Uber Technologies, Inc. v Google LLC – Case Study

CASE STUDY PREPARED FROM ORIGINAL PUBLISHED OPINION
ERNEST A. LONG
Alternative Dispute Resolution
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Uber Technologies, Inc. v Google LLC 9/28/18
Attorney-Client Privilege; Attorney Work Product
Anthony Levandowski and Lior Ron are former Google LLC (Google) employees
who started the self-driving vehicle company Ottomotto LLC (Otto). Levandowski and
Ron started working at Google in 2007. Both resigned from Google in January 2016.
After leaving, they formed Otto, a self-driving technology company which Google
considered a competitor of its own self-driving car project. In August 2016, Otto was
acquired by Uber Technologies, Inc. (Uber). In October 2016, Google initiated
arbitration proceedings against Levandowski and Ron for allegedly breaching
non-solicitation and non-competition agreements. The arbitration between Google and
Levandownski and Ron was scheduled to commence on April 30, 2018.
In July 2017, Google issued a third-party subpoena in the arbitration proceedings,
demanding that Uber produce documents related to pre-acquisition due diligence
conducted by the investigative firm Stroz Friedberg LLC (Stroz). Google sought all
documents related to Stroz’s investigation into Levandowski, Ron, and Otto, including
a report Stroz prepared at the request of counsel. Uber objected and refused to
produce the documents, asserting they were protected under the attorney-client
privilege and as attorney work product
.
In September 2017, Google moved in the arbitration to compel production of the
Stroz documents. The arbitration panel chair found these Stroz-related materials
(“Stroz Materials”) were not privileged or attorney work product. Uber appealed to
the full arbitration panel which summarily affirmed the chair’s order.
Uber petitioned the San Francisco Superior Court to vacate the panel’s discovery
order. The superior court granted Uber’s petition and vacated the arbitration panel’s
decision, requiring Uber to produce the documents (the “Order” or “Discovery Order”).
On January 22, 2018, Google filed this appeal, asserting the Order was a final
appealable “order vacating an arbitration award.” Days later, in an effort “to
accelerate adjudication of the issues raised by Google’s appeal,” Google petitioned for a
writ of mandate, prohibition, and/or other appropriate relief (Case No. A153457), asking
this Court to direct the superior court to vacate the Order. This court summarily
denied the writ.
In February 2018, Uber moved to dismiss this appeal on the ground that the DCA
lacked jurisdiction. Following oral argument on Uber’s motion, the Justices deferred a
decision on the motion to dismiss until they considered the appeal on its merits.
Uber contended the appellate court lacked jurisdiction over Google’s appeal
because the trial court’s Discovery Order was not a final arbitration award and thus not
appealable. Google argued the Order was final, conclusive, and appealable as “an
order vacating an award” under Code of Civil Procedure section 1294, subdivision (c).
Following a lengthy discussion and analysis, the First District Court of Appeal found
the Discovery Order is a final determination of the discovery rights between Uber and
Google in the special proceeding commenced for the sole purpose of resolving this
discovery dispute, and the order is appealable. Uber’s motion to dismiss was denied,
and the Justices agreed to consider the merits of the appeal.
On February 22, 2016, Uber and Otto signed a term sheet for Uber’s acquisition of
Otto, portions of which have been redacted from the opinion. The term sheet
established a process for Uber to potentially acquire 100% ownership of Otto through
the execution of a Put Call Agreement. An “Indemnity Construct” agreement was part
of the term sheet and provided that Uber would indemnify Levandowski and Ron from
certain claims Google might assert against them post-acquisition. These included
claims for the infringement or misappropriation of any intellectual property; breach of
fiduciary duty to their former employer; and breach of any non-solicitation,
non-competition, or confidentiality agreement.
To determine the scope of the indemnified claims, the Indemnity Construct
contained a “Pre-Signing Due Diligence Process.” An “Outside Expert” was to
investigate certain Otto “Diligenced Employees,” including Levandowski and Ron.
