The fight between HR tech startups has heated up another notch this week as Rippling on Thursday filed an 84-page amended complaint in its lawsuit against Deel.
The complaint accuses Deel of targeting, infiltrating, and compromising four other competitors, in addition to Rippling.
The revised complaint doesn’t name all of the four other alleged victims, except cryptocurrency-based tax and payroll compliance company, Toku. Toku is suing its competitor LiquiFi, also alleging corporate espionage and that Deel was involved.
Rippling’s revised complaint alleges that “Victim-3 is a startup accelerator that previously partnered with Deel.” The complaint doesn’t name, or even imply, who that is. (Y Combinator backed both Rippling and Deel but there’s no indication this refers to the VC firm. YC has not yet responded to our request for comment.)
The complaint also says that there are one or more additional victims who are “major competitors of Deel” in the employer of record market. A source familiar with the investigation believes that more witnesses will soon come forward at these other companies to offer details.
A Deel spokesperson called the claims in Rippling’s original lawsuit “far fetched” adding that “its amendment fails to correct any of the myriad fatal flaws in its original complaint.”
Rippling’s amended suit also alleges that Deel’s CEO Alex Bouaziz was the direct mastermind of it all, sharing screenshots of messages as its evidence. And, although this is a civil suit, Rippling is now implying that this could be a criminal matter.
“This case is about a criminal syndicate that operated from the shadows of a multibillion-dollar technology company — Deel,” the complaint reads.
Rippling’s amended lawsuit is now suing Deel under the federal racketeering (RICO) statute, as well as the Defend Trade Secrets Act, and California state law. The lawsuit directly names Alex Bouaziz; his father Philippe Bouaziz — who is chairman and chief financial officer; and Deel’s chief operating officer, Daniel Westgarth.
It’s important to note that the lead attorney for Rippling is Alex Spiro of white-shoe law firm Quinn Emanuel. Spiro is a former prosecutor for the Manhattan District Attorney’s Office. (He’s so well known in the legal world that he has his own Wikipedia page.) Using words like “criminal syndicate” in a civil case would be a deliberate choice.
According to the source familiar with the case, federal prosecutors are now actively looking into the allegations against Deel as well. A spokesperson from Deel denies this, “We are not aware of any active investigations into our business. As detailed in our lawsuit, Rippling has a long history of making false or sensationalized allegations to governmental authorities about competitors, which prompt ‘inquiries’ from the government that Rippling then leaks to the media.”
An investigation, in whatever form it may exist, is not, however, a conviction. But should charges be filed, Rippling is doing its best to set up Bouaziz himself as one of the people responsible. The complaint even goes so far as to repeatedly use the colorful language “the Bouaziz Racketeering Enterprise.”
Other than that, much of the amended complaint reiterates what Rippling has already alleged. To recap: a Rippling employee confessed to being a paid spy for Deel in an affidavit that reads like a Hollywood movie. The employee admitted in court to taking sales leads, product roadmaps, customer accounts, names of superstar employees, and whatever other information was asked for.
The employee was caught in a Rippling-set honeypot, both he and Rippling say. Rippling is suing Deel, alleging misappropriation of trade secrets, tortious interference, unfair competition, and more, largely based on the spying allegations.
Deel has counter-sued in a case that is less about denying Rippling’s charges and more about making several of its own claims about Rippling. For instance, earlier this week, Deel filed an amended lawsuit that claimed that Rippling was spying on Deel by having an employee “impersonate” a customer to obtain non-public product information.The Deel spokesperson called Rippling’s amended filing a “rehash,” and insisted on the superiority of its own allegations. “We are winning in the marketplace, we stand by our own lawsuit, and we will be vindicated in court as well.”
Grab some fresh popcorn. This battle between archrivals shows no sign of slowing.
