Thomas Siebel, CEO of C3 IoT Inc. and founder of Siebel Systems, speaks during the 2015 IHS CERAWeek conference in Houston, Texas, U.S., on Thursday, April 23, 2015.
Thomas Siebel, CEO of C3 IoT Inc. and founder of Siebel Systems, speaks during the 2015 IHS CERAWeek conference in Houston, Texas, U.S., on Thursday, April 23, 2015. (Photo: F. Carter Smith/Bloomberg)

SAN FRANCISCO — Depending on who you talk to, Thomas Siebel is either a man who stands up for his principles, or someone who uses his vast resources to grind his opponents into the ground.

Either way, he’s probably not someone you want to be litigating against.

The Silicon Valley billionaire, who heads the internet-of-things company C3 IoT Inc., has been locked in a courtroom standoff for more than two years with an ex-salesman at his company in what started as a fight over $360,000 in commissions.


John Potter.

Siebel has spared no expense in waging the legal battle, churning through a small army of top-shelf law firms including Cooley LLP and Jackson Lewis. Employment law big-hitter Lynne Hermle of Orrick, Herrington & Sutcliffe was also involved. Now, C3 is on its fourth set of attorneys, a team from Quinn Emanuel Urquhart & Sullivan led by John Potter.

While Siebel has a particular reputation for being tough, the case is also emblematic of the legal battles in Northern California’s tech world: deep-pocketed, Type-A personalities determined to come out on top, and willing to throw cash and energy into a fight. It calls to mind, for example, the bitter legal feud between the friends-turned-rivals behind networking companies Optumsoft Inc. and Arista Networks Inc.

For lawyers representing such clients, the work can be both rewarding and chancy. It can be a rare opportunity to bring to trial a compelling case that clients with fewer resources might opt to settle because of the ballooning costs of litigation. Or—depending on the facts and personalities involved—it can put an attorney in the undesirable position of having to continue to go through the motions of litigating a lost cause simply because the client won’t accept defeat.

Siebel, who founded Siebel Systems Inc. and sold it to Oracle in 2005 for $5.85 billion, has experience coming out on the winning end. In 2008, he extracted $100,000 and a public apology from a sitting state court judge in San Mateo, California, for her role in a gender discrimination case against his former company. From start to finish, the battle lasted roughly 12 years.

Siebel also went toe-to-toe with the U.S. Securities and Exchange Commission in 2005, winning dismissal of a case that centered on the alleged disclosure of nonpublic information about Siebel Systems to a group of institutional investors. His decision to fight the case after other firms had settled was cheered at the time by The Wall Street Journal editorial page, which congratulated him “for standing up for free speech and against the SEC’s bullying.”

Small Sums, Big Guns

In the current case, pending in state court in San Jose, Siebel was sued by Gregg Carman, a Massachusetts-based salesman who was fired by C3 in August 2014. Carman alleges that he was owed a little more than $1 million in commissions from a couple big-ticket deals he locked in with public utility companies, but that the company paid him only $152,867.

Carman says C3 then tried to force a new commission agreement on him that would cut his payment to about a fourth of what he was originally owed. According to his complaint, Carman refused and told Siebel he would quit unless he was paid a compromise amount of $360,000.

Instead, Carman says, he was terminated. He filed suit against Siebel in December 2014, and is now seeking over $1 million for the unpaid commissions, wrongful termination, and emotional distress.

While other wealthy defendants might have tried to bury a small-dollar suit like Carman’s quietly, Siebel came out swinging. He quickly cross-sued, accusing Carman of exaggerating the value of his deals and insisting that Carman actually owed C3 about $120,000.

Kim Dion, a spokeswoman for C3, declined to make Siebel available for an interview. The various attorneys that have been hired by C3 either did not respond to messages seeking comment or said they could not talk publicly about the case.


David Lowe, Rudy Exelrod Zieff & Lowe partner

Carman’s attorney is David Lowe, a partner Rudy, Exelrod, Zieff & Lowe, the same firm that represented Ellen Pao in her gender discrimination case against the venture capital firm Kleiner Perkins Caufield & Byers.

In an interview, Lowe described Siebel’s hardball response as par for the course in cases against powerful companies. “It has become increasingly common for well-heeled defendants to respond to a former employee’s lawsuit with frivolous counterclaims,” he said. “In most cases, it is simply an attempt to bully the plaintiff and scare him or her into either abandoning the case or taking a settlement that is less than the claims are worth.”

“But in my experience, it is a tactic that rarely works. And it is certainly not going to work in this case,” he added. “We are not intimidated by Mr. Siebel or his threats.”