The Outside Expert was to prepare a “third party report,” which the term sheet defined
as “the written report(s) . . . summarizing in detail all of the facts, circumstances,
activities or events obtained by the Outside Expert from any Diligenced Employee that
the Outside Expert deems are reasonably related to any Bad Act of such Diligenced
Employee, in each case, based on the interviews, forensic due diligence and other due
diligence investigation with respect to all Diligenced Employees conducted by the
Outside Expert.” “Bad Acts” covered any infringement or misappropriation of trade
secrets, breach of fiduciary duty, and violation of any non-solicitation, non-competition,
or confidentiality agreement committed by an employee.
Stroz, an independent third party and digital forensic expert, was the Outside
Expert tasked with performing the pre-signing due diligence and was to be “jointly
directed by and engaged by” Uber and Otto. Stroz was jointly retained in an
engagement letter dated March 4, 2016, by Uber’s outside counsel at Morrison Foerster
(MoFo) and Otto’s outside counsel at O’Melveny & Myers (O’Melveny). Their
engagement letter with Stroz states: “The purpose of the investigation is to ascertain
facts that, in the opinion of MoFo and O’Melveny, bear on issues of whether certain
current or prospective employees . . . of Ottomotto have improperly retained on devices
or in storage repositories not belonging to former employers, confidential information
belonging to former employers, and whether such current or prospective employees
breached any fiduciary duty, duty of loyalty, or other confidentiality, non-solicitation,
non-competition or other obligations based in contract, statute or otherwise.”
During the pre-acquisition due diligence, Levandowski was represented by
Donahue Fitzgerald LLP’s John Gardner. Ron was personally represented by Levine
& Baker, LLP. Neither retained Stroz on behalf of their clients.
In and around March 2016, Stroz began its investigation under MoFo’s and
O’Melveny’s supervision and direction. Stroz collected from Levandowski and Ron
various electronic devices and access to various cloud-based storage accounts. In
addition, Stroz interviewed Levandowski and Ron.
Sometime in April 2016, Stroz gave Uber’s counsel at MoFo an oral report on its
preliminary fact finding and memos of interviews with Levandowski and Ron.
On April 11, 2016, Uber and Otto executed the Put Call Agreement and finalized
the indemnification agreement.
That same day, Otto, Levandowski, Ron, and Uber through their respective
counsel executed a “Joint Defense, Common Interest, and Confidentiality
Agreement” “in contemplation of potential investigations, litigation, and/or other
proceedings” related to Uber’s acquisition of Otto. Uber claims that the parties had an
oral joint defense and common interest agreement as of February 24, 2016.
On August 5, 2016, Stroz issued its final, written report to Uber’s MoFo attorneys
and Otto’s O’Melveny attorneys. That report is labeled “Privileged & Confidential
Attorney Work Product.”
On February 23, 2017, with Google’s arbitration pending against Levandowski
and Ron for the alleged breach of their employment contracts, Google filed a related
civil action, Waymo LLC v. Uber Technologies, Inc., Case No 3:17-cv-00939-WHA in the
United States District Court for the Northern District of California (the “Federal Case”).
In this Federal Case, Waymo, the Google-related self-driving car company, sought
damages and injunctive relief against Uber based on alleged trade secret
misappropriation arising out of Uber’s acquisition of Otto.
Waymo moved to compel production of the Stroz report and its exhibits. In June
2017, the magistrate judge granted Waymo’s motion. The magistrate held the Stroz
documents were not protected by Levandowski’s attorney-client privilege because the
“record is clear that Uber and Otto alone engaged Stroz to conduct the due diligence
required by the Term Sheet.” Nor were the documents protected by Uber’s attorney
client privilege because Stroz interviewed Levandowski and Ron in their individual
capacities, not as Otto executives. The magistrate also found the Stroz report was not
protected attorney work product, and not protected under the common interest
doctrine. Over the objections of Uber, Otto, and Levandowski, the district court
affirmed the magistrate’s order. Levandowski unsuccessfully sought mandamus relief
in the Federal Circuit. (See Waymo LLC v. Uber Techs., Inc. (Fed. Cir. Sept. 13, 2007) 870
F.3d 1350.) In October 2017, Uber released the Stroz report.
