Hyperloop One Sued by Former Executives for Mismanagement, Nepotism and Threats
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UPDATED: Aug 3, 2016
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The co-founder and Chief Technology Officer of Hyperloop One, Brogan BamBrogan, has resigned and filed a lawsuit against the company, alleging mismanagement, nepotism, and threatening behavior.
BamBrogan is joined in his suit by Dr. Knut Sauer, former Vice President of Business Development, David Pendergast, former Assistant General Counsel, and William Mulholland, Vice President of Finance. The suit was filed against Hyperloop One, its co-founder and Executive Chairman Shervin Pishevar, chief legal officer Afshin Pishevar, board member Joseph Lonsdale, and CEO Rob Lloyd.
Pattern of Nepotism and Retaliation for Complaints
Hyperloop is a proposed long-distance, high-speed transportation system. Passengers and cargo would be transported through large tubes with a minimal amount of air inside. The lack of air would minimize resistance and the pods would levitate, removing friction. The pods would be able to travel up to 700 miles per hour, allowing travel between Los Angeles and San Francisco in just 30 minutes. Hyperloop One has raised $92 million and is largely backed by Shervin Pishevar’s venture capital firm, Sherpa Capital.
The plaintiffs allege retaliation in violation of Labor Code § 1102.5, wrongful termination in violation of public policy, breach of contract, defamation, intentional infliction of emotional distress, assault, and breach of fiduciary duty.
Specifically the plaintiffs claim that the defendant Shervin Pishevar began dating the company’s PR vendor and increased her salary from $15,000 to $40,000 a month, which was more than any other employee in the company. When their relationship broke off, Pishevar terminated the arrangement. Similarly, Pishevar hired his brother, a personal injury and criminal defense attorney, as Hyperloop One’s General Counsel and granted him a salary and stock options larger than any of the engineers.
The plaintiffs also allege that defendant Vice-Chairman Joseph Lonsdale insisted that the company hire his brother’s inexperienced two-person company as the company’s exclusive investment bank.
The suit also alleges that defendant Afshin Pishevar placed a hangman’s noose on BamBrogan’s chair after a dispute.
Targets for Termination Following Letter
According to the suit, the plaintiffs and several of their colleagues wrote a letter to the defendant Shervin Pishevar, CEO Robert Lloyd, and Joseph Lonsdale, detailing the various breaches of fiduciary duty they had witnessed and the changes that would be necessary to put the company on track for success. The lawsuit claims that, over the next month, the authors of the letter were targeted for termination. BamBrogan, Mulholland, and Sauer claim that they were forced to resign, while Pendergast was fired.
Plaintiffs are seeking an injunction of defendants’ behavior, public apology, reinstatement, and monetary damages.
Attorneys for Hyperloop One released a statement calling the lawsuit “unfortunate and delusional,” and claiming that the plaintiffs “tried to stage a coup and failed. They knew that the company was aware of their actions, and this lawsuit is their preemptive strike. The claims are pure nonsense and will be met with a swift and potent legal response.”
Brogan BamBrogan was replaced by Josh Giegel as CTO. Giegel was formerly the Vice President of Engineering at Hyperloop One.
The case in pending in Superior Court of California in Los Angeles County as Case Number BC626780.