Case Background
Mordechai Avisar co-founded Surgical Theater, Inc. in 2010 and worked as the company’s Chief Executive Officer until August 2022. Surgical Theater produces and globally distributes a three-dimensional advanced visualization and image guidance platform for brain surgery and patient consultation. Avisar regularly performed his executive duties from his residences in California and at company facilities. Problems arose after HTC Corporation became the largest shareholder of Surgical Theater. Defendant Wen-Chi Chen served as a director for HTC Corporation and became the Chairman of the Board of Directors for Surgical Theater.
Chen entered into an exclusive distribution agreement that gave HTC the sole rights to market and distribute Surgical Theater products in East Asia. Over a seven-year period, HTC generated zero revenue in that territory. Avisar claimed that Chen intentionally blocked sales and starved the company of cash to artificially lower its value so Chen could acquire more ownership interest at a cheaper price. Avisar also discovered that Chen and another company he controlled had been ordered in foreign arbitrations to pay millions of dollars because they manufactured computer chips with hidden backdoor vulnerabilities. Avisar reported that these vulnerabilities allowed the Chinese Communist Party to access private data.
Because Surgical Theater handled confidential medical records, Avisar raised serious concerns to the board of directors regarding Chen's actions and foreign ties. Shortly after Avisar submitted whistleblower reports and openly opposed a predatory loan offer from Chen, the board of directors voted to terminate Avisar's employment during an August 2022 board meeting. Following his termination, the company also moved his personal belongings from company-leased housing into a storage unit and failed to return the majority of his property.
Cause
The legal dispute involved claims of whistle-blower retaliation, wrongful termination, and financial self-dealing. Avisar asserted that Surgical Theater fired him exclusively because he exposed corporate misconduct and safety threats. Surgical Theater brought counterclaims against Avisar, asserting that the former executive handled corporate funds improperly and breached his legal duties to the organization.
Injury
Avisar suffered severe financial losses, including the loss of his front wages, executive benefits, and corporate bonuses. He also experienced the loss of personal property valued at $48,000, including clothing, jewelry, and recording equipment that disappeared from a company-controlled storage unit. Surgical Theater sustained financial injuries resulting from Avisar exercising unauthorized control over corporate funds.
Damages Sought
Avisar filed his lawsuit seeking to recover financial compensation in excess of $18 million for front pay, lost benefits, interest, and punitive damages. Surgical Theater sought a judgment that would dismiss Avisar's claims entirely and award the company damages, reasonable attorney fees, and legal costs.
Key Arguments and Proceedings
Legal Representation
Plaintiff(s): Mordechai Avisar
Counsel for Plaintiff(s): Allen Graves | Jacqueline Treu | Benjamin M Cutchshaw | Bobby Samini | Jenny Jae Yu
Defendant(s): Surgical Theater, Inc. | Wen-Chi Chen
Counsel for Defendant(s): Roger Mansukhani | Joseph Huprich | Stephanie E. Gorman | John L Barber | Jon William Borderud | Michael A Laurenson
Key Arguments or Remarks by Counsel
Claims
Avisar's legal team argued that the executive functioned as a protected whistleblower under California law. Counsel stated that Avisar made direct disclosures to the designated corporate whistleblower recipient regarding Chen's illegal breaches of fiduciary duty and fraud. The Plaintiff argued that Chen held a massive conflict of interest, engaged in severe self-dealing, and hid foreign arbitrations regarding data security risks from shareholders.
Avisar's attorneys emphasized that the board fired the co-founder mere weeks after he raised these complaints and warned that HTC's ownership could spark a federal investigation by the Committee on Foreign Investment in the United States. Counsel also argued that the termination violated internal company bylaws because the board failed to provide notice to shareholders or call a formal shareholder meeting before staging the vote. Finally, the Plaintiff argued that the company committed conversion and breached bailment duties by withholding his personal belongings.
Defense
Surgical Theater's defense team denied all allegations of wrongdoing and countered that the board possessed legitimate, independent business reasons to discharge Avisar. The defense argued that Avisar's employment ended for good cause and denied that his internal letters qualified as a credible or valid whistleblower report.
The defense asserted that Avisar failed to take reasonable steps to minimize or mitigate his economic losses. Furthermore, corporate counsel argued that any post-resignation or post-termination claims were barred because Avisar committed misconduct himself, including the unauthorized theft of company property. Surgical Theater's lawyers presented counterclaims proving that Avisar breached his fiduciary duty and exercised unlawful control over the corporation's money without proper authorization or consent.
Jury Verdict
The civil trial concluded before United States District Judge John W. Holcomb in the United States District Court for the Central District of California. The jury evaluated distinct questions regarding the liability of both parties and returned a mixed verdict on April 21, 2026.
Before the final verdict, the Court reshaped the litigation through multiple dismissals. The Court dismissed Defendant Wen-Chi Chen from the lawsuit on January 10, 2024, which eliminated Avisar's fourth claim for intentional interference with prospective economic relations. On April 13, 2026, the Court dismissed Avisar's fifth, sixth, and seventh claims regarding conversion, penal code penalties, and breach of bailment against Surgical Theater.
On the remaining primary claims, the jury determined that Avisar proved by a preponderance of the evidence that Surgical Theater discharged him from his position as Chief Executive Officer in retaliation for disclosing information about an unlawful act. The jury also found that Surgical Theater failed to prove that it would have terminated Avisar anyway at that time for legitimate, independent business reasons.
The jury rejected Avisar's separate claim that the company retaliated against him for disclosing specific working conditions. Additionally, the jury found that Avisar failed to provide clear and convincing evidence that Surgical Theater acted with malice, fraud, or oppression, which barred any recovery of punitive damages. For his successful retaliation claims, the jury awarded Avisar $300,000 in past economic losses, while awarding zero dollars for future economic loss or non-economic damages.
Regarding the counterclaims, the jury found that Surgical Theater proved that Avisar breached his fiduciary duty to the company. The panel also determined that Avisar exercised control over Surgical Theater's personal money without receiving consent or permission. The jury found that Avisar did not act with malice, fraud, or oppression during this conduct. The jury awarded Surgical Theater $229,000 in damages against Avisar.
Judgment
Judge Holcomb entered the final judgment on May 29, 2026. The Court ordered that Avisar secure a judgment in his favor on his first and third claims for whistleblower retaliation and wrongful termination in violation of public policy, totaling $300,000. The Court entered judgment in favor of Surgical Theater on Avisar's second claim for working conditions retaliation. Finally, the Court entered judgment in favor of Surgical Theater on its second, third, fourth, and fifth counterclaims, ordering Avisar to pay the company $229,000. The Court dismissed Surgical Theater's first counterclaim and denied all other outstanding requests for relief.
Court documents are available upon request at [email protected]