As the Federal Case proceeded, the arbitration between Google and Levandowski
and Ron moved forward. Like Waymo did in the Federal Case, Google sought and
moved to compel production of the Stroz-related documents in the arbitration. The
arbitration panel chair found these Stroz Materials were protected by neither the
attorney-client privilege nor attorney work product doctrine. Uber appealed to the full
arbitration panel which summarily affirmed the chair.
Then, Uber successfully petitioned the San Francisco Superior Court to vacate the
panel’s order. The superior court held the Stroz Materials were protected under the
attorney client privilege, and it was not waived when the documents were shared
between Uber, Otto, Levandowski, Ron, and their respective attorneys. The superior
court granted Uber’s petition and vacated the arbitration panel’s decision compelling
Uber to produce the documents.
On January 22, 2018, Google appealed from the Order.
The First DCA began its discussion by noting that under California law, an
attorney-client communication is one “between a client and his or her lawyer in the
course of that relationship and in confidence.” (Evid. Code, § 952.) An
attorney-client relationship exists when the parties satisfy the definitions of “lawyer”
and “client” as specified in Evidence Code sections 950 and 951, respectively. For
purposes of the attorney-client privilege, “client” is defined in relevant part as “a
person who, directly or through an authorized representative, consults a lawyer for
the purpose of retaining the lawyer or securing legal service or advice from him in his
professional capacity . . . .” (Evid. Code, § 951, italics added.) “Confidential
communication” protected by the privilege refers to “information transmitted
between a client and his or her lawyer in the course of that relationship and in
confidence” by confidential means. (Evid. Code, § 952.) A confidential
communication may include “a legal opinion formed and the advice given by the
lawyer in the course of that relationship.” (City of Petaluma v. Superior Court (2016) 248
Cal.App.4th 1023, 1032.)
The attorney client privilege may also extend to third parties who have been
engaged to assist the attorney in providing legal advice. (See State Farm Fire &
Casualty Co. v. Superior Court (1997) 54 Cal.App.4th 625, 639)
In assessing whether a communication is confidential and thus privileged, the
initial focus of the inquiry is on the “dominant purpose of the relationship” between
attorney and client and not on the purpose served by the particular communication.
(Costco, at pp. 739-740) “If the trial court determines that communications were made
during the course of an attorney-client relationship, the communications, including any
reports of factual material, would be privileged, even though the factual material might
be discoverable by other means.”
The privilege “is to be strictly construed” in the interest of bringing to light
relevant facts. (Greyhound Corp. v. Superior Court (1961) 56 Cal.2d 355, 396.) The
privilege is also to be strictly construed “where the relationship is not clearly
established.” (People v. Velasquez (1987) 192 Cal.App.3d 319, 327, fn. 4.)
“When a party asserts the attorney-client privilege it is incumbent upon that
party to prove the preliminary fact that a privilege exists. Once the foundational facts
have been presented, i.e., that a communication has been made ‘in confidence in the
course of the lawyer-client . . . relationship, the communication is presumed to have
been made in confidence and the opponent of the claim of privilege has the burden of
proof to establish that the communication was not confidential,’ or that an exception
exists.” (State Farm, at p. 639.)
