[00:00:03] Speaker 06:
Okay, the next argued case who reached us on motions is number 172130, Waymo LLC against Uber Technologies.

[00:00:09] Speaker 06:
Mr. Heumann.

[00:00:09] Speaker 06:
Good morning, Your Honor.

[00:00:11] Speaker 06:
It's me, Mr. Heumann.

[00:00:12] Speaker 06:
Good morning, Your Honor.

[00:00:13] Speaker 06:
It's me, Mr. Heumann.

[00:00:14] Speaker ?:
Good morning, Your Honor.

[00:00:17] Speaker ?:
It's me, Mr. Heumann.

[00:00:18] Speaker 03:
Good morning, Your Honor.

[00:00:18] Speaker 03:
It's me, Mr. Heumann.

[00:00:19] Speaker 03:
Good morning, Your Honor.

[00:00:19] Speaker 03:
It's me, Mr. Heumann.

[00:00:20] Speaker 03:
Good morning, Your Honor.

[00:00:20] Speaker 03:
It's me, Mr. Heumann.

[00:00:21] Speaker 03:
Good morning, Your Honor.

[00:00:22] Speaker 03:
It's me, Mr. Heumann.

[00:00:22] Speaker 03:
Good morning, Your Honor.

[00:00:23] Speaker 03:
It's me, Mr. Heumann.

[00:00:24] Speaker 03:
Good morning, Your Honor.

[00:00:25] Speaker 03:
It's me, Mr. Heumann.

[00:00:25] Speaker 03:
Good morning, Your Honor.

[00:00:25] Speaker 03:
It's me, Mr. Heumann.

[00:00:26] Speaker 03:
Good morning, Your Honor.

[00:00:27] Speaker 03:
It's me, Mr. Heumann.

[00:00:28] Speaker 04:
Good morning, Your Honor.

[00:00:29] Speaker 04:
It's me, Mr. Heumann.

[00:00:30] Speaker 04:
Good morning

[00:00:31] Speaker 04:
in a straight secret misappropriation claim against Uber.

[00:00:35] Speaker 04:
It has to prove conduct that constitutes a violation of the obligations under Mr. Lewandowski's employment agreements.

[00:00:47] Speaker 04:
They say that the conduct also violates other things, but it has to violate the agreements.

[00:00:55] Speaker 05:
Haven't they agreed that they're not going to rely on the agreement?

[00:00:58] Speaker 04:
They have said they're not going to.

[00:01:00] Speaker 04:
Of course, they then put the agreements, reference them in interrogatory responses, which is in our motion to supplement.

[00:01:07] Speaker 05:
Yes.

[00:01:07] Speaker 05:
But not the Lewandowski agreement by name, just generically.

[00:01:11] Speaker 04:
Correct.

[00:01:12] Speaker 04:
My point, Your Honor, is if you look at the agreements, they explicitly govern the subject matter at issue here.

[00:01:19] Speaker 06:
Why does that make you a party to the agreement?

[00:01:24] Speaker 06:
If you aren't deemed at least an equitable party,

[00:01:27] Speaker 06:
then how can you come under the agreement provisions?

[00:01:31] Speaker 04:
We don't claim to be a party, and we don't need to be a party.

[00:01:33] Speaker 04:
Under the California doctrine of equitable estoppel, we are entitled to raise the arbitration agreement, and they are stopped from arguing that we aren't a party.

[00:01:44] Speaker 02:
You know, that's an interesting question.

[00:01:47] Speaker 02:
I went to law school in California many, many years ago, and I seem to remember some maxims which I didn't find discussed here.

[00:01:54] Speaker 02:
Ones like

[00:01:56] Speaker 02:
he who seeks equity must do equity, and one may not come to equity with unclean hands.

[00:02:03] Speaker 02:
Neither side seems to have discussed that, but it seems to me that given the allegations that are made here, that may have a major impact on the determination of this case.

[00:02:15] Speaker 02:
That is still California law, is it not?

[00:02:18] Speaker 04:
It may be California law in general, equity, Judge Wallach.

[00:02:21] Speaker 04:
It hasn't been that doctrine has never been invoked in any of the

[00:02:26] Speaker 04:
arbitration, equitable estoppel cases that have arisen since the 11th Circuit started deciding them in the 1990s, and then they were adopted in the metal clad case, which was the first California case to hold that a party who's not a part of the contract may invoke the doctrine and may invoke the arbitration cost to compel arbitration, and there they were accused of egregious fraud, a conspiracy to commit fraud.

