VMware sues former executive who left to become Nutanix's CEO

VMware files a lawsuit against former COO Rajiv Ramaswami over his hiring by rival Nutanix as its new CEO. (Pixabay)

VMware has filed a lawsuit against one of its former top executives that said he had violated his contractual obligations while being wooed by a rival. On Dec. 9, Nutanix announced it had hired VMware COO Rajiv Ramaswami as its new CEO and president. On Dec. 14, he joined Nutanix's board of directors.

Last week, VMware filed a lawsuit in the Superior Court of the State of California, County of Santa Clara that accused Ramaswami of "material and ongoing breaches of his legal and contractual duties and obligations to VMware."

RELATED: Nutanix reels in VMware COO Ramaswami as its new CEO and president

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While at VMware, Ramaswami helped guide the company's transition to cloud products and services for close to five years. VMware and Nutanix are competitors across the cloud computing, networking and hybrid-cloud verticals.

"Rajiv Ramaswami failed to honor his fiduciary and contractual obligations to VMware," VMware said in a statement on Dec. 28. "For at least two months before resigning from the company, at the same time he was working with senior leadership to shape VMware’s key strategic vision and direction, Mr. Ramaswami also was secretly meeting with at least the CEO, CFO, and apparently the entire Board of Directors of Nutanix, Inc. to become Nutanix’s Chief Executive Officer. He joined Nutanix as its CEO only two days after leaving VMware."

VMware also said Ramaswami "demonstrated poor judgment and had a clear and extended period of conflict of interest."

"He should have disclosed this conflict of interest to VMware so that the company could have taken steps to protect itself. But he did not notify VMware, and thus deprived the company of the ability to do so by concealing his Nutanix-related activities," the statement said.

Palo Alto, Calif.-based VMware said it tried to resolve the dust-up without litigation, but Ramaswami and Nutanix "refused to engage with VMware in a satisfactory manner."

Of course, San Jose, Calif.-based Nutanix sees the hiring of Ramaswami under a different lens. Nutanix maintained that it and its new CEO have done nothing wrong.

"Mr. Ramaswami and Nutanix have gone above and beyond to be proactive and cooperative with VMware throughout the transition. Nutanix and Mr. Ramaswami assured VMware that Mr. Ramaswami agreed with his obligation not to take or misuse confidential information, and VMware does not contend otherwise," Nutanix said in a blog post last Monday. "However, VMware requested that Mr. Ramaswami agree to limit the ordinary performance of his job duties in a manner that would equate to an illegal non-compete covenant, and it requested that Nutanix agree not to hire candidates from VMware in a manner that Nutanix believes would be contrary to the federal antitrust laws."

As one of the first hyperconverged infrastructure (HCI) vendors, former CEO and founder Dheeraj Pandey grew Nutanix into a $1.6 billion software company that added hybrid cloud software and services to its portfolio. Pandey announced in August that he would be stepping down from his CEO role. In addition to VMware, Nutanix competes against Cisco, HPE and Red Hat.