SunPower deposition reveals details over former employees who 'stole off' to SolarCity

Each of the individuals named had formerly worked for SunPower – four of them as senior-level project directors; and the fifth, Tom Leyden, as managing director. As first reported in Justia.com, in addition to civil damages and injunctive relief, SunPower is seeking to hold its ex-employees criminally liable for violating a California law prohibiting unauthorized computer data access and fraud.

The company contends that Leyden recruited four former staff members to join him at SolarCity, and that all of the five named defendants used USB drives and emails to copy and steal what amounted to tens of thousands of documents containing proprietary account information from SunPower, during their last days on the job; as well as afterward.

Much of the information that the company claimed pilfered was related to customer accounts on which the former employees had worked. SunPower believes that, if the theft had gone undiscovered, SolarCity would have gained both the professional staff and the proprietary client files needed to jumpstart its own commercial sales and installation division. The lawsuit alleges that SolarCity "knowingly" accepted the stolen information.

Leyden had been a favorite son at SunPower from the time he joined the company in 2000, until he left last August 23 and joined SolarCity on September 20 as vice president of Project Development. He has a long and successful record in the industry, as well as a reputation for influential participation in solar associations— as president of the Mid-Atlantic Region for the Solar Energy Industries Association (MSEIA), chairman of PV Now (predecessor of Solar Alliance), board member of the national SEIA; and an advisor to the Interstate Renewable Energy Council.

Giannini, a five-year SunPower employee, left the company in September and began work at SolarCity immediately. Dan Leary, Alice Cathcart, and Felix Aguayo, all at SunPower for several years, left in November and joined SolarCity during the same month.

SunPower claims that all five had signed confidentiality agreements that constrained them from exposing SunPower’s exclusive information and inventions; as well as a "no-solicitation" clause; which prohibited them from recruiting workers still employed at SunPower for at least two years after leaving.

In an affidavit in support of the temporary constraining order, Mark Bronez, vice president and general manager, North America Systems, at SunPower Corporation, theorized about the motive for the alleged theft, noting that his company maintained in-depth, "vital," industry and sales information on the database Salesforce.com. Much of SunPower’s success to date, he said, has been "related to our research and analysis of the solar market, resulting in significant amount of trade-secret and proprietary information of incredible value. This information includes market and business forecasts detailing potential target customers, regions, and industries. SunPower also has developed countless tools and models for financial planning and quote information. This information is invaluable to the success of a commercial solar sales department."

Conversely, Bronez said, "Until recently, SolarCity primarily sold solar panels in the residential market and has not had a significant presence in the commercial solar market. As a result, It is my understanding that SolarCity’s commercial sales department is much less mature than SunPower’s and lacks the information that SunPower has developed over time. This information would take years to independently develop."

Bronez said the company first became suspicious on December 9, when management learned that, even after his last day of employment at SunPower on November 1, defendant and former SunPower Project Development Director Felix Aguayo was still able to access his company email account and forward "several emails containing customer information, price lists, and market reports to his personal email address." SunPower then launched a forensic analysis of computers used by the five former employees.

Through the analysis, "I reviewed information provided by www.salesforce.com," Bronez stated for the record, "indicating that Mr. Leyden downloaded data …on August 17, 2011… [including] information about major SunPower customers accounting for over $100 million of sales through 2011. This data also contained the name of the SunPower employee [who] was responsible for these sales. Those SunPower employees included Mr. Aguayo, Mr. Leary, and Ms. Cathcart."

Bronez emphasized, "This information is extremely valuable to SunPower, any sales person in the solar industry, and SunPower’s competitors."

Next, Bronez reviewed Aguayo’s keyword searchers. "These file appear to include thousands of proposals, contracts, and quotes, as well as hundreds of files containing cash flow analysis, market analysis, business analysis, forecast analysis, SREC analysis, and selling strategies. Several of these files appear to be critical business plans containing the details of targeted potential customers… [as well as] a proposal generation matrix that provides forecasts of SunPower’s solar panel manufacturing costs for the next four years."

The data trail for Leary, said Bronez, showed that he had copied a large amount of information about one major account on which he had worked, including "SunPower’s prior and forecasted dealings with this customer that would allow Mr. Leary to unfairly compete against SunPower."

Bronez then provided what he considered to be further proof that Leary was stealing the account. "We recently submitted a proposal for a multimillion-dollar project for that large customer. As part of the proposal, SunPower employees met the customer at their location. While there, they encountered Mr. Leary, who appeared to also be walking the location, in preparation to submit a competing proposal. The information Mr. Leary and Mr. Leyden appear to have copied may allow SolarCity to predict and counter SunPower’s bid."

In regard to Cathcart’s involvement, Bronez testified that, among the files she "appear[ed] to have stolen from Sunpower," several "are related to areas of SunPower’s business that Ms. Cathcart was not involved in and would have no reason to access."

Finally, Gianni not only copied hundreds of quotes, deals, proposals, contracts, and forecasts, said Bronez, but, "It also appears that Mr. Giannini copied critical strategic market forecasts for two strategic markets that Mr. Gianinni was involved in during his employement at SunPower. I am informed," stated Bronez, "that SolarCity has now begun competing in these markets."

Since word of the suit has circulated throughout the industry, none of the defendants, except SolarCity, has been available for comment. In a statement to the press, SolarCity did not directly refer to the lawsuit, but noted that it "takes trade secret issues very seriously and will ensure that we act in accordance with the law."

"SolarCity’s commercial market share has grown significantly in the past few years, and this growth threatens SunPower," it said. "Over the past few months, following its acquisition by a foreign oil company [Paris-based Total], a number of SunPower’s best salespeople decided to join SolarCity. SolarCity has created a leading service offering and a dynamic work environment to attract the best people in the industry; just yesterday, we were named the tenth most innovative company in the world by Fast Company magazine. SunPower is apparently taking exception to that."

When contacted for reaction to the suit, the Solar Industries Energy Association told pv magazine, "Unfortunately it is our policy to not comment on lawsuits between companies." In addition, another solar competitor with offices in California, First Solar, refused to air any opinion on the case.

The case is SunPower Corp v. SolarCity Corp et al. in the U.S. District Court for the Northern District of California in San Jose, case no. CV 12- -00694.

The Federal Bureau of Investigation (FBI) estimates that, every year, billions of U.S. dollars are lost to foreign and domestic competitors who deliberately target economic intelligence in flourishing American industries. When the corporate espionage is carried out by long-term trusted and productive employees, it can have a disquieting and disillusioning effect on the entire enterprise – and, worse, it can damage the lives and the livelihoods of everyone it touches.