[00:02:52] Speaker 04:
And if the doctrine of unclean hands prevented a defendant who's not a signatory to an arbitration agreement from raising it, it would have prevented the defendants in metal clad.

[00:03:01] Speaker 04:
And it would have prevented the defendants, Your Honor, in two cases that are virtually identical to this.

[00:03:07] Speaker 04:
The Torbett case, decided by Judge DeVilla, in the order of... Identical?

[00:03:11] Speaker 06:
That's substantially different on its facts.

[00:03:14] Speaker 06:
However, you say virtually identical, and it didn't go your way, as I recall.

[00:03:21] Speaker 04:
It did go our way.

[00:03:22] Speaker 04:
Your Honor, Torbett and the CardioNet case, which was a district of Massachusetts decision applying California law, both addressed the following fact matter.

[00:03:32] Speaker 04:
An employee works for one company, is alleged to take trade secrets, in one case by downloading files, maybe in both cases, leaves, sets up his own company with other people, and then the first company sues the new company.

[00:03:50] Speaker 04:
And the company that's created, and that's what happened here, Anthony Lewandowski set up a company called Automoto.

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They are a defendant in this case.

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He is alleged to have downloaded trade secrets, taken it, and used it in his new company that he co-founded with others.

[00:04:05] Speaker 02:
Neither party seems to dispute the district court's fact findings.

[00:04:11] Speaker 02:
I'm not sure which fact findings you're referring to, Your Honor, but one finding is that... Well, any of them.

[00:04:15] Speaker 02:
Do you dispute any of the district court's factual findings?

[00:04:19] Speaker 02:
or any specific statements in way most summary of factual unrelevance.

[00:04:25] Speaker 04:
Your Honor, I don't believe the district court made factual findings in this decision.

[00:04:29] Speaker 04:
It made a legal decision based on the allegations in the complaint and, we believe erroneously, on this representation in court.

[00:04:37] Speaker 02:
You're right.

[00:04:38] Speaker 02:
There is not a separate findings of fact and conclusions of law.

[00:04:41] Speaker 02:
But there are statements of fact by the court.

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Do you disagree with any of them?

[00:04:47] Speaker ?:
Your Honor, we didn't.

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view the decision as setting forth findings of fact.

[00:04:52] Speaker 04:
It made a legal decision based upon the complaint and the representation in court that the judge solicited that they won't rely on the contract.

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Are you going to answer my question?

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I don't think we're appealing a finding of fact.

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We're appealing a legal decision.

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Do you disagree with any of the statements of fact in Waymo's

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statement of facts.

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Your Honor, I can't stand here and say I agree with every single thing they said in their factual summary.

[00:05:18] Speaker 02:
I didn't ask you to.

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I said, do you disagree with any of them?

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I can't say whether I do or not.

[00:05:25] Speaker 04:
I don't know.

[00:05:28] Speaker 06:
There is a body of California law with respect to the strength of the agreement to arbitrate.

[00:05:36] Speaker 06:
That's easy.

[00:05:38] Speaker 06:
That's not an issue.

[00:05:39] Speaker 06:
The question is the

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whether in fact there is an equitable exception.

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And the assorted facts in the California cases which have ended up deciding that there is not an equitable exception for various parties and so on, all on quite different facts, but on facts in which the equities seem to be as strong as the equities here because, and I think this is really the point,

[00:06:10] Speaker 06:
that Judge Wallach and all of us have been thinking about.

[00:06:14] Speaker 06:
There's no representation of disadvantage, as far as I can tell, in the district court as to making your case.

[00:06:25] Speaker 06:
It's solely that we ought to be entitled to tag along somehow on the separate contract between the employee and the ex-employer.

[00:06:38] Speaker 06:
And that's

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That's the difficulty that needs to be overcome on the principles of equity that it's unfair and that you wouldn't get a fair consideration because there are issues that couldn't be explored and so on.

[00:06:54] Speaker 06:
I haven't seen any of that.

[00:06:56] Speaker 06:
Whatever it is that Waymo may have said they are or aren't going to rely on in the district court, I don't think it's relevant to whether in fact equity entitles you

[00:07:09] Speaker 06:
to move out of the ordinary standard judicial approach.

[00:07:16] Speaker 04:
Yes.

[00:07:16] Speaker 04:
Your Honor, let me try to address that.

[00:07:17] Speaker 06:
Yes.

[00:07:18] Speaker 04:
In none of the cases that compel arbitration applying this doctor, both in California and elsewhere, in none of them did they look at unfairness to the non-signatory defendant, to the defendant who is in the position of Uber.

