Uber is in trouble.
The trial between Alphabet’s Waymo and Uber over Waymo’s self-driving car trade secrets was scheduled to begin on December 4th before Judge William Alsup, of Oracle v. Google fame. (Readers familiar with coverage of that case know how smart and tough he is).
According to published reports, at the last minute evidence (a letter) was discovered suggesting that Uber has a team dedicated to collecting trade secrets from competing companies. Allegedly, the people involved use disappearing-message apps, anonymous servers, and secret computers and phones to communicate without leaving a trail. The purpose was to ensure there was no paper trail that would come back to haunt the company in any criminal or civil litigation.
However, now that this has been disclosed, that strategy has backfired.
Whether this Uber team targeted Waymo is not entirely clear, but there is enough suspicion that it did for Judge Alsup to have postponed the trial so Waymo can conduct additional discovery – discovery that would have already have taken place had Uber disclosed this earlier.
All of this has Judge Alsup royally peeved. According to press reports (links below) his comments at the hearing postponing trial included the following:
- “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”
- “You [Uber’s lawyers] should have come clean with this long ago”
- “You’re just making the impression that this is a total cover up”
- “Any company that would set up such a surreptitious system is just as suspicious as can be”
- “I have never seen a case where there were so many bad things done like Uber has done in this case”
So, Uber has a federal judge who is about to start a trial (not next week, but probably very soon), who distrusts Uber and, perhaps more importantly, its lawyers.*
*This is not the first time Judge Alsup has had problems with Uber’s lawyers. See Judge blasts Waymo v. Uber lawyers, delays trial until December (Ars Technica, Oct. 3, 2017).
This is bad news for Uber. It’s important that a trial judge trust the lawyers trying a case to tell him the truth. Trial lawyers are constantly making representations to the judge about the law and evidence, and if the lawyers representing one side of the case lose the judge’s trust, they are at a huge disadvantage. Once a judge catches a lawyer in a lie the judge will question everything the lawyer says.
While Judge Alsup must follow the rules of evidence and civil procedure in his courtroom, there are countless ways he can tilt the scales against Uber. Studies have shows that jurors believe that the judge knows what’s “really going on” in a trial, and they watch the judge closely to try to pick up on how he views the case. The judge can communicate how he feels about the case through body language, tone of voice and a thousand other subtle clues that can’t be reviewed on appeal. He can also rule against Uber on motions and procedural issues on which he has discretion, without fear of being reversed.
All of this leaves Uber at a disadvantage before the trial even begins.
Presumably, Uber’s executives and in-house counsel (and perhaps the Board of Directors) are on top of this situation and trying to figure out how to proceed. What are their choices?
- Do nothing. Uber can decide to ignore its problems with the judge and proceed to trial. If the evidence supports Uber’s position that it has not actually used any of Waymo’s trade secrets (as Uber has repeatedly stated in its public announcements on this case), perhaps it can muscle its way through the case. It will have one strike against it, but that’s not an out.
- Retain new counsel. The judge may no longer trust Uber’s lawyers, but it’s probably too late to change law firms. However, it may not be too late to bring in a new lawyer (one that Judge Alsup is known to “trust”) to help try the case. Judge Alsup has not set a new trial date, and depending on when he does, this is not out of the question. If the new trial date is far enough in the future, it may be possible to bring in a new firm to take over as lead counsel. By doing that Uber would be signaling to the judge that it recognized his problem with current counsel, and took steps to replace them. Of course, this ignores the possibility that Uber hid information from its lawyers, and that all of the fault with the newly discovered evidence lies with Uber, something Judge Alsup may already suspect.
- File a motion asking Judge Alsup to recuse himself (withdraw from the case). A recusal motion may be based on evidence that a judge is biased or lacks impartiality. That said, recusal motions are always a long shot, and I don’t think Judge Alsup’s comments have crossed the line. And, an unsuccessful motion for recusal might only backfire and make things worse for Uber. Before filing a motion to recuse Judge Alsup, Uber would do well to keep in mind Emerson’s quote that “when you strike at a king, you must kill him.”
That said, I’m pretty sure some associate at Uber’s law firm is feverishly researching Ninth Circuit recusal law today.
- Settle the case. It’s almost certain that there have been settlement discussions in this case. Given its current problems, Uber’s cost/benefit analysis of settle/litigate has changed, and Uber should consider putting more on the table. This may include more money and some form of independent monitoring process that would give Waymo assurances that Uber is not using its trade secrets. It may even go so far as to put Uber’s self-driving car project on hold for some period of time.
None of these options is likely to be appealing to Uber, but these are the choices that face a party who has (and whose attorneys have) angered or alienated a judge. Uber is in a tough spot. How it will extricate itself – or whether it even can – remains to be seen.
See: Rebuking Uber Lawyers, Judge Delays Trade Secrets Trial (NYT, Nov. 28, 2017); Uber trial delayed after new evidence emerges (CNN, Nov. 28, 2017); Judge Tells Uber Lawyer: ‘It Looks Like You Covered This Up’ (NYT, Nov. 29, 2017).
Update: The case settled.