Uber Argues 'Fraud' Absolves It From Paying Star Engineer's $179 Million Fine (techcrunch.com) 41
An anonymous reader quotes a report from TechCrunch: Uber argued in a recent court filing that former employee Anthony Levandowski committed fraud, an action that frees the company from any obligation to pay his legal bills, including a judgment ordering the star engineer to pay Google $179 million. Uber's fraud claim was part of its response to Levandowski's motion to compel the ride-hailing company into arbitration in the hopes that his former employee will have to shoulder the cost of the $179 million judgment against him. The motion to compel arbitration, and now Uber's response, is part of Levandowski's bankruptcy proceedings. It's the latest chapter in a legal saga that has entangled Uber and Waymo, the former Google self-driving project that is now a business under Alphabet.
In this latest court filing, Uber has agreed to arbitration. However, Uber also pushed back against Levandowski's primary aim to force the company to stand by an indemnity agreement. Uber signed an indemnity agreement in 2016 when it acquired Levandowski's self-driving truck startup Otto. Under the agreement, Uber said it would indemnify -- or compensate -- Levandowski against claims brought by his former employer, Google. Uber said it rescinded the indemnification agreement several months prior to the inception of Levandowski's bankruptcy case "because it was procured by his fraud," according to the court filing. Uber revoked the indemnification agreement after Levandowski was indicted by a federal grand jury with 33 counts of theft and attempted theft of trade secrets while working at Google, where he was an engineer and one of the founding members of the group that worked on Google's self-driving car project.
In this latest court filing, Uber has agreed to arbitration. However, Uber also pushed back against Levandowski's primary aim to force the company to stand by an indemnity agreement. Uber signed an indemnity agreement in 2016 when it acquired Levandowski's self-driving truck startup Otto. Under the agreement, Uber said it would indemnify -- or compensate -- Levandowski against claims brought by his former employer, Google. Uber said it rescinded the indemnification agreement several months prior to the inception of Levandowski's bankruptcy case "because it was procured by his fraud," according to the court filing. Uber revoked the indemnification agreement after Levandowski was indicted by a federal grand jury with 33 counts of theft and attempted theft of trade secrets while working at Google, where he was an engineer and one of the founding members of the group that worked on Google's self-driving car project.
Something doesn't add up (Score:5, Interesting)
So let me get this straight. Levandowski brought trade secrets into Uber at no personal gain to himself out of kindness to his new employer, who did not see any red flags when he asked for an indemnity agreement to cover his fraudulent activities that were completely unknown to Uber?
Or.... Uber hired him specifically for the trade secrets, and when he realized that was what they wanted, he forced them to sign an indemnity agreement before he would agree to it.
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It will ultimately hinge on the wording of the indemnity contract and what representations Levandowski made to Uber, but it seems reasonable that the gist was "we will indemnify you against lawsuits by previous employers as long as you do not bring or apply any of their trade secrets during your employment here". If he lied to Uber about where the source code, training information, NN models, or whatever else came from, that is pretty textbook fraud.
Re:Something doesn't add up (Score:5, Interesting)
Something does not add up because you misunderstand the situation. Levandowski did not go from Google to Uber. He left Google to start his own company, and the company was later acquired by Uber (for what it's worth, this is noted in the summary above).
The whole "out of the kindness of his heart" is more "because of the $700,000,000 they paid him." Presumably, they had a good faith belief that what they paid $700M for was actually his to sell. The fact that it wasn't is where the "fraud" part comes in, hence the indemnity agreement being void.
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I'm pretty sure the court found that Uber knew good and well what they were buying.
You may be sure of that, but I do not believe the record bears that out. Waymo v. Uber ended in a settlement, there was no finding of fact. The $179M at issue in the story here is the result of arbitration between Waymo and Levandowski.
If a court has found that Uber "knew good and well what they were buying" I'd love to see the citation.
Re: Something doesn't add up (Score:1)
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Extremely unlikely that a settlement has any admission or stipulation of wrongdoing.