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I'll grant you that the name of the doctrine of equitable softball leads you to wonder where is the unfairness to the non-signatory defendant.

[00:07:48] Speaker 04:
But they never talk about that.

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And I think there's at least one case site I can give you.

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I'll have to check for a rebuttal that says that that's not the test.

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But none of them ever talk about it.

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What they talk about is that it is unfair for the signatory plaintiff to try to have it both ways.

[00:08:06] Speaker 05:
How do they have it both ways here?

[00:08:09] Speaker 05:
What you're talking about is the policy of relying on a contract in order to prove that someone did you wrong, while at the same time avoiding the arbitration clause in the contract.

[00:08:21] Speaker 05:
But I don't see anybody relying on the contracts here.

[00:08:24] Speaker 04:
So let me try to explain why we think they are.

[00:08:28] Speaker 04:
Nothing says they have to explicitly rely.

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They are implicitly relying on the contract 100%, Judge Scholl.

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100%.

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You cannot have a trade secret misappropriation claim of any kind.

[00:08:40] Speaker 04:
if the employee was committed to do what he did.

[00:08:44] Speaker 05:
If they lose based on that common law doctrine of loyalty in district court, then that ends that.

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But if they're saying we're not going to rely on the Lewandowski agreement to show his obligation, then

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What are you doing?

[00:09:03] Speaker 02:
Not only that, they have a conversion argument.

[00:09:05] Speaker 02:
They have a ton of arguments.

[00:09:06] Speaker 04:
Your honor, please urge the court, before the court, to read paragraph 3a of the contract.

[00:09:13] Speaker 04:
This is a prodigious inventor who had his own businesses.

[00:09:16] Speaker 04:
He had businesses before he went to Google.

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He had businesses while he was at Google.

[00:09:21] Speaker 04:
That's why he's got two agreements.

[00:09:22] Speaker 04:
They had paragraph 3a called inventions not assigned.

[00:09:27] Speaker 06:
Explain to me why the obligation to arbitrate

[00:09:31] Speaker 06:
between Lewandowski and his ex-employer, entitles now the successor to whatever it is, to move out, to avoid judicial process, and to move into that arbitration, which doesn't include any alleged transgressions of your client.

[00:10:01] Speaker 06:
or anything else that relates to the arbitration is the relationship between the employer and the ex-employee.

[00:10:10] Speaker 04:
Because in every case, and I can cite five to the court, in every single case where the plaintiff's claim against the defendant requires the plaintiff to prove conduct that would violate the obligations of a contract with an arbitration clause, arbitration is compelled, whether it's explicit or implicit.

[00:10:31] Speaker 06:
It doesn't eliminate that evidence, that situation from the presentation to the district court, a trial.

[00:10:41] Speaker 06:
If it did, that I think might be a different picture.

[00:10:45] Speaker 02:
Is there a conspiracy count in that complaint?

[00:10:49] Speaker 02:
No, not as such, but they clearly alleged a certain misconduct.

[00:10:52] Speaker 04:
I really want to try to finish explaining why the contract is in, inescapably relied on here.

[00:11:00] Speaker 06:
The contract addresses... Between those two?

[00:11:03] Speaker 06:
Between the parties to the contract?

[00:11:04] Speaker 04:
Yes.

[00:11:06] Speaker 04:
Yes, Your Honor.

[00:11:07] Speaker 06:
There's just no quibble about that.

[00:11:09] Speaker 04:
No, there is not.

[00:11:09] Speaker 04:
There's no quibble.

[00:11:10] Speaker 04:
Waymo is bound to the contract to Mr. Lewandowski.

[00:11:14] Speaker 04:
Uber is not a party.

[00:11:15] Speaker 04:
Automoto is not a party.

[00:11:17] Speaker 04:
There's no dispute about that.

[00:11:19] Speaker 04:
But there's also no dispute that those are the same facts in the following five cases, which I urge the Court to look at.

[00:11:26] Speaker 04:
CardioNet, both trade secret misappropriation cases by former employees who created companies who were not party to the contract, the companies were able to compel out of court.

[00:11:36] Speaker 05:
But of course, Corbett involved, the court there found that the contract with the arbitration clause was in fact at issue in the case that was in district court.

[00:11:46] Speaker 04:
Yes, so let me just rattle off the cases.

[00:11:49] Speaker 04:
The other ones are Uptown Drug, where they don't reference the contract.

[00:11:52] Speaker 04:
They try to be cute about it.

