NowDeel Accuses Rippling of Spying on Customers

Deel's Amended Complaint Reveals New Details in Legal Battle with Rippling

HR technology firm Deel has submitted an amended complaint on Tuesday as part of its ongoing legal dispute with competitor Rippling. This filing introduces surprising new specifics regarding Deel’s accusations of corporate espionage.

Rippling's Initial Lawsuit and Allegations

Rippling initiated legal action against Deel in March following an affidavit presented in an Irish court. The affidavit, resembling a plot from a Hollywood film, detailed a Rippling employee’s admission to spying on his employer for the benefit of Deel. Rippling’s lawsuit centers on claims of trade secret misappropriation, unfair competition, and tortious interference, largely stemming from these alleged spying activities.

Deel's Countersuit and Expanding Accusations

Deel responded with a countersuit, seeking dismissal of Rippling’s claims on technical grounds. Simultaneously, Deel leveled its own accusations, asserting that Rippling had also engaged in espionage. The amended complaint now provides further clarification on these claims.

Allegations of Impersonation and Data Collection

Specifically, Deel alleges that a Rippling employee, designated as Competitive Intelligence, spent six months posing as a genuine Deel customer. This was allegedly done to gain unauthorized access to Deel’s systems. The purpose was to thoroughly analyze, record, and replicate Deel’s products and operational methods for Rippling’s advantage.

Personal Attacks and Speculation Regarding Rippling's CEO

The lawsuit contains critical remarks directed at Rippling’s CEO, Parker Conrad, and references past difficulties he encountered at his previous venture, Zenefits. The complaint even delves into speculative psychological analysis. “Understanding Conrad is key to understanding Rippling,” the suit contends.

Alleged Motives Rooted in Past Conflicts

The complaint further speculates that Rippling’s actions against Deel are motivated by Conrad’s resentment towards Zenefits’ venture capital investor, Andreessen Horowitz. It claims, “Conrad appears to be driven by a desire for retribution against those associated with Andreessen, including Deel, in which Andreessen holds a 20% stake.”

Claims of Disinformation Campaigns

Deel also alleges that “Rippling has disseminated false and misleading information about Deel to the media and regulatory bodies nationwide.”

Connection to a U.S. Senator's Inquiry

This reportedly originated in 2023 when U.S. Senator Adam Schiff sent a public letter to the U.S. Department of Labor. The letter requested an investigation into Deel’s worker classification practices, following an investigative report published by Business Insider. Deel refuted any wrongdoing at the time and stated that discussions with Senator Schiff had resolved the issue.

Financial Performance Disclosure

The amended complaint also reveals a financial detail: Deel asserts that it has been consistently profitable for several years and currently generates over $1 billion in annual revenue.

Rippling's Response and Claims of Backtracking

A Rippling spokesperson stated that the company is investigating the specific allegations concerning the employee’s intelligence gathering methods as outlined in the complaint. The spokesperson affirmed, “Rippling remains dedicated to fair competition and the highest ethical standards. We anticipate full adherence to our clearly defined written policies.”

The spokesperson also contends that the revised complaint “retracts” certain assertions made in the original filing, including removing language that suggested Rippling had gained access to Deel’s board-level information.

Comparing the Allegations: Different Forms of Espionage

While the lawsuit is captivating, akin to a reality television show, Deel is essentially presenting a reciprocal case regarding corporate spying. However, the nature of the two sets of allegations differs significantly.

Rippling accuses Deel of compensating an employee to obtain information from Rippling’s internal network. This employee, having confessed to the espionage, testified to providing Deel with data including sales leads, product roadmaps, customer details, and key employee names.

Legitimate Competitive Intelligence vs. Illegal Access

Deel, conversely, accuses Rippling of unfairly acquiring knowledge about its products and features through legitimate product usage and customer-facing information. Competitors have historically analyzed each other’s offerings to gain a competitive edge. The courts will determine whether Rippling’s tactics crossed legal boundaries.

The "Honeypot" Incident and its Cultural Impact

Rippling’s alleged apprehension of the corporate spy – involving a deceptive trap, a damaged phone, and a “honeypot” – has become a notable anecdote within the tech industry.

Last month, Cotool, a Y Combinator graduate, launched an agentic security platform featuring honeypots. Their advertisement cleverly spoofed the account of how Rippling’s spy claimed to have been caught.