Why Anthony Levandowski has (almost) nothing to lose.
The Uber-Waymo litigation has all the markings of a Silicon Valley soap opera — stolen files, self-driving cars, and hundreds of millions of dollars at stake. Last week the soap opera became more fascinating — a judge’s ruling revealed that Uber did deep due diligence on Anthony Levandowski and his personal devices in anticipation of potential litigation by Google.
The Otto-Uber term sheet required Uber to complete certain pre-signing due diligence to complete the deal. In March 2016, after Levandowski departed Waymo and before the Otto-Uber transaction closed, Otto and Uber jointly hired an outside forensic expert Stroz Friedman. Friedman interviewed employees, including Levandowski and Lior Ron, reviewed their digital devices like mobile phones and cloud storage, and prepared a report recording the results of the investigation.
Now for the juicy part: as part of this due diligence process, Levandowski was asked to truthfully disclose any “Bad Acts” he had committed, defined as “fraud, misappropriation of Waymo’s patents, copyrights, trademarks or trade secrets, breach of a fiduciary duty owed to Waymo, or breach of a nonsolicitation agreement with Waymo.” Uber dangled a huge carrot for Levandowski to be truthful (or Levandowski demanded protection for what Uber already knew), and agreed to indemnify him for any prior bad acts he confessed to committing. In other words, if Levandowski told Stroz what he stole, then the high priests at Uber have absolved him of his civil sins and Uber will pay for any resulting lawsuits or penalties.
Uber and Levandowski have both worked very hard to keep the Stroz report secret. They’ve claimed that the report was protected by attorney client privilege, attorney work product, and common interest privilege. Ultimately, the Court disagreed. On June 5, Magistrate Judge Corley ordered Uber to produce the Stroz report, though Uber and Levandowski can still appeal the decision.
Once the Stroz report is produced we will find out if Levandowski admitted to stealing files from Waymo before the merger, and if he did, then he has (almost) nothing to worry about. Whether Levandowski suffers a bad judgment in his current arbitration with Waymo, or if Waymo tries to sue him then Uber will be standing by ready to pick up the tab. In addition, while Levandowski’s $250 million in Uber shares from the Otto transaction never vested and have been forfeited, if his separation from Uber included a release of claims against Uber he will have likely received a significant amount of fully vested Uber shares.
Despite these benefits, Levandowski should still worry about what Brian Stretch, the US Attorney for the Northern District of California, has planned for him. Uber’s protective cloak will not shield Levandowski from criminal charges.
