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When Waymo, the autonomous car company once known as Google’s self-driving car outfit, announced it was suing Uber for trade-secret theft in February, the action seemed to center on a single person: Anthony Levandowski. According to Waymo, the former Google engineer downloaded 14,000 secret documents from its system and used the contents to launch his own self-driving truck startup, Otto, in January 2016. By August, Uber had acquired Otto for a reported $680 million, and Waymo says the ride-hailing giant was in on the theft from the start.
Juicy, yeah? Well forget Levandowski and say hello to the litigation’s newest and most unlikely star: former Uber intelligence employee Richard Jacobs.
Last weekend, the US Attorney’s Office pulled the very unusual move of forwarding a piece of evidence to Judge William Alsup, who is overseeing the lawsuit in the Northern District Court of California. The document is a 37-page letter written by Jacobs' lawyer in May 2017, as part of an employment dispute with Uber. And it makes some pretty amazing allegations. It claims that Uber dedicated its intelligence team to acquiring trade secrets from competitors like Waymo; that the company was very, very deliberate in shielding information from discovery in potential lawsuits; and that Uber employees used disappearing messaging apps to communicate with one another.
On the stand Monday, Jacobs walked back some of his claims, telling the court he had approved the letter without giving it a full read. Still, Judge Alsup was mightily displeased that Uber had not been more forthcoming about the letter. During a hearing Tuesday, he delayed the trial until February 2018 to give Waymo more time to paw through Uber’s documents. (It had been scheduled to begin December 4.)
“Poor Uber, I don't feel sorry for you because you brought all this on yourself,” Alsup said.
Alsup’s questions: Why the heck didn’t Uber hand over this implicating letter to Waymo during the lengthy discovery process? Why did Uber eventually pay Jacobs and his lawyer $7.5 million in settlements and consulting fees if Jacobs' allegations were not true? And could Uber have communicated about using Waymo’s stolen secrets within the messaging apps Jacobs mentioned, in an attempt to leave no (paper) trace?
On the stand Tuesday during pretrial testimony, Uber employees tried to respond to Alsup's questions. Even so, the lawsuit plunged into chaos, with legal teams scrambling to turn up new documents and information. As the four-hour hearing concluded, a reporter observed a group of somberly suited lawyers in the elevator banks, mourning their holiday vacations.
According to a Linkedin profile, Jacobs came to Uber in March 2016 after a two-year stint as a risk intelligence consultant at the Bill & Melinda Gates Foundation. On Tuesday, Uber employees described Jacobs as a recalcitrant, underperforming worker, a bumbling extortionist who made off with a $4.5 million settlement and consulting-fee payday anyway. (Jacobs’ lawyer also reached a $3 million agreement with Uber and company, bringing the bill for this particular adventure to that $7.5 million.)
Mat Henley, Uber’s head of global threat operations and Jacobs’ boss while he worked there as a risk analysis manager, testified that Jacobs had been demoted in February 2017 following performance issues. “He has a specific charter for his team, which is to anticipate threats to the company,” Henley said, clarifying later that those threats included prospects of violence against Uber drivers or employees, mostly overseas. “There were multiple misses that shouldn’t have been missed, and those continued over time,” Henley said.
After the demotion, things got messy. Uber deputy counsel Angela Padilla testified that the company’s IT specialists flagged that Jacobs had attempted to move Uber documents onto a personal email account. Company representatives scheduled a meeting with him to discuss it. Instead of attending the meeting, Padilla testified, Jacobs sent an email full of his allegations to Uber officials, including then-CEO Travis Kalanick and Liane Hornsey, the company’s human resources chief.
Jacobs portrayed himself as a would-be whistle-blower, but Padilla said there was little truth to Jacobs’ claims. She testified that Uber settled not because the company believed him but because it would have cost too much money to litigate against him. She said the company also feared the letter going public, because its allegations might have threatened the safety of drivers and employees overseas.
“I believe that Ric's demands were extortionate,” she testified, noting she found many of his claims about the company “quite fantastical.”
Alsup didn’t buy the explanation. “You said it was a fantastic BS letter, no merit, and yet you paid four-and-a-half million dollars," he said. “People don’t pay that kind of money for BS.”
It is unusual for a company to pay out money for someone peddling complete fabrications. “A company would not pay that amount for a meritless claim,” says Jason Zuckerman, a Washington, DC, lawyer who focuses on employment law and whistle-blower cases. Still, he says Uber could have had legal reasons to settle, even if it did not believe everything Jacobs alleged. “Bear in mind that this might be just a few years' pay and it could be very difficult, if not impossible, for him to find comparable work. Accordingly, if he had a strong retaliation claim, the company could face a significant liability.”
Was Jacobs a disgruntled employee, or a thwarted whistle-blower? Might his team have used messaging apps like Wickr to hide Waymo trade secrets? Uber employees testified they had not, but Waymo has more time to find out now.
Whatever the truth of the letter, Alsup remained ever cranky about the actions of Uber's legal team, which had failed to reveal the letter at all. Padilla testified there were good reasons. She said Uber's compliance officers warned her not to distribute the letter to anyone because they feared it would "obstruct or hinder or taint the internal investigation" into Jacobs' claims—though she also testified that then-general counsel Sallie Yoo and then-CEO Travis Kalanick were informed. And she said she assumed Uber's searches into its own documents for discovery would uncover the letter or emails about it. In court, Waymo lawyers said that while they had asked Uber to turn over documents mentioning their own Waymo codenames, they had not asked for documents with the word "Waymo"—a possible explanation for why they didn't find the letter on a first pass.
Still, Alsup seemed to expect malfeasance. "I've never seen a case where there were so many bad things like Uber has done in this case," he said. "Usually, it’s more evenly divided."
Alex Davies contributed reporting.
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