Determining the Duty to Preserve in Waymo v Uber

Judge William Alsup’s Waymo v Uber order is epic Rule 37(e) analysis. The opinion has a substantial amount of detail and legal analysis. There are numerous issues in play and the Court logically addressed them with the precision that Judge Alsup is legendary known for in complex cases. In a case with multiple broadsides between counsel, Judge Alsup’s knows how to cut to the chase about the merits of a lawsuit:

To repeat, the central issue in this case remains whether or not Uber misappropriated Waymo’s trade secrets, not whether or not Uber is an evil corporation. Waymo’s decision to devote so much time and effort to pursuing matters with so little connection to the merits raises the troubling possibility that Waymo is unwilling or unable to prove up a solid case on the merits and instead seeks to inflame the jury against Uber with a litany of supposed bad acts. This order remains sensitive to this concern while also allowing certain facts about Uber’s misconduct to go before the jury insofar as they may actually help explain that weak spots in Waymo’s case may well be the result of Uber’s spoliation or obstruction of discovery.

Waymo LLC v. Uber Techs., Inc., 2018 U.S. Dist. LEXIS 16020, at *46-47 (N.D. Cal. Jan. 29, 2018).

Focusing on the spoliation issues, the Court stated that Rule 37(e) applied and not inherent authority, because the case involved electronically stored information. The Court then conducted full analysis to identify whether the Defendants had a duty to preserve.

Was there a Duty to Preserve ESI?

The Court held that Uber had a duty to preserve ESI, because a reasonable party in Uber’s position would have reasonably foreseen litigation in January 2016. Moreover, Uber actually foresaw litigation at the time of acquiring Otto. Uber and Otto planned for the litigation, which gave rise to joint-defense and common-interest privileges between the parties. With the issue of spoliation, Uber argued that they did not have a duty to preserve, resulting in the following quote from Judge Alsup:

But now, facing accusations of spoliation, Uber has reversed course and, in a performance deserving of an Academy Award, claims the exact opposite — that it did not reasonably foresee this litigation in 2016 and thus supposedly had no duty to preserve evidence. Uber’s own statements show otherwise.

Waymo, at *51-52.

The Court explained that Uber retained the law firm Morrison & Foerster LLP for legal advice on the possible liability for the acquisition of Ottomotto and Otto Trucking. “Otto” was started by former Waymo employees. Otto and Uber entered into a joint-defense agreement by February 2016. Furthermore, an indemnity agreement was entered in the event of “super duper litigation” for “Bad Acts” that included trade secret misappropriation. Waymo, at *52-53. A forensic service provider was hired to conduct a due diligence investigation to assist the law firm with their legal analysis. Id. The due diligence investigation and report focused on the possibility that Otto employees might have retained trade secret material from Waymo. Waymo, at *53. In words no lawyer wants to hear, the Court stated, “the purported joint-defense and common-interest privileges among the parties to the Otto acquisition were an elaborate artifice carefully and meticulously constructed for the purpose of shrouding the acquisition and ‘due diligence’ process in secrecy.” Waymo, at *53-54.

Judge William Alsup hit cancel on Uber’s argument that retaining attorneys, conducting a due diligence report, and the indemnification and joint-defense agreements were just for anticipated “potential litigation,” thus did not trigger a duty to preserve. The Court held that litigation was “reasonably foreseeable” and that Uber’s arguments would “strain credulity” to believe otherwise. Waymo, at *54-55.

Was Relevant ESI Lost?

Uber unsuccessfully argued that the hundreds of deleted text messages would have involved “innocuous business matters” and not trade secret misappropriation. Waymo, at *58. The Court’s response to this argument was, “Tell it to the jury.” Id. What happened between the Defendants and the acquisition of Otto went to the heart of the lawsuit. Id. Simply put, Uber could not “evade spoliation by speculating that all of the lost information was benign.” Waymo, at *58-59.

Lost ESI included data on five discs and one Defendant’s five personal laptops. The Court noted that the personal laptops could have contained the trade secrets at issue in the case. Uber also directing the Defendant to destroy the discs could support the argument Uber tried to avoid misappropriation or conceal it. Waymo, at *59.

Was There the Intent to Deprive?

The Court reserved deciding whether Uber acted with the intent to deprive, and whether or not the jury would be instructed that it may or must presume the lost information was unfavorable to Uber under Federal Rule of Civil Procedure Rule 37(e)(2)(B), until AFTER Waymo presented its case-in-chief. Waymo, at *61. The Court would rely on the evidence presented at trial to supplement the record whether the ESI was lost with the intent to deprive. Waymo, at *61-62.

What About Ephemeral Messages?

The Court stated that the use of ephemeral communications was relevant as a possible reason why the Plaintiff had failed to discovery more evidence of misappropriation. Waymo, at *69. The Court permitted the Plaintiff to present evidence at trial on ephemeral communications with qualified witnesses. Conversely, the Defendant could present counter evidence and argument that there was no wrongdoing with using ephemeral messaging apps. Waymo, at *69.

Bow Tie Thoughts

This is a complex case with multiple data sources and individuals who are relevant to the case. The attorneys on both sides are smart, representing some of the best in Silicon Valley. Judge William Alsup is an exceptional jurist. He is one of the few on the bench who taught himself to code. The upcoming trial will be “must see” TV for those of us in Silicon Valley.

Every case involving the destruction of evidence starts with knowing when there was the duty to preserve. Here, the Court found litigation was reasonably foreseeable, as Uber had retained counsel, forensic experts, and entered into a joint-defense and indemnity agreements. These are clear facts showing the Defendant had a duty to preserve.

Proving the intent to deprive requires facts. “Intent” is one of the most difficult requirements to prove, short of party admissions or damning statements in emails. Judge Alsup reserving his decision on whether the Plaintiff could prove intent until after their case-in-chief makes sense, given what is at stake in the lawsuit.

The use of ephemeral communications is an issue to watch. Did the Defendant decide to use this form of communicating after they had a duty to preserve? What was the reason for using this form of messaging? There could be a valid business reason, but if a party has a duty to preserve ESI, suspending the use of that form of messaging is advisable.

As with every trial, this will be a battle of facts and law. We do not know the strength of the Plaintiff’s case or whether Uber acted with the intent to deprive. We should find out both answers at trial.

Josh Gilliland is a California attorney who focuses his practice on eDiscovery. Josh is the co-creator of The Legal Geeks, which has made the ABA Journal Top Blawg 100 Blawg from 2013 to 2016 and was nominated for Best Podcast for the 2015 Geekie Awards. Josh has presented at legal conferences and comic book conventions across the United States. He also ties a mean bow tie.