Uber never established the Stroz Materials were attorney-client communications
nor could it. The Stroz Materials resulted from a pre-acquisition due diligence process
Uber’s and Otto’s attorneys jointly hired Stroz to perform. Both Levandowski and Ron
had separate personal counsel who never retained Stroz. Uber and Otto attorneys
directed Stroz’s efforts, not the personal attorneys for Levandowski or Ron. Moreover,
at the time Stroz performed its due diligence, the interests of Uber were adverse to those
of Otto, Levandowski and Ron. Uber was in the process of evaluating whether it
would purchase Otto and in doing so indemnify Levandowski and Ron. To that end,
when Stroz interviewed Levandowski and Ron and collected their devices for review,
it did not do so as their agent or on behalf of their attorneys. Levandowski and Ron
were the subjects of an investigation and were not MoFo or O’Melveny clients. Their
communications to MoFo and O’Melveny lawyers through Stroz (the agent) did not
constitute information transmitted from client to lawyer. This is made clear in the
Stroz engagement letter. It provides that “under no circumstances will Stroz Frieberg
disclose to Uber or MoFo or any of their representatives any attorney-client privileged
communications between Ottomotto and/or any of its employees, stockholders, officers,
members, managers or directors, on the one hand, and counsel for Ottomotto or counsel
to any of such persons, on the other hand, that are disclosed to or discovered by Stroz
Friedberg in its performance of the services. For the avoidance of doubt,
communications between Ottomotto and/or any of its employees, stockholders, officers,
members, managers or directors, on the one hand, and any of the following attorneys
and law firms, on the other hand, is attorney-client privileged communication and will
not be disclosed by Stroz Friedberg to Uber or MoFo or any of their respresentatives:
O’Melveny & Myers LLP, . . . .” Thus, Levandowski’s and Ron’s communications with
Stroz, as reflected in the Stroz Materials, and shared with MoFo are not protected by the
attorney-client privilege.
Uber argues that the attorney-client privilege attaches to the Stroz Materials
because Levandowski and Ron were Otto employees when they communicated with
Stroz, who was acting as the agent for Otto’s lawyers at O’Melveny. Uber observes
that “when a lawyer for a corporation gathers facts from the corporation’s employees in
order to give legal advice to the corporation, those factual communications are
privileged.” The Justices, however, note the record shows that neither of them had
any attorney-client relationship with O’Melveny. Each retained separate personal
counsel, and the Stroz engagement letter makes clear that attorney-client privileged
information obtained from Otto employees is not to be shared with Uber and MoFo.
Further, Levandowski’s and Ron’s personal attorneys established additional parameters
around sharing certain information with the MoFo and O’Melveny lawyers. Prior to
turning over devices and account information to Stroz, Ron’s attorney instructed Stroz
not to provide MoFo or O’Melveny or Uber or Otto any of Ron’s privileged documents.
Next, Uber claims these communications “were made for the purpose of
seeking legal advice” to “assess the potential litigation threats faced” from Google.
The record shows otherwise. The term sheet’s “Indemnity Construct” does not discuss
anticipated litigation. Rather, Diligenced Employees are required to cooperate and
make their devices available to Stroz as a pre-condition to the execution of the Put Call
Agreement and as a means to determine the scope of the indemnified claims.
Levandowski did not comply with the Term Sheet to seek O’Melveny’s legal advice.
Rather, he provided Stroz information to clarify the extent of any obligation arising out
of the Indemnity Construct. In a letter written to the MoFo and O’Melveny attorneys,
Levandowski’s lawyer, John Gardner, stated the purposes of the Stroz examination
were to “(i) support the indemnification agreement and (ii) to provide evidence that
Uber and Otto exercised due care prior to . . . entering into the Transaction Documents.”
Asked in deposition whether he agreed with the statement by Gardner, Otto’s
designated company witness testified, “You would have to ask Uber about the
purposes. As I’ve previously indicated, my understanding is that it was more broadly
related to Uber determining whether to enter into the transaction, including the
indemnification agreement.” The need for legal advice or to assess a potential
litigation threat did not drive Levandowski’s or Ron’s communications with Uber and
Otto’s lawyers.
Because Uber was unable to demonstrate Levandowski’s or Ron’s
communications with Stroz were made in the course of an attorney-client relationship,
the attorney-client privilege does not attach.
