Employees Wanted – Work at your Own Risk

Workplace InjuryBloomberg Business Week recently featured a story about the South’s manufacturing renaissance. The article, by Peter Waldman, is titled Inside Alabama’s Auto Jobs Boom: Cheap Wages, Little Training, Crushed Limbs.

The workplace injuries and deaths described are simply horrific. Here are a few examples:

  • A female employee at auto parts supplier Ajin USA was impaled while trying to fix a robot. The robot unexpectedly turned on and impaling her upper body with a pair of welding tips. Ajin, per OSHA, had never given workers safety locks and training on how to use them.
  • A male employee lost his arm. This happened after a heated die press that stamps metal parts slammed onto his arms. He was trapped like this for an hour while his flesh burned inside the heated press. When emergency crews finally freed him, his left hand was “flat like a pancake.”
  • In 2015, a 33-year-old technician suffered third-degree burns all over his upper body at Nakanishi Manufacturing Corp.’s plant in Winterville, Ga. This incident happened after four previous fires in the factory’s dust-collection system. Last year, OSHA levied a $145,000 fine (later negotiated down to $105,000).

Bloomberg reported that the incidents of workplace injuries far outpaced the rest of the country, in particular Michigan. Specifically,

[T]he incidence of traumatic injuries in Alabama’s auto parts plants remains 9 percent higher than in Michigan’s and 8 percent higher than in Ohio’s. In 2015 the chances of losing a finger or limb in an Alabama parts factory was double the amputation risk nationally for the industry, 65 percent higher than in Michigan and 33 percent above the rate in Ohio.

* * *

OSHA records obtained by Bloomberg document burning flesh, crushed limbs, dismembered body parts, and a flailing fall into a vat of acid. The files read like Upton Sinclair, or even Dickens.

These examples are typical of recent violations. Here are a couple of examples:

  • In Sec’y of Labor v. Martin Mech. Contractors, Inc., (4/17/17), a Georgia contracting company whose employee died after falling through a skylight was assessed a $49,000 penalty. It was determined the company had inadequate fall protection training program.
  • Exide Technologies, a Kansas battery maker, faces $149K fine over lead hazards for failing to protect workers from overexposure to lead at its manufacturing plant in Kansas. Exide was cited by the OSHA for one serious and three repeat violations.

Work Place Fatality Was on the Decline

Data from the Bureau of Labor Statistics shows that the number of deaths for every 100,000 full-time worker equivalents declined from 4.2 to 3.7 during the Bush administration. Further declines continued under the Obama administration going from 3.6 to 3.3.

However, there is cause for concern these reductions in worker mortality may cease. This is because, within days of taking office, President Trump invited American manufacturers to recommend ways the government could cut regulations. The Department of Labor was the second most popular target in comments submitted. The Environmental Protection Agency was the number of one target.

Further, the Trump administration has proposed to cut the Labor Department’s fiscal year 2018 budget by 21 percent. And President Trump has insisted on eliminating two rules for every new rule.

President Trump ran on a promise to make America Great Again. But that America may not be so great for factory workers and other blue-collar employees when it comes to workplace safety. Hopefully, things won’t get worse.

Employment Agreements Found Unlawful by NLRB

Employment ArbitrationEmployers should carefully evaluate their employment agreements with a focus on eliminating provisions that may be unlawful, given a recent National Labor Relations Board (NLRB) ruling. Specifically, DISH Network was ordered on April 13, 2017, to revise or rescind its employment agreements after the NLRB found the agreements contain provisions that violate federal labor law. See

Specifically, DISH Network was ordered on April 13, 2017, to revise or rescind its employment agreements after the NLRB found the agreements contain provisions that violate federal labor law. See DISH Network, LLC, 365 N.L.R.B. No. 47 (4/13/17). This order applies to DISH Network’s entire U.S. workforce.

Since October 2013, DISH Network required all applicants to sign its mandatory arbitration agreements.  These agreements required employees at U.S. locations to arbitrate “any claim, controversy and/or dispute” against the employer, “whenever and wherever brought.”

