VMware drops lawsuit against ex-COO: Ramaswami and Nutanix retain clean slate

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VMware dismisses its lawsuit against former COO Rajiv Ramaswami. Ramaswami was sued by the tech giant after switching to competitor Nutanix in December 2020, where he currently serves as CEO. Now VMware is waiving the lawsuit. The legal process comes to an end.

Both Nutanix and VMware develop a proprietary hypervisor and hyperconverged infrastructure service. Until the end of 2020, Rajiv Ramaswami worked as COO for VMware. He switched to Nutanix and has since held the position of CEO. The change wasn’t received well by VMware’s management. In late 2020, the tech giant sued Ramaswami for failing “to honour his fiduciary and contractual obligations.”

“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, Ramaswami met secretly with Nutanix’ board to become CEO. 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”, VMware pleaded at the start of the lawsuit.

Ramaswami’s new employer, Nutanix, saw things differently. “We believe VMware’s lawsuit is nothing more than a baseless attempt to hurt a competitor,” said Tonya Chin, vice president of corporate communications and investor relations at Nutanix.

The dispute ended up in a Californian court. We will never know the state’s ruling on the case. VMware has since announced that the lawsuit has been dropped. Nutanix and VMware came to an agreement behind closed doors. Ramaswami retains a clean slate.

Is the ex-COO actually in the right?

The organizations do not clarifly how the agreement was reached. Explanations of the decision are speculative.

Ramaswami previously informed SDxCentral that he was comfortable with the legal position he and Nutanix were in. The law, he said, worked in their favour. It is possible that VMware came to share this premise, preferring to dismiss the case to avoid an official ruling — with all the attention and consequences that entails. The somewhat crude statement Nutanix shared after VMware announced its decision fits the theory. While VMware soberly stated that it was happy to put the matter behind, Nutanix added that “the lawsuit was misplaced and inappropriate.”

Still, nothing can confirm what took place between Nutanix and VMware. The fact that Ramaswami appears to walk away from the proceedings scot-free does not mean that the ex-COO had legal grounds to pursue a management position at Nutanix. Competition law is risky territory.