Siebel and his various attorneys have a different take—that it’s Carman who is exploiting the legal system.

“Mr. Siebel has a well-established track record of taking aggressive legal action against unscrupulous litigators who have filed knowingly specious cases against him, or misused the legal process in attempts to unlawfully enrich themselves,” Dion, the C3 spokeswoman, said in a statement. “Mr. Siebel expects that he will be fully vindicated in this case and will prove that the other party, Mr. Carman, is the wrongdoer.”

In a motion for summary adjudication last August, C3′s lawyers cast Carman as disloyal and money-hungry, saying he presented an “ultimatum” to the company: pay the $360,000 or he would take a job with a direct competitor. They also argued that Carman was never entitled to the amount of commissions he has claimed because he inked the utility deals after the company’s commissions terms had changed.

More recently, the company’s legal team at Quinn Emanuel alleged in court filings that Carman secretly assisted a direct C3 competitor in vying for potential customers even while he was still employed at Siebel’s company, and that Carman retained over 100 gigabytes of “highly confidential” business information after leaving. Lowe called the accusations “further retaliation against Gregg Carman for standing up to claim the wages he is owed.”

Force of Nature

Siebel made his fortune largely from building—and then selling—Siebel Systems, which specialized in customer relationship management software. Now largely occupied by giants like Salesforce Inc., SAP and Oracle Corp., it is a high-stakes industry where competitors either win big—with large, multimillion-dollar contracts—or lose fantastically.

But Siebel’s reputation for being tough hasn’t just come from his business chops. In 2009, he was brutally attacked by an elephant while on safari in Tanzania. The animal broke six ribs, gored one leg and crushed the other. He barely survived.

In an interview with Forbes, Siebel recounted how on the emergency 20-hour flight back to the United States, the medical staff had only brought 10 hours’ worth of morphine. “By the time I arrived in San Jose, I’d lost two-thirds of my blood,” he told the magazine.

And then there’s his litigation track record.

In 1996, Debra Christoffers, a sales director at Siebel Systems, sued Siebel alleging unpaid commissions, gender discrimination, wrongful termination, and fraud. The case made its way to a jury, which went in favor of Siebel on most counts but did find that he had failed to pay Christoffers $193,000 in commissions. Both sides appealed but ultimately settled ­with Siebel paying $351,892 for damages and interest, and Christoffers paying Siebel $51,829 for his litigation costs.

Then, in 2000, Siebel turned around and sued Christoffers’ attorneys for malicious prosecution, saying that the sex discrimination claims were brought without any basis and solely to coerce a settlement. The case went up to the California Supreme Court, which ruled in 2007 on a procedural issue allowing Siebel’s lawsuit to move ahead. The case finally resolved when Carol Mittlesteadt, one of Christoffers’ lawyers who later became a San Mateo judge, apologized and paid $100,000 in a settlement.

Siebel has also twice tangled with the SEC. In 2002, the commission accused his company of breaching “Regulation Full Disclosure,” a rule barring the selective dissemination of business information to analysts, broker-dealers, investment advisers and institutional investors, before disclosing it to the public. He settled that case and paid a $250,000 civil penalty, without admitting or denying guilt.

The commission then smacked him with another Reg FD complaint in 2004, and this time Siebel fought back—making it the first such case to actually go to court, Siebel’s lawyer at Cooley told the Los Angeles Times. The New York federal judge handed him a total win, and chastised the SEC for being overly aggressive and straining the meaning of a company executive’s comments.

An Army of Lawyers

It’s not exactly clear why Siebel has had so many different law firms involved in the Carman case, or the extent to which any of them except for Quinn Emanuel is still involved. Cooley initially responded to Carman’s complaints and filed the first cross-complaint in 2015, but was substituted out of the case for Jackson Lewis in May of that year.

The next swap-out—Jackson Lewis for Orrick—came in September. The depositions of Carman and Siebel were delayed by agreement of the parties, court records show, and Orrick partners Hermle and Joseph Liburt appeared on the case in March 2016. They filed an amended cross-complaint, loading it up with additional causes of action, but then substituted out in November.

Dion dismissed the idea that the revolving cast of lawyers has anything to do with the substance of the litigation. C3, she said, “can confirm the attorney substitution was not based on any divergence of views about the direction of the lawsuit. Each of the law firms C3 IoT retained continues to assist in this action, and we continue to work with each of the law firms in other matters as well.”

The case is headed toward a summary judgment ruling at the end of May. If it’s not wiped out by Santa Clara Superior Court Judge Mary Arand then, the two sides will be speeding toward a 10-day trial in front of a jury at the end of June. With both sides dug in, the prospects of settlement seem remote.