I am more suspicious of Uber than the average bear, but the fraud defense can plausibly hold up under the bright lights of a courtroom. I am sure that Uber will have no trouble presenting evidence supporting that argument. The question is what evidence is available to indicate that Uber knew "too much" for that defense to hold.
I take it as a given that Uber intended to beg, borrow, buy, steal whatever they could. But my b
Re: Something doesn't add up (Score:1)
Also of interest is Uber's internal emails and other documents concerning the original Otter purchase and during the immediate post acquisition phase. It is not impossible that some minor Uber exec said something really dumb in email to the effect of, "Here's the link to the repo you can drop the google stuff".
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Not impossible at all. A normal organization would have employees smart enough about what to never put in email, but, given Uber's history, the depths of their wisdom is not something to take for granted. And then there are messages/texts to search, too.
I am sure everything that possibly could be searched will be searched.
If I were a betting man with a time machine, I would bet sufficient evidence did exist at one time to prick Uber's defense. But what matters to the court will be what evidence is availa
Re: Something doesn't add up (Score:1)
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He should subpoena that settlement to see what Uber acknowledges to Google.
No settlement offer is ever written so that it can be used as a confession if the offer is declined. Basically it'll say that this is no admission of any wrongdoing, but if you agree to drop the case they'll pay you a lump sum rather than fight you in court. Typically it also comes with an NDA to not discuss the case or the terms in public. It's pretty much all legal boilerplate though, it will not go into the meat of the allegations at all.
Re: Something doesn't add up (Score:1)
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If that were the case, then all claims would transfer to the new owner. It's kind of like buying a house with a lien on it. The lien doesn't disappear because you purchased the house.
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So what was it for? (Score:5, Insightful)
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Comment removed (Score:4, Interesting)
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Innocuous sounding phrases like "contingent upon proper execution" and "in good faith" have very specific legal meanings that have consequences you wouldn't expect from a strictly English interpretation.
How is that not fraud on the part of the lawyers.
Giving someone a contract that appears to be written in English, but in reality being written in some twisted dialect that doesn't mean the same thing as English feels wrong.
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It is no more fraudulent than a programmer using "objects" that have absolutely no corporeal form.
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You're missing that [arstechnica.com]:
So we get to argue about whether Uber could reasonably rely upon the representation, and whether Levandowski is liable under his warranty, making the indemnification p
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Right. At face value, it is a reasonably strong argument. The question becomes what evidence is available indicating that Uber knew "too much" about Levandowski's alleged wrongdoing, and when did they know it.
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How can a layman (Lewandowski) know what constitutes a Trade Secret? Does Google aassert what is and what is not a trade secret? It's reasonable to believe that Lewandowski used techniques and information that Google asserted as a blanket Trade Secret that is not, but a mathematical fact or casual practice (JIRA). This is yet-another-weakness in the corporate property landscape and the details would be interesting, if I didn't have to wade through the mountain of transcripts.
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How can Levandowski, the lead engineer at Google's Waymo project, who founded startups including 510 Systems and Anthony's Robots, know what constitutes a trade secret?
Next ask how a layman can know what constitutes "property and confidential information belonging to a prior employer," since that's what Levandowski's representation and warranty apparently said.
Levandowski is not a layman, and could Google the information [cornell.edu] better than any lay
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At which point Google's lien snaps up the $179M indemnification check, leaving Levandowski to make good on the reciprocal side out of his own skin.
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they agree to protect against any claims made by Google but the claims themselves will void the agreement.
That depends on the indemnity. So far there's no evidence that the indemnity agreement said: "Hey Uber we stole all these trade secrets from Google, indemnify us!" Indemnity against an organisation takes all forms, including patent infringement claims which is what the indemnity was most likely about.
I don't credit Uber a lot of intelligence, but no lawyer would be dumb enough to indemnify against someone who stole trade secrets, especially from an organisation with very deep pockets.
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or am I missing something?
The part that you are missing is that the judgement is nearly $200 MILLION DOLLARS. Wouldn't you, as a C-level executive bound by fiducial responsibility, do whatever you can to avoid paying that fine? I would be surprised if this action is about morals or ethics or legality in the least. It's about doing anything and everything to avoid paying that much money.
Editors ought to edit (Score:2)
Employer. Uber was his former employer, not his employee....
Not uncommon (Score:5, Informative)
If I ever went to a competitor to my current employer, I would require this indemnification - and most anyone does require this if you've got something vaguely resembling a non-compete.
I've seen this happen too: "I have a non-compete, I want indemnification if my current employer tries to enforce it"... *reviews language* "ok, here's your indemnification.
We Hereby Agree To Rescind This Agreement (Score:2)
Yea, that contract to indemnify you...? Well, we didn't think we were actually going to have to indemnify you, which is why we agreed to it.
But, we've unilaterally decided that we're rescinding the contract, so it turns out that we didn't have to indemnify you after all.
Win win!
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I think you have the gist of it - What did Uber do as soon as they found out that Anthony was dealing with stolen trade goods? Did they firewall off the data letting no one see it, require the engineers white-room reverse engineer it, and hope that Google wouldn't notice..... or did they (Uber) move forward with parallel development - using the Google system as some sort of template while they developed their own?
Seeing that Uber didn't dump Anthony and Otto out on the curb, hand Google's code back to them
Uber knew damn well what they were doing (Score:3)
Uber is desperate to offer a service without paying wages. This guy could help deliver it. Uber signed the indemnification agreement because they knew they were playing with fire. Very few people had what this guy - experience with self driving cars. That made this guy very valuable from a poaching standpoint and he assuredly got a sweetheart pay package accordingly.
That also meant that this guy is going to be under a lot of pressure to deliver and ensure his value to his employer. He obviously thought the best way to do that would be steal a bunch of trade secrets from his old employer and bring them to his new. Some less then ethical employers will turn a blind eye to this kind of behavior as long as they get the results they want from their new employee. They just do not want to know how the new employee delivered those results. The employer who benefited from the materials has much deeper pockets than the employee and it is highly unlikely that they will get away without paying what was obviously intended as a fine against them.
Your average large enterprise insider threat team will catch current employees attempting to take intellectual property with them every single day. This is so routine that is rarely makes the news. The only difference this time was the subject of note and the companies involved. This is a really good way to lose any severance package, unemployment or positive references you might have had coming from your old employer.
The indemnity contract is not the actual problem (Score:4, Informative)
If you go to a civil court and convicted and ordered to pay $179,000,000, you are bankrupt. Two million or 179 million or 3 thousand gazillions doesn't make a difference, because they take all you have, and once they have that, there is nothing more to take.
But if two parties go to a civil court and convicted and ordered to pay $179,000,000 and one party (the one with more money) is found just an itsy bitsy tiny little bit liable, the claimant can go after them for the whole amount.
So not having to indemnify this engineer isn't going to help Uber if they are found even 1% liable for the damages.
Fraud against Uber is different than against Uber (Score:2)
If Uber is claiming he lied to UBER, then they have a leg to stand on. That, if he stated something along the lines of "I never did anything close to illegal".
If Uber is claiming he lied to Google, they are violating their own agreement. The indeminity clause is specifically put in to protect against claims that he did something wrong against Google.. You can't claim that because he did something wrong about Google, it does not apply.
Not unless their 'indeminity' clause was really weirdly worded.
Insurance doesn't cover fraud (Score:1)
Since nobody has brought this up yet... directors & officers errors & omissions insurance (D&O/E&O) covers a whole lot of things your employees, managers, officers, and directors can do. If these people do something wrong, typically the insurance company will pay for the lawyer, the legal fees, the process, and eventually if the claim is upheld -- the claim.
However, it is explicitly excepted to pay for fraud. The reason is obvious but I'll make it clear -- insurance companies want to disco