(The opinions expressed here are those of the author, a columnist for Reuters.)
By Alison Frankel
NEW YORK, May 12 (Reuters) - Uber’s legal strategy to ward off a trade secrets suit by Waymo backfired spectacularly on Thursday night.
U.S. District Judge William Alsup of San Francisco denied Uber’s motion to send the Alphabet subsidiary’s case to arbitration. But that’s not all.
The judge also referred Waymo’s claims that Uber misappropriated its self-driving technology to the U.S. Attorney’s office, based on an evidentiary record the judge (uncharacteristically) kept under seal, and partially granted Waymo’s bid for a preliminary injunction to stop Uber from using its tech.
That order is not publicly available, and Judge Alsup styled it as a grant of provisional relief rather than an injunction. But assuming that he applied the exacting likelihood-of-success standard to Waymo’s evidence that Uber misappropriated trade secrets, Thursday night’s rulings mean Uber is now stuck litigating in front of a judge who thinks Waymo has a quite convincing case.
And what’s more, Judge Alsup's 10-page decision to keep the Waymo suit out of arbitration contains hints that the judge is skeptical of tactics used by Uber’s lawyers at Morrison & Foerster and Boies Schiller Flexner.
The judge’s squeamishness about Uber’s litigation gamesmanship is nowhere near the top of the company’s long list of legal problems, which already includes a criminal investigation of its alleged use of software to help drivers evade transportation regulators as well as this case and class actions by drivers and passengers.
But the Waymo suit isn’t the first time Uber’s aggressive litigation style has played badly with a federal judge. So as Uber and Waymo battle over what will doubtless be one of the most important technological developments of the next decade, it’s worth taking a look at how the company ticked off the judge presiding over the fight.
The most obvious clue comes from the last substantive paragraph in Judge Alsup’s opinion. As the judge explained, the theme of Uber’s motion to send this case to arbitration was an assertion that Waymo and its lawyers at Quinn Emanuel Urquhart & Sullivan were using litigation trickery to keep their suit in the public forum of federal court instead.
Waymo’s claims centered on technology allegedly stolen by a Google engineer, Anthony Levandowski, who was the longtime head of Google’s self-driving tech team. (Levandowski left Google to start up a self-driving truck company that was later acquired by Uber.)
Levandowski had signed two Google employment agreements requiring arbitration of any disputes he had with the company. According to Uber, those arbitration agreements should have compelled Waymo to arbitrate its trade secrets case against Uber – but Waymo deliberately omitted naming Levandowski as a defendant in the suit in order to keep the case in federal court.
As Judge Alsup recounted in Thursday’s opinion, Uber alleged that Waymo used “’artful’ or ‘tactical’ pleading to evade its arbitration obligations.” Those words aren’t necessarily derogatory and might even be considered lawyerly compliments. But Judge Alsup read them as implicit accusations – and found them to be “unwarranted.”
Waymo, according to the judge, had behaved with propriety. The company had, in fact, honored its arbitration agreement with Levandowski by bringing arbitration claims against its former employee.
Its decision to assert a separate case against Uber in federal court “was not only reasonable but also the only course available, since Waymo had no arbitration agreement” with Uber, said Alsup, who elsewhere in the opinion said Waymo had “dutifully” gone to arbitration against Levandowski.
By contrast, the judge said Uber lawyers had behaved “unfairly” when they cited supporting precedent for the first time in a reply brief.
Judge Alsup also wasn’t happy with Uber’s too-clever-by-half explanation for why the leading California case on arbitration and equitable estoppel – which, as Alsup concluded, was not necessarily good precedent for Uber – did not mention a San Jose federal court decision that Uber considered great support for its argument to compel arbitration.
Uber’s lawyers, according to Judge Alsup, said in a footnote that the California decision did not contradict “the holding and rationale” of the federal-court opinion. What they didn’t say, according to the judge, was that the California case could not have discussed the federal finding because the federal case wasn’t decided until about two weeks after the state opinion.
These are subtle criticisms, to be sure, but in combination with the judge’s pointed defense of Waymo’s pleadings, they’re not a good portent for Uber. In a high-stakes case like this one, you just don’t want the judge to think your side is unfair and sneaky and the other side is dutiful and honorable.
In a statement responding to a detailed email request for comment, an Uber spokesperson said, “It is unfortunate that Waymo will be permitted to avoid abiding by the arbitration promise it requires its employees to make. We remain confident in our case and welcome the chance to talk about our independently developed technology in any forum."
Reporting by Alison Frankel. Editing by Alessandra Rafferty.