SmartStream Technologies clashes with ex-CEO Chambadal over trade secrets

Provider of software and managed services SmartStream Technologies, Inc. has been engulfed in a legal fight with former CEO Philippe Chambadal over trade secrets, confidential information and compensation payments.

The legal action which names Philippe Chambadal as Defendant, seeks injunctive relief to enforce an agreement containing a return of information and confidentiality clause and to enjoin Defendant from further misappropriation or dissemination of SmartStream’s trade secrets and confidential information.

The company alleges that Mr Chambadal who was provided with a 90 days’ notice of termination of his contract with SmartStream on January 5, 2017, retained corporate property and access to confidential information after this notice was issued. In particular, the company states that Mr Chambadal did not return a computer and a phone provided by his employer within the time frame requested. Furthermore, he made visits to cloud storage, used TimeMachine and deleted files on the computer after having been given notice of termination from SmartStream.

Following notice of termination, Mr Chambadal is also alleged to have threatened to “destroy the company’s market position and pipeline” by issuing disparaging letters to SmartStream’s clients.

Mr Chambadal, of course, has a different story to tell. In his response to the Complaint, he has denied all claims against him made by SmartStream and has filed a Counterclaim, seeking damages in the amount of at least $25,000,000, saying that this sum represents the total value of the granted, earned and unpaid awards and equity based options due to be paid to him, plus attorney’s fees and costs.

Mr Chambadal insists that he was refused proper compensation because of the intentions of SmartStream, Khalifa Daboos (chairman of SmartStream) and ICD to maximize returns from an anticipated sale of the company. “Upon information and belief, Daboos and ICD have decided – as of late 2016 – to sell SmartStream in 2017, and are currently preparing to SmartStream for the sale to a strategic buyer for $500 million”, the document filed by Mr Chambadal says.

Haytham Kaddoura, who succeeded Mr Chambadal, as a CEO of SmartStream, is labelled by Mr Chambadal as “a figurehead, sycophant, and “yes man” for Daboos”. “Kaddoura was a cheap placeholder until Daboos decided to sell SmartStream”, he says.

Earlier this week, SmartStream responded to the Counterclaim filed by Mr Chambadal, saying that his unpaid award claims are futile, because awarded options cannot be exercised unless and until a specific “Exit” triggering event (i.e., an acquisition or initial public offering of the company) has occurred. And no such triggering exit event has taken place when Mr Chambadal purported to exercise Plan options on January 23, 2017. Furthermore, even if a requisite triggering exit event had occurred, the Plan states an individual’s options lapse as soon as he is given notice of termination of his employment.

The case, captioned Smartstream Technologies, Inc. v. Chambadal (1:17-cv-02459), continues to develop at the New York Southern District Court.