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Virty giant VMware drags upstart Hortonworks to court over 'unfair practices'

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Exclusive VMware has taken Hortonworks to court along with four ex-VMers who now work at the startup - and among them is VMWare's former global sales chief.

Virtualisation juggernaut VMware is taking on the little elephant Hortonworks over claims that the Hadoop vendor committed "unfair practices" - the details of which were not confirmed in the initial filing. However, El Reg understands that the litigation may involve allegations of staff poaching.

On Thursday morning, VMware filed legal papers against Hortonworks Inc; the company’s president Herb Cunitz; Hortonworks’ enterprise accounts manager Taylor Ivey; vice president of global technical services Jamie Engesser; and Melissa Warner, whose Hortonworks’ job title is not clear.

All four hail from VMware's SpringSource, its open-source Java division.

Neither company would comment on the details of the case, but a well-placed source told The Reg that VMware had taken action over an alleged breach of non-solicit clauses in contracts of those who’d left and also over the alleged theft of trade secrets.

Non-solicits are written to stop those who’ve left a company from approaching, hiring or introducing their new employer to their former company’s current staff.

Those losing a claim for unfair practices in California face potentially unlimited penalties under state law. The case has been filed with the Superior Court of California in Santa Clara.

In a statement, Hortonworks told The Reg VMware’s action had no merit "and is the legal equivalent to bullying".

The Apache Hadoop Big-Data muncher's spokesperson continued: “Any allegation that the decisions of former employees to leave and go to work for Hortonworks resulted from improper conduct is ridiculous. People have every right to freely pursue opportunities with any company they believe will advance their personal and professional objectives, and should not be limited in any way from doing so."

Hortonworks - a Yahoo! spinout - and the individual defendants have asked the court to compel arbitration to end the matter.

VMware will be on weak ground if it tries to catch out Hortonworks for breach of non-solicit clauses. The Supreme Court of the State of California in 2008 ruled non-solicit provisions in employment agreements are illegal and break state law.

However, an unfair practice litigation does give plaintiffs the right to take action against “intentional interference” in “contractual relations” to obtain business advantage. These are points VMware may seek to exploit.

Warner, Engesser and Ivey had all occupied important sales, account management or engineering positions inside VMware’s SpringSource business until 2012. They joined Hortonworks in August, October and December of last year respectively, according to their LinkedIn profiles.

However, Cunitz was the biggest VMware fish named in the filing, having occupied the position of vice president of worldwide sales for SpringSource at VMware. It’s not clear when Cunitz joined the startup, as his LinkedIn profile still has him at VMware - where he moved after the firm's acquisition of SpringSource - but his CrunchBase profile puts the hire at November 2012.

The four individual defendants with their teams would have sold VMware customers the Spring framework combined with vSphere and provided crucial post-sales support and engineering. They will have detailed knowledge of important and lucrative VMware accounts running Spring in conjunction with vSphere.

VMware bought SpringSource in a celebrated deal in August 2009 for $420m to develop integrated Platform-as-a-Service offerings using the open-source Java framework and VMware’s vSphere hypervisor virtualization management software. More attractive, though, was Spring’s vast community of devs using the ubiquitous framework - whom VMWare hoped to turn into supporters of its software and cloud.

Hortonworks, meanwhile, is trying to build a business based on services and support for users of the Hadoop, the open-source data crunching framework based on Google’s MapReduce.

The four defendants are not VMware’s only losses to Hortonworks. VMware’s Spring unit has haemorrhaged sales, support and technical staff to the startup over the last two years.

Today, Hortonwork’s chiefs of corporate strategy and of business development – both senior management along with Cunitz – its vice presidents of sales, regional sales managers, global head of field, senior director of professional services and its director of marketing all hail from VMware’s Spring biz.

Hortonworks’ chief executive is Rob Bearden, the Benchmark Capital venture capitalist who initially came on board as an early stage investor.

Bearden was chief operating officer architect of JBoss and SpringSource and architect of SpringSource's sale to VMware and the $350m sale of open-source Java app server biz JBoss to Linux distro Red Hat in 2006 – he was also an investor both in JBoss and in SpringSource.

Bearden became Hortonwork’s CEO at the insistence of the board, taking the reins from Eric Baldeschwieler, who is now chief technology officer. Baldeschwieler been Yahoo! vice president of engineering. Yahoo! spun out Hortonworks in June 2011. The new company contained most of the engineering team who had helped build and refine Hadoop, the architecture begun by Doug Cutting.

Now it certainly appears as if Bearden is trying to re-assemble his former SpringSource team, with those from JBoss and Red Hat, to flip Hortonworks in another SpringSource or JBoss-style sale – Bearden’s forte. Sources tell The Reg Hortonworks made $20m in revenue last year, but $15m came from Yahoo!

Hortonworks denied Yahoo! represented a majority of the company's revenue, saying just a single-digit percentage of revenue came from Yahoo!. The spokesperson said Hortonworks has a diverse and rapidly growing revenue base in the range of $20m. ®

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