VMware sues new Nutanix CEO over contract breach

VMware is suing its former chief operating officer, Rajiv Ramaswami, who, after leaving, became Nutanix's president, CEO, and board member. The reason for filing a lawsuit is a breach of contractual obligations.

In a statement, VMware indicated that it initiated legal proceedings in the California Supreme Court (Santa Clara County) against Ramaswamy " for material and continuing violations of his legal, contractual and obligations to VMware ." Ramaswami joined Nutanix in December, just two days after leaving VMware.

The lawsuit alleges that “Rajiv Ramaswami did not honor his fiduciary and contractual obligations to VMware,” because he, while at VMware, “ met at least with the CEO, CFO and apparently the entire board of directors of Nutanix, Inc. to become CEO of Nutanix."

VMware announced that it was not an inherently litigious company and “has attempted to resolve this issue out of court. But Mr. Ramaswamy and Nutanix refused to work satisfactorily with VMware.” Nutanix said in a statement on the matter: “VMware's lawsuit seeks to make it illegal to interview new jobs. We view VMware's misconduct as a response to the loss of a highly regarded and respected member of its management team.”

Nutanix further indicated that she and Ramaswamy did their best to work with VMware throughout the transition, but requiring him to restrict his normal performance of duties could amount to an illegal non-compete agreement. Therefore, Nutanix believes that "VMware 's actions are nothing more than an unreasonable attempt to harm a competitor, and intends to actively defend their position in court."

An employment contract in the United States may contain a non-competition clause that prohibits an employee from leaving and working with a competitor until a certain amount of time has passed after the employee is fired. But VMware is not talking about anti-competitive actions in the lawsuit, but about the breach of contractual obligations. Therefore, one can only guess how this confrontation will develop further, and what consequences it will have for Ramaswamy and Nutanix.