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Advancing Waymo’s Case, Judge Invites US Probe of Uber

In a pileup of bad news for Uber, a federal judge Thursday ruled that it must face a civil trial on accusations of filching driverless car technology from Google spinoff Waymo, and asked federal prosecutors to consider launching a criminal investigation.

SAN FRANCISCO (CN) — In a pileup of bad news for Uber, a federal judge Thursday ruled that it must face a civil trial on accusations of filching driverless car technology from Google spinoff Waymo, and asked federal prosecutors to consider launching a criminal investigation.

Uber had asked U.S. District Judge William Alsup to send Waymo's claims to arbitration, but Alsup refused, and referred the case to the U.S. attorney “based on the evidentiary record supplied thus far.”

Waymo initiated two arbitration proceedings against its former employee Anthony Levandowski, claiming he violated two agreements he signed on protection of confidential information, assignment of inventions and arbitration.

“Pursuant to the 2009 and 2012 agreements, Waymo initiated two arbitration proceedings

against Levandowski on October 28, 2016, asserting claims for breach of contract, breach of

fiduciary duties or duties of loyalty, fraud-deceit, tortious interference with contract, tortious

interference with prospective economic advantage, unfair competition, and unjust enrichment. The gravamen of those proceedings is Waymo’s allegations of employee poaching by Levandowski,” Alsup wrote in his Thursday order denying Uber Technologies’ motion to compel arbitration. (Citation omitted).

Both Levandowski and Uber have refused to testify or turn over key documents in the case — actions Alsup slammed Thursday.

“Levandowski’s assertion of his Fifth Amendment privilege has obstructed and continues to obstruct both discovery and defendants” ability to construct a complete narrative as to the fate of Waymo’s purloined files," the judge wrote in his referral to the U.S. attorney.

Waymo claims Levandowski downloaded 14,000 confidential files from its server just before he resigned in January 2016 and used them to set up a competing company called Otto that same month. The files include information on Waymo’s secret LiDAR system, a laser-based scanning and mapping technology its driverless cars use to “see” their surroundings.

Uber acquired Otto for $680 million in August 2016, three months after Otto was launched. Waymo claims Levandowski met with Uber’s senior executives days before he resigned, that Uber knew it would be illegally acquiring Waymo’s technology, and bought Otto to fast-track Uber’s floundering driverless car program.

Waymo sued Uber and Otto in February over the alleged theft but did not name Levandowski as a defendant. It moved to bar Uber from using its technology two weeks later, a request Uber said in a court filing “would impede Uber’s efforts to remain a viable business” if Alsup grants it.

In its bid to force Waymo’s claims into arbitration, Uber argued that Waymo is legally obligated to arbitrate because the claims arise from two employment contracts Levandowski signed with Waymo in 2009 and 2012 that contained arbitration clauses.

And though only parties to an arbitration agreement can invoke arbitration, nonparty Uber said it is entitled to invoke it because Waymo’s allegations are connected to those contracts.

It also argued that Waymo uses the confidentiality provisions in the contracts to show that it makes an effort to guard its trade secrets.

Alsup disagreed with Uber’s assessments Thursday, ruling that Waymo doesn't need to rely on the employment contracts to prove its case, and noted that Waymo’s attorneys have foresworn their reliance on them. And, he said, Waymo’s claims are not connected to the contracts.

“Indeed, it appears Waymo can make out its case-in-chief without any reference to either agreement,” he wrote in refusing to compel arbitration.

Waymo was pleased with Alsup’s ruling.

“This was a desperate bid by Uber to avoid the court’s jurisdiction,” the company said in a statement. “We welcome the court’s decision today, and we look forward to holding Uber responsible in court for its misconduct.”

In his 10-page ruling, Alsup also addressed Uber’s accusations that Waymo chose not to name Levandowski as a defendant in order to dodge its own arbitration requirements, even though its claims center around Levandowski’s alleged misconduct while he was at Waymo.

“These accusations are unwarranted,” Alsup wrote, pointing out that Waymo is already arbitrating claims against Levandowski for poaching its employees for Otto. “Its decision to bring separate claims against defendants in court was not only reasonable but also the only course available, since Waymo had no arbitration agreement with defendants.”

Also Thursday, Alsup issued a third order on Waymo’s sealed motion for provisional relief. Though the order was also filed under seal, online docket records show that Alsup granted some of Waymo's requests but not others.

At a May 3 hearing on Waymo’s motion for a preliminary injunction barring Uber from using more than 100 of its trade secrets pending trial, Alsup suggested he would deny the injunction and instead grant Waymo provisional relief barring Uber from using only some of the trade secrets, because it is unclear whether certain secrets belong to Waymo or are public knowledge.

Waymo is represented by Charles Verhoeven with Quinn Emanuel Urquhart & Sullivan; Uber by Arturo Gonzalez with Morrison & Foerster, both in San Francisco.

Neither attorney could be reached for comment late Thursday.

Uber did not return a request for comment.

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