Bombshell Jacobs Letter in Waymo-Uber Suit Unsealed

After months of contentious discovery, the high-profile trade secrets dispute between Uber and Waymo was scheduled to go to trial December 4th. That hasn’t happened. Six days before trial, previously undisclosed documents from an ex-Uber employee were revealed—shaking a lawsuit that has already seen more than its fair share of unusual twists and turns.

Those documents—a resignation letter from former Uber global security officer Richard Jacobs, a demand letter from his attorney, and a subsequent settlement agreement—involve accusations that Uber engaged in an elaborate scheme to illicitly gather information on competitors, including Waymo. That scheme also allegedly included strategies meant to avoid a paper trail that could be discovered in later litigation—strategies such as the use of unattributable computer servers, ephemeral messaging services that would not retain electronic records, and “legal training around the use of attorney-client privilege markings on written materials.”

Now, demand letters can be hyperbolic, aggressive, even totally unfounded. Uber has called the accusations simply an attempt at extortion from an employee who was upset after being demoted for poor performance. Jacobs, as well, has recanted some of his claims, saying he barely reviewed his attorney’s letter before it was sent to Uber and no longer stands behind all of its assertions.

There is one significant flaw with these denials, however: Uber paid Jacobs off, handsomely.

Jacobs settled out of court with Uber for $4.5 million. He was then brought back on as an outside consultant, hired to aid Uber’s investigation into the very unit Jacobs had accused of “achieving business goals through illegal conduct, even though equally aggressive legal means were available to achieve the same end." Uber also agreed to pay Jacobs' lawyer $3 million—not a bad ROI for an aggressive demand letter.

In another bizarre twist to this story, the Jacobs documents were revealed to the court not by Waymo or Uber, but the U.S. Department of Justice. In a letter to U.S. District Judge William Alsup, who is overseeing the trial, prosecutors from the DOJ’s Computer Hacking and Intellectual Property Unit alerted the court that their separate criminal investigation into Uber had unearthed evidence that the company had not previously disclosed in the civil suit—namely, the Jacobs letter and related documents.

The actual contents of those documents, however, have remained shrouded in secrecy. What little information that was available had been cobbled together from statements in court, while the Jacobs letter itself remained under seal. That is, until Friday. Friday afternoon, the court unsealed the documents, shortly after a special master found that the one of the Jacobs documents was responsive to Waymo's discovery requests and should have been produced.

The Special Master’s Report

While the Jacobs materials were not required to be disclosed by any court order, Special Master John L. Cooper found that Jacobs’ demand letter, though not his resignation email or settlement agreement, was both relevant and responsive to two requests for production. As such, Uber was obligated to produce it.  

As the report notes, Waymo made several pertinent document requests just three weeks after Jacobs retired. Those requests asked for information regarding misappropriated materials by current and former Google or Waymo employees, information on key authorized devices, and Uber’s policies surrounding the retention and destruction of ESI, litigation holds, and ESI preservation.

While discovery was accelerating, Uber’s Deputy GC of Litigation and Employment, Angela Padilla, was simultaneously trying to get more information from Jacobs. When that was unsuccessful, the report explains, Padilla “was ‘able to prevail upon his attorney’ to set out Mr. Jacobs’ claims in writing.”

That writing was the 37-page demand letter accusing Uber of illegal intelligence gathering and setting up a system so that corporate records “would never be subject to legal discovery.” That letter was sent to two committees of Uber’s Board of Directors and its outside counsel, and also disclosed to the Department of Justice in order to, according to Padilla, “take the air out of [Jacobs’] extortionist balloon.”

While Jacobs’ resignation email and settlement were not responsive to any document requests, that demand letter was responsive to two of Waymo’s requests for production, the special master determined.

That the letter did not show up when Uber ran searches under agreed-upon protocols was not enough to save it from its obligation to produce responsive documents. “First, the parties never reached an agreement to limit their obligation to searching for documents to only those documents that hit on agreed-upon search terms,” the report explains. It continues:

Second, Uber needed no such help in finding the Jacobs Materials. They were not stowed away in a large volume of data on some server. They were not stashed in some low-level employee’s files. Parties agree to use search terms and to look into the records of the most likely relevant custodians to help manage the often unwieldy process of searching through massive amounts of data. These methods are particularly called for when a party, instead of merely having to look for a needle in a haystack, faces the prospect of having to look for lots of needles in lots of haystacks. This needle was in Uber’s hands the whole time.

The Jacobs Letter

The demand letter claims to explain how parts of Uber were organized to illicitly gather information on competitors and evade discovery in litigation. Uber’s Strategic Services Group was accused of frequently engaging in “fraud and theft,” and using third-party vendors to obtain unauthorized data or information. The group’s assignments were said to come directly from Uber’s senior executives. Uber’s Market Analytics division was said to “exist expressly for the purpose of acquiring trade secrets, codebase, and competitive intelligence” from Uber competitors.

Among the many claims of illegal or improper activities the letter makes (and there are many) were accusations that Uber bugged a meeting with transportation regulators, that the market analytics team hacked into competitor systems, and that stolen trade secrets were delivered straight to then-CEO Travis Kalanick. An entire section of the letter is devoted to Uber’s alleged attempts to obtain trade secrets from Waymo.

The letter also details Uber's alleged actions designed to evade discovery. Jacobs’ supervisors, the letter claims, established a “program of ephemeral and encrypted communications for the express purpose of destroying evidence in illegal or unethical practices to avoid discovery in actual or potential litigation,” using apps that would erase communications after no more than six days. “Consequently,” the letter asserts, “Uber employees cannot be compelled to produce records of their chat conversations because no record is retained.”

Uber is also accused of using attorney-client privilege in order to “shroud” documents. Jacobs’ supervisor allegedly taught the team “that if they marked communications as ‘draft,’ asked for a legal opinion at the beginning of an email, and simply wrote ‘attorney-client privilege' on documents, they would be immune from discovery.”

Finally, Uber is said to have tried to conceal records through the use of non-attributable hardware. Jacobs alleges that members of the market analytics team used computers purchased through third parties, rather than Uber, and relied on mobile hotspots, rather than wifi, so that their traffic could not be traced back to Uber servers. By doing so, the letter says, “Uber believed it would avoid detection and never be subject to legal discovery.”

This is because a standard preservation of evidence order typically focused on Uber work laptops, Uber networks, and Uber mobile devices. Non-attributable devices were deemed as not reasonably subsumed by any such preservation order and they could, and did, “legally” (not so) dispose of any evidence or documentation held on these devices in the intervening period before knowledge of the devices’ existence could be uncovered.

Uber denies the accusations in the letter. In an earlier email to employees, Uber CEO Dara Khosrowshahi wrote that, “With regard to the allegations outlined in Ric Jacobs’ letter, I can tell you that we have not been able to substantiate every one of his claims, including any related to Waymo.”

You can read the Jacobs letter here and the special master's report here—and judge their worth, and their potential impact on the litigation, for yourself.

This post was authored by Casey C. Sullivan, who leads education and awareness efforts at Logikcull. You can reach him at casey.sullivan@logikcull.com or on Twitter at @caseycsull.