“Mr. Siebel will pursue this matter as long as it takes,” Dion said.

Contact the reporter at bhancock@alm.com. On Twitter: @benghancock

Copyright The Recorder. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

SAN FRANCISCO — Depending on who you talk to, Thomas Siebel is either a man who stands up for his principles, or someone who uses his vast resources to grind his opponents into the ground.

Either way, he’s probably not someone you want to be litigating against.

The Silicon Valley billionaire, who heads the internet-of-things company C3 IoT Inc., has been locked in a courtroom standoff for more than two years with an ex-salesman at his company in what started as a fight over $360,000 in commissions.


John Potter.

Siebel has spared no expense in waging the legal battle, churning through a small army of top-shelf law firms including Cooley LLP and Jackson Lewis . Employment law big-hitter Lynne Hermle of Orrick, Herrington & Sutcliffe was also involved. Now, C3 is on its fourth set of attorneys, a team from Quinn Emanuel Urquhart & Sullivan led by John Potter.

While Siebel has a particular reputation for being tough, the case is also emblematic of the legal battles in Northern California’s tech world: deep-pocketed, Type-A personalities determined to come out on top, and willing to throw cash and energy into a fight. It calls to mind, for example, the bitter legal feud between the friends-turned-rivals behind networking companies Optumsoft Inc. and Arista Networks Inc.

For lawyers representing such clients, the work can be both rewarding and chancy. It can be a rare opportunity to bring to trial a compelling case that clients with fewer resources might opt to settle because of the ballooning costs of litigation. Or—depending on the facts and personalities involved—it can put an attorney in the undesirable position of having to continue to go through the motions of litigating a lost cause simply because the client won’t accept defeat.

Siebel, who founded Siebel Systems Inc. and sold it to Oracle in 2005 for $5.85 billion, has experience coming out on the winning end. In 2008, he extracted $100,000 and a public apology from a sitting state court judge in San Mateo, California, for her role in a gender discrimination case against his former company. From start to finish, the battle lasted roughly 12 years.

Siebel also went toe-to-toe with the U.S. Securities and Exchange Commission in 2005, winning dismissal of a case that centered on the alleged disclosure of nonpublic information about Siebel Systems to a group of institutional investors. His decision to fight the case after other firms had settled was cheered at the time by The Wall Street Journal editorial page, which congratulated him “for standing up for free speech and against the SEC’s bullying.”

Small Sums, Big Guns

In the current case, pending in state court in San Jose, Siebel was sued by Gregg Carman, a Massachusetts-based salesman who was fired by C3 in August 2014. Carman alleges that he was owed a little more than $1 million in commissions from a couple big-ticket deals he locked in with public utility companies, but that the company paid him only $152,867.

Carman says C3 then tried to force a new commission agreement on him that would cut his payment to about a fourth of what he was originally owed. According to his complaint, Carman refused and told Siebel he would quit unless he was paid a compromise amount of $360,000.

Instead, Carman says, he was terminated. He filed suit against Siebel in December 2014, and is now seeking over $1 million for the unpaid commissions, wrongful termination, and emotional distress.

While other wealthy defendants might have tried to bury a small-dollar suit like Carman’s quietly, Siebel came out swinging. He quickly cross-sued, accusing Carman of exaggerating the value of his deals and insisting that Carman actually owed C3 about $120,000.

Kim Dion, a spokeswoman for C3, declined to make Siebel available for an interview. The various attorneys that have been hired by C3 either did not respond to messages seeking comment or said they could not talk publicly about the case.


David Lowe, Rudy Exelrod Zieff & Lowe partner

Carman’s attorney is David Lowe, a partner Rudy, Exelrod , Zieff & Lowe, the same firm that represented Ellen Pao in her gender discrimination case against the venture capital firm Kleiner Perkins Caufield & Byers.

In an interview, Lowe described Siebel’s hardball response as par for the course in cases against powerful companies. “It has become increasingly common for well-heeled defendants to respond to a former employee’s lawsuit with frivolous counterclaims,” he said. “In most cases, it is simply an attempt to bully the plaintiff and scare him or her into either abandoning the case or taking a settlement that is less than the claims are worth.”

“But in my experience, it is a tactic that rarely works. And it is certainly not going to work in this case,” he added. “We are not intimidated by Mr. Siebel or his threats.”

Siebel and his various attorneys have a different take—that it’s Carman who is exploiting the legal system.

