RES Group sues Hudson Clean Energy Partners

Hudson Clean Energy Partners, a private equity firm formed last year by alternative energy bankers from Goldman Sachs & Co., has been hit with a lawsuit by U.K.-based wind power giant Renewable Energy Systems Ltd.

The complaint was filed in New Jersey District Court, and includes allegations of trade secret misappropriation and inducing, aiding and assisting breach of fiduciary duty.

At issue is Hudson’s July hiring of Mike O’Neill, who had been second-in-command at RES and a director on the company’s board.

According to the complaint:

For several months before O’Neill gave notice to RES, he was actually serving in part as Hudson’s top-level “inside man” within RES, helping Hudson develop its competitive venture, working on numerous business planning and other documents for Hudson, and inevitably providing to Hudson the benefit of RES’ proprietary, trade secret and confidential information. If RES had not discovered that O’Neill was secretly helping Hudson to develop its competitive venture while remaining in the employ of RES, and thereafter commenced an investigation, it is unknown for how much longer Hudson would have continued to use him in this manner.

The “competitive venture” to which RES refers is Element Power, a global platform focused on utility-scale wind and solar energy development. O’Neill was officially hired to launch the company—alongside Hudson co-founder Joseph Slamm—and has already helped it acquire Spanish renewable power company Helium Energy SLU.

RES also alleges that Hudson has tried inducing other high-level executives to follow O’Neill’s lead, and that the firm retains possession of unspecified RES documents and other trade secrets. It is asking the court for a return of all such information, an enjoinder against future “interference” with RES employees and monetary damages.

Hudson has denied all of RES’ claims in a subsequent legal reply, adding that RES has suffered no damages and that the O’Neill hiring breached neither contract nor fiduciary duty.

Judge Patty Shwartz has removed the case from arbitration, and scheduled a settlement hearing for Dec. 9, according to legal documents.

Representatives from RES and Hudson have not provided any comment.

The suit comes as Teaneck, N.J.-based Hudson was targeting $1 billion for its debut fund. Earlier this year, the firm received a $300 million commitment from Credit Suisse. As of about a month ago, the firm was telling prospective investors that it had closed on $425 million and was expecting to raise another $250 million to $350 million. C.P. Eaton is serving as placement agent.

“I hadn’t previously heard about [the lawsuit],” says an institutional investor who has had discussions with Hudson about becoming a limited partner. “It could make the fund a tough sell, because none of us are really too eager to make new commitments right now.”

Another source adds that if prospective investors are unaware of the suit, it indicates that they haven’t read all of their paperwork. “Everything about this has been disclosed in the due diligence materials,” he says.