Amazon sues longtime exec over new job at Target, says retail rival will be able to steal its secrets

BY TODD BISHOP on March 21, 2016 at 11:12 pm

Photo by Mike Mozart, via Flickr.

Amazon filed suit Monday against a 16-year veteran of the company, Arthur Valdez, alleging that his new job as a high-ranking supply chain and logistics executive at Target Corp. violates the terms of the non-competition agreement that he signed as part of his Amazon employment.

The suit, filed a week before Valdez is scheduled to start his new job, alleges that he “cannot lead Target’s supply chain operations without referencing confidential information learned and developed by him at Amazon to drive superior performance in exactly the same areas.”

Amazon claims that Valdez has already started spilling the beans to Target executives, in the process of interviewing with the rival retail company.

Amazon is asking the court to enforce a provision of the non-compete agreement requiring an 18-month “time out” before employees such as Valdez can work in comparable positions for competing companies. These non-compete clauses have long been a standard part of Amazon employment agreements. Valdez first signed his agreement in 1999, when he joined Amazon, the company says in its complaint.

The dispute comes as Target attempts to step up its e-commerce game to better compete with Amazon and take advantage of the growth in the online retail sector. Target’s hiring of Valdez was viewed as another key step in that effort. He was hired as Target’s executive vice president, chief supply chain and logistics officer.

Valdez was most recently an Amazon vice president, involved in the Seattle-based company’s supply chain, fulfillment centers and transportation operations, in addition to expansion in developing countries. Those are key areas for Amazon as the e-commerce giant builds out its infrastructure to deliver products around the world — increasingly using its own planes, tractor trailers and delivery vehicles to do the job.

Target announced the hiring of Valdez on Feb. 29, saying he “will lead Target’s supply chain transformation including planning, distribution and transportation,” reporting directly to Target’s executive vice president and chief operating officer, John Mulligan.

Mulligan said in a news release that Valdez’s “leadership and experience will be a tremendous asset as we continue to drive improvements in end-to-end processes including leveraging our almost 1,800 stores to deliver a seamless experience for our guests.”

Valdez is scheduled to start his new job next week, March 28, in Target’s hometown of Minneapolis, Minn. Amazon’s suit, filed in King County Superior Court in Seattle, is seeking to block Valdez from taking the job, asking the court to enforce the non-compete agreement.

“While interviewing with Target’s most senior executives, Mr. Valdez referenced not only core aspects of Amazon’s confidential information, training and expertise, but also the title and topics of a key analysis and strategy meeting Mr. Valdez was contributing to and participating in at Amazon,” the company says in its suit. “Mr. Valdez’s behavior at Target with respect to Amazon’s confidential information before being hired there highlights the injury to Amazon from Mr. Valdez’s work for Target if he works there.”

The complaint does not say how the company obtained this information, but Amazon does note that it has been in contact with Valdez and his lawyer in an unsuccessful attempt to resolve the dispute before filing suit. Amazon declined to comment for this story.

GeekWire has contacted Valdez’s lawyer seeking comment. We’ve also contacted Target representatives. The retailer is not named as a defendant in the suit, which was filed by Amazon directly against its longtime executive.

Amazon has filed suits such as this in the past against executives and other employees who have left to work for Google and other rivals. The company’s home of Washington state provides a more favorable legal climate for non-compete deals. In Washington courts, the terms of such deals have generally been allowed, if considered reasonable. Non-compete clauses have repeatedly been found invalid in California courts.

Legislation to ban many forms of non-competition agreements stalled in Washington state for the second straight year, after business groups voiced opposition to the bill.