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Two rival human resources companies are caught up in a lawsuit worthy of a movie thriller.
Workforce management platform Rippling is suing HR platform Deel, alleging it stole confidential information with help from a “spy,” according to a new lawsuit. Rippling claims that over the course of four months, the employee searched Rippling’s Slack channels for information about Deel an average of 23 times per day. The company alleges that person also relayed critical information about Rippling, such as sales pipelines, customer profiles, and pricing, to senior leadership at Deel, including CEO and cofounder Alex Bouaziz, according to the suit.
“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 alleges.
A spokesperson from Deel told Fortune that the company denies all legal wrongdoing and is looking forward to “asserting our counterclaims.” The company also accused Rippling of trying to “shift the narrative with these sensationalized claims.”
Rippling began to suspect a mole within its own ranks when Deel tried to hire away at least 17 workers via WhatsApp messages, according to the lawsuit. The company alleges that the person inside Deel used their access to the company Slack to find worker contact information, and then shared that information with Deel, which reached out to workers with recruiting messages. Rippling is seeking remediation costs including attorney fees, the loss of employee time due to the intrusion, and the costs of hiring outside firms to investigate the claims.
When the alleged spy, referred to as D.S. in court documents, was confronted by a lawyer, he locked himself in the bathroom to avoid providing evidence, the lawsuit alleges. When the employee was told that deleting such evidence would be seen as not complying with a court order, the suit alleges he responded by saying “I’m willing to take that risk,” and then fled the office.
“We always prefer to win by building the best products and we don’t turn to the legal system lightly,” said Rippling cofounder and CEO Parker Conrad about the lawsuit on X on Monday. “But we are taking this extraordinary step to send a clear message that this type of misconduct has no place in our industry.”
This isn’t the first time the two HR companies have clashed. Last year, Conrad made waves when he announced that former employees who went to work for a competitor, including Deel, were barred from selling vested equity in Rippling. Then earlier this year, Deel was accused in a separate lawsuit of violating money laundering laws and U.S. sanctions against Russia. Deel applied to dismiss the case and blamed Rippling for trying to damage its reputation, The Information reported, which Rippling denied. Rippling has also faced questions about its own payment systems in Russia, the outlet reported.
Investors say this feud is likely to continue as long as both companies are in operation. Both Rippling and Deel are currently competing for market share in the HR tech space. Deel is valued at around $12 billion, and Rippling at $13.5 billion, according to PitchBook.
“Both of them are in the way of the other for the dream they think is possible,” Logan Bartlett, a software-focused venture capitalist at Redpoint Venture, told The Information last month.
Brit Morse
brit.morse@fortune.com
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