Founder of GM's Acquired Company Facing Legal Battle

Founder of GM's Acquired Company Facing Legal Battle
Image credit: Paul Sancya — AP

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This story originally appeared on Fortune Magazine

General Motors’ $1 billion acquisition of autonomous driving startup Cruise might not all be smooth driving.

Cruise founder and CEO Kyle Vogt has filed a complaint in San Francisco Superior Court against Jeremy Guillory, who he says is unjustly claiming a stake in the company. The lawsuit asks that Guillory be barred from making those claims.

According to the complaint, the two men met just after Vogt founded his then new startup, Cruise, which develops technology that turns traditional cars into ones capable of autonomous driving. The two discussed potentially working together on the company.

However, after about a month, the two parted ways after deciding that their visions and personalities didn’t match, according to the lawsuit. Though Guillory was listed on the startup’s application for Y Combinator, a prestigious accelerator program for startups, Vogt said he interviewed with the program’s partners alone after the two men had already decided against working together.

Vogt claims in the lawsuit that Guillory didn’t write any code or build any products for the startup.

Guillory, who couldn’t be reached for comment, is allegedly asking for a stake in Cruise that he says he’s entitled to. According to Vogt’s complaint, he made his claim just five days after GM announced it would acquire Cruise last month.

The dispute creates a new complication for GM’s acquisition, which is intended to help the auto giant compete in what many believe will be a future filled with self-driving cars. Ownership battles, although fairly common, can delay major deals or, at minimum, add to the headaches involved.

“Defendant’s shocking and opportunistic claim is an attempt to thwart, interfere or otherwise delay GM’s merger acquisition of Cruise for his own pecuniary benefit,” the lawsuit says. “Knowing that this claim could interfere with the GM transaction, Mr. Guillory hopes to leverage his extortionist claims to achieve a pay-off from the Company.”

Sam Altman, Y Combinator’s president, said in a blog post that Vogt tried to settle the dispute by offering to pay an undisclosed amount to Guillory from his personal funds. But the offer was not accepted by last Friday’s deadline.

“Kyle has worked incredibly hard to settle this claim amicably, despite what I consider to be the obvious ridiculousness of it, and has done far more than I would have personally done under these circumstances,” Altman wrote.

The acquisition of Cruise is still expected to close by the end of June, according to Altman’s blog post.

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