Legal battle unfolds between workforce management companies, with company 'spy' allegedly fleeing the scene
Two of the major players in HR technology are embroiled in a legal dispute, as Rippling files a lawsuit against Deel, accusing the rival firm of corporate espionage.
Rippling announced the lawsuit on its blog Monday, stating that that the suit, filed in a San Francisco federal court, alleges that Deel obtained confidential business information with the help of an internal informant.
“The lawsuit alleges Deel cultivated a Rippling employee to conduct thousands of suspicious searches and funnel stolen confidential business intelligence directly back to Deel,” the blog post states.
Allegations of corporate espionage
Rippling claims that one of its employees, based in Ireland, searched its Slack channels for information related to Deel “an average of 23 times per day” over the course of four months, “which allowed the spy to comprehensively capture every detail of Rippling’s sales pipeline competing with Deel.”
According to the lawsuit, Rippling became suspicious when Deel attempted to poach at least 17 Rippling employees on WhatsApp, Fortune reports.
Rippling’s internal investigation found that the employee searched Slack for the term “Deel” more than a dozen times a day and downloaded a 31-slide deck outlining Rippling’s competitive strategy, reports Business Insider.
“This was not an isolated act of misconduct – it was a deliberate attack, perpetrated for over four months, designed to steal and weaponize critical competitive data, including a competitor’s sales leads, sales pipeline, and its entire playbook for pitching prospective clients,” the lawsuit states.
A honeypot operation to confirm suspicions
Perhaps the most interesting part of the case is Rippling’s strategy dealing with the alleged intruder and the dramatic climax, described in detail in the lawsuit: when Rippling’s security team identified the “spy” through unusual activity on its systems, it set up a “honeypot” to catch the employee.
The honeypot operation had Rippling’s legal team send an email to three of Deel’s top executives – “Phillipe Bouaziz, the chairman of Deel’s board, CFO, General Counsel, and the father of Deel CEO Alex Bouaziz; Spiros Komis, Deel’s Head of US Legal; and the company’s outside counsel at law firm” according to the blog post – referencing a fake Slack channel called “#d-defectors” which allegedly contained sensitive information about Deel.
The lawsuit claims that Deel took the bait, and within hours the employee searched for and accessed the empty Slack channel.
A dramatic confrontation in Dublin
Rippling obtained a court order in Ireland to seize and inspect the employee’s phone – but when a lawyer arrived to serve the order, the employee apparently locked himself in a bathroom.
“When repeatedly warned not to delete materials from his device and that his non-compliance could result in jail time, the spy responded: ‘I’m willing to take that risk,’ and fled the premises”, according to the Rippling blog post.
Rippling further claims that a flushing sound was heard, leading to speculation that the phone was destroyed, though a later inspection of the plumbing did not produce any evidence of such activity.
Deel’s response: countersuit expected
Deel has denied the allegations and indicated it will file counterclaims in response to the lawsuit.
In a statement to TechCrunch, a Deel spokesperson stated: “Weeks after Rippling is accused of violating sanctions law in Russia and seeding falsehoods about Deel, Rippling is trying to shift the narrative with these sensationalized claims. We deny all legal wrongdoing and look forward to asserting our counterclaims.”
Am I understanding this right? Rippling…
— Theo - t3.gg (@theo) December 4, 2024
…called Deel “snake oil”
…then made a marketing campaign with a game and Deel’s logo as the snake
…with an automatic chat bot on the page
…and posted a Deel employee’s info when they got angry at them in said automatic chat?
wtf? pic.twitter.com/9qXwhVf2op
The legal battle is the latest development in an increasingly fierce and public rivalry between the two HR tech firms, TechCrunch reports. The lawsuit marks an escalation in tensions between the two firms, which have previously clashed over hiring restrictions and allegations regarding Deel’s licensing practices.