Also, the arbitration agreement contained a strict confidentiality provision requiring that “all arbitration proceedings, including but not limited to hearings, discovery, settlements, and awards shall be confidential …”

An employer violates Section 8(a)(1) if it maintains an arbitration policy that employees would reasonably believe interferes with their ability to file a Board charge or to access the Board’s processes. Applying this, the Board had easily ruled that employees would reasonably understand the DISH Network agreement as prohibiting them from filing unfair labor practice charges or using the NLRB’s administrative processes. Accordingly, the agreement was unlawful.

Additionally, the Board found the agreement’s confidentiality requirement independently violated the NLRA (Section 8(a)(1)). Applying this section, the Board ruled that DISH Network’s agreement was a workplace rule that prohibits the discussion of terms and conditions of employment by prohibiting employees from discussing “all arbitration proceedings, including but not limited to hearings, discovery, settlements, and awards.” As such, the rule was unlawfully overbroad.

Considerations for your Company’s Employment Agreements

Decisions like this are reminders that broad company rules prohibiting employees from discussing workplace issues are likely to be inconsistent with NLRB rules and, therefore, unlawful.

So employers should review their employment agreements to eliminate blanket prohibitions. It is also recommended to expressly note that the agreement is not intended to interfere or restrict an employee’s rights under the NLRA or to file any NLRB charges. Such carve out provisions may save an agreement from being found unlawful.

For more practical advice and best practices for improving your company’s employment agreements and other policies, contact, employment attorney Jason Shinn. He routinely works with companies to implement HR best practices or update their existing policies to comply with federal and Michigan employment laws.

Ex-Worker Sued for Accessing Former Employer’s Google Drive Account

Data BreachA former employee’s accessing a Google Drive he set up for his employer may result in a violation of the federal Computer Fraud and Abuse Act (CFAA). This case also serves as a reminder to carefully evaluate how your company uses any third-party services like Dropbox, Google Drive, etc.

Computer Fraud and Abuse Act Background

The CFAA is primarily a criminal statute focused on combating hacking. It was later expanded to provide civil remedies. Specifically, it grants “[a]ny person who suffers damage or loss by reason of a violation of this section” the ability to bring a civil action “to obtain compensatory damages and injunctive relief or other equitable relief.” 18 U.S.C. § 1030(g). Violating any of the statute’s provisions exposes the offender to both civil and criminal liability.”

The CFAA is frequently used against former employees believed to have improperly used or accessed company information. See “Courts Continue to Narrow Application of Computer Fraud and Abuse Act Against Former Employees.”

Accessing Former Employer’s Database

That happened in this case, Estes Forwarding Worldwide LLC v. Cuellar (3/9/17). This case was filed in federal court in Virginia where Estes Forwarding Worldwide LLC alleged its former employee wrongfully accessed and downloaded information from a Google Drive account used in Estes’ shipment and vendor business.

Estes fired Cuellar in February 2015. Cuellar then worked for a competitor of Estes. In May 2016, over one year after his termination, Cuellar accessed the Google Drive account from his home and removed both a recovery phone number associated with the account and a secondary email address on file. This email went directly to Estes. Cuellar also changed the password for the account and created an archive of the spreadsheets it contained.

Later that same day, Cuellar again accessed the account. This time, he accessed the account from his work. At that time, Cuellar downloaded the entire archive he created earlier that morning. The archive was over 1,900 spreadsheets generated by Estes employees. Cuellar then deleted the account.

Distinction Between Personal Account and Business Account

Cuellar moved to dismiss the CFAA claim. One argument he made focused on “authorization.” Cuellar argued that “[w]hen a person provides personal information to register an email account with a service provider like Google or Yahoo, and establishes a password, it is the service provider that authorizes that person’s access to the account and not the employer.”

In other words, Cuellar argued that “[f]or purposes of unauthorized access to the [account] under the CFAA, Estes does not get to create [the] rules [governing authorization]; only the Google Terms of Use can do that.”

To support this argument (and as discussed below this point is important for employers), Cuellar cited to another case (Hoofnagle v. Smyth-Wythe Airport Comm’n, 5/24/16) in which a former airport worker could pursue a claim that his employer accessed his Yahoo e-mail account without authorization. The Hoofnagle court said that although the plaintiff created the account in part to conduct airport business, he did so with his personal information and used the account for personal use.

