Veeva lawsuit challenges noncompete agreements
Veeva Systems Inc., a target of lawsuits over hiring away employees from rivals in life sciences cloud computing, is now trying to turn the tables.
In a complaint filed in Alameda County Superior Court, Veeva seeks to liberate itself and other employers from restrictions on hiring from competitors based in other states.
Veeva operates at the intersection of two of the fields that attract some of the best tech talent: cloud software and life sciences. It went public almost four years ago at $20 per share, raising $300 million. The stock closed Tuesday at $63.08, giving the company a market value of almost $9 billion.
While California is one of just a handful of states where noncompetition agreements can’t be enforced as a matter of policy, employees whose company headquarters are based elsewhere can still be blocked by their contracts from taking new jobs in the state.
In announcing its suit against three companies that have sought court orders to block ex-employees from joining Veeva or allegedly threatened litigation — Medidata Solutions Inc., Quintiles IMS Inc. and Sparta Systems Inc. — Veeva said it’s taking a stand to end a practice it views as anticompetitive.
Veeva is asking a court to declare that it’s a violation of California’s unfair competition law for any employer that does business in the state to try to block its workers, regardless of where they live, from going to work for a rival based in the state.
“Employees should have the right to move freely between jobs, advance their careers and improve their lives without fear of being sued by their former employers,” Veeva CEO Peter Gassner said in a statement. “Many companies outside California take advantage of that fact that noncompetes are banned and freely hire from California companies, yet require their employees to sign agreements that do not allow them to work for California companies.”
Medidata, based in New York City, said it supports and respects the rights of workers to build their careers, but it sued Veeva in January over the defection of five employees, challenging the Pleasanton company’s “illegal targeting and unfair use of our trade secrets.”
“Medidata will not tolerate the misappropriation of its intellectual property,” it said.
Representatives of Quintiles IMS and Sparta Systems didn’t immediately respond to email messages seeking comment on Veeva’s complaint.
Typically, a noncompete agreement — which many job candidates in the tech world have to sign as a condition of employment — bars them from working on rival products for a set period of time, say a year, after leaving their current employer.
Supporters say they help protect trade secrets and other confidential information and prevent rapid turnover at companies that have made big investments to train employees. Critics say they suppress wages and stifle innovation and economic growth.