“Mr. Siebel has a well-established track record of taking aggressive legal action against unscrupulous litigators who have filed knowingly specious cases against him, or misused the legal process in attempts to unlawfully enrich themselves,” Dion, the C3 spokeswoman, said in a statement. “Mr. Siebel expects that he will be fully vindicated in this case and will prove that the other party, Mr. Carman, is the wrongdoer.”

In a motion for summary adjudication last August, C3′s lawyers cast Carman as disloyal and money-hungry, saying he presented an “ultimatum” to the company: pay the $360,000 or he would take a job with a direct competitor. They also argued that Carman was never entitled to the amount of commissions he has claimed because he inked the utility deals after the company’s commissions terms had changed.

More recently, the company’s legal team at Quinn Emanuel alleged in court filings that Carman secretly assisted a direct C3 competitor in vying for potential customers even while he was still employed at Siebel’s company, and that Carman retained over 100 gigabytes of “highly confidential” business information after leaving. Lowe called the accusations “further retaliation against Gregg Carman for standing up to claim the wages he is owed.”

Force of Nature

Siebel made his fortune largely from building—and then selling—Siebel Systems, which specialized in customer relationship management software. Now largely occupied by giants like Salesforce Inc., SAP and Oracle Corp. , it is a high-stakes industry where competitors either win big—with large, multimillion-dollar contracts—or lose fantastically.

But Siebel’s reputation for being tough hasn’t just come from his business chops. In 2009, he was brutally attacked by an elephant while on safari in Tanzania. The animal broke six ribs, gored one leg and crushed the other. He barely survived.

In an interview with Forbes, Siebel recounted how on the emergency 20-hour flight back to the United States, the medical staff had only brought 10 hours’ worth of morphine. “By the time I arrived in San Jose, I’d lost two-thirds of my blood,” he told the magazine.

And then there’s his litigation track record.

In 1996, Debra Christoffers, a sales director at Siebel Systems, sued Siebel alleging unpaid commissions, gender discrimination, wrongful termination, and fraud. The case made its way to a jury, which went in favor of Siebel on most counts but did find that he had failed to pay Christoffers $193,000 in commissions. Both sides appealed but ultimately settled ­with Siebel paying $351,892 for damages and interest, and Christoffers paying Siebel $51,829 for his litigation costs.

Then, in 2000, Siebel turned around and sued Christoffers’ attorneys for malicious prosecution, saying that the sex discrimination claims were brought without any basis and solely to coerce a settlement. The case went up to the California Supreme Court, which ruled in 2007 on a procedural issue allowing Siebel’s lawsuit to move ahead. The case finally resolved when Carol Mittlesteadt, one of Christoffers’ lawyers who later became a San Mateo judge, apologized and paid $100,000 in a settlement.

Siebel has also twice tangled with the SEC. In 2002, the commission accused his company of breaching “Regulation Full Disclosure,” a rule barring the selective dissemination of business information to analysts, broker-dealers, investment advisers and institutional investors, before disclosing it to the public. He settled that case and paid a $250,000 civil penalty, without admitting or denying guilt.

The commission then smacked him with another Reg FD complaint in 2004, and this time Siebel fought back—making it the first such case to actually go to court, Siebel’s lawyer at Cooley told the Los Angeles Times. The New York federal judge handed him a total win, and chastised the SEC for being overly aggressive and straining the meaning of a company executive’s comments.

An Army of Lawyers

It’s not exactly clear why Siebel has had so many different law firms involved in the Carman case, or the extent to which any of them except for Quinn Emanuel is still involved. Cooley initially responded to Carman’s complaints and filed the first cross-complaint in 2015, but was substituted out of the case for Jackson Lewis in May of that year.

The next swap-out— Jackson Lewis for Orrick—came in September. The depositions of Carman and Siebel were delayed by agreement of the parties, court records show, and Orrick partners Hermle and Joseph Liburt appeared on the case in March 2016. They filed an amended cross-complaint, loading it up with additional causes of action, but then substituted out in November.

Dion dismissed the idea that the revolving cast of lawyers has anything to do with the substance of the litigation. C3, she said, “can confirm the attorney substitution was not based on any divergence of views about the direction of the lawsuit. Each of the law firms C3 IoT retained continues to assist in this action, and we continue to work with each of the law firms in other matters as well.”

The case is headed toward a summary judgment ruling at the end of May. If it’s not wiped out by Santa Clara Superior Court Judge Mary Arand then, the two sides will be speeding toward a 10-day trial in front of a jury at the end of June. With both sides dug in, the prospects of settlement seem remote.

“Mr. Siebel will pursue this matter as long as it takes,” Dion said.

Contact the reporter at bhancock@alm.com. On Twitter: @benghancock

Copyright The Recorder. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.