Uber next contends that even if the Stroz Materials were not privileged
attorney-client communications, they were protected attorney work product. Google
argues the attorney work product doctrine provides no alternate ground to support the
superior court’s Discovery Order.
“An attorney’s work product is the product of the attorney’s ‘ “ effort,
research, and thought in the preparation of his client’s case. It includes the results
of his own work, and the work of those employed by him or for him by his client, in
investigating both the favorable and unfavorable aspects of the case, the information
thus assembled, and the legal theories and plan of strategy developed by the
attorney— all as reflected in interviews, statements, memoranda, correspondence,
briefs, and any other writings reflecting the attorney’s ‘impressions, conclusions,
opinions, or legal research or theories’ and in countless other tangible and intangible
ways.” ’” (Meza v. H. Muehlstein & Co. (2009) 176 Cal.App.4th 969, 977.)
The attorney work product doctrine, codified at Code of Civil Procedure section
2018.030, provides: “A writing that reflects an attorney’s impressions, conclusions,
opinions, or legal research or theories is not discoverable under any circumstances.”
(§ 2018.030, subd. (a).) All other attorney work product “is not discoverable unless
the court determines that denial of discovery will unfairly prejudice the party
seeking discovery in preparing that party’s claim or defense or will result in an
injustice.” (§ 2018.030, subd. (b).) The superior court did not address the attorney
work product doctrine in the Discovery Order at issue in this appeal, so it made no
relevant findings. Based on the record, the Stroz Materials do not meet either standard.
The Stroz Materials do not reflect an attorney’s impressions, conclusions,
opinions, or legal research or theories. Rather, the Stroz Materials reflect the result of
a factual investigation into possible past misconduct committed by Levandowski and
Ron in the course of leaving Google so that Uber could decide whether to proceed with
the Otto transaction and indemnify Levandowski and Ron. The materials summarize
what Levandowski and Ron told Stroz without the filter of Stroz’s impressions,
conclusions, opinions or legal theories. In addition, the engagement letter between
Stroz and counsel further indicates that Stroz was not authorized to practice law and
its services were “limited to non-legal services.” Thus, the Stroz Materials do not
constitute opinion work product that is absolutely protected under section 2018.030,
subdivision (a).
Nor do the Stroz Materials qualify for the limited privilege for non-opinion
work product set forth in section 2018.030 subdivision (b). Substantial evidence in the
record supports a conclusion that denial of discovery will unfairly prejudice Google in
preparing its claims. These findings supported the arbitration panel’s conclusion that
production of the Stroz Materials “may be one of the only effective ways for Google to
obtain certain relevant information in this case.”
Uber disputes that Google showed a “substantial need” for the information, and
further argues Google cannot make such a showing because it elected to proceed with
the arbitration without the Stroz Materials while there are alternative means to access it.
There is substantial evidence in this record from which the arbitrators could conclude
the information in the Stroz Materials was material to Google’s claims and could not
otherwise be obtained. Moreover, there is no evidence identifying the alternative
sources for it. The Court will give no weight to the fact that Google was proceeding
with the arbitration proceedings in the face of the adverse ruling from the trial court.
These factors do not abate or otherwise negate the prejudice Google will unfairly suffer
from being denied the Stroz Materials in arbitration.
Finally, Google contends even if Levandowski’s communications with Stroz were
protected under the attorney-client privilege or attorney work product, any such
privilege was waived by disclosure to Uber and not preserved by the common-interest
doctrine. Google contends the superior court’s reliance on the common-interest
doctrine was misplaced. Because Uber never established the Stroz Materials were
privileged or work product, the Court will not reach this issue. (See OXY Resources
California LLC v. Superior Court (2004) 115 Cal.App.4th 874, 889.)
Uber’s motion to dismiss Google’s appeal is denied. The superior court’s
Discovery Order granting Uber’s petition to vacate the arbitration panel’s discovery
decision is reversed. The matter is remanded to the superior court with directions to
enter a new order denying Uber’s petition to vacate the arbitration award. Google is
awarded costs on appeal.
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