vmware files suit against former exec for moving to rival company

Earlier this month, the appointment of former VMware COO Rajiv Ramaswami as Nutanix’s CEO appeared to be a beneficial alignment, and also represented the acquisition of a significant individual from a direct competitor. However, VMware has responded to the loss of this executive by initiating legal action against him yesterday, alleging a breach of contract.
The company asserts that Ramaswami possessed confidential knowledge regarding VMware’s strategic initiatives and was obligated to disclose his engagement in job interviews with a rival organization.
“Rajiv Ramaswami did not fulfill his contractual and fiduciary duties to VMware. During a period of at least two months prior to his resignation, while actively collaborating with senior leaders to define VMware’s core strategic vision and direction, Mr. Ramaswami was simultaneously holding secret discussions with Nutanix, Inc.’s CEO, CFO, and reportedly its entire Board of Directors, regarding the position of Nutanix’s Chief Executive Officer. He commenced his role as Nutanix’s CEO just two days following his departure from VMware,” the company stated.
Nutanix countered this claim, issuing a statement that, “VMware’s legal action attempts to characterize the act of seeking new employment as a wrongdoing. We believe VMware’s response is motivated by the loss of a highly valued and respected leader. Mr. Ramaswami and Nutanix have consistently acted with transparency and cooperation with VMware throughout this transition.”
At the time of the hiring announcement, analyst Holger Mueller of Constellation Research highlighted the competitive relationship between the two companies and characterized Ramaswami’s recruitment as a substantial achievement for Nutanix. “Securing Ramaswami provides Nutanix with both a specialist in multicloud technologies and weakens a key competitor in terms of talent,” he explained earlier this month.
Mueller expresses skepticism regarding the likelihood of the lawsuit’s success. “It has been some time since a similar legal case involving a technology executive’s move between companies occurred in Silicon Valley. Given California’s ‘employment at will’ status, such lawsuits are generally unsuccessful,” he noted this morning.
He further elaborated, “A central question in the VMware v. Nutanix lawsuit is whether a senior executive simply interviewing with a competitor constitutes a breach of confidentiality, or whether the disclosure of specific confidential information is required to reach that point. Traditionally, the right to interview confidentially has been legally protected,” he said.
The ultimate outcome of this legal action remains uncertain, but it introduces complexities for Nutanix as it integrates its new chief executive. Ramaswami succeeded co-founder Dheeraj Pandey, who announced his intention to step down from the position last summer.
The lawsuit was filed on Monday in the Superior Court of the State of California, County of Santa Clara.