Secrets, Lies, and Lessons from the Theranos Scandal

Abstract

Theranos, Inc., the unicorn startup blood-testing corporation, was ultimately laid low by a former employee whistleblower. The experience of that whistleblower during and after her employment illuminates detrimental secrecy practices within the startup sector, as well as legal and practical barriers to corporate accountability. Theranos sought to avoid exposure by cultivating an environment of secrecy and intimidation, and by aggressively extracting and enforcing non-disclosure agreements. The legal landscape for whistleblowers facilitated this strategy: while whistleblowing employees enjoyed certain protections under anti-retaliation statutes, trade secrets statutes, and common law contract principles, these protections were neither readily accessible nor certain. This Article critically examines the contours and ambiguities of those legal frameworks, using the Theranos case study, and offers observations on the need for a harmonized public policy to facilitate private sector whistleblowing.