These days, it seems that Uber can’t stay out of the news. From wage and hour claims (were drivers being misclassified as independent contractors instead of employees? Read more on the distinction between the two here) to vicious assaults (by both drivers and passengers), the ride-sharing app has had its time in the limelight.
Unfortunately for the company, its days on top of the headlines aren’t ending anytime soon. In a high profile case in Northern California, Waymo LLC v. Uber Technologies, the issue of non-competes (generally a non-issue in California, more on that here) is at stake. The case involves a former employee of Google (doing business as Waymo) who was later hired by Uber. The employee had worked on Waymo’s driverless car team and left Google to start his own self-driving technology company, Otto. Uber acquired Otto last August for $680 million. Waymo then sued Uber for trade secret misappropriation, patent infringement and unfair competition.
Not surprisingly, the case is being heavily litigated (and monitored by tech companies and start ups across the state). Recently, court found that Waymo “has shown compelling evidence that its former engineer, Anthony Levandowski, downloaded over 14,000 confidential files from Waymo immediately before leaving employment there.” The court continued, stating that Uber likely knew, or should have known, that Mr. Levandowski had taken and retained possession of Waymo’s confidential files. Lastly, the court ordered that Uber do everything in its power to ensure Levandowski was screened from using any of the downloaded files, that he be taken off the particular project where the trade secrets were implicated, and that the downloaded material be returned to Waymo or the court by noon on May 31, 2017.
It appears that Mr. Levandowski and Uber are not on the same page. On May 26, 2017, Uber sent a letter to Mr. Levandowski informing him that he was being terminated “for cause” for failure to cooperate with the company’s efforts to comply with the court’s order requiring return of material. Uber also gave Mr. Levandowski until June 15, 2017 to fully cooperate and reserved the right to rescind the termination of employment.
So what next? It is well established under California law that competitors may generally solicit each other’s employees provided they do not use unlawful means or engage in acts of unfair competition. See Metro Traffic Control, Inc. v. Shadow Traffic Network, 22 Cal. App. 4th 853, 860 (1994). At the same time, trade secrets are incredibly valuable and subject to a great deal of protection.
Employers must be vigilant when it comes to acquiring employees subject to a non-compete and determining what steps, if any, the employee may have taken to obtain confidential material of the prior employer. To discuss hiring an employee with a non-compete or non-solicitation agreement, contact experienced business attorney Drew E. Pomerance today.
