Uber Technologies Inc. says Alphabet Inc.’s own ground rules require accusations that the ride-hailing giant stole trade secrets for driverless cars be resolved in private arbitration and not a public court.
It’s a bold gambit by the world’s most valuable startup to shift the lines of battle for a showdown that may decide who controls key technology in the race to market autonomous vehicles — a business that both companies believe will be worth hundreds of billions or even trillions of dollars a year.
Uber on Monday urged a San Francisco federal judge to hold an April 13 hearing on its arbitration request for key claims in the complaint filed by Alphabet’s Waymo unit last month. Uber’s lawyers told the judge Alphabet’s “employment agreements contain very broad arbitration provisions.”
Arbitration has been a game-changer for Uber in its protracted battle with its drivers seeking the pay and benefits of employees. While those lawsuits were initially seen as a threat to the company’s business model, they will be marginalized if the drivers can’t find a way out of the arbitration provisions that force them to fight Uber one-on-one instead of with the powerful leverage of class-action status in court.
Uber said it wants to defend against Waymo’s patent-infringement claims in court, while moving the allegations of trade-secret theft and unfair competition into arbitration. The company told the judge it would lay out its arguments to justify arbitration in another filing.
Intellectual property lawsuits are sometimes steered into arbitration, but legal experts question Uber’s legal footing to insist on that route in the Waymo case. That’s because the lawsuit didn’t name as defendants former Waymo engineer Anthony Levandowski and his two colleagues who are accused of taking confidential information. Instead, Waymo sued only corporate entities, Uber and Otto, the self-driving startup formed by Levandowski and acquired by Uber in August for $680 million.
That may have been a strategic decision by Waymo to avert being pulled into a “rabbit hole,” as California law bars arbitration from being imposed on a party that hasn’t agreed to it, said Jim Evans, a lawyer who defends companies against employment lawsuits. Not naming the people Waymo accuses of wrongdoing was a “conspicuous omission,” Evans said. “Waymo didn’t want to get slowed down.”
Waymo lawyer Charles Verhoeven addressed the issue at a March 16 hearing, after Uber lawyer Arturo Gonzalez told the judge he planned to file a request for arbitration, without offering specifics about how it would apply to the individuals Waymo accuses of stealing information. Verhoeven reminded U.S. District Judge William Alsup that “those individuals are not parties” to the lawsuit.
Uber has denied the allegations in the lawsuit, calling it “a baseless attempt to slow down a competitor.” Gonzalez told Alsup at the March 16 hearing he wasn’t seeking arbitration as a stalling tactic in the litigation.
Waymo, meanwhile, is asking the judge to quickly order Uber not to make any further use of the confidential information Levandowski allegedly took before he resigned from Alphabet in January 2016. Alsup said in court he’s taking the allegations against Uber seriously.
“You don’t get many cases where there is pretty direct proof that somebody downloaded 14,000 documents, and then left the next day,” the judge said during the hearing. Charlotte Garden, an associate law professor at Seattle University, called Uber’s request for arbitration a long shot.
But arbitration may be advantageous to Uber in limiting the information it’s required to share with Waymo while the case proceeds, she said. Uber may also have a greater interest in keeping aspects of the fight confidential, especially if it’s nervous about a ruling in Waymo’s favor, she said. Evans, too, said he could see why closed-door proceedings would appeal to a company that’s been grabbing a lot of negative public attention lately.
“Uber has taken its fair share of criticism with respect to sexual harassment claims, its work environment and disputes with its drivers,” he said. “I could understand why Uber might want to keep this in a more private forum.”