A fraud suit against a once-celebrated Silicon Valley battery startup is abruptly dropped

The next one will be even better.
The next one will be even better.
Image: REUTERS/Mark Blinch
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This story has been updated

In a surprise ending to a legal drama involving a formerly high-flying Silicon Valley battery startup, a judge has allowed three former executives to drop their damning fraud suit against Envia Systems, which came out of nowhere to win, and then abruptly lose, a lucrative licensing deal with General Motors.

As Quartz has reported, Envia Systems was only recently a darling of Arpa-E, the US Energy Department’s venture capital arm, and then-Energy Secretary Steven Chu. At its apex in late 2012, the Newark, California-based company signed a huge multi-year licensing deal with GM, which planned to use one of the startup’s powerful batteries in a 2016 mid-priced electric car that would shake up the industry by going 200 miles on a single charge. For 2015, GM hoped to get an improved battery for its plug-in Chevy Volt (pictured above).

But the GM deal fell apart, and Atul Kapadia, Envia’s former CEO, filed a 52-page lawsuit that detailed alleged IP theft and fraud by the company’s founder, Sujeet Kumar. Along with his business team—Hari Iyer and Rohit Arora—Kapadia laid out a chronology describing how GM quickly became disenchanted and canceled its technology license with the startup.

During the falling out with GM, Kapadia and Kumar went to war, climaxing in the trio’s departure last August and the lawsuit three months later. There was no doubting that GM decided that Envia had misrepresented its technology—that was plain in letters reviewed by Quartz. But in statements, Envia denied the fraud accusations as “spurious” and characterized the trio as nothing more than “disgruntled” former employees.

The company got a lift in an order posted late today on the Alameda County Court website, where Judge Robert McGuiness granted the plaintiffs’ petition to dismiss the suit. The trio offered no explanation for their request. Reached by phone, Rohit Arora declined to comment while Kapadia and Iyer did not return phone and email messages.

Interim Envia CEO Purnesh Seegopaul also declined to comment. Since the debacle, he and Kumar have sought to quietly rebuild the company. Still Envia’s legal woes aren’t quite over: The company faces a second lawsuit, this one by Michael Pak, the CEO of NanoeXa, a battery firm where Kumar previously worked. Pak claims that Kumar stole IP from NanoeXa, a claim that Envia also denies.

GM did not immediately respond to a request for comment.

Envia has released the following statement:

“Envia Systems is pleased that the lawsuit brought by Atul Kapadia and two other former employees has been dismissed. Envia is considering its options to address the fact that the baseless lawsuit was filed at all. The company’s own investigation and other data confirmed that the lawsuit was meritless, and the plaintiffs and their lawyers have now essentially agreed—by themselves dropping          the suit less than two months after it was filed.”