Toast sues San Francisco rival, alleging it's been 'raiding' employees

Local restaurant payments company Toast Inc. has sued a California competitor and two of its former salespeople over what it alleges is a violation of non-competition obligations related to the recruiting of Toast personnel.

Boston-based Toast filed the complaint on Oct. 30 in the U.S. District Court for the District of Massachusetts against the San Francisco-based provider of payment solutions for businesses, SpotOn Transact Inc. Toast is demanding a trial by jury.

Adam Jay and Kristina Bompiani, both former manager-level employees at Toast who went to work for SpotOn, are also defendants in the lawsuit.

The complaint claims that "a significant part of SpotOn’s modus operandi involves raiding Toast personnel and placing them in positions at SpotOn where they operate in actual and inevitable violation of their ongoing contractual obligations to Toast, including their non-competition obligations and their obligations not to disclose, use, or permit the use of Toast’s proprietary information."

Earlier this year, Toast and Jay reached a settlement agreement that Toast is now asking the court to declare to be null and void.

Toast declined to comment on the lawsuit. Jay, when asked for comment, referred the Business Journal to Michelle Zmugg, SpotOn's general counsel, who did not respond to request for comment.

But RJ Horsley, president of SpotOn, said in an emailed statement that he was "disappointed" to see Toast file the lawsuit.

"In the rare case where a contractual issue has arisen with a new hire, SpotOn has consistently tried to resolve those issues so that our employees are able to pursue opportunities with SpotOn. The same was true here and, in fact, Toast already raised all of these issues with its former employee, Mr. Jay, months ago, and chose to settle with him. There is nothing new here to even remotely suggest that Toast, a multimillion dollar company, was defrauded into settling those disputes. Toast should abide by the terms of its settlement contract."

Horsley further contends that as SpotOn has been growing, Toast has been laying employees off. "This lawsuit appears to be nothing more than a struggling company attempting to distract a competitor and limit its employees’ job opportunities through litigation, when it is failing in the marketplace."

Founded in 2011, Toast provides point-of-sale software and hardware systems for restaurants, kitchen display systems connecting servers and kitchen staff and self-service ordering kiosks for restaurant guests. With almost $900 million in total funding, the company surpassed the $1 billion valuation in 2018. In April, the company cut its staff by roughly half, laying off or furloughing hundreds of people, citing a halt in sales due to the pandemic.

Toast’s dispute with SpotOn "has been brewing since May," according to the complaint, when SpotOn hired Jay — then a Toast sales employee since April 2018 — as vice president of sales. Toast sued Jay, but reached a settlement under which Jay agreed not to have any involvement in SpotOn’s restaurant business, according to the 34-page complaint.

Toast now says in its compliant that, "looking back through the 20-20 lens of hindsight Toast should never have entered the Settlement Agreement," the complaint reads.

In the lawsuit, Toast said it has learned that Jay had solicited a Toast salesperson, Ilde Quintero, to come work for SpotOn, and had used Toast proprietary documentation at SpotOn. Toast also claims that the claims by both Jay and SpotOn that SpotOn was not focused on the restaurant business turned out to be "entirely false."

Toast accuses Jay of downloading onto his laptop "over 1,700 proprietary Toast documents taken from Toast’s system" throughout the final three weeks of his Toast employment. These documents described Toast's regional and territorial sales strategies and projections, and post-Covid strategies, Toast said in the complaint.

Toast also claims that Jay also had communications with Bompiani about SpotOn. Bompiani, a former district manager in Toast’s sales division until August 2020, joined SpotOn as regional sales director, reporting to Jay.