VMware Sues Former Executive Who Left for CEO Job at Nutanix
(Bloomberg) -- VMware Inc. said that one of its former top executives, Rajiv Ramaswami, violated his contractual obligations while being courted to be the chief executive officer of rival Nutanix Inc., adding another dimension to a bitter rivalry between the two software makers.
VMware’s lawsuit against Ramaswami, who was named CEO on Dec. 9, was filed Monday in California state court in San Jose. The company accused its former chief operating officer of products and cloud services of meeting with Nutanix executives and board members while helping VMware craft a strategy and acquisitions road map. VMware, majority owned by Dell Technologies Inc., said the executive’s actions and knowledge of its plans has caused “irreparable injury.” Nutanix, which wasn’t named as a defendant in the suit, called the case “misguided” and said it’s an attempt by VMware to hurt a competitor.
“We cannot unring the bell of that conflict that existed during that two-month period that he was engaged with Nutanix while involved in planning for us,” Brooks Beard, a VMware vice president and deputy general counsel, said in an interview. “Through this lawsuit, we’re hoping that we can find a way to protect VMware’s rights and interests, steps that we would have taken, could have taken, had he alerted us of this conflict.”
The Palo, Alto-based software maker may seek to recoup its compensation to Ramaswami during the time period and wants to “meaningfully engage” with the executive and his new employer to ensure they won’t use confidential VMware information to make competitive decisions, Beard added.
San Jose, California-based Nutanix, in a blog post Monday, said the company and its new CEO have done nothing wrong.
“Nutanix and Mr. Ramaswami assured VMware that Mr. Ramaswami agreed with his obligation not to take or misuse confidential information, and VMware does not contend otherwise,” Nutanix said Tuesday when it amended the post. “However, VMware requested that Mr. Ramaswami agree to limit the ordinary performance of his job duties in a manner that would equate to an illegal non-compete covenant, and it requested that Nutanix agree not to hire candidates from VMware in a manner that Nutanix believes would be contrary to the federal antitrust laws.”
VMware and Nutanix compete in networking, cloud computing and hybrid-cloud markets. The companies’ rivalry erupted in a public fracas in 2019 after Nutanix launched a campaign called “Decide” that VMware found “vitriolic.” Former Nutanix CEO Dheeraj Pandey wrote a blog post titled, “Stop being a bully, VMware,” in which he compared his battle against the company to the struggle for civil rights in the U.S., the American Revolution, and India’s movement for independence from the British Empire.
VMware accused Ramaswami, who spent more than four years at the company, of breaching contractual agreements, duty of loyalty, fiduciary duty as well as unfair competition. The company said that one month before the executive left his job, he downloaded 2,200 files from his VMware computer to a personal hard-drive without VMware’s knowledge or consent. Ramaswami said the files were “personal,” which the company argued is further evidence he knew in advance that he would be leaving VMware.
A copy of the complaint was provided by VMware. It couldn’t immediately be confirmed in electronic court records.
©2020 Bloomberg L.P.