VMware’s ‘Misguided’ Lawsuit Against Nutanix CEO Dropped

After nearly one year, VMware has dropped its lawsuit against Nutanix CEO Rajiv Ramaswami that alleged contractual and legal breaches after Ramaswami joined Nutanix just days after leaving VMware.

Just days after leaving VMware as its chief operating officer, Rajiv Ramaswami took the reins as CEO of rival Nutanix in December 2020. VMware immediately sued Ramaswami for the move, charging him with “material and ongoing breaches” of his legal and contractual duties to VMware as he was being courted by competitor Nutanix in late 2020.

Nearly one year later, VMware has now agreed to dismiss the lawsuit.

“VMware’s lawsuit was misguided and inappropriate, as there was no wrongdoing on Mr. Ramaswami’s part,” said Nutanix in a statement to CRN. “VMware has agreed to dismiss the lawsuit, and we are very pleased that the matter has been favorably resolved.”

[Related: VMware’s Lawsuit Against Nutanix CEO: 5 Big Things To Know]

In a statement from VMware, the Palo Alto, Calif.-based company said it has “settled their dispute regarding Mr. Ramaswami’s departure from VMware” and has dismissed the lawsuit.

“VMware is pleased that the matter has been resolved, allowing it to focus on developing exceptional products and services for its customers,” said VMware in a statement.

Compared with December 2020, VMware is now operating differently. Over the past 12 months, VMware hired a new CEO in longtime veteran Raghu Raghuram—a friend and former colleague of Ramaswami.

“Look, Raghu has been a personal friend of mine long before I joined him at VMware,” said Nutanix CEO Ramaswami in a June interview with CRN. “So I’ve known him for more than 20-plus years at this point. “He’s a friend. And over the past five years, I’ve worked very closely with him as a colleague.”

VMware also is no longer part of Dell Technologies.

Dell spun off its 81 percent majority stake in VMware to Dell Technologies shareholders on Nov. 1, 2021, making VMware an independent company for the first time since 2004.

A Summary Of The Lawsuit

VMware initiated legal proceedings in the Superior Court of the State of California, County of Santa Clara, against Ramaswami for what it alleged were material and ongoing breaches of contractual duties and obligations, according to the lawsuit.

VMware said it was suing its former COO for failing “to honor 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, 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,” said VMware in a statement in late 2020 in conjunction with the litigation filing. “He joined Nutanix as its CEO only two days after leaving VMware.”

Ramaswami officially left VMware on Dec. 7, 2020. He was named Nutanix’s new CEO on Dec. 9.

VMware also alleged conflict of interest and said Ramaswami exhibited “poor judgement.”

“Mr. Ramaswami demonstrated poor judgement 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,” said VMware.

San Jose, Calif.-based Nutanix, for its part, said the lawsuit was filed to simply hurt the company’s bottom line.

“We believe that VMware’s action is nothing more than an unfounded attempt to hurt a competitor and we intend to vigorously defend this matter in court,” said Tonya Chin, vice president of corporate communications and investor relations at Nutanix, in a statement to CRN in January 2021. “It is disappointing to see VMware’s management sue him just because he chose to pursue an opportunity to become a public company CEO. … We view VMware’s misguided action as a response to losing a deeply valued and respected member of its leadership team.”

In early 2021, VMware was seeking to engage with Ramaswami and Nutanix to make sure they don’t use confidential VMware information as part of Nutanix’s strategy going forward. Chin said both Nutanix and its new CEO have assured VMware that Ramaswami “agreed with his obligation not to take or misuse confidential information.”

Nearly one year after those remarks were made, VMware has now dropped the lawsuit against Ramaswami.