Uber attorney struggles to explain payouts
Even as Uber seeks additional billions of dollars from new investors to cement its lead in the global ride-hailing business, a federal judge in San Francisco asked questions Wednesday about how it is spending some of the money it has already raised.
A top Uber lawyer said in court that allegations that the company used spy tactics to impede investigations were “fantastical” accusations from an “extortionist.” But she struggled to explain why Uber hired back the person making the allegations as a consultant and paid him $1 million a year, on top of $3.5 million it gave to him and $3 million more it paid his lawyers.
Angela Padilla, Uber’s vice president and associate general counsel, took the stand at a hearing in the Waymo vs. Uber trade secrets lawsuit. Waymo, the self-driving car unit of Al-
phabet, has accused Uber of stealing its proprietary technology for helping robot cars see the world around them.
“You said it was a fantastic, no-merit, B.S. letter, yet you paid $4.5 million,” U.S. District Judge William Alsup told Padilla. “People don’t pay that kind of money for B.S. And they certainly don’t hire (someone as a consultant) if you think everything they’ve got to contribute was B.S.”
The explosive letter in question, sent to Padilla in May from an attorney for former Uber security analyst Ric Jacobs, said Uber tried to “impede, obstruct or influence investigations” with tactics such as self-destructing messages, encrypted communication, false use of attorney-client privilege, and servers that could not be traced to the company.
The U.S. attorney’s office for the Northern District of California provided the letter to Alsup, who is presiding over the Waymo vs. Uber case and had previously referred the matter to the federal office for possible criminal investigation.
Alsup, who berated Uber’s lawyers for having withheld evidence by not producing the letter, postponed a jury trial that had been scheduled to start next week, instead holding evidentiary hearings and encouraging more discovery to delve into the letter’s allegations of nefarious behavior at Uber. The trial is now slated for Feb. 5.
Both Alsup and Waymo attorney Charles Verhoeven asked why Padilla and Uber failed to give the 37-page Jacobs letter to Waymo lawyers as part of the lawsuit’s discovery process. Her explanation: Uber’s plan was to hire an outside law firm staffed by former federal prosecutors to investigate the letter’s claims. She said she was instructed to keep the letter confidential so as not to impede that probe.
Padilla said Uber receives hundreds of letters from disgruntled employees, ex-employees and drivers making “all sorts of wild, crazy allegations that were never substantiated,” many of which are just for nuisance and to harass the company.
However, she also testified that the Jacobs letter was shown to two committees of the board of directors, naming Bill Gurley, Garrett Camp, Ryan Graves, Arianna Huffington and David Bonderman as board members who would have seen the letter. In addition, thenCEO Travis Kalanick was shown the letter by then-general counsel Salle Yoo, she said.
If the letter’s claims were so ridiculous, why was it shared with the board and top executive, Waymo’s lawyer asked. Padilla’s answer: Because the letter mentioned so many “risk opportunities” that were concerns of the company.
And did Uber regularly hire “extortionists,” as Padilla called Jacobs, as consultants?
“I think Ric’s case would be the most extreme,” she said.
Padilla said a court battle with Jacobs could have cost Uber millions of dollars in legal fees plus other costs in distraction, lost productivity and reputation damage from his “salacious allegations.”
Padilla said Uber turned the letter over to U.S. attorneys in three jurisdictions, showing it wasn’t engaged in a cover-up.
But Alsup said she likely thought the attorneys’ offices would not share the letter with the court overseeing the civil litigation, as that’s a highly unusual step.
“On the surface it looks like you covered this up, refused to turn it over to the lawyers who were most involved with the Waymo case for reasons to me that are inexplicable, that it would somehow taint the special investigations,” Alsup said to Padilla. “To me it does not add up.”
Alsup later said it’s possible that Jacobs, who, according to his LinkedIn profile, left the company in April, is just a disgruntled employee.
In retrospect, Padilla said, she felt the letter should have been shared with Waymo’s lawyers: “I take full responsibility for that.”
New Uber CEO Dara Khosrowshahi addressed some of the claims Jacobs made about Uber employees sending secret messages through services like Wickr and Telegram, tweeting that the apps were often used when he took over this summer but that he’d banned their use in September. Wickr and Telegram messages are heavily encrypted and can be set to self-destruct after a predetermined period. Khosrowshahi’s tweets were cited in court.
Alsup wants the parties to use the extra time until trial “to get to the bottom of the story of the use of Wickr” at Uber, he said.
The judge theorized that Anthony Levandowski, a former star Waymo engineer who the company claims brought its trade secrets to Uber, could have used Wickr to communicate about Waymo trade secrets with other ex-Waymo employees who’d joined Uber with him.
“The evidence is gone now because it was an intentionally set-up system to not leave a paper trail,” Alsup said.
Uber attorney Arturo Gonzalez made the point that Google, Waymo’s sibling company, itself makes several applications that enable secure messaging, including Google Chat, Google Hangouts and Google Allo.
Two Uber security experts, Mat Henley, head of global threat operations, and Nick Gicinto, senior manager of its Strategic Services Group, testified that they had no knowledge of Uber using the clandestine tactics alleged in the Jacobs letter. Both denied Jacobs’ account that they instructed Uber’s self-driving team on using covert measures to shield communications from future investigations.
Gicinto said Uber did not record private conversations — except for one time when it secretly recorded a meeting in a public space between representatives of Didi Chuxing and Grab, ride-hailing services in China and Southeast Asia, respectively.
Gicinto said he was “appalled” that Uber paid Jacobs $4.5 million. “There’s very little truth in that document,” Gicinto said of the Jacobs letter. “He perverted and twisted information to serve his own devices.”
As Uber continues its defense ahead of the trial — another hearing is scheduled for Monday — it’s also seeking to facilitate a share sale to a consortium led by Japanese tech conglomerate SoftBank, which could give the new investors a stake worth between $7 billion and $10 billion. Bloomberg reported Wednesday that two investors, General Atlantic and Russia’s DST, dropped out of the consortium. Uber faces at least five federal investigations, a potential ban in London, and a security breach that leaked details of 57 million accounts, amid other woes confronting Khosrowshahi.