Uber could be left with some discovery-related whiplash after a rough few days in federal court last week. The ride-hailing company is in the midst of a high profile lawsuit with Waymo, a self-driving car company that is part of Google’s parent corporation, Alphabet. Waymo accuses Uber driving off with its trade secrets in a case that the New York Times describes as “one of the most important courtroom fights for the tech industry in years” whose outcome “could affect the future of driverless car technology.”
The two companies have been in a fierce battle over evidence ever since Waymo filed suit in February. Last week, Uber suffered two major setbacks in that battle. First, a ruling that Uber’s CEO and in-house counsel had waived attorney-client privilege on an issue central to the case, followed by threats by Judge William Alsup to put Uber’s lawyers on the stand to testify as to why Uber did not “come clean” over evidence allegedly in its possession.
The dispute stems from Anthony Levandowski’s move from Waymo to Uber a year ago. Levandowski, a self-driving car expert, was an engineer at Waymo until he left in January, 2016, to form his own autonomous truck company, Otto. Six months later, Uber bought Otto for $680 million, with Levandowski joining the tech company as vice president of engineering for its self-driving car project. That move, Waymo alleges, was a scheme to steal Waymo’s technology. It’s suing Uber and Otto for trade secret misappropriation.
A day after the suit as filed, Levandowski told Uber that he had downloaded documents from Waymo—Waymo puts the number at 14,000 files—before departing in order to help him work from home and, perhaps, to make sure he was given a bonus by Google. Uber fired Levandowski in May, after he asserted his Fifth Amendment right against self-incrimination rather than turn over documents and missed an internal deadline to hand over information to the company.
Uber’s Waives Privilege It Claims It Didn't Have
The first setback to Uber last week came on Monday, as U.S. Magistrate Judge Jacqueline Scott Corley ruled that the ride-hailing company had waived attorney-client privilege regarding conversations between Levandowski, Uber’s then-CEO Travis Kalanick, and Uber’s in-house litigation counsel.
This was not your typical privilege ruling, however. Rather than asserting privilege, Uber, the privilege holder, insisted that the discussion wasn’t privileged. That put the court in what Magistrate Judge Corley described as the “unusual situation of having to adjudicate whether a conversation is privileged notwithstanding the purported privilege holder’s insistence that it is not.”
The conversations in question took place not long after Waymo sued Uber. On March 26th, 2017, for example, Kalanick and Uber’s counsel met with Levandowski, then still in charge of Uber’s self-driving car engineering team, to discuss the suit and his intent to invoke the Fifth Amendment. Three days later, Levandowski met with Uber executives and lawyers, followed by a smaller meeting with Kalanick and Angela Padilla, Uber’s associate general counsel for litigation and employment.
Both Kalanick and Padilla counseled Lewandowski against pleading the Fifth. Though Padilla noted she couldn’t provide Lewandowski with legal advice, she urged him to “just tell the Court what he did.” During that conversation, Levandowski repeated an earlier claim that he had downloaded files from Waymo in order to use them while working at home, adding as well that his downloading was motivated in part over concerns that he wouldn’t be paid his bonus.
Uber later revealed that Levandowski had told Kalanick that he downloaded the files to ensure payment of his bonus, but failed to initially disclose that Padilla had been present as well, which “would have revealed the attorney-client privilege issue,” according to the court.
When deposed by Waymo in July, Kalanick discussed the content of the conversations with Levandowski, including his reasons for invoking the Fifth, and was clear that attorneys had been present at all such conversations.
Kalanick’s testimony, Waymo subsequently argued, waived any privilege objection not just to the conversation itself, but to the entire subject matter, to “everything Mr. Levandowski said to Uber on those topics.”
Uber argued, unsuccessfully, that the conversations were not privileged in the first place, thus there could be no subject matter waiver. The purpose of the March meeting between between Levandowski, Kalanick, and Padilla, Magistrate Judge Corley concluded, “was to learn information from then-Uber executive Mr. Levandowski to enable to [sic] Ms. Padilla and her colleagues to advise their client—Uber—about how to proceed in the lawsuit.”
