions that led to his termination, and working with the Company to remain part of the Bako community, he has repeatedly altered the facts of his departure and proclaimed his innocence, which we find to be disingenuous and unethical, particularly after his admission to physically striking a female employee. Moreover, Dr. Bakotic has undertaken legal action against the company, asking the court to nullify his non-compete agreements, while failing to mention that he signed the agreements voluntarily and as part of a 2016 transaction where he sold certain interests in the company for over $30 million. These types of non-compete agreements are commonplace in business and are critical components of allowing Bako to continue to conduct business without unfair competition. We had no choice but to respond with our own legal claims following Dr. Bakotic’s lawsuit.

As a result of Dr. Bakotic’s continued disregard for his non-compete agreements, Bako Diagnostics recently sought a temporary restraining order (TRO) against Dr. Bakotic in an effort to protect our business and safeguard these important contractual promises made by Dr. Bakotic. Initially, Bako Diagnostics was supportive of Dr. Bakotic’s intention to continue lecturing and educating in the podiatry community and if Dr. Bakotic would simply abide by the terms of his non-compete agreement, this TRO would no longer be necessary. But despite many months of discussions aimed at finding an amicable solution, we took this action in response to Dr. Bakotic’s continued attempt to disrupt the company’s business operations and our conclusion that Dr. Bakotic’s Rhett Foundation is being used as a tool to directly violate his non-compete agreement.

These facts speak for themselves and are clearly described and outlined in our legal filings, a full copy of which can be found here.

Despite the ongoing distractions, Bako Diagnostics remains committed to supporting our more than 250 employees, current and potential clients, and the next generation of the podiatry community. We are optimistic about the future of the industry and believe that it is important to stand up for what we believe is right and ethical in challenging times like these. We believe in fostering an inclusive community where misconduct of any kind will not be tolerated and with this letter, reiterate our commitment to protect the integrity of the podiatry community.

If you have any questions about this matter please see Bako Diagnostics’ FAQ or feel free to reach out to us directly. We thank you for your continued support and look forward to our ongoing relationship.

Sincerely,

Bako Diagnostics

Case Information: The Court filings related to Bradley Bakotic, et al. v. Bakotic Pathology LP, et al; may be found under Case Number: N17C-12-337 WCC in the Superior Court of New Castle County, Delaware

The Court filings related to BAKO PATHOLOGY LP and BPA HOLDING CORP., v. BRADLEY BAKOTIC and JOSEPH HACKEL; may be found under Case Number: 2018-0520- in the Chancery of the State of Delaware.

Litigation Update

FAQ

Legal Filings

Answer and Counterclaims in the Superior Court of New Castle County, Delaware (Bradley Bakotic, et al. v. Bako)

DEFENDANTS' ANSWER to Complaint and Counterclaims

Exhibit 1 – Bradley Bakotic and Joseph Hackel Confidentiality, Non-Solicitation and Non-Competition Agreement

Exhibit 2 – Agreement and Plan of Merger, Including Confidentiality, Non-Compete, and Non-Solicit Covenants

Exhibit 3 – Letter Sent to BakoDx Board of Directors Regarding Accusations Against Bradley Bakotic

Exhibit 4 – Bradley Bakotic Termination Letter


Complaint and Brief in Support of Temporary Restraining Order, filed in the Chancery of the State of Delaware (Bako v. Bradley Bakotic and Joseph Hackel)

Verified Complaint for Injuctive Relief

Exhibit 1 to Verified Complaint – Select Marketing Materials During 2015 Sale of Equity Interest in BakoDx

Exhibit 2 - Agreement and Plan of Merger, Including Confidentiality, Non-Compete, and Non-Solicit Covenants

Exhibit 3 - Amended and Restated Limited Partnership Agreement, Including Non-Compete Covenants

Exhibit 4 - Bradley Bakotic and Joseph Hackel Confidentiality, Non-Solicitation and Non-Competition Agreements

Exhibit 5 - Transcript of the Declaratory Judgment Action Hearing on April 30, 2018

Exhibit 6 - Various Statements from Bradley Bakotic’s and Joseph Hackel’s Counsel

Exhibit 7 - Various Statements from Bradley Bakotic’s and Joseph Hackel’s Counsel

PLAINTIFFS' BRF ISO MOT for TRO – Bako’s Opening Brief in Support of Their Motion For Temporary Restraining Order


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