Dan Handman is quoted in Law360 regarding the top Uber cases to watch.
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Top Uber Cases To Watch
By Linda Chiem
Uber, which for years has faced a legal onslaught targeting multiple facets of its ride-hailing business, is battling allegations of aggressive operating tactics including fostering a corporate culture that allowed sexual harassment and mismanagement to thrive and misclassifying drivers as independent contractors to minimize costs.
Amid the relentless litigation, Uber Technologies Inc. has continued its worldwide expansion and just this week inked a deal reportedly worth up to $10 billion for Japanese conglomerate Softbank to snatch up a sizeable stake and become one of Uber’s largest shareholders.
The Softbank investment could mark a shifting wind for a ride-hailing titan that in recent months has been beset by boardroom infighting and regulatory scrutiny into some of its more controversial operating strategies, all while its new chief executive has vowed to right the company’s past wrongs.
“Uber is operating in the legal Wild West where there aren’t many rules and so, to a large degree, I think their business model is predicated on this type of chaos,” Daniel H. Handman, a partner with Hirschfeld Kraemer LLP, told Law360. “I don’t think it scares investors away. The fact that there are so many lawsuits and on so many different fronts, I don’t think is unanticipated.”
But fresh lawsuits, an upcoming district court trial and several upcoming appellate court rulings loom large and could disrupt Uber’s way of doing business, experts say. Here, Law360 examines some of the more high-profile legal battles that Uber has been embroiled in.
Waymo Trade Secrets Spat
Uber is fending off allegations it misappropriated self-driving car technology from Waymo LLC, the self-driving car unit of Google parent Alphabet Inc., in a hotly anticipated trade secrets dispute that heads to trial Dec. 4 in Northern California federal court.
The case has moved at a lightning pace. It kicked off in February when Waymo sued Uber alleging that ex-Waymo engineer Anthony Levandowski downloaded about 14,000 documents before leaving Waymo to create his own company, OttoMotto LLC, which Uber later acquired for $680 million as part of a foray into driverless car technology. Levandowski is not a party to the instant suit, but is facing a criminal probe. The allegedly stolen files relate to Waymo’s laser-based autonomous vehicle sensor and navigation technology, LiDAR.
It’s a high stakes case, especially given courtroom revelations that a Waymo-commissioned expert report estimated damages caused by Uber’s alleged trade secret theft at $2.6 billion.
“It’s two-fold: The amount of money at stake and because of the [self-driving car] industry being new and everybody expecting autonomous cars to change the world both environmentally and from an employment perspective,” Mike Greco, a regional managing partner for Fisher & Phillips LLP and a member of the firm’s employee defection and trade secrets practice group, told Law360.
It’s been a rollercoaster ride for discovery. Uber has invoked privilege on several fronts since the litigation began, asserting attorney-client or attorney-work product privilege for a number of reports and documents sought by Waymo, which in turn has sought Uber’s source code alongside other purportedly withheld evidence. With just weeks left before the start of trial, the companies are still hashing out jury instructions and getting admonished by U.S. District Judge William Alsup who’s overseeing the case.
“The thing that’s most notable is how so much of this stuff hasn’t been resolved earlier and just in the last couple weeks before trial,” said David Becker, a litigation partner with Freeborn & Peters LLP. “The fact that there are potential piles of emails that haven’t been reviewed or turn over when they’re getting ready to pick a jury.”
Trade secrets law is complicated and it’s a tough ask to have a jury sort through the technological issues and determine where to draw the line on what counts as a trade secret, Handman explained.
“The real question in this case is going to be how much Uber knew and when they knew it and how far along they went knowing that they were doing something wrong or, as Uber will portray it, they were duped by this guy the same way that [Waymo] was,” Handman said.
The case is Waymo LLC v. Uber Technologies Inc. et al., case number 3:17-cv-00939, in the U.S. District Court for the Northern District of California.
Driver Misclassification Battles
Uber has long promoted itself as a technology company with a ride-hailing app that makes it more seamless to connect passengers seeking rides with drivers willing to provide those rides. But lawsuits across the country have slammed the company for allegedly misclassifying drivers as independent contractors instead of employees. The most high-profile of these battles include several class actions in Northern California that are currently on appeal before the Ninth Circuit to address a central part of the litigation — whether Uber’s arbitration provisions are valid and enforceable.
Uber has been trying to get the Ninth Circuit to reverse or vacate several Northern California district court orders from U.S. District Judge Edward M. Chen that paved the way for the driver misclassification suits to advance further toward class certification, rather than be pushed into arbitration as Uber has long fought for.
The Ninth Circuit in September paused the consolidated appeal involving the four class actions overseen by Judge Chen, known as the O’Connor, Yucesoy, Mohamed and Del Rio cases, saying it’ll hold off on ruling until the U.S. Supreme Court decides a trio of closely watched cases on whether employers can legally include class waiver provisions in employee arbitration agreements.
