Court Reserved Its Right to Impose an Adverse Inference Instruction for ESI Spoliation in Google’s Driver-less Car Dispute Against Uber; Parties Reached a $245 Million Settlement Shortly Thereafter

26 Mar 2018

In the headline-grabbing case Waymo LLC v. Uber Technologies, Inc., No. 17-cv-00939-WHA (N.D. Cal. Jan. 28, 2018), Plaintiff Waymo LLC (“Waymo”) sued Defendants Uber Technologies, Inc., and Ottomotto LLC (collectively, “Uber”) for misappropriation of trade secrets related to self-driving vehicle technology.

On June 21, 2017, Waymo (a Google-owned company) moved for an order to show cause for why Uber should not be held in contempt for alleged violations of the discovery orders. The court stated that it was unlikely to hold Uber in contempt of court but that it would reserve its right to inform the jury regarding Uber’s discovery misconduct.  At the same time, the magistrate ordered Uber to produce certain evidence related to its due diligence investigation. Uber produced an avalanche of documents in response, leading Waymo to seek a continuance. In September, Uber informed the Court that it had found another fifteen thousand relevant emails along with 85 gigabytes of documents. On November 13, Waymo filed a new motion seeking yet another adverse-inference instruction against Uber for spoliation of evidence.

On November 22, 2017, while briefing on Waymo’s new motion and the new trial date approached, the court received a letter from the Office of the United States Attorney explaining that, during a pending criminal investigation, the government had interviewed a former Uber employee named Richard Jacobs whose allegations about Uber seemed relevant to the trade secret misappropriation claims in this case. Moreover, Jacobs’s attorney had laid out his allegations in a 37-page demand letter dated May 5, 2017, to Uber’s associate general counsel. Before the communication from the Office of the United States Attorney, Waymo had no knowledge of Jacobs, his allegations, or the demand letter despite months of extensive discovery.

Accordingly, Waymo moved under both Federal Rule of Civil Procedure 37(e) and the Court’s inherent authority for an adverse-inference instruction against Uber on the basis that Uber spoliated evidence. Uber did not dispute that it lost evidence (including hundreds of text messages and an unknown amount of other electronic communications, files, Slack records, and archives) and cannot restore or replace the data through additional discovery. Potential litigants have a duty to preserve relevant information when litigation is reasonably foreseeable. Spoliation is the destruction or material alteration of evidence or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation. The court found both that a reasonable party in Uber’s circumstances would have reasonably foreseen this litigation in January 2016, and also that Uber actually foresaw this litigation in January 2016.

Following these developments, the court cautioned that the trial would be related to Waymo’s claims of trade secret misappropriation, not a trial on Uber’s litigation practices or corporate culture – although evidence of litigation misconduct or other bad behavior could be relevant and admissible insofar if it reasonably related to actual claims and defenses.  While the court may instruct the jury as to relevant aspects of the case’s discovery, the court stated that it would reserve its decision to instruct the jury to draw any adverse inference against Uber based on the discovery issues in the case.  Shortly after the court issued the foregoing order, Uber settled the case for approximately $245 million.