The court further rejected Uber’s argument that Padilla had been present in order to “comfort” Kalanick, rather than in a legal function. “She was Uber’s head of litigation,” the court noted with more than a hint of incredulity. “She was present at similar meetings immediately before and after that were the purpose of providing legal advice.”
Even if she was there for “comfort,” that made no difference. “Why was Ms. Padilla a comfort? Because she was the in-house litigation counsel and Mr. Kalanick was hoping to learn facts relevant to this litigation.”
Thus finding that the conversations were subject to attorney-client privilege, the court went on to hold that Uber had deliberately waived that privilege by disclosing the communications—and that waiver extended to “undisclosed communications regarding the subject matter of the disclosed communications.”
Uber's insistence that the conversations weren't privileged initially left Magistrate Judge Corley "flabergasted." Uber, however, had sought to reveal Levandawski's bonus claim on the belief that the bonus motivation would "exonerate" the company. Now, however, evidence connected to those conversations could expand well beyond what Uber wanted to present—evidence Waymo asserts will "reveal holes in Mr. Levandowski’s late-disclosed ‘bonus’ explanation." If Uber's strategy was to selectively work around privilege, revealing only the information that might benefit it, that approach would seem to have crashed and burned.
The question of whether Levandowski had an individual attorney-client privilege that was also waived is still undetermined, but the ruling could open the flood gates to additional discovery covering both Levandowski’s motivations for downloading documents from Waymo and for invoking the Fifth Amendment—potentially exposing Uber to way mo’ discovery woes.
Will Uber’s Lawyers Be Forced to Testify?
Uber’s rough Monday was soon followed by an even worse Wednesday, during which U.S. District Judge William Alsup indicated that he could let the jury hear about Uber’s failure to “come clean” with all documents during discovery. As Bloomberg notes:
Since the case was filed in February Alsup has repeatedly expressed frustration with lawyers at Morrison and Foerster, or MoFo, for making sweeping arguments that information sought by Waymo is protected by confidentiality provisions and out of its adversary’s reach.
The suggestion that a jury could be informed of Uber’s evasiveness came as Waymo complained that Uber was withholding important evidence. According to Waymo, Uber’s third-party discovery and technology vendor was able to recover ESI through forensic imaging of Levandowski’s computer, but Uber repeatedly asserted that it did not have those documents. The company also failed, Waymo says, to disclose that Levandowski had destroyed other Waymo documents until three months after a court deadline to disclose any such destruction.
“I am inclined to tell the jury this scenario, that Uber was ordered to come clean did not come clean,” Judge Alsup said during the Wednesday hearing. “With these big firms, these big companies, I can't regulate everything. But I can do this: I can tell the jury what we're up against and how they hide the ball.”
The suggestion that the jury could be informed of Uber’s alleged discovery gamesmanship was posited as a potential alternative to holding Uber and MoFo in contempt.
Judge Alsup even suggested that Uber’s lead attorney, Arturo Gonzalez, could be called to take the stand. “You will be a good witness,” he said. “You’ll be up there explaining to the jury, and you’re going to tell them that, and then Mr. Verhoeven,” Waymo’s counsel with Quinn Emanuel, “will cross-examine you.”
The judge also expressed frustration with Uber’s shifting claims as to what documents were and were not privileged. “This was a mess of your own making,” he said. “Now you're now going back through the record and deciding what you need. I see right through it. You're not fooling me for a second. Someone decided, ‘Oh, I need that.’ That's how slick it looks.”
In Uber terms, that’s the equivalent of a one-star review.
Gonzalez, however, rejected Waymo’s accusations. “The notion that MoFo has the documents is completely false,” he said. “This is much ado about nothing.”
It wasn’t all bad news for Uber last week, however. On Tuesday, the company got a brief respite from the court’s negative rulings when Magistrate Judge Corley declined to let Waymo depose Uber board members Arianna Huffington and David Bonderman, finding that Waymo hadn’t shown they had knowledge of trade secrets theft. Waymo has already backed away from some of its claims against Uber, as well, scaling back its patent infringement claims after Uber changed its self-driving car designs.
The case is fast tracked for trial in San Francisco this October. In the meantime, we’ll have to wait and see if Uber’s lawyers end up taking the stand.