iVillage Case Moving To New York Court

A Nashville, Tenn., judge late Friday declined to dismiss a lawsuit brought by a former executive of the online women’s network iVillage Inc. and ruled it will proceed in a New York court instead of Tennessee as the company had requested.

The ruling means the potentially damaging case will move forward as the company prepares to go public this week. The shares are set to be priced later Monday. Lead underwriter Goldman Sachs & Co. said it will go ahead with the offering despite the company’s problems, according to a report in the Financial Post.

The lawsuit, filed by Todd Kenner, is supported by comments from a former iVillage chief financial officer who submitted a brief in support of his suit.

Kenner claims he was lured to New York last summer from Nashville after the company promised him a senior position and 100,000 stock options. Kenner said he was told the options would be worth up to $2 million once the company went public.

Kenner said he was fired without cause after less than six months with the company and never received the options he was promised. His lawyer alleges the treatment was part of a pattern of “systematic fraud” iVillage used in recruiting senior executives, according to the newspaper report.

Attorney Paul Yetter said Kenner was led to believe he was taking a position of long-term employment in a stable company and instead found “a company that had a revolving door for executives.”

iVillage attorney Jeffrey Conciatori called the proceedings a simple employment case. He said Kenner decided on his own to take the job and was dismissed because of his work performance and other unspecified matters.

Conciatori attacked sworn statements by former company executives, calling them “outrageous and scurrilous.” Both the former executives said they too never received promised stock options. They also attacked the company’s business practices.

U.S. District Judge Aleta Trauger agreed to seal the statements after iVillage successfully argued they are potentially damaging and should not have been filed as part of jurisdictional arguments.

Trauger said she agreed to move the case because it is important for the court that decides the case “to be able to look into the eyes” of people as they testify about the conditions of Kenner’s employment. Most of the people involved in the case reside in the New York area.

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