Employees' Suit Against Analyst Behind Infamous 'Jacobs Letter' Raises New Issues for Uber
Though Uber is not a named defendant in the complaint, experts said the company will still have plenty of work on its hands in dealing with a defamation suit recently filed against former Uber security analyst Richard Jacobs.
April 17, 2018 at 01:19 PM
5 minute read
The original version of this story was published on Corporate Counsel
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Claims made by former Uber Technologies Inc. security analyst Richard Jacobs and publicized last year are still affecting the company—they've now spurred a defamation suit.
And although the ride-hailing company isn't named as a defendant in the litigation filed late last week, it could be forced to take action to protect itself.
Four security managers at San Francisco-based Uber, which did not respond to request for comment, are suing Jacobs, their former colleague, for defamation. After leaving the company last year, Jacobs' attorney sent a 37-page letter to Uber's then-deputy general counsel, Angela Padilla, detailing the alleged activities of the company's global threat operations team.
Jacobs, who did not respond to request for comment, gave explosive testimony in pretrial hearings last fall in Waymo v. Uber around the allegations in the document, which claimed the company's in-house security team spied on competitors and used encrypted messaging and other techniques to keep sensitive information on these competitors secret.
New Litigation
Matthew Henley, Nicholas Gicinto, Edward Russo and Jacob Nocon, all currently employed with Uber, allege in their suit that in his April 2017 resignation email to company executives, including former CLO Salle Yoo, Jacobs told a “litany of lies” about the plaintiffs. The complaint said that Jacobs, who had been “demoted for underperforming in his job,” accused his four security colleagues of “illegal and unauthorized misconduct.”
In the suit, the four claim that Jacobs' allegations resulted in the plaintiffs' “previously unblemished reputations” to have harmed “their prospects for advancement at Uber and employment elsewhere.”
“The false statements were made with actual malice because Jacobs knew the statements were false and/or Jacobs made the statements with reckless disregard of whether the statements were false or not,” the complaint reads. It notes that Padilla, in the Uber pretrial hearings last year, called the bulk of Jacobs' claims about the company “meritless.”
Attorneys for the plaintiffs at Spertus, Landes & Umhofer in Los Angeles declined to comment.
Jacobs' resignation email was allegedly sent to Yoo, then-CEO Travis Kalanick, communications VP Jill Hazelbaker and HR officer Liane Hornsey. Three of the recipients did not immediately respond for comment for this story. And Yoo, through a spokesperson, declined comment on the suit.
Padilla, formerly second-in-command during former CLO Yoo's tenure, was replaced last month by Covington & Burling partner Tammy Albarrán. She'll be working under the new top lawyer, Tony West.
At the time, a representative for Uber said Padilla would remain with the company in an advisory capacity. An April 16 email to Padilla's work account generated an automated response stating: “Angela Padilla is no longer with Uber.”
Possible Fallout
Observers uninvolved in the Uber litigation noted the potential consequences of the defamation suit.
One recruiter who works with legal departments said this group of employees could now have a stigma attached to their names, much like whistleblowers in some companies.
“I have noticed that they can struggle to find new employment,” said Michael Roche-Kelly, director of in-house search at Special Counsel's Parker + Lynch, in an email.
Sterling Miller, general counsel at Marketo Inc., who is not involved in the case, said that Uber's lawyers should meet with their internal HR team to see if the plaintiffs were in fact passed over for any promotions.
And although Uber is not a named defendant, Miller said it is highly likely the company will be issued a subpoena.
“The company's square in the crosshairs here,” Miller said. He noted that he would be surprised if Uber's lawyers were aware of the lawsuit prior to its filing. Otherwise, the company may appear to be party to or in support of the litigation.
Miller anticipates that Uber's in-house attorneys, specifically those who work in the litigation division, are already thinking of which documents both parties in the suit could eventually want the company to produce. He also anticipates Uber's attorneys are “going to have to start monitoring this litigation to make sure no trade secrets or confidential information will be used … Those documents belong to Uber, not the employees, current or former.”
Of course, Uber has no control over the plaintiffs' or Jacobs' usage of any documents that were already shared publicly in previously disclosed court documents, Miller said.
There's also a likelihood that some employees, aside from the plaintiffs, could be deposed.
Miller suggested that Uber or any company tangentially involved in a lawsuit should reach out to both parties' lawyers to request some form of review so they have notice to file an objection or a protective order in the release of any documents.
There's no guarantee, though, the parties will work with Uber moving forward, he explained.
Miller also noted this will come at an expense to Uber's legal department, which is “unfortunate and cannot be avoided” for any company in this situation, he said.
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