After reading briefly through the lawsuit[1], it seems that Osama Bedier was working as a senior manager at PayPal creating a product similar to Google Wallet (referred to as a "mobile payment" point of sale). He then interviewed and left for Google (whilst PayPal and Google were in negotiations for a separate business deal), and PayPal claims that he used trade secrets from PayPal to help Google create Wallet.

Stephanie Tilenius broke her contractual agreement with eBay after she recruited Bedier (and attempted to recruit many other PayPal employees).

"Bedier was the senior PayPal executive accountable for leading negotiations with Google on Android during this period. At the very point when the companies were negotiating and finalizing the Android—PayPal deal, Bedier was interviewing for job at Google without informing PayPal of this conflicting position. Bedier’s conduct during this time amounted to breach of his responsibilities as PayPal executive."

I'm not a lawyer, but it looks like they have pretty good reason to be upset.

1. http://www.ebayinc.com/assets/pdf/fact_sheet/2011_PayPal_DOC...