The Supreme Court on Oct. 2 heard oral arguments in a trio of cases — National Labor Relations Board v. Murphy Oil USA Inc., Epic Systems Corp. v. Lewis and Ernst & Young LLP v. Morris — that address whether employment agreements forcing workers to sign away their rights to pursue class action claims are legal.
So where the high court lands on this will influence whether the Ninth Circuit upholds or strikes down Uber’s arbitration agreements with drivers.
“Uber was smart to the extent that they obviously had an issue — are [drivers] properly classified or not — and they counteract that by requiring them to sign mandatory arbitration agreement and that’s a disincentive for plaintiffs attorneys to try and overcome,” said Mark Zisholtz, partner-elect, head of the contingent labor practice group at Morris Manning & Martin LLP. “Generally speaking, these are enforceable but the U.S. Supreme Court is taking up a case that’s really going to have a material impact on Uber’s litigation.”
Freeborn & Peters’ Becker also said previous Supreme Court cases tackling arbitration provisions have resoundingly determined that such provisions are enforceable.
“I don’t see why an employee or contractor would have a better argument than the plaintiff in [AT&T Mobility LLC v. Concepcion] or in some of the other major arbitration cases that have been decided in the last decade,” Becker said. “If a cell phone service purchaser doesn’t have a right to invalidate an arbitration provision in an agreement they click on, then why would it be any different for an employee at least from the perspective of the Federal Arbitration Act.”
The Uber-related consolidated appeal includes Douglas O’Connor et al. v. Uber Technologies Inc., case numbers 14-16078, 15-17420, 15-17532, 16-15000, and 16-15595; Hakan Yucesoy et al. v. Uber Technologies Inc., case numbers 15-17422, 15-17534, and 16-15001; Abdul Mohamed et al. v. Uber Technologies Inc., case numbers 15-17533 and 16-15035; and Ricardo Del Rio et al. v. Uber Technologies Inc., case number 15-17475, all in the U.S. Court of Appeals for the Ninth Circuit.
Sexual Misconduct Lawsuits
Earlier this week, Uber was hit with a proposed class action in California federal court from two women who say they were raped by Uber drivers, and alleging that the company’s “woefully inadequate” driver screening process has allowed drivers to sexually assault or harass more than 1,000 riders.
The women, who filed suit under Jane Doe pseudonyms, allege Uber purports to provide “the safest ride on the road” while maintaining lax background-check, monitoring and safety policies despite hundreds of reports of rape, sexual assault and sexual harassment by riders.
They claim in their suit that the company uses an online portal that does not require would-be drivers to verify their identities, allowing “numerous drivers” to use false identities, social security numbers, licenses or photos. The women further claim the companies Uber contracted to check up on applicants have done a poor job of flagging dangerous drivers.
In September, two Los Angeles women who say they were sexually harassed and assaulted by Uber drivers filed negligence suits in California state court, similarly accusing Uber of failing to properly screen drivers.
The women, both identified as Jane Does in their suits, described incidents where drivers for Uber made derogatory comments or physically assaulted them, and went on to further allege “rampant sexual abuse” among Uber drivers.
It’s a black mark for a company that in recent months has been struggling to change course following an explosive essay and blog post from former engineer Susan Fowler earlier this year highlighting sexual harassment at the company, and a subsequent workplace culture report from Covington & Burling LLP that recommended updates to discrimination and harassment policies.
Uber’s founder and former CEO Travis Kalanick was pushed to step down in June and Dara Khosrowshahi, the former chief executive of travel booking giant Expedia Inc., came on board as Uber’s new CEO in August, and promptly vowed to overhaul the corporate culture.
“It’s another example of when there’s allegations of harassment at the top and a possibility of allegations have been ignored at folks at the top, what kind of organization are you building?” said Angela Reddock-Wright of Reddock Law. “Where we see with a startup, you may have a dynamic leader and someone who really knows how to build a company from a product or service standpoint, but hasn’t been sensitized or trained in exhibiting proper conduct.”
“It’s hard to say they’re being targeted unfairly if the allegations are investigated and proven to be true,” Reddock-Wright added. “The fact that the CEO and the executives are not sophisticated enough, not smart enough to know that they’re in positions of power and not to use them for bad? They kind of set themselves up to be targeted. It doesn’t excuse the behavior or prevent people from bringing a claim forward.”
The federal court case is Jane Doe 1 et al. v. Uber Technologies Inc., case number 3:17-cv-06571, in the U.S. District Court for the Northern District of California.
The state court cases are both captioned Jane Doe v. Uber Technologies Inc. Does 1-100, case numbers BC677231 and BC677351, in the Superior Court of the State of California, County of Los Angeles.
–Additional reporting by Cara Bayles, Melissa Daniels, Vin Gurrieri and Braden Campbell. Editing by Pamela Wilkinson and Kelly Duncan.