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Judge Mum on Status of Uber Spying Class Action

A federal magistrate gave little indication on Thursday whether she would dismiss a California man's class action accusing Uber of spying on Lyft drivers to lure them away from its competition.

SAN FRANCISCO (CN) - A federal magistrate gave little indication on Thursday whether she would dismiss a California man's class action accusing Uber of spying on Lyft drivers to lure them away from its competition.

But U.S. Magistrate Judge Jacqueline Scott Corley did hint she may allow lead plaintiff Michael Gonzalez to amend at least one of his claims, keeping the case alive while similar conduct is hashed out in Waymo's high-stakes trade-secrets trial against Uber next month.

"The Stored Communications Act allegation doesn't say anything," Corley told Uber's attorneys in a hearing in San Francisco. "But I don't think I could say as a matter of law that they couldn't say something," she concluded, referring to the proposed class.

Gonzalez, a former San Francisco Bay Area Lyft driver, sued Uber in April 2017 on federal Wiretap Act claims after reading an article about the company's alleged spying activity in tech-news publication The Information.

According to the article, Uber created fake Lyft rider accounts and used spyware called Hell to intercept the information Lyft sent those accounts, allowing Uber to access a driver's Lyft identification number and track the driver’s location over time.

Uber then combined Lyft’s data with its own driver-location data to determine which Lyft drivers also worked for Uber. Their names ended up on lists distributed to Uber’s city managers, who targeted them for bonuses and steered more ride requests to them to manipulate them into devoting more work-time to Uber.

With fewer Lyft drivers on the road, Lyft customers faced increased wait times, leading them to cancel their rides and hail new ones through Uber, Gonzalez says.

Corley dismissed the lawsuit last September with leave to amend, telling Gonzalez's attorneys to "amend with actual allegations and not just quote someone's article."

Gonzalez filed an amended complaint later that month, adding a Stored Communication Act claim and a state claim alleging violations of California's Computer Data Access and Fraud Act. He is also suing under California's Invasion of Privacy Act, its Unfair Competition Law and the California Constitution.

But on Thursday, Corley questioned whether the new complaint satisfies the Wiretap Act, which anchors the case.

The Wiretap Act prohibits the interception of the "contents" of a communication - its sender's intended message - but not "record information," such as a sender's name or identity, which can be automatically generated when a communication is sent, according to Uber's court brief.

Although driver identification numbers and location data are usually considered record information, they are content in the Gonzalez case because Lyft drivers intended to communicate the information to Lyft to find riders, Gonzalez’s lawyer Caleb Marker with Zimmerman Reed said at Thursday’s hearing. He added that only automatically generated data lacking intent is not content under the Wiretap Act.

"I think the context of how the geo-location data was created is important," Marker said.

Corley partly agreed, noting that although the Ninth Circuit ruled in 2014's In re Zynga Privacy litigation that information such as names and addresses is record evidence, the court also concluded that if a sender transmits a text message of his or her location, that information is considered content.

Patrick Oot Jr., Uber's attorney with Shook, Hardy & Bacon, was unconvinced. "The intent would be when you swipe on the app to say 'I'm going to work,' not the location sent," he said.

"Intent does matter in the test," Corley replied. But she also warned that "what you run into head-first is that [Lyft ID and location-information] is record information."

Corley, however, seemed certain that Uber did not actually intercept communications between drivers and Lyft - a showing essential to winning a Wiretap Act claim.

"The communication that Uber actually acquired is different from the communication that went from the driver to Lyft, so no interception," she concluded.

Uber argued that Gonzalez failed to show it intercepted driver communications meant for Lyft. Instead, based on the theory of the case, Gonzalez had actually alleged that "if Uber had been 'opening mail'" by impersonating Lyft drivers, "it would only have been opening its own."

According to the amended complaint, Uber used "sniffer" software to intercept Lyft communications and determine how the Lyft app communicated with Lyft's secure servers.

The allegations are similar to ones in a bombshell letter made public last month in Waymo's lawsuit accusing Uber of stealing its autonomous-car trade secrets. The letter, written by a lawyer for former Uber security manager Richard Jacobs, accuses the company of setting up a secret intelligence team to steal trade secrets and intelligence from its competitors. Jacobs sent the letter to Uber after he was forced to resign.

A significant portion of the 37-page letter details Uber's tactic of impersonating riders and drivers on competitor apps and hacking into competitor databases to obtain trade secrets, "with a focus on stealing key supply data to boost Uber's pool of drivers" and studying how the app works by requesting "thousands of rides in a given geographic area."

Supply data, according to the letter, includes unique driver information like driver name and license number.

The judge overseeing the Waymo case delayed a scheduled December jury trial after reading the letter to give Waymo time to investigate its explosive allegations.

The Justice Department sent the letter to the judge just before the trial, after obtaining it from Uber. It is now investigating Uber for criminal misconduct.

An Uber executive testified at a hastily-called evidentiary hearing in December that she had sent the letter to the Justice Department in June to pre-empt Jacobs' "wild" allegations, calling him an "extortionist" looking for a payout.

Two months later, Uber settled Jacobs' employment claims stemming from his termination for $4.5 million, and hired him to consult for it on issues raised in the letter, according to testimony from Jacobs.

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