Two heavyweight arch rivals in the world of Bay Area workforce-management startups are locked in a legal battle with one accusing the other of planting a spy within its ranks, and claiming in a federal lawsuit filed Monday that it caught the alleged mole after baiting its rival with a trap.
When the alleged corporate spy was handed a court order to preserve his phone and all its data, he fled to a bathroom and locked himself in. Despite being told through the door that deleting data from his phone would break the order, he purportedly answered, “I’m willing to take that risk.” Then he fled the premises, according to a lawsuit filed Monday by San Francisco-headquartered Rippling against chief competitor Deel.
Rippling claimed in the lawsuit that Ireland-based competitor Deel, also based in San Francisco, committed “a brazen act of corporate theft.” Deel “cultivated a spy” inside Rippling in a “deliberate attack” to steal trade secrets and other sensitive information, the lawsuit in San Francisco U.S. District Court claimed. Rippling is accusing its rival of fraud, conspiracy, racketeering, trade-secrets misappropriation, and unfair competition, and is seeking unspecified damages.
Deel did not respond to requests for comment. A Deel spokesperson told the New York Times it denied “all legal wrongdoing.”
Reported valuations of the two private companies indicate this is a battle between rival “decacorns,” a term coined after so-called unicorn tech companies worth $1 billion or more became commonplace. Rippling said in April 2024 it was valued at $13.5 billion, and Deel in 2022 claimed a $12 billion valuation, putting both companies in the $10 billion-and-up decacorn category. Dueling announcements last year by Rippling and Deel, each calling out the other by name, testify to the pointed competition between the two companies.
Rippling, the lawsuit said, unwittingly hired the alleged spy as a manager in 2023 because he was experienced in global payroll systems. The man, identified only by the initials “D.S.” for being an alleged “Deel spy,” had access to Rippling’s internal messaging, and to its database with confidential information about current and prospective customers, the lawsuit said.
But last month, a hunt by Rippling for a suspected leaker turned up suspicious searches by D.S. on Rippling’s Slack messaging platform, the lawsuit alleged.
The man, based in Rippling’s Dublin, Ireland office, started searching for the word “deel” in November 2024 “at an unprecedented rate, sometimes more than 20 times a day,” the lawsuit claimed. Often, D.S. used “preview” mode to conceal the searches from colleagues, the lawsuit alleged.
The Slack channels D.S. viewed had nothing to do with his job, but instead concerned “all aspects of Rippling’s business development, sales, and customer retention strategies” plus “competitive intelligence concerning Deel” that could be “exploited to Deel’s advantage,” the lawsuit claimed.
Between November and this month, D.S. downloaded information from Slack about prospective clients more than 1,300 times, and viewed or downloaded data about Rippling’s existing customers more than 600 times, the lawsuit alleged.
The “spy” also stole key proprietary information about sales leads, Rippling’s sales procedures, and “its entire playbook for pitching prospective clients,” the lawsuit claimed.
Rippling — led by CEO Parker Conrad, who previously led Bay Area insurance-tech startup Zenefits until resigning in 2016 after reports of in-office boozing and employee sex in a stairwell — laid a trap, the lawsuit said.
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Early this month, Rippling’s head lawyer sent a letter to three people: Deel’s board chair, its head of U.S. legal affairs, and an employment lawyer at a law firm used by Deel, the lawsuit said. Included in the letter was a fabricated screenshot of a message from Rippling’s chief revenue officer Matt Plank referring to a non-existent Slack channel named “d-defectors” to suggest it was for use by former Deel employees employed at Rippling.
“Rippling believed this would be extremely interesting to Deel,” the lawsuit said.
Deel, the lawsuit claimed, “took the bait.” Within hours after the letter was sent, D.S. began searching Slack for the non-existent channel, and for Plank’s name, the lawsuit alleged.
“The results of Rippling’s honeypot operation left no doubt: Deel’s senior leadership or those closest to them were directing D.S.’s actions, in furtherance of Deel’s business interests and to harm Rippling and its customers,” the lawsuit claimed.
Rippling had a “smoking gun,” but worried that if it confronted D.S. directly, he and Deel would erase allegedly incriminating evidence, the lawsuit alleged. So on March 12, Rippling obtained a court order in Ireland “directing seizure and inspection of D.S.’s phone,” the lawsuit said. The court ordered that the alleged spy must hand over his phone to an independent lawyer, in advance of a hearing to determine whether Rippling could access the device’s data, the lawsuit said.
The lawyer showed up at Rippling’s Dublin office, handed the order to D.S. and explained that he must relinquish his phone. At first, D.S. said the device was in a bag on another floor, but the bag contained only a notebook, the lawsuit alleged. The alleged spy, Rippling believes, had the phone on his person, and locked himself in the bathroom “seemingly in order to delete evidence,” the lawsuit claimed.
What became of D.S. and his phone after he allegedly “stormed out of the office and fled the scene” is not made clear in the lawsuit.
