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Human resources software company Rippling has initiated legal proceedings against its rival Deel, filing a lawsuit in federal district court on Monday. The lawsuit alleges that Deel orchestrated a scheme involving a hired employee, referred to as a “spy,” who allegedly stole trade secrets from Rippling.
The complaint, filed in the U.S. District Court for California’s Northern District, states that this employee engaged with Deel executives and transferred confidential internal documents to a journalist. According to Rippling, Deel has violated the Racketeer Influenced and Corrupt Organizations Act, as well as misappropriated trade secrets.
Rippling, which has garnered a valuation of $13.5 billion during a recent funding round, is one of the leading startups in the human resources software sector. Deel, another high-value player in the industry, reported a valuation of $12 billion earlier this year. Notably, Deel made an appearance on CNBC’s 2024 Disruptor 50 list, ranking at number 28.
A spokesperson for Deel reacted to the lawsuit, asserting that Rippling is attempting to distract from its recent accusations of violating sanctions in Russia by making sensational claims against Deel. The representative stated, “We deny all legal wrongdoing and look forward to asserting our counterclaims.”
Rippling’s legal filing details an incident in which the company’s general counsel issued a warning to Deel executives regarding communications in a newly established Slack channel. Following this, the employee allegedly sought out the Slack channel and was subsequently served with a court order in Dublin, Ireland. This order required the individual to preserve data stored on his mobile device.
The filing draws attention to actions taken by the employee, who is accused of misleading a court-appointed solicitor concerning the whereabouts of his phone. It is reported that he attempted to delete evidence while locked in a bathroom, despite warnings against such actions. Rippling described this as a breach of court orders, with the individual reportedly stating, “I’m willing to take that risk,” before absconding from the location.
The lawsuit claims that the employee accessed sensitive customer data and internal communications, including sales strategies and customer support requests. Rippling noted that they hired this individual in a management capacity in 2023, coinciding with an intensification of competition between the two companies. Notably, Deel had previously utilized Rippling’s software, but the contract was not renewed.
In February, Rippling received inquiries from a reporter at The Information, which included Slack messages that Rippling believes were acquired through the actions of the alleged spy. Furthermore, an email trail indicates the individual had met with Deel executives in December, which adds weight to Rippling’s claims.
Parker Conrad, the co-founder and CEO of Rippling, stated in a post on social media that while the company prefers to excel through innovation and product development rather than litigation, they are taking this significant step to highlight the unacceptable nature of such misconduct within the industry.
This is not the first legal issue for Conrad related to data access. In 2015, he was involved in a defamation case when ADP accused his previous startup, Zenefits, of improperly acquiring information from clients for payment processing services. Ultimately, ADP dropped the lawsuit.
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