The Court rejected this argument. It reasoned that Cuellar unlike the employee in Hoofnagle, created the account within the scope of his employment with Estes and at its direction. This was not Cuellar’s personal account and it had never been used by Cuellar or any other employee for personal use.

What Employers Should Do to Protect their Business

For any company that uses third-party services – think Dropbox, Box, Google Drive, etc. – to conduct business, this case should be a wake-up call. This is because the case itself involved a clear-cut issue of wrongful access to a company database by a former employee – Cuellar was terminated in February 2015 and accessed the Google Drive account over a year later without permission.

But the court opinion suggests that a different result may have been reached had Cuellar originally used the Google Drive for personal use in addition for business reasons or if he had set up the account using his personal information. In our experience, both situations commonly happen.

For this reason, your business should immediately audit of any third-party data or file sharing services used, officially or otherwise, to conduct business. As part of this audit, you will want to:

  1. Make sure these accounts are in your company’s name. For any account created by an employee or that is in the name of the employee, immediately take appropriate steps to transfer the account or rights to the account;
  2. Confirm the account is used only for your company’s business;
  3. Identify anyone with access to the accounts and data stored in any such account;
  4. Have a written policy specifically advising employees that the information belongs exclusively to the employer, the account and information is to be used only for business, and it may only be accessed for business; and
  5. Make sure an individual’s access to the account is disabled upon termination.

For more information about the Computer Fraud and Abuse Act, and litigating claims under the CFAA, contact attorney Jason Shinn. On behalf of businesses and individuals, Mr. Shinn has brought and defended against CFAA and related trade secret misappropriation issues in federal and Michigan courts.

Company Sued for Rescinding Job Offer Because Prospective Employee Signed Online Petition

Online petition legal issuesEmployers have a new concern with job offers and social media; In what appears to be a first, a federal court of appeals held an employer could be liable for rescinding a job offer because the prospective employee signed an online petition supporting issues under the federal Fair Housing Act (FHA).

Specifically, in Linkletter v. Western & Southern Fin. (3/23/17), the plaintiff, Gayle Linkletter, was offered a position with Western & Southern Financial Group. At the time the offer was made, Western & Southern was engaged in a lengthy real estate dispute with a women’s shelter over its location in the neighborhood. Residents of the Anna Louise Inn women’s shelter had sued Western & Southern in federal court under the FHA.

While the dispute between the shelter and Western & Southern was ongoing, Linkletter signed a petition expressing support for the shelter. The petition was titled, “The Anna Louise Inn has my Support!” It also stated, “I support the mission of the Anna Louise Inn, which has provided safe and affordable housing for women for 102 years in its current location.” As a signor, Linkletter also stated that “[the] Anna Louise Inn should remain where it is and continue its mission of providing safe and affordable housing for single women.” The Inn posted the petition online with the names of the signors, including Linkletter.

Before Linkletter began working, Western & Southern’s Senior Vice President of Human Resources called Linkletter to notify her that Western & Southern had rescinded the employment offer. Linkletter said she was told the rescission due to Linkletter having taken “a position that was contrary to Western & Southern” and Senior VP mentioned Linkletter’s support for the Anna Louise Inn.

Linkletter sued Western & Southern. Her suit argued that Western & Southern violated the FHA as it related to her. On this point, the FHA makes it “unlawful to coerce, intimidate, threaten or interfere with any person” for having “aided or encouraged any other person in the exercise” of the rights granted by the act. Linkletter argued that she was protected by this provision because her would-be employer interfered with her employment because she aided or encouraged women in the exercise of their housing rights under FHA.

The lower court dismissed the case because the petition didn’t “aid or encourage” the women of the inn as contemplated by the law. That decision was reversed on appeal.

Linkletter’s action, signing a petition, is seemingly innocuous. However, the language and timing of the petition demonstrate that it existed to encourage the women to remain in their residence in opposition to the alleged discrimination by Western & Southern … Linkletter signed the petition to “encourage” the women in their dispute with Western & Southern

* * *

the defendants fail to explain why a petition-signing is not encouragement beyond vague assertions that the action lacks “concreteness” or “directness.” The allegations in the complaint show that the action was concrete and important enough to alert Linkletter’s future employer to her public support, and result in her termination. If the encouragement is sufficiently concrete to lead to an individual’s firing, it is sufficiently concrete to state a plausible claim.

Employment Protections Extended to Online Petitions and Activity

The Linkletter decision was issued by the Sixth Circuit Court of Appeals, which covers Michigan. This decision also means that an employee signing a petition, at least under certain circumstances, may be protected activity. While this case involved the FHA, its reasoning would extend to other situations where an employee or job applicant signs an online petition or voices support through Facebook to support co-workers or people attempting to uphold their statutory rights.

For example, Title VII prohibits discrimination on the basis of the employee’s friendship with or advocacy on behalf of a member of a protected class. See Barrett v. Whirlpool Corp., 556 F.3d 502 (6th Cir., 2009) (Title VII extended to Plaintiffs who were not members of the protected class but claimed they were discriminated against because they were friends with and spoke out on behalf of their African-American co-workers).

Also, readers of this blog know that employers have repeatedly faced liability for disciplining employees for Facebook postings that implicate rights under the National Labor Relations Act. See NLRB Once Again Wades Into the Lawfulness of Employer’s Workplace Policies or NLRB Finds Employer’s Workplace Rules Violated Federal Labor Law.

Considering the political environment and how technologically allows anyone to publicly communicate their support or opposition on any issue, employers must carefully evaluate the reasons behind any termination to avoid unintended liability.

For more information about employment and social media law, contact attorney Jason Shinn. He routinely works with clients to address issues at the intersection of technology and the workplace.

State Marijuana Laws can Leave Employees Dazed and Confused about their Rights

Workplace drug testingMany states have decriminalized marijuana, whether generally or when used for medical reasons. But such changes present challenges for companies and their employees when it comes to balancing workplace concerns and employee rights. The latest marijuana issue employers may need to consider is called “microdosing.”

Rebecca Greenfield in her article, “The Case for Eating Weed at Work, ” explains the recent microdosing trend :

With recreational marijuana now legal in eight states and the District of Columbia, users have gravitated to low-dose edibles, such as brownies and mints with THC content of fewer than 5 milligrams—low enough for a manageable high for first-time users …

Microdosing refers to regularly taking small amounts of drugs—generally, hard-to-get and illegal psychoactive ones, such as LSD or psychedelic mushrooms—throughout the day to boost creativity. Taken in such small quantities, the drugs don’t make users trip. Rather, people claim the drugs improve their concentration, problem-solving abilities, creativity, and productivity and reduce their anxiety.

Marijuana Use in the Michigan Workplace

Michigan is one state that has decriminalized marijuana for medical reasons. Specifically, under Michigan’s Michigan Medical Marijuana Act (MCL 333.26421) “a certified user may not be subjected to any “penalty of any manner, or denied any right or privilege, including but not limited to civil penalty or disciplinary action by a business.”

However, employees have not fared well under the statute. Consider for example in Casias v. Wal-Mart Stores, Inc. (2012) the employee was a certified medical marijuana user. He had sinus cancer and an inoperable brain tumor. He later failed a drug test and was fired.

The plaintiff then sued for wrongful discharge. He claimed that his marijuana use was not illegal under Michigan’s Medical Marijuana Act. The Sixth Circuit disagreed. It concluded that Michigan’s medical marijuana statute provided only a “defense to criminal charges or other adverse state action,” and that applying it to claims against private employers would be unduly broad.

Disciplining Employees for Marijuana Use

Legally, employers will continue to have significant leeway for punishing marijuana use in the workplace. Even if its use is permitted under state law, marijuana remains an illegal Schedule I drug under the federal Controlled Substances Act.  And employees using the drug are not currently afforded protections under the Americans with Disabilities Act.

This means whether your state law permits recreational or medicinal marijuana use, you still generally have the right to test your employees for drug use and discipline them if their marijuana use violates your drug-free workplace policy. However, consult with your company’s employment attorney because there are nuances to employment-related drug testing. For instance, recent changes to OSHA’s drug testing and its enactment of an anti-retaliation rule alters the circumstances when drug testing can be conducted. This rule is intended to reemphasize the protections for employees to report injury and illnesses without fear of retaliation.

For instance, recent changes to OSHA’s drug testing and its enactment of an anti-retaliation rule alters the circumstances when drug testing can be conducted. This rule is intended to reemphasize the protections for employees to report injury and illnesses without fear of retaliation.

For more information about complying with federal and Michigan employment laws and your rights under those laws, contact employment attorney Jason Shinn. Since 2001, he’s worked with clients to address employment law matters, and litigating those issues in federal and Michigan courts.

Trade Secret Misappropriation Lawsuit Dismissed – What Your Business Can Learn

Misappropriation company informationTrade secret misappropriation lawsuits continue to be a potent offense for businesses against departing employees seeking to compete wrongfully. But as with any offense, it is critical to pay attention to fundamentals to be successful.

A recent federal district court opinion illustrates this point (link to memorandum and opinion provided below). Specifically, Raben Tire Co., LLC sued two of its former employees, Dennis McFarland and Christopher Bates, and their new employer, CBA Tire Inc. and Antioch Tire, Inc., d/b/a Tredroc Tire. Raben Tire sued for misappropriation of trade secrets under the Defend Trade Secrets Act of 2016 (DTSA), 18 U.S.C. § 1831 et seq., and other state law claims.

In response, Defendants moved to dismiss the complaint. Defendants argued that Raben Tire Co. did not “plausibly” allege how the information in question qualifies as a ‘trade secret’ under federal law” and, therefore, the claim should be dismissed. Defendants also argued the Court should decline to exercise supplemental jurisdiction on the remaining state-law claims if the federal claim was dismissed.

The Court agreed with Defendants. In concluding this, the judge reasoned (Memorandum and Order),

Other than labeling that information as ‘confidential’ in its complaint … Raben Tire Co. has not alleged any steps that it took to protect the information from disclosure.

* * *

In this case, Raben Tire Co.’s complaint is entirely devoid of any allegations of how it protected the information in question from dissemination. There is no suggestion, for example, that either McFarland or Bates were restricted from sharing that information due to a nondisclosure agreement.

Trade Secret Litigation Considerations

Two points jump out. First, before filing a trade secret lawsuit, it is important for a company to make sure it has information that qualifies as “trade secret.” This is done by working closely with the company and its managers to understand the type of information involved in the litigation and whether reasonable steps were taken to protect the subject information.

Second and similar to the Raben case, I’ve had significant success over the years defending trade secret misappropriation claims by attacking the alleged trade secrets. For example, our client and his new company were sued in a federal lawsuit for trade secret misappropriation and other federal and Michigan claims. We aggressively focused on attacking the claimed trade secrets. By the time the case went to trial in December 2016, we had eliminated numerous categories of information from trade secret consideration. This also resulted in eliminating over 80% of the damages Plaintiff had identified during the litigation.

The bottom line is that a plaintiff alleging misappropriation of trade secrets under the federal DTSA or Michigan trade secret law must be able to substantiate that the stolen information meets the statutory definition of what is a trade secret. This standard is typically not demanding at the pleading stage, but Raben shows if you aren’t careful problems may arise. But during the litigation trade secrets may be whittled away substantially, even if not entirely.

For more information about federal or Michigan trade secret law, contact attorney Jason Shinn. He has represented clients in federal and state courts in such matters. He also collaborates with businesses and their management to investigate suspected misappropriation of confidential business information and other wrongful conduct.

Employment Discrimination in the Application Process – You Never Know Who is Watching

Employment DiscriminationHere’s a good reason for why employers need to have and stick to a standard job application procedure: A woman in Ypsilanti,
Michigan posted on Facebook a textbook example of employment discrimination.

You can read the post in its entirety. But the short story is that she was at Big Boy when a black man asked if the restaurant was hiring. He was told no. However, when the white woman later asked if the restaurant was hiring she was told the exact opposite and given an application.

It doesn’t take an HR genius to know that, if true, this is the kind of event that gives rise to unlawful discrimination claims and a lot of bad press. And if this is news to your business, you need to get a hold of an employment attorney ASAP.

Federal and Michigan Anti-Discrimination Laws

This is because, under Title VII of the Civil Rights Act of 1964, employers are prohibited from discriminating against applicants based on race, sex, color, religion or national origin. See 42 U.S.C. § 2000e-2(a)-(b). And as amended by the Pregnancy Discrimination Act, Title VII’s prohibition on sex discrimination extends to pregnancy or childbirth (42 U.S.C. § 2000e(k).

Similarly, under Michigan law, an employer cannot “[f]ail or refuse to hire or recruit … an individual … because of religion, race, color, national origin, age, sex, height, weight, or marital status. MCL 37.2202.

Consistency is Needed to Limit Discrimination Charges 

Employers are permitted to reject unsolicited or walk-in applicants, provided this policy is uniformly applied and not used for discriminatory purposes. But the key phrase is “uniformly applied.”

Accepting this Facebook post at face-value, this is anything but uniform and under the circumstances would likely be the type of discrimination that can get an employer sued – and rightfully so. The bottom line is that employers must ensure that they comply with federal, state and local nondiscrimination laws and do not use discriminatory criteria during recruitment.

It is, therefore, important for a business to have in place and follow non-discriminatory employment selection strategies. These strategies, if applied consistently to any applicant provide a line of defense against negligent hiring, discrimination and other claims.

For more information about complying with federal and Michigan employment laws, including improving your current policies and procedures, contact employment attorney Jason Shinn. Since 2001, Jason has collaborated with employers to implement best practices in all phases of the employment cycle.

An Employer’s First and Best Line of Defense to Discrimination Claims

Defending Discrimination LawsuitsA recent Michigan Court of Appeals decision highlights the important role employment agreements can play in defending against employment discrimination lawsuits.

Specifically, in Sams v Common Ground, when William Sams was hired by Common Ground he signed an employment contract. In that contract, Sams agreed that he would not sue the company one year after his employment ended and that waived any statute of limitations to the contrary.

Federal and Michigan employment laws are subject to statutes of limitations. For example, the statute of limitations for Michigan’s Persons with Disabilities Civil Rights Act (MCL 37.1101 et seq.) is three years. A statute of limitations refers to the time frame an individual has from the date the alleged action occurred to the date that a lawsuit must be filed. If a lawsuit is not filed within the statute of limitations, it will be barred.

Despite this agreement, Sams later sued Common Ground 2½ years after his employment ended. Sams seemed to argue that because his position and job duties had changed after signing the contract, it no longer applied. The court rejected this argument noting that while his job conditions were altered, his employment with the company never ended. Thus, his original contract applied to the new position.

The Court also reaffirmed well-established Michigan law that an employer and employee may alter the statute of limitations that would normally apply to a discrimination claim. This includes shortening the time a plaintiff has to file a discrimination lawsuit. Only in limited circumstances will a court not enforce such an agreement. Examples include where the shortened limitation violates the law, public policy, or where traditional contract defense, such as unconscionability, may exist.

Employer Considerations – First and Best Line of Defense

From a company perspective, shortening the statute of limitations should be a no-brainer. The longer an employee’s statute of limitations is, the larger the window your company is exposed to liability. Obviously, it is smart business to decrease risks wherever possible. And it is an inexpensive line of defense to later attack an untimely discrimination lawsuit. It is important, however, to have your employment agreements reviewed by experienced legal counsel to avoid having it later be invalidated.

For example, agreements to shorten the statute of limitations may raise different issues under federal anti-discrimination laws. The Equal Employment Opportunity Commission, for instance, has challenged shortening of the limitations period for federal claims as unlawful.

Employees – Know when the clock runs out

For individuals who may have been discriminated against, consider whether you are “on the clock,” regarding when you must sue or pursue a discrimination charge. On this point, we’ve seen instances where our clients – employers and employees – agreed to shorten a statute of limitations down to as little as six months. And sometimes, this agreement was buried in the fine print of an application that was likely overlooked or forgotten by the employee.

For more information about reviewing your company’s employment agreements and policies, contact employment attorney Jason Shinn. Since 2001, he regularly assists employers and management in complying with federal and Michigan employment laws, as well as investigating employment discrimination claims or defending against them in federal or Michigan courts.

Uber’s Autonomous Vehicle Development Collides with Federal Trade Secret Lawsuit

Autonomous vehicle trade secretsOn Feb. 23, 2017, Waymo, the Alphabet Inc. company formed from Google’s self-driving project, sued Uber Technologies, Inc. and its related entities, Ottomotto LLC, and Otto Trucking LLC. The suit is for violations under the federal Defense of Trade Secrets Act and other related claims. 

Waymo alleges its former engineer, Anthony Levandowski, took valuable intellectual property relating to LiDAR that is essential to its autonomous driving vehicle program and then resigned without notice. Levandowski then passed the technology off to Uber.

While Uber and the other defendants have yet to respond with their version of the story, the lawsuit sets forth a detailed and damning account of unfair competition and theft by a former employee. According to Waymo’s suit (Waymo LLC v. Uber Technologies Complaint), Levandowski:

Waymo has uncovered evidence that Anthony Levandowski, a former manager in Waymo’s self-driving car project – now leading the same effort for Uber … searched for and then installed specialized software onto his company-issued laptop in order to access the server that stores these particular files. Once Mr. Levandowski accessed this server, he downloaded the 14,000 files, representing approximately 9.7 GB of highly confidential data. Then he attached an external drive to the laptop for a period of eight hours. He installed a new operating system that would have the effect of reformatting his laptop, attempting to erase any forensic fingerprints that would show what he did with Waymo’s valuable LiDAR designs once they had been downloaded to his computer.

* * *

While Waymo developed its custom LiDAR systems with sustained effort over many years, Defendants leveraged stolen information to shortcut the process and purportedly build a comparable LiDAR system in only nine months.

A few observations about this suit.

  • First, the Defend Trade Secrets Act (DTSA), 18 U.S.C. 1832, et. seq., was signed into law 0n May 11, 2016, by President Obama. It creates a federal civil cause of action for trade secret misappropriation. Since its enactment, there have been an increasing number of DTSA suits filed. This trend will continue in light of the remedies and other enforcement procedures under the DTSA.
  • Second, Alphabet and Google were on the receiving end of a DTSA lawsuit. Both were sued in June 2016, in California federal court for allegedly violating the DTSA. However, that claim was recently dismissed (See order from Space Data Corp. v. Alphabet, Inc. lawsuit).
  • Third, Waymo’s suit against Uber caps a horrendous month for the ride-sharing company. Specifically, Uber made headlines for hiring a notorious gun-toting “preacher” who was No. 2 on Al-Qaeda’s hit list and damning revelations about it handled charges of sexual harassment (See Hiring the No. 2 Guy on Al-Qaeda’s Hit List: An Uber-Example of Limitations in Employee Background Checks and An Uber Example For How Not to Respond to Sexual Harassment, respectively). Headlines like these above are not good for business. But the DTSA lawsuit is especially troubling if the allegations are proven true. Besides significant damages, it could set back Uber’s autonomous vehicle plans indefinitely.
  • Fourth, let’s assume Uber had no involvement with the initial misappropriation. However, it still faces legal liability and risks to its business operations even if it was not initially involved in the wrongful conduct. For example, a few years ago, I represented several engineers sued for allegedly taking source code and confidential information that was later used in their new employer’s competing software. That software was marketed as a “game-changer” prior to its release and intended to replace the new employer’s flagship product. The new employer hired the engineers for their experience – not because they had or were expected to bring with them any wrongfully acquired trade secrets or other confidential information. Even so, the release was delayed indefinitely and the competitor was facing substantial damages under various legal theories for the actions of the engineers. Mission accomplished if you were the former employer.

For this reason, your business should have in its hiring procedure checkpoints and procedures to warn and protect against new hires from using confidential business assets of a former employer. Such measures go along way towards avoiding litigation or limiting liability.

For more information about trade secret protection, contact attorney Jason Shinn. Since 2001, he has worked with businesses to protect trade secret and confidential business information. This collaboration includes drafting enforceable non-compete, non-solicitation, and confidentiality agreements and suing for trade secret misappropriation claims in state and Michigan courts Also, Mr. Shinn works with engineers and programmers involved with autonomous vehicle technology with respect to negotiating and assessing employment, confidentiality, and licensing agreements.