A federal judge has rejected payroll startup Deel's attempt to block testimony from the former Rippling employee at the center of Rippling's corporate espionage lawsuit, and handed Deel several other setbacks in the same order, The Next Web reported Saturday, citing Bloomberg. The ruling keeps the rivalry between two of the most valuable HR software startups headed toward trial.

What Happened

U.S. District Judge Charles Breyer, who is overseeing People Center Inc. v. Deel Inc. in the Northern District of California, turned down Deel's motion to prevent Keith O'Brien from testifying. Deel had asked the court in July to exclude his evidence after O'Brien declined to answer more than 100 of its questions and document requests, citing among other grounds his Fifth Amendment right against self-incrimination. Breyer found the request improper and said Deel had avoided efforts to resolve the dispute.

The judge also refused to revisit his February decision allowing Rippling's racketeering and trade secret claims to proceed. He sent Deel's most serious counterclaims to private arbitration, dismissed Deel's cybersquatting and trademark claims, and allowed part of its false-advertising claims under the Lanham Act to go forward, with permission to revise and refile those he dismissed.

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Rippling said in a statement that Deel's attempts to avoid facing justice continue to collapse. Deel did not immediately comment, according to the report.

Why It Matters

The case is one of the most closely watched disputes among venture-backed software companies because it turns on an insider rather than an outside hacker. Rippling sued in March 2025, alleging that Deel paid O'Brien, then a Rippling payroll compliance manager in Ireland, to pass along confidential information about its customers, sales pipeline and operations. Deel denies the allegations and has argued that O'Brien was a whistleblower whom Rippling pressured into giving false statements.

For security teams, the lawsuit is a reminder that ordinary internal tools can become the channel for leaks. Rippling's filings described an employee using routine workplace access, including searches in internal Slack channels, to collect information about accounts and deals, which is harder to spot than an external intrusion.

The stakes are also financial. StartupFortune noted that Rippling was valued at $16.8 billion in May 2025 and Deel at $17.3 billion in October 2025, and both compete for the same employers buying global payroll and HR software.

Context

Deel has fought the case on several fronts. According to StartupFortune, it previously failed in an effort to have the dispute moved to Ireland, and it has a separate defamation counterclaim pending in Delaware. Rippling is represented by Alex Spiro of Quinn Emanuel. The February ruling that Breyer declined to reconsider was the decision that let Rippling pursue racketeering claims, which can carry heavier damages than trade secret claims alone.

What to Watch

The next milestones are the schedule for O'Brien's testimony, whether Deel refiles the false-advertising claims the judge dismissed, and how quickly the arbitration of its counterclaims moves. Any trial date, or settlement talks between the two companies, would be the clearest sign of how the dispute ends.