[00:11:54] Speaker 04:
Please look at page 1185, where the court says,

[00:11:57] Speaker 04:
You're making implicit references to the contract.

[00:11:59] Speaker 06:
But they said that you were... That didn't go your way, however, Uptown Drug.

[00:12:04] Speaker 04:
Yes, it did.

[00:12:04] Speaker 04:
They kept you at arbitration in every one of the cases I referenced.

[00:12:07] Speaker 06:
There was a general statement about equitable estoppel in that case.

[00:12:11] Speaker 04:
Yes, they kept you at compel arbitration in Torbett and in Cartier in that trade secret cases with employees.

[00:12:17] Speaker 04:
Uptown Drug, a trade secret misappropriation case involving commercial relationship between a retail pharmacy and CVS.

[00:12:24] Speaker 04:
They tried to avoid the contract.

[00:12:26] Speaker 04:
They didn't talk about the contract.

[00:12:28] Speaker 04:
The court says on page 1184, you can't get around the fact that you gave trade secret information to a person pursuant to a contract.

[00:12:35] Speaker 04:
You're complaining that that person gave it to six other people, and that that's a breach, and you're trying not to talk about the contract.

[00:12:43] Speaker 04:
And they said two things that are applicable here.

[00:12:45] Speaker 04:
On page 1184, they said that contract expressly governs whether the person you gave the trade secrets to was entitled to give it to someone else or not.

[00:12:55] Speaker 04:
It governs that.

[00:12:56] Speaker 04:
I don't know what it says, good or bad.

[00:12:58] Speaker 04:
It doesn't matter if it's good or bad.

[00:12:59] Speaker 04:
That's a merits question.

[00:13:01] Speaker 04:
But it governs the subject matter.

[00:13:03] Speaker 04:
It governs the subject matter.

[00:13:05] Speaker 04:
And then they said on page 1185, you don't get out of it by not explicitly referencing the complaint.

[00:13:10] Speaker 04:
You are implicitly referencing the complaint.

[00:13:13] Speaker 05:
But they here said expressly, they are not going to rely on that.

[00:13:17] Speaker 04:
Your Honor, if they would stipulate that the contract permits what Lewandowski did, and they're going to rely on common law and trade secret law, we'll go forward.

[00:13:27] Speaker 04:
They can't.

[00:13:28] Speaker 04:
Because if the contract tells you... Now you're asking them to... But that's the point.

[00:13:37] Speaker 04:
That's the point.

[00:13:37] Speaker 04:
That's a frivolous argument.

[00:13:39] Speaker 04:
Your Honor, let me try to explain it better.

[00:13:42] Speaker 04:
Let me try to explain it better.

[00:13:44] Speaker 04:
In order to know whether Mr. Lewandowski breached a common law duty or to breach a statutory trade secret law, you have to look at whether or not the contract

[00:13:57] Speaker 04:
prohibit him from doing this because it governs which inventions he owned and which inventions Google owned.

[00:14:04] Speaker 04:
He had inventions.

[00:14:06] Speaker 04:
Appendix 334 lists out inventions in the contract that he owned and that he did not assign to Google.

[00:14:15] Speaker 04:
So you have to look at the contract.

[00:14:17] Speaker 04:
It governs it.

[00:14:18] Speaker 04:
It says what his confidentiality obligations are.

[00:14:21] Speaker 04:
It says whether he has to return files.

[00:14:23] Speaker 02:
Let me ask you a fact question.

[00:14:24] Speaker 02:
Do you agree he downloaded those 14,000-something documents?

[00:14:29] Speaker 04:
Your Honor, to be honest with you, no one knows what really happened.

[00:14:34] Speaker 04:
So he hasn't denied it.

[00:14:37] Speaker 04:
We don't have 100% confidence, but we fully understand what exactly happened with the downloading, when exactly he downloaded it, whether he took it when he downloaded it.

[00:14:50] Speaker 06:
OK, let's hear from the other side.

[00:14:52] Speaker 04:
We genuinely do not understand.

[00:14:54] Speaker 04:
There's also a huge dispute of whether, if he did it, why he did it.

[00:14:57] Speaker 04:
And we have presented evidence of him saying that he did do some downloads, and that the reason he did it was so he would have information to protect his ability to negotiate back with Google over whether or not he was entitled to the full bonus that he was hoping for, some of which was paid in August.

[00:15:15] Speaker 04:
Now, if he did that, that may have been misconduct by him.

[00:15:19] Speaker 04:
may be very serious, but nothing that has anything to do with the trade secrets coming to Uber.

[00:15:24] Speaker 04:
My point is not that the merits of the contract, I'm not trying to litigate the merits of the case and say the contract permitted this.

[00:15:33] Speaker 04:
If I were arguing that, maybe it would be frivolous.

[00:15:35] Speaker 04:
What I am saying is, the contract governs the subject matter.

[00:15:40] Speaker 04:
And in order to determine whether a person has violated trade secrets and taken trade secrets they weren't supposed to,

[00:15:46] Speaker 04:
If there's a written contract, if the employer chose to have a written contract that explicitly governs that subject matter, you have to look at that to determine whether or not they did anything wrong.

[00:15:57] Speaker 06:
Now, is that arbitration proceeding or is it awaiting the resolution of these motions?

[00:16:03] Speaker 04:
The litigation over trade secrets is proceeding.

[00:16:06] Speaker 06:
Not the litigation.

[00:16:07] Speaker 06:
We know that's proceeding.

[00:16:08] Speaker 06:
Is the arbitration proceeding?

[00:16:10] Speaker 04:
The arbitration is proceeding.

[00:16:11] Speaker 04:
I believe there's a schedule for a hearing in April.

[00:16:13] Speaker 04:
It's proceeding relatively expeditiously.

[00:16:16] Speaker 04:
They've reserved their right to add the trade secret claims.

[00:16:19] Speaker 04:
We've said we'll go as fast as they want if we are sent to arbitration.

[00:16:23] Speaker 05:
And the district court litigation, that's moving at a quicker pace, right?

[00:16:27] Speaker 04:
Yes, it is set for trial in October.

[00:16:30] Speaker 06:
Okay, let's hear from the other side, but we'll save you rebuttal time.

[00:16:33] Speaker 04:
Thank you.

[00:16:39] Speaker 06:
Mr. Verhoeven.

[00:16:41] Speaker 01:
Good morning, Your Honor.

[00:16:42] Speaker 01:
May I please the court?

[00:16:43] Speaker 01:
Hoover is bringing this appeal

[00:16:46] Speaker 01:
to enforce a contract it didn't sign.

[00:16:49] Speaker 01:
Waymo didn't agree with Uber, its competitor, with arbitrary claims.

[00:16:57] Speaker 01:
As your honors have noted, the rule, the general rule, is if you didn't sign or agree to an arbitration provision, it's not applicable to you.

[00:17:08] Speaker 01:
You're entitled to use the federal courts.

[00:17:11] Speaker 06:
Well, then there have been

[00:17:13] Speaker 06:
There's been a discussion, hasn't gone heavily in their favor, of equitable principles, as in any case, where you transcend the general rule and try and figure out what's the right thing to do.

[00:17:29] Speaker 01:
That's correct, Your Honor.

[00:17:30] Speaker 02:
And while you're discussing equity, answer my question.

[00:17:34] Speaker 02:
Why didn't you argue unclean hands or that he who does equity must?

[00:17:41] Speaker 01:
A couple of reasons, Your Honor.

[00:17:44] Speaker 01:
We didn't expressly argue unclean hands.

[00:17:47] Speaker 01:
We don't have it as an expressly complaint.

[00:17:51] Speaker 01:
The facts would support that.

[00:17:53] Speaker 01:
But we have a certain trade secret with appropriations, our client.

[00:17:57] Speaker 02:
No, I mean in response to their equitable argument because they're making an argument in equity.

[00:18:03] Speaker 02:
Yes.

[00:18:04] Speaker 02:
And a response to an argument in equity is you can't make it because you have unclean hands.

[00:18:08] Speaker 02:
That's true, Your Honor.

[00:18:10] Speaker 02:
But our primary position

[00:18:11] Speaker 01:
is that the exception that Judge Newman was referring to is not a general equitable doctrine.

[00:18:22] Speaker 01:
It's not who's more equitable.

[00:18:25] Speaker 01:
It is very specific and very limited because the right to the federal court system is really important.

[00:18:32] Speaker 01:
And if you didn't agree to waive that right, then

[00:18:37] Speaker 01:
You can't be compelled under the provisions of the Constitution.

[00:18:40] Speaker 02:
You're missing my point, counsel.

[00:18:42] Speaker 02:
I'm sorry.

[00:18:42] Speaker 02:
Which is, it's not a who's more equitable, it's that unclean hands is a complete bar to equitable relief.

[00:18:52] Speaker 02:
So that if they're seeking equitable relief, that is to say equity permits us