‘Academy Award’-Worthy Denials Can’t Save Uber From Spoliation

Waymo LLC v. Uber Techs., Inc., No. 17-cv-00939 WHA, 2018 U.S. Dist. LEXIS 16020 (N.D. Cal. Jan. 29, 2018).

In this highly publicized case alleging that Uber misappropriated trade secrets, the court held that Uber spoliated electronically stored information (ESI) despite both reasonably and actually foreseeing litigation. The court further held that the lost evidence might have been relevant and reserved judgment until trial about whether Uber willfully deprived its opponent of evidence. After the court issued this opinion, the parties settled the case, reportedly for about $245 million.

The plaintiff, Waymo LLC, a Google spinoff, sued Uber charging that it misappropriated Waymo’s trade secrets related to its self-driving technology. Specifically, Waymo argued that its former employee, Anthony Levandowski, had stolen proprietary information from Waymo and used that information to start his own company, Otto. Levandowski then sold Otto to Uber, which was trying to design its own self-driving car.

The court colorfully observed that the case has “suffer[ed] from a deluge of accusations” that Uber “tossed out evidence and engaged in litigation misconduct.” After addressing Waymo’s complaints that Uber repeatedly violated the court’s discovery orders with late disclosures, including Uber’s “belated and bone-crushing production of evidence” on the eve of the first trial date, the court turned to spoliation.

Waymo requested adverse-inference jury instructions under Federal Rule of Civil Procedure 37(e) for Uber’s destruction of evidence. That evidence included “hundreds of text messages,” “electronic communications, files, and Slack records,” five discs, emails, and Levandowski’s personal laptops.

Under Rule 37(e), the court first considered whether litigation had been “reasonably foreseeable” when Uber allowed the above ESI to be lost. The court held that Uber should have reasonably foreseen the Waymo litigation. Moreover, it ruled that Uber “actually foresaw this litigation” when it first sought to obtain Otto. Uber had argued earlier that it could withhold information about the Otto acquisition, since it involved privileged conversations with legal counsel. Now, however, with spoliation at issue, “Uber has reversed course and, in a performance deserving of an Academy Award, claim[ed] the exact opposite — that it did not reasonably foresee this litigation” and had no duty to preserve ESI.

The court rejected this argument. It found that Uber’s privilege assertions “were an elaborate artifice carefully and meticulously constructed” to “shroud” the Otto acquisition “in secrecy.” Therefore, since Uber both reasonably and actually foresaw this litigation with Waymo, the duty to preserve began January 2016.

Next, the court turned to whether Uber had taken reasonable steps to preserve ESI. The court rejected Waymo’s assertion that Uber was responsible for Levandowski’s laptops, which it “never controlled, destroyed, or otherwise failed to preserve.” Uber did not dispute that it had lost and could not restore or replace the other categories of ESI.

Uber countered that the loss was of no consequence because the spoliated evidence was irrelevant. The court wasted no time in finding this argument “meritless.” It noted that “Uber cannot now evade spoliation by speculating that all of the lost information was benign.”

Finally, the court weighed whether Uber acted in bad faith or with the intent to deprive Waymo of evidence. Here, the court hesitated. It observed, “There is considerable ground for Waymo to argue that Uber had the requisite intent.” However, Waymo appeared “unwilling or unable to prove its case.” Rather, Waymo persistently sought “to have the court fill in the gaps” of its proof with adverse inferences.

Therefore, the court withheld its judgment. It reserved its decision about Uber’s intent until “after Waymo presents its case-in-chief” at trial. As part of its proof, the court permitted Waymo to offer evidence at trial about Uber’s “use of ephemeral communications” to explain its lack of evidence. Uber could similarly present evidence and argument justifying its use of such communications and pointing out that Waymo did the same.

The court noted in summary that it “reserves the possibility of an adverse-inference instruction … based on Uber’s spoliation of evidence” until the presentation of Waymo’s case at trial. While “evidence of Uber’s litigation misconduct … may be relevant and admissible,” the court reiterated that it would “not be allowed to consume” the issues at trial. Indeed, the “central issue in this case” was misappropriation, “not whether or not Uber is an evil corporation.”

Takeaways on presenting your best evidence

The court provided sound advice here. It noted that “Waymo has whined — often without good reason — at every turn in this case, making it hard to separate the wheat from the chaff…. Less time would have been consumed had Waymo focused on its best examples of misconduct instead of piling on every miscellaneous grievance.” When alleging spoliation or other discovery misconduct, focus on your best examples. Tell the court succinctly what your opponent has botched; don’t compile laundry lists of minor complaints.

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