Rippling Accuses Competitor of Criminal Activity & Spying

Escalating Legal Conflict Between HR Tech Companies Rippling and Deel

The competitive landscape within the HR technology sector has intensified this week, marked by Rippling’s Thursday filing of an 84-page amended complaint in its ongoing legal dispute with Deel.

Allegations of Corporate Espionage

The revised complaint details accusations against Deel, asserting that the company engaged in the targeting, infiltration, and compromise of not only Rippling, but also four additional competing businesses.

While the identities of all alleged victims remain undisclosed, the complaint specifically names Toku, a company specializing in cryptocurrency-based tax and payroll compliance. Toku is currently pursuing legal action against LiquiFi, alleging corporate espionage with purported involvement from Deel.

Unidentified Victims and Potential Connections

Rippling’s amended complaint references “Victim-3” as a startup accelerator that formerly collaborated with Deel. The complaint refrains from naming this entity or offering any direct implications regarding its identity.

Both Rippling and Deel have received backing from Y Combinator; however, there is currently no indication that this connection is relevant to the case. A request for comment from Y Combinator remains unanswered.

Furthermore, the complaint suggests the existence of additional victims – significant competitors to Deel within the employer of record market. Sources familiar with the investigation anticipate further witnesses emerging from these companies to provide detailed accounts.

Deel’s Response and Counterclaims

A spokesperson for Deel dismissed the claims presented in Rippling’s initial lawsuit as “far fetched,” asserting that the amended complaint fails to address fundamental flaws in the original filing.

Direct Accusations Against Deel’s Leadership

Rippling’s amended suit directly implicates Alex Bouaziz, Deel’s CEO, as the primary instigator of the alleged misconduct, presenting screenshots of messages as supporting evidence.

Significantly, Rippling is now suggesting the possibility of criminal implications, characterizing the situation as a “criminal syndicate that operated from the shadows of a multibillion-dollar technology company — Deel.”

Legal Strategies and Statutes Invoked

Rippling’s amended lawsuit invokes the federal racketeering (RICO) statute, the Defend Trade Secrets Act, and California state law. The lawsuit specifically names Alex Bouaziz, his father Philippe Bouaziz – who serves as chairman and chief financial officer – and Deel’s chief operating officer, Daniel Westgarth.

The legal representation for Rippling is led by Alex Spiro of Quinn Emanuel, a prominent law firm. Spiro’s background as a former prosecutor for the Manhattan District Attorney’s Office, and his public profile, suggest a deliberate choice in employing strong language within a civil case.

Potential Federal Investigation

Sources indicate that federal prosecutors are actively investigating the allegations against Deel. However, a Deel spokesperson denies any knowledge of ongoing investigations, stating that Rippling has a history of making unsubstantiated claims to governmental authorities.

It’s crucial to recognize that an investigation does not equate to a conviction. Nevertheless, Rippling is actively positioning Bouaziz as a key figure should charges be filed, repeatedly referring to “the Bouaziz Racketeering Enterprise.”

Recap of Allegations

The core of the dispute revolves around allegations that a Rippling employee acted as a paid informant for Deel, as detailed in an affidavit resembling a cinematic narrative.

The employee purportedly disclosed sensitive information, including sales leads, product roadmaps, customer accounts, and details about key personnel.

Rippling claims to have uncovered this espionage through a deliberately established “honeypot” scenario, a claim supported by both parties.

Deel’s Countersuit and Ongoing Dispute

Deel has filed a countersuit, focusing less on denying Rippling’s accusations and more on presenting its own claims against Rippling.

Specifically, Deel alleges that Rippling engaged in spying activities by having an employee “impersonate” a customer to acquire confidential product information.

Deel’s spokesperson characterized Rippling’s amended filing as a “rehash,” reaffirming the company’s confidence in its own lawsuit and its position in the marketplace. “We are winning in the marketplace, we stand by our own lawsuit, and we will be vindicated in court as well.”

The rivalry between these two companies continues to unfold, promising further developments in this complex legal battle.