Ex-employee, Rackspace settle lawsuit

Rackspace Technology Inc. has settled a lawsuit against an ex-employee who it alleged threatened to go to the media with “concerns” about its business practices unless it paid him severance.

Under a permanent injunction and judgment reached last month, former employee James Barcelona must refrain from disclosing any of Rackspace’s confidential business information to the media or through social media.

Barcelona also is barred from contacting Rackspace’s customers and interfering with those relationships.

Barcelona had worked as a storage and backup engineer at the San Antonio cloud-computing company.

Edward Piña, Barcelona’s attorney, said there were other, confidential terms to the settlement agreement that weren’t part of the final judgment.

“There is a confidential settlement agreement between the parties that was mutually satisfactory,” Piña said. “That limits how much we can say about that, but Mr. Barcelona was pleased with the outcome.

“Both sides viewed this as a learning experience, I think,” Piña added.

A Rackspace spokeswoman declined to comment Tuesday.

The company had sued Barcelona for breach of contract, breach of fiduciary duty, violation of the Texas Uniform Trade Secrets Act and interference with business relationships. It had sought damages ranging from $200,000 to $1 million.

All of Rackspace’s claims were dismissed, while Barcelona’s claims were resolved, Piña said.

Barcelona was fired June 15, the same day Rackspace filed its lawsuit in state District Court in San Antonio. The company obtained a temporary restraining order preventing him from disclosing any of its confidential business information.

In his Aug. 13 response to Rackspace’s lawsuit, Barcelona said he had been treated in a “very demeaning and unprofessional manner” by his immediate supervisor. The mistreatment included insults, slurs and other offensive comments, he said.

Barcelona had filed a discrimination complaint with the Equal Employment Opportunity Commission and the Texas Workforce Commission, but it will be withdrawn as part of the settlement agreement, Piña said.

After complaining about how he was being treated, Rackspace’s human resources department sent Barcelona a “corrective action” that later was withdrawn,

Barcelona said in his response.

On May 30, Sarah Miller, a Rackspace human resources representative, said Barcelona had sent her an email demanding a severance package equal to at least 12 months’ pay.

“In that email, for the very first time, Barcelona also raised business ‘concerns’ about Rackspace’s business practices and protocols — concerns that he had never before raised to me or anyone else on my team,” Miller said in a declaration filed with the company’s lawsuit.

Barcelona countered that Rackspace had “gone out of its way to pervert months of internal discussions intended by Barcelona as an impetus for Rackspace management to improve its core business and core values into a paranoid tirade against him.”

In an earlier interview, Piña said Rackspace “panicked” over Barcelona’s workplace complaints because of a planned initial public offering.

Rackspace returned to the public markets Aug. 5, raising $703.5 million in the process. It sold 33.5 million shares at $21 each. The shares fell 5 cents to close at $19.04 Tuesday.

The injunction and final judgment was signed by state District Judge Norma Gonzales.