Uber’s deputy general counsel Angela Padilla called a former employee’s letter alleging corporate espionage and other shady tactics “extortion” on the stand during a Wednesday today ahead of Waymo's trial against Uber.
But that former employee’s lawyer, Clayton Halunen, told BuzzFeed News that Padilla’s testimony was “outrageous and could be defamatory.” He declined to comment at all on any of the specifics about the settlement, which was revealed to be $7.5 million in court on Wednesday.
The letter in question, which was written by Halunen for former Uber security analyst Ric Jacobs and sent to Uber in May, blew up Waymo’s trade secrets case against Uber on Tuesday, just a week before the set trial date.
Waymo — the self-driving car division of Google’s parent company, Alphabet — sued Uber back in February, alleging that former Google engineer Anthony Levandowski stole documents and trade secrets that were acquired by Uber along with Levandowski’s self-driving truck startup Otto in August 2016. Jacobs’ letter alleges that Uber had teams whose purpose was finding competitor’s unguarded intellectual property online, that employees used encrypted and ephemeral chat apps to cover their tracks, and even that Uber’s corporate espionage specifically targeted Waymo.
After a state attorney general, who was also investigating Uber for another matter, alerted Judge William Alsup to the existence of this letter, Alsup — who appeared visibly annoyed in court — was forced to further delay the trial in order to allow Waymo sufficient time to investigate these new claims and additional evidence. The trial, which was supposed to begin next week, is now slated to begin in February.
"Poor Uber. I don’t feel sorry for you because you brought all this on yourself."
Alsup acknowledged that this delay would mean lawyers on both sides would be working through the holiday season. But the judge was unsympathetic. "Poor Uber,” he said during Wednesday’s hearing. “I don’t feel sorry for you because you brought all this on yourself."
Hoping to get to the bottom of why Uber withheld Jacobs’ letter from the court, even though the document explicitly alleged that Uber stole information from Waymo, Alsup ordered Padilla, as well as other Uber employees, to testify in court. During her Wednesday morning testimony, Padilla repeatedly denied the claims made in Jacobs’ letter, comparing it to any other letter from a disgruntled former employee.
“We see a lot of letters from unhappy employees, drivers, a lot are very fantastical and make all sorts of wild, crazy allegations that were never substantiated,” said Padilla. At other points during her testimony, Padilla said she only skimmed Jacobs’ letter, and noted for the court that she is overseeing at least 750 individual lawsuits against Uber.
But there is one significant way in which Jacobs’ letter is different from those of other disgruntled former employees — after making these allegations against Uber, the company paid Jacobs and his lawyer a total of $7.5 million. The money bought both an end to his claims, and his help as a consultant working to address the compliance and security issues he raised to Uber, both in his letter and elsewhere. Padilla said in court that Jacobs is helping law firm WilmerHale conduct another internal investigation at the embattled ride-hailing company.
Though Padilla and other Uber employees argued that Jacobs’ allegations were unsubstantiated, the large sum of money he was paid suggests they weren’t entirely baseless. "You said it was a fantastic BS letter, and there was no merit, and yet you paid $4.5 million [to Jacobs],” said Alsup to Padilla in court on Wednesday. “People don’t pay that kind of money for BS … and they certainly don’t hire them as a consultant if they thought what they had to contribute was BS."
In a call with BuzzFeed News, Halunen, whose firm received about $3 million from the Jacobs settlement, said he takes most of his cases on contingency and usually takes 40% of any reward his clients obtain. He would not discuss the specifics of Jacobs’ claims against Uber and said he was no longer representing Jacobs at this time. On Wednesday, Alsup also allowed Waymo's lawyer to subpoena Halunen to understand how much time the lawyer had spent working on Jacobs' claims.
Lawyers for Waymo noted that the number of high-level executives and Uber board members who reviewed Jacobs’ letter suggests that, despite what the company is arguing in court now, they took the missive, and its contents, seriously. Padilla admitted that former Uber CEO Travis Kalanick received a resignation email in April containing similar allegations from Jacobs; board members who received copies of his May letter included Benchmark’s Bill Gurley, Arianna Huffington, Garrett Camp, Ryan Graves, David Bonderman, and Wan Ling Martello.
“People don’t pay that kind of money for BS."
On Tuesday, Judge Alsup said he wanted to know which Uber employees created accounts on platforms like Wickr, Snapchat, and Telegram, which allow for encrypted communication, and which Jacobs alleges Uber used to conceal potentially shady tactics against competitors. While there’s no word yet on whether Alsup will get his way (these companies tend not to hand over account information without a subpoena), Uber’s new CEO Dara Khosrowshahi tweeted during Wednesday’s proceedings that “as of Sept 27th I directed my teams NOT to use such Apps when discussing Uber-related business.”
Alsup remained interested in the use of encrypted, ephemeral messaging apps, which allow messages to disappear after a certain amount of time, on Wednesday. After learning of Khosrowshahi’s tweet during a hearing break, he came back and quizzed another Uber employee — Nicholas Gicinto — about the company's alleged Wickr use. Alsup justified the line of questioning by saying that the purpose of Wednesday’s hearing was in part to discern whether the Wickr app was being used across different units at Uber, or just within an Uber security group, as previously stated.
Gicinto, who testified after Mat Henley, head of global threat operations at Uber, also had some harsh words for Jacobs. Though he acknowledged that he only received the Jacobs letter last night, Gicinto said there was “very little truth” in it and that the former security analyst had "perverted and twisted [company information] to no end to serve his interests."
Alsup asked Gicinto how much he would have paid Jacobs to settle the dispute. "What's the least possible amount you can give someone?" Gicinto responded.
The court did not decide whether to make Jacobs’ letter public, although Alsup previously said on Tuesday that Waymo’s lawyers should receive a copy. Alsup seemed inclined to make the letter public on Tuesday, but Jacobs himself moved to keep it confidential in a motion filed later that day.
In court Wednesday, Uber said the company provided the letter to state officials after Jacobs threatened to do so himself. One of those state officials made Alsup aware of the letter, which Padilla said she declined to produce for the court out of concern for influencing internal investigations.