'Poetic justice': Why a common part of employee contracts could keep the Google-Uber case from going to trial

Google's policy forcing its employees to resolve grievances with the company in private arbitration, rather than in the public courts, could be about to come back and bite it.

That's because Google's self-driving car spinoff Waymo is in a high-stakes legal battle involving one of its former engineers and the arch-competitor he now works for - Uber.

Uber is trying to keep the case from ever going to a jury trial, and its main justification is the mandatory arbitration clause in Google's employment contract.

The judge in the case appears to be relishing the rich irony of the situation, telling the lawyers representing Google's spinout during a court hearing on Thursday that it would be "poetic justice" if the litigation wound up in private arbitration.

Arbitration clauses are increasingly common in everything from bank and credit card contracts to employment agreements, and Google is hardly alone in using them.

Big companies in particular like private arbitration because it lets them resolve sensitive disputes with employees, about anything from sexual harassment to stealing confidential information, outside of the public's eye. Some legal experts also believe that arbitration forums tend to favor corporations over employees.

Behind closed doors

As it turns out Google, has itself actually brought a separate case in arbitration against the very same former employee at the center of the current Uber dispute. Anthony Levandowski, the former Google engineer who joined Uber, is currently in arbitration with Google for allegedly trying to poach employees.

But Google spinout Waymo would prefer that its latest legal action, alleging that Levandowski stole 14,000 files before he left the company, go to a jury.

That's not flying with Uber, which insists that closed-door arbitration is required because the case directly concerns Levandowski's actions while at Google.

"Waymo doesn't get to pretend these contracts don't exist in order to avoid arbitration," said Uber's attorney, Hamish Hume. "Waymo chose to have a contract, that talks about information, about inventions, and about who owns what."

Uber's lawyers have argued that Google has made its arbitration agreement overly broad when it says they have to arbitrate disputes with anyone as it relates to an individual's employment. Waymo's lawyer, Charles Verhoeven, tried to clarify that "anyone" meant "any Google employee", but Judge Alsup was quick to shut that argument down with a slap on the wrist for all companies.

"You're suddenly scrambling"

"See, here's what happens with these big companies. Your company wanted to force everyone into arbitration, and sets the broadest arbitration agreements it can," Judge William Alsup said during Thursday's court hearing. "... You're suddenly scrambling."

While any disputes between Waymo and Levandowski would have to be bound by the employment contract, Waymo did not sue Levandowski directly; rather, it sued Uber and the companies founded by Levandowski that were acquired by Uber, including Otto. Now the judge has to decide whether the overly-broad arbitration agreement covers this case since Levandowski's actions are intrinsically tied to the case.

"Google and Waymo have an arbitration agreement with Mr. Levandowski such that if Mr. Levandowski wanted to bring a claim against some third party, arising out of his employment, he would have to bring it in arbitration," Alsup said. "Wouldn't there be poetic justice at a minimum to say Waymo has to do the same thing? that it's reciprocal?"

While it could be poetic justice, Alsup's question was largely hypothetical and the federal judge has not decided whether the complaints about trade secrets and intellectual property theft will go to arbitration.

"We believe Uber should not be permitted to avoid the jurisdiction of the court and move this case to a private arbitration. We respectfully wait for the court's views on this important issue," a Waymo spokesperson said after the hearing.

Regardless of Alsup's decision, the claims of patent infringement would move forward since they don't involve Levandowski's actions. But having that arbitration agreement, a common clause in so many contracts, could mean that the most controversial claims in the high-stakes case could be resolved in secret.

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