Tesla lawsuit against Rivian claims they’re poaching employees and asking them to steal trade secrets

    We tend to think of the current vehicle battle as a war between those who make EVs and those who make ICE vehicles, but things just got incredibly ugly in the electric vehicle space.

    Competing with the market leader is not easy, but you have to play fair and it really seems electric startup Rivian has been conducting some sketchy business practices.

    In a lawsuit filed by Tesla, against Rivian, they are accused of curating a culture of poaching employees from Tesla. There’s nothing illegal about that on the surface, but when we look through the detail, things turn bad, fast.

    To date, Rivian has hired 178 eX-Tesla employees, roughly 7O of which
    joined Rivian directly from Tesla. 13 of Rivian’s recruiters are former Tesla employees.

    When you become an employee of Tesla (and many other companies), you sign an NDA. In Tesla’s case, employees are required to agree that they won’t disclose ‘technical data, trade secrets, know-how, plans, designs, methods, processes, data, programs, lists of or information relating to, employees, suppliers, financial information and other business information.

    Under Tesla’s Internet Usage Policy, employees agree that they ‘must not forward work emails outside of .. Tesla or to personal email account.

    Here’s the problem. A number of ex-Tesla employees, now employed by Rivian, directly breached those rules. Judging by the level of detail on what occured, Tesla has the evidence to support these accusations.

    Tesla uses Office 365 for business communication and after reading through the detail of the lawsuit, I believe they’re using Office 365 data loss prevention policies to track any breaches of this kind.

    Employees were straight-up named in the lawsuit, and their actions detailed for everyone to see. The lawsuit alleges the following actions:

    1. Kim Wong

    Worked at Tesla as Staff Recruiter until she left to work for Rivian. Earlier this year, Wong was contacted by Vince Duran at Rivian, Who had been her manager When he was at Tesla. Duran recruited Wong to join Rivian. She accepted Rivian’s offer of employment on June 30, 2020.

    Before Wong left Tesla, Duran instructed her that Rivian did not have the recruiting templates, structures, formulas, or documents that would be needed for Rivian’s recruitment efforts. Such information and documents, as Wong admitted, would be particularly useful for Rivian as startup that was currently building sales force.

    On July 7, 2020, after her conversation With Duran and the same day that Wong received an update on her background check by Rivian, she sent at least sixteen highly confidential and trade secret recruiting documents from Tesla’s network to her Gmail account, including various guides and templates developed by Tesla—the very types of documents that Duran had instructed her that Rivian needed.

    As you can see from this, Tesla has specific dates, knows the number of files and that they left the business a personal gmail address. This information could have easily been captured outbound from Tesla email server (O365) and assuming the files she sent were labelled by the DLP, it would be flagged in the system. There’s no microSD card in a rubix cube here, that looks like a very straight forward case of theft which would likely be in direct contradiction to the signed NDA.

    The allegations of said crimes don’t stop there.

    Even more harmful to Tesla, Wong took highly sensitive trade secret compensation and bonus information for Tesla sales personnel for use at Rivian—including base pay rates, target bonuses, new hire equity awards, and incentive-based compensation numbers. For example, the
    “Tesla Advisor Overview” document that she took had salary rates, equity grants, bonus tiers, and fluctuations therein for various positions and performance levels.

    Knowing Tesla’s pay scales would provide Rivian huge competitive advantage in its efforts to poach Tesla’s vehicle sales and service employees as Rivian builds out its business. This also would allow Rivian to unfairly avoid the hard work of developing through trial and error comparably effective compensation structures.

    Ok now we’re really talking about some seriously sketchy behaviour. Having insider knowledge regarding what people make does provide a competitor an unfair advantage in hiring, and it’s likely the explanation as to why Rivian have been so successful at poaching employees from Tesla.

    Knowing what someone is paid currently, means you are in a position to make them an offer that’s higher than what they earn to entice them to move.

    2. Tami Pascale

    Defendant Tami Pascale worked at Tesla as Senior Manager for Staffing until she left to work for Rivian. On or around June 23, 2020, Pascale received and signed an offer letter from Rivian. The very next day, on June 24, 2020, Pascale took at least ten confidential and proprietary documents from Tesla’s network, Which would allow Rivian to poach Tesla’s highest-performing talent and promising employment prospects

    Pascale took Tesla presentation decks with detailed information on Tesla’s candidate pipeline for senior-level operations managers, including detailed internal write-up of an executive level candidate. She also took presentations that identified high-performing Tesla employees, summaries of Tesla candidates and hires, and information on Tesla’s best recruiters.

    Another presentation set forth “heat map” showing the best recruiting sources for Tesla, summarizing the results of years of trial and error by Tesla to identify and verify these sources.

    This stuff isn’t just stealing the Kernel’s recipe to the secret herbs and spices, it’s stealing the chef who made it.

    When asked to work With one of the Tesla investigators to delete Tesla’s documents from her personal cloud-based storage, Pascale declined, claiming she did not have access to a computer at her residence. In fact, as Tesla later learned, Pascale still had possession of her Tesla laptop—and her husband is an IT professional.

    After back and forth, Pascale shared the screen 0f her phone and claimed she had already deleted the documents. Throughout this process, however, Pascale stopped screen sharing several times, preventing Tesla investigators from seeing what she was doing.

    Investigators eventually convinced Pascale to search for “Tesla.” When she did, numerous files were briefly visible to Tesla investigators via the screen share, but Pascale abruptly ended the session and said all the remaining files were personal. She then refused to cooperate With any deletions.

    This sounds bad for the defendant, really suspect behaviour and also sounds like Tesla has a straight-up case for theft of the corporate laptop and the content on it. Pretending you forgot the password is definitely not a legal defence.

    3. Jessica Siron

    Worked at Tesla as Manager, Environmental Health and Safety, where she oversaw safety operations. On or around March 21, 2020, Siron signed an offer letter from Rivian. Just three days later, on March 24, 2020, Siron used her Tesla-issued laptop to access several confidential and proprietary documents from the EHS fileshare and other locations on the Tesla network. Siron then sent the documents to her personal Gmail account and, afterward, tried to delete them from her desktop computer.

    These documents consisted of highly sensitive trade secret, confidential, and proprietary engineering information about manufacturing project management, controls specifications for manufacturing equipment, specifications regarding manufacturing robotics, and manufacturing equipment requirements.

    These documents would be used rarely, if at all, by Siron as manager of Environmental Health and Safety, yet she exported them shortly after accepting her offer at Rivian.

    Tesla says these documents would be particularly useful to a company like Rivian, acting as almost a playbook for Rivian to set up manufacturing operations for building electric vehicles. For example, one of the documents, “Procedure Equipment Design,” provides detailed, step-by-step guidebook for the start-to-finish management of the incredibly complex task of installing and setting up manufacturing.

    Look I get it, people move jobs and employers all the time, but these, multiple examples strongly point to a serious case against Rivian and their practices to incentivise this behavior, not just a rogue employee.

    Building a car company from scratch is an incredibly hard thing to do and of course it’d be nice to get great talent and hit the ground running with some prior knowledge. Where that really crosses the line is taking the actual documents from Tesla, a company that spent years developing this stuff.

    Rivian also isn’t a small company, they have multiple funding rounds, the latest was $2.5 Billion recently, on top of a $2.85 Billion in 2019. Companies like Ford have invested $500 million into Rivian along with Amazon who also chipped in a cool $700 million.

    With those kind of investments, it seems the company’s issue isn’t money, it’s knowledge and that’s something company’s have to learn themselves, not by the behaviour alleged in this lawsuit.

    4. Carrington Bradley

    Worked at Tesla as Manager for Charging Programs until he left for Rivian on March 20, 2020. Mr. Bradley’s role at Rivian is Senior Manager for Charging Development—presumably to build charging network for Rivian to mimic Tesla’s Supercharger network.

    On March 19, 2020, the day before he left Tesla to go to Rivian, Bradley forwarded to his personal email address list of highly curated select group of high-level Tesla employees Who are experts in the deployment and management of charging networks—precisely the type of team Rivian needs to deploy its own charging network.

    It seems the employees were also just straight-up bad at doing this task and I can’t imagine how anyone expects to send corporate documents to their personal gmail accounts and not get caught.

    In summary, Tesla are pissed and rightly so, this is a sizable problem for the company. About 70 Tesla employees joined Rivian directly from Tesla, with 22 of those leaving in the last four months. Using recently acquired sophisticated electronic security monitoring tools, Tesla investigators were able to catch four of those employees red-handed.

    Tesla is pursuing an injunction and damages from the leaked corporate data. If this was to be granted, it would be a serious dent in Rivian’s ability to deliver their first vehicle to market.

    Here’s the kicker, a line from point 92, page 15 of the complaint: Rivian aided, assisted, and/or encouraged Tesla’s former employees to use, take, or disclose Tesla’s confidential and proprietary information–all for Rivian’s advantage.

    I’m definitely not a lawyer, but I don’t think Tesla is likely to cast public accusations without great evidence, they’re a company that always brings data to the fight and usually wins. After reading the detail provided here, I’m confident they can prove this occurred.

    As I said at the start, we like to think of the EV makers as partners in the global challenge to shift the work to sustainable forms of transport, but if Rivian is found guilty of this, I worry about it’s ability to recover.

    If it comes to that, it’ll be an absolute shame because their products actually look great, but you have to compete fairly and what’s described here is definitely not.

    You can read the whole document for yourself right here.

    Jason Cartwright
    Jason Cartwright
    Creator of techAU, Jason has spent the dozen+ years covering technology in Australia and around the world. Bringing a background in multimedia and passion for technology to the job, Cartwright delivers detailed product reviews, event coverage and industry news on a daily basis. Disclaimer: Tesla Shareholder from 20/01/2021

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