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Uber Lawyer Grilled About Hidden Evidence in Waymo War

A federal judge on Wednesday told Uber's in-house lawyer she could be in trouble for allegedly hiding key evidence in a case accusing Uber of stealing self-driving car technology from rival Waymo and delaying a high-stakes trial over the theft.

SAN FRANCISCO (CN) – A federal judge on Wednesday told Uber's in-house lawyer she could be in trouble for allegedly hiding key evidence in a case accusing Uber of stealing self-driving car technology from rival Waymo and delaying a high-stakes trial over the theft.

U.S. District Judge William Alsup ordered Angela Padilla, Uber's deputy general counsel of litigation and employment, to testify about the evidence at a hearing in San Francisco Wednesday after allegations surfaced a day earlier that Uber had set up a covert intelligence team to steal trade secrets from Waymo and unnamed competitors overseas.

The allegations, made in a sealed demand letter sent to Padilla by an attorney for former Uber security manager Richard Jacobs after Jacobs was forced to resign, was obtained by the Justice Department in an unrelated criminal investigation into espionage by Uber and sent to Alsup on Nov. 22.

Padilla testified she did not show the 37-page letter to Uber's in-house lawyers handling Waymo's suit on trade-secret theft claims or to Uber's trial counsel. Instead, she "escalated" it to the company's compliance team, which opened an internal investigation into the veracity of Jacobs' allegations.

The compliance team told Padilla not to disclose Jacobs’ "wild" and "fantastical" allegations until they were substantiated out of concerns of tainting the investigation, she told Alsup.

"Then why did Mr. Kalanick get to see the letter," Alsup countered, referring to ex-Uber CEO Travis Kalanick. "If anyone is going to be tainted, wouldn't it have been him, for goodness' sake?"

Waymo sued Uber and co-defendant Ottomotto, a driverless trucking startup founded by its former engineer Anthony Levandowski, this past February. The Google spinoff claims Levandowski downloaded 14,000 of its trade-secret files before resigning in January 2016 to start Ottomotto, and that Uber quickly struck a deal to buy the company and hire him to build autonomous vehicles using Waymo’s technology.

Levandowski is not a defendant in Waymo’s lawsuit against Uber, but he faces a criminal probe stemming from the allegations.

Padilla called Jacobs an "extortionist" and said the bulk of his claims are "meritless" during Wednesday's testimony. But she confirmed Uber paid him $4.5 million in August to settle his employment claims and to consult for the company on issues surrounding his resignation. Uber paid his lawyer another $3 million, she said, a sum Alsup called "unconscionable."

"Here's the way it looks, Ms. Padilla," he said. "You said it was a fantastical, BS, no-merit letter, and yet you paid $4.5 million. To ordinary mortals, that's a lot of money, and people don't pay that kind of money for BS. And you certainly don't hire them as consultants if you think everything they've got to contribute is BS. It's a highly relevant letter. On the surface it looks like you covered this up and refused to turn it over to the lawyers."

Padilla denied an effort to cover up the letter, reiterating she was instructed to not share it outside the compliance team.

"That is not the way litigation works in your U.S. District Court, so you had better tell those people that told you otherwise that they're in trouble," Alsup replied. "And maybe you're in trouble."

According to testimony given by Jacobs on Tuesday, the letter also revealed Uber stores its competitors' trade-secret information on computers that bypass its servers, and its employees communicate about the information using Wickr, an encrypted messaging application that erases messages after a certain amount of time.

Uber says it is innocent because Waymo’s trade secrets never made it to its servers; multiple searches failed to find any. But the letter, portions of which were read aloud in court, states Uber used the tactics to keep trade secrets off its servers so it could avoid disclosing them in civil and criminal cases.

Padilla also testified Uber voluntarily disclosed Jacobs' letter to the Justice Department in June to "take the air out of his extortionist balloon." She said he was fired for downloading confidential documents to his personal email account so he could blow the whistle on Uber.

His lawyer’s letter says he was demoted and then fired for not cooperating sufficiently with Uber’s policy of hiding evidence from discovery.

"It undercuts this notion of an attempt to keep this document secret," she told Alsup.

He shot back: "I bet you [O’Melveny attorney and former federal prosecutor] Damali Taylor, who was in that office, told you no way the U.S. Attorney in the history of the world would turn that letter over in civil litigation to us.

"You wanted this case to go to trial so that they didn't have the benefit of this discovery, that's the way it looks.”

Alsup has delayed the trial, which was set to begin Dec. 5, so Waymo can gather more evidence about the allegations. He asked Uber to produce the names of every employee who uses Wickr, but warned Waymo that it could lose the upper hand if it uses similar services.

Now set for Feb. 5, he suggested Waymo could win the trial based on Uber's use of Wickr.

"You've made it a mess of what would've been a decent point. Now it's going to get clouded in the atmospherics," he told Uber's trial attorneys of their argument that no trade-secret files had made it onto their client's network.

"And poor Uber, I don't feel sorry for you because you brought this on yourself."

Waymo is represented by Charles Verhoeven of Quinn Emanuel Urquhart & Sullivan, and Uber by Arturo Gonzalez of Morrison & Foerster.

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