Settled Waymo (Google) litigation for $245 million

After four days of trial, Uber settled claims from Waymo (Google) that a former Google engineer had downloaded before forming his own company that was later bought by Google. As part of the settlement, Waymo gets 0.34 of Uber’s equity, worth about $245 million at Uber’s estimated valuation of $72 billion.

Discussing the settlement, new Uber CEO Dara Khosrowshahi said his job includes “acknowledging and correcting mistakes of the past.” He continued: “The prospect that a couple of Waymo employees may have inappropriately solicited others to join Otto, and that they may have potentially left with Google files in their possession, in retrospect, raised some hard questions” though he continued to deny that any Waymo trade secrets made their way to Uber.

Kalanick’s stated objectives for acquisition of Otto

In litigation with Google about alleged theft of Google intellectual property, Google counsel presented notes from John Bares, then director of Uber’s driverless car center in Pittsburgh, from a December 2015 meeting with Uber then-CEO Travis Kalanick discussing:

TK what we want
all of their data
road map
pound of flesh

On one interpretation, the “what we want” was what Uber wanted from a prospective acquisition of Otto — but notably, what Otto would in turn bring from Google (where key staff had worked previously). In particular, Uber had no fight with Otto and no reason to want a “pound of flesh” from Otto. In contrast, Uber’s tensions with Google were longstanding and well known. In that case, these notes would also indicate Uber intentionally wanting “all of their [Google’s] data” as well as Google’s “source [code]” and more.

European Court of Justice said Uber is a transportation service, may be regulated at national level

The European Court of Justice (the highest court in Europe) held that Uber is a transportation service, which may therefore be regulated by each country in Europe. The ECJ explained:

The service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport. Member states can, therefore, regulate the conditions for providing that service.

In contrast, Uber had argued that the company was an information technology service, subject only to Europe-wide regulation and exempt from national law.

Complained of “extortion” by a former employee, but paid $7.5 million anyway

When former employee Richard Jacobs sent a demand letter alleging possible criminal behavior by the Uber team where he previously worked, Uber viewed the claims as extortion. Uber deputy general counsel Angela Padilla said Jacobs’ claims were “extortionate.” Yet Uber paid Jacobs $4.5 million ($2 million upfront, $1.5 million in stock, and an additional $1 million to consult with the company and cooperate in any investigations over the course of the next year), plus an additional $3 million to his attorney.

Concerns resulting from Jacobs’ letter and the practices he reported

Federal judge harshly criticized Uber and its lawyers

In Google’s lawsuit against Uber as to alleged theft of self-driving car technology,  federal judge William Alsup offered a stern critique of Uber. In particular, Alsup criticized Uber’s Competitive Intelligence group and the company’s intentional concealment of its practices. Beginning with the fact that Uber “withheld evidence,” Alsup continued:

I can no longer trust the words of the lawyers for Uber in this case. If even half of what is in that letter is true, it would be an injustice for Waymo to go to trial.

Alsup specifically criticized Uber’s use of a system that deleted correspondence automatically, saying this was contrary to court instructions for producing relevant documents:

The server [that Uber searched] turns out to be for dummies, that’s where the stuff that doesn’t matter shows up. The stuff that does matter is going to be in the Wickr evaporate file.

Alsup expressed shock at Uber’s practices:

You don’t get taught how to deal with this problem in law school. In 25 years of practice and 18 years in this job I have never seen such a problem.

He continued after a second day of hearings:

I’ve never seen a case where there were so many bad things that—like Uber has done in this case. So many

Alsup said he plans to tell the jury about the new findings, including Uber’s concealment of its practices and intentional destruction of staff discussions:

That is going to hurt your case because any company that would set up that kind of system is as suspicious as can be. I don’t know how you are going to get around that.

Market Intelligence team used surreptitious practices to prevent sensitive information from emerging in legal disputes

Uber’s Competitive Intelligence group used surreptitious practices to communicate with others in Uber in order to avoid creating digital records that could be used in future legal disputes.

Some employees used the Wickr service, which automatically deletes communications after a preset period.

Some employees used special devices for hiding communications. These “non-attributable” devices could not be easily traced back to Uber. Reporting from a hearing, a Tweeter reported Judge Alsup asking who supplied these devices to employees. An ex-Uber employee explained that Uber used third-party vendors so that the expense would stay off of Uber’s books.

The ex-employee confirmed the purpose of these methods: “to evade, impede, obstruct, influence several ongoing lawsuits against Uber.” He said email was a last resort because the messages could be used in litigation. He continued: “There was legal training around the use of attorney-client privilege markings on written materials and the implementation of encrypted and ephemeral communications intended to destroy communications that might be considered sensitive.”

“Stack ranking” employee ratings allegedly disadvantage women

A former Uber engineer sued the company, alleging that its “stack ranking” system of evaluating employees had an unfair and disproportionate impact on women.

Bloomberg reported on research about stack ranking:

Academic researchers have found that performance rating systems like stack rankings play to managers’ unconscious — and conscious — biases. Reviewing a decade of performance reviews at a “large professional services firm,” Paola Cecchi-Dimeglio, a senior research fellow at Harvard Law School, found that women were 1.4 times more likely than men to receive critical feedback in highly subjective categories.

For example, in one pair of reviews a female employee was described as having “analysis paralysis.” A man with the same behavior was praised for his careful thoughtfulness. “There is a lot of bias in the system, more than in the people,” Cecchi-Dimeglio said.

Microsoft faced similar litigation in 2015, and Goldman Sachs in 2010. Both those companies ended the practice, as did Uber before the filing of this lawsuit.

Litigation docket including complaint.