Uber’s Well-Paid ‘Whistle Blower’ Slammed by In-House Lawyer

Carlos Jasso/Reuters

An Uber Technologies Inc. security manager who was paid $4.5 million over his termination was derided by one of the company’s top internal lawyers as a thief and “extortionist” who made “fantastical” allegations of unethical conduct inside the company.

Angela Padilla, vice president and deputy general counsel of litigation and employment, was responding Nov. 29 to claims by the ex-manager that the ride-hailing company used encrypted messaging to hide its tracks while spying on rivals, evading authorities and fighting off lawsuits.

But even as Padilla disputed the revelations that are part of a criminal probe, Chief Executive Officer Dara Khosrowshahi confirmed the truth of some of what’s alleged by the ex-manager. Khosrowshahi tweeted that in September he directed his teams not to use apps such Wickr and Telegram for “Uber-related business” after learning that the company was using encrypted and ephemeral communications.

Richard Jacobs, who worked on the corporate surveillance team, said the agreement he reached when he left his job required him to serve as a paid consultant to Uber and to cooperate with government probes, and barred him from publicly disparaging the company.

Uber Pushed the Limits of the Law. Now Comes the Reckoning

U.S. District Judge William Alsup Alsup told Padilla Nov. 29 that to “ordinary mortals” $4.5 million is “a lot of money” and that paying that much to someone making dishonest claims “doesn’t add up.” He also criticized the way Uber handled the explosive claims by Jacobs and never disclosed them to Waymo while the Alphabet Inc. unit was preparing to take Uber to trial over allegations that it stole trade secrets.

“People don’t pay that kind of money for B.S.,” Alsup said. “On the surface it looks like you covered this up, refused to turn it over to the lawyers for reasons that to me are inexplicable, that it would somehow taint the investigation.”

After a lawyer for Waymo told the judge that Uber also paid $3 million to an attorney representing Jacobs in his termination settlement, Alsup encouraged Waymo to subpoena the law firm for more information.

“If it turns out that was a payoff to be quiet, the jury is going to hear about it,” Alsup said.

Uber said it looks forward to the trial against Waymo and remains confident in its case.

“Today’s hearing changed nothing about the facts of Waymo’s case, and did nothing to support their claims that Uber is using their alleged trade secrets,” Uber said in an email.

Compliance Officers

Padilla, under questioning from Waymo’s lawyers, said that Uber turned over a May 5, 2017, letter from Jacobs to in-house compliance officers and then to outside lawyers at WilmerHale, which was hired to investigate what she called his sometimes “fantastical” allegations. Padilla said said then-Chief Executive Officer Travis Kalanick, general counsel Salle Yoo and a committee of the board saw the letter.

“I felt I had discharged my duty by escalating it,” Padilla said. Inside lawyers initially prohibited her from sharing the letter more widely until the allegations were reviewed, she said. Eventually the company shared the letter with the Justice Department.

Padilla said the company sent Jacobs’s letter to federal prosecutors in June because “we had an ex-employee that was very unhappy with the company.”

“We wanted them to know that so they could investigate,” she said.

‘In Retrospect’

There was “no effort to cover this up,” Padilla said. Responding to Alsup’s criticism that she should have sent it to lawyers handling Jacobs’s claims and the Waymo litigation, Padilla admitted that the judge was right. “In retrospect, yes, I should have,” Padilla said. “And I will take full responsibility for that.”

Uber felt Jacobs’s demands were “extortionate,” Padilla said. “The bulk of his letter is meritless.”

She testified that shortly before Jacobs resigned, Uber caught him stealing trade secrets. Jacobs said “he needed those documents to prove that he’s a whistle blower,” she said.

On cross-examination by Uber lawyer Arturo Gonzalez, Padilla estimated the company might have had to spend as much as $10 million to litigate the case Jacobs threatened to bring.

Uber weighed the disruption to its business and reputation weathering “salacious, unanswered allegations” if it fought the case, Padilla said. She said keeping Jacobs’s allegations away from Waymo wasn’t a motivation behind the settlement.

Jacobs became the main focus of a hearing Nov. 28 that was meant to cover final preparations for a trial over allegations that Uber stole self-driving technology from Waymo.

The trial, which was set to begin Wednesday with jury selection, was postponed until Jan. 31 over the judge’s concern that relevant information that Jacobs shared with prosecutors may have been withheld from Waymo.