Analysis: Hyperloop's legal battles just got even stranger

Silicon Valley has had its share of squabbles among start-up founders - just look at Facebook and Twitter. But few are stranger than the legal battle taking place at Hyperloop One.

The high-profile Los Angeles start-up is building a high-speed train that gets propelled through a tube faster than the speed of sound - an idea that was proposed by Elon Musk several years ago, when he challenged fellow entrepreneurs everywhere to build it.

But even as it aims to transform the future of transportation, the company has been embroiled since July in a bitter lawsuit brought by four former executives that gets uglier by the day. The plaintiffs, one of whom is a co-founder, claimed the company was nepotistic and grossly mismanaged. When they tried to fix the problems, they said they were wrongfully fired and harassed by their former colleagues. The company's chief technology officer, Brogan BamBrogan, even claimed a noose was left on his desk as a threat, forcing him to seek a restraining order against a former colleague with whom he was once close.

The company's founders fired back, claiming BamBrogan and the other executives had been secretly plotting a coup to take over the company. When they failed, the founders allege, the former executives made plans to steal trade secrets and build a rival hyperloop company, going as far as registering a domain name, hyperlooptoo.com. The founders also alleged that the disgruntled employees had gone so far as to create a fake Twitter account, the real Shervin, which they used to splatter insults on their former boss, according to the complaint.

Now Hyperloop One is doubling down. In a new legal salvo filed on Wednesday morning, Hyperloop One's founders - investors Shervin and Afshin Pishevar, Joe Lonsdale and Robert Lloyd - said they had uncovered more evidence of the coup. According to the filing, in California Superior Court in Los Angeles, the group held secret meetings in BamBrogan's garage. There, they compiled a list of colleagues to poach for their competing venture and began efforts to steal Hyperloop's One's patents. They also discussed raising millions of dollars to fight their former employer in court, the complaint said.

Sallie Hofmeister, a spokeswoman for the former executives, declined to comment Wednesday before seeing the filing.

The suit comes at a moment when the hyperloop, which would allow commuters to zip between San Francisco and Los Angeles in 30 minutes or less, is starting to get some traction. The start-up has signed early agreements to begin exploring the technology in Dubai, and is conducting feasibility studies at eight locations around the world, including the ports of Los Angeles and Long Beach. The case came shortly after a major test of the technology in the Nevada desert.

"Today's filing sheds even more light on the attempted illegal coup by this Gang of Four, and demonstrates the extensive plans they took to form a competing company," Hyperloop One's attorney, Orin Snyder, said in an emailed statement on Wednesday. "When their plans blew up in their face, they staged a propaganda campaign designed to harm the company. We will hold them responsible for their conspiracy and lies, as Hyperloop One continues to prosper as a better company without their destructive behavior."

Snyder, who represented Facebook during a bitter dispute with its early investor, insisted the lawsuit would not derail Hyperloop One's progress. He said squabbles tend to happen when a start-up is on the rise and people crave more compensation. In court filings, the founders denied that a noose was left on BamBrogan's desk. Rather. it was a lasso, they said, placed near a cowboy hat BamBrogan kept on his desk.

The language in the complaint filed Wednesday veers on mocking. The Hyperloop One founders describes BamBrogan's original lawsuit as a "Sham Complaint," and " a premeditated scheme to cause economic and reputational injury to the Company and its core leadership to extract a quick settlement based on smoke and mirrors."

Both sides describe a seething and chaotic atmosphere in the months leading up to the suit. The founders claim BamBrogran and the other executives were poor performers who knew they were going to be fired soon. The plaintiffs denied this, saying the men were told they were "stellar" performers.

At the same time, 11 employees, including those who brought the suit, were upset with the company's management, and drummed up a list of demands to the board. The demands included that Pishevar step down as executive chairman and BamBrogan be appointed to the board. Some of those demands were filled.

All along, BamBrogan and his colleagues have said they were making an effort to right a company that suffered from extensive mismanagement, itself not an uncommon complaint within early-stage start-ups. They said the start-up was managed as the personal fiefdom of Pishevar and Lonsdale, both successful Silicon valley entrepreneurs. Pishevar is an early Uber investor. Lonsdale co-founded the data-mining company Palantir Technologies.

At one point, the two controlled 78 percent of Hyperloop One's voting rights. The plaintiffs alleged the two men rarely spent time at the start-up, except to give tours to celebrity friends, according to their filing. They also accused them of unfair favoritism toward family members. Pishevar's brother Afshin was the company's general counsel.