Waymo Loses Damages Expert, Struggling v. Uber

In the latest chapter of the Waymo v. Uber trade secret litigation, the Court has dealt Waymo yet another blow, this time excluding its damages expert. Let’s take a look.

To briefly recap: Waymo is a Google spin-off focused on self-driving cars. Uber is Uber. Anthony Levandowski was a leading Waymo engineer. In 2015, Uber expressed interest in acquiring a division of Waymo. Uber met with Levandowski. Fast forward to December 2015 / January 2016. Levandowski leaves Waymo and starts his own self-driving car company called Ottomotto. In early 2016, Levandowski meets with Uber about finding investors for his new company. A couple Waymo employees jump ship and join Levandowski at Ottomotto. Then, in August 2016, in a plot twist that will surprise no one, Uber acquires Ottomotto for $680 million. Eventually, Waymo gets wind of this and sues Uber and Levandowski for theft of trade secrets. Trial is set to begin on December 4th, 2017.

As always happens in litigation, trial is when shit gets real. Most lawyers in commercial litigation have never actually tried a case, let alone a federal jury trial. But even seasoned veterans who have tried numerous cases make missteps. Waymo is represented by Quinn Emanuel. And Quinn Emanuel tries lots of high stakes commercial cases. But this time, they got caught with their pants down. The judge just excluded Waymo’s damages expert. And although Waymo and its lawyers will downplay this in the media and act like it’s no big deal, that’s absurd. Some of the highlights:

The Court basically mocked Waymo’s expert, Michael Wagner, for his lack of serious credentials: “Wagner is not an economist but merely an inactive certified public accountant and inactive California-licensed attorney.” He had no specialized knowledge or expertise. The Court repeatedly hammered Wagner’s testimony as speculative, unreliable, unsophisticated and incoherent. At one point, the Court noted: “Other than grade-school arithmetic, however, he did not apply any coherent principle, methodology, theory, or technique, much less one possessing any discernible indicia of reliability. Instead, he made the same arguments that the lawyers can make based on other evidence in the case that can speak for itself.”

It doesn’t get any better from there. The Court picks apart Wagner’s “amazing” math and his “fantastic” leaps, concluding that Wagner badly overreached, had no independent factual basis for his calculations and – instead – had just recycled numbers provided by other Waymo experts. To add insult to injury: Wagner had offered his fantastical damages testimony all while repeatedly claiming that his calculations were “conservative.”  The Court calls him out for that hypocrisy, saying this is “just another attempt to surround astronomical numbers with a facade of conservatism.”

In the end, it wasn’t even a close call. The Court ripped Wagner apart and excluded his testimony wholesale. Naturally, Waymo has attempted to downplay this. Waymo argues that it can still pursue damages at trial by utilizing the same documents relied upon by the expert. But it’s not that simple.

From the jump, Waymo was demanding at least $1 billion from Uber in settlement talks. Now, on the brink of trial, they don’t even have a damages expert.  Remember the context: Waymo is trying to prove damages related to technology or trade secrets that have yet to be commercialized. Meaning that even if Uber misappropriated Waymo’s trade secrets, Uber isn’t actually selling relevant products and – therefore – hasn’t derived a profit yet. Proving damages in that context is inherently difficult and speculative. It’s even harder when you don’t have a damages expert.

The Takeaway: Pipe dream damages: It’s easy to run your mouth about wanting $1 billion in damages when trial isn’t imminent and you don’t have to prove it yet. Plaintiffs – particularly in commercial cases and especially in non-compete, trade secret and unfair competition cases – love to throw around massive “estimates” of their damages. If you can’t bring these sorts of plaintiffs down from their pipe dream damage theories, you just play it out and destroy their expert pre-trial.

But remember: Waymo is fighting for more than just damages. Their real goal is a permanent injunction shutting down Uber’s self-driving car division.

The case is WAYMO LLC, Plaintiff, v. UBER TECHNOLOGIES, INC.; OTTOMOTTO LLC; & OTTO TRUCKING LLC, Defendants., No. C 17-00939 WHA, (N.D. Cal. Nov. 6, 2017).