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Uber Doesn’t Want Jury to See Due Diligence Report: Judge Rules Uber is Stuck With It

February 8, 2018

Waymo v. Uber is shaping up to be a drama series on Netflix one day. On day two of the trade secrets trial, U.S. District Judge William Alsup ruled in favor of Waymo, allowing an internal due diligence report to stand.

As reported in Ars Technica, Uber lawyers asked the judge to exclude materials and deposition testimony that was made public for the first time on Monday evening, arguing that they constituted inadmissible "hearsay."

The items included drafts and notes that eventually formed the due diligence report that Uber commissioned after a prominent self-driving engineer, Anthony Levandowski, suddenly left Google in January 2016. Several months later, Levandowski's company, Ottomotto, was acquired by Uber for $680 million.

Prior to the deal, Uber hired forensics firm Stroz Friedberg to investigate whether Uber's hands would be clean before it eventually acquired Lewandowski's new company, Ottomoto. That document, known as the Stroz Report, was finalized in August 2016 and was later made available publicly as part of the court record in October 2017.

Part of the documents revealed on Monday included a March 2016 set of notes that included an interview of Levandowski himself, in which he was asked whether he had downloaded, copied, or exported various materials to his laptop. He admitted to a Stroz investigator that he had taken "trade secrets" but also said he had not taken any intellectual property. Levandowski, who was fired from Uber in May 2017, has refused to testify.

According to documents filed in the case, Uber began its efforts to buy a non-existent company that Levandowski was set to form even before he left Google. Uber "reached agreement [in] December (started [negotiating] term sheet which was signed in [February])," the notes continue, referring to Levandowski. "There was a plan to [acquire] Otto before he left Google." However, later on in those same notes, Levandowski added that he was "not relying on Google technology to do the work for Uber."

That timeline has Uber agreeing to buy Levandowski's startup in December 2015 before he left Google the following month. All of this material will stay in, and the jury can see it, the judge ruled.

I have never seen this exact fact pattern before involving a due diligence report. Here is the colorful language from the judge:

"Uber set up this elaborate system; even put in the best light for Uber, Uber wanted to get at the truth of what was going on," Judge Alsup said. "So to my mind, anything that those investigators at Stroz wrote down as having been said by Levandowski or anybody else is accurate. That's step one. Uber cannot be heard to say that it's hearsay. It is so attributable to Uber that it's an injustice that Uber gets to run away from that due diligence."

He explained that if a person is reporting on what another person said, then yes, that is hearsay—but the notes, drafts, and the report itself will stay. "You're stuck with that report," he said. "Too bad for Uber, that you set up this elaborate system. You're stuck with the fact that, anything that Stroz wrote down, it might as well be that Uber wrote it down."

I particularly liked the flat statement that "You're stuck with that report." One doesn't ever know what a jury will do, but I suspect that this report won't do Uber any good in jury deliberations.

This certainly wasn't the way Uber wanted the trial to begin. In the lawsuit, filed in February of 2017, Waymo sued Uber and accused one of its best engineers of stealing 14,000 files shortly before he left Waymo. After Levandowski's company was acquired by Uber and he became an Uber employee, he refused to comply with his employer's demands during the course of this case and was fired. Uber has denied that it benefited in any way from Levandowski's actions.

Oh sure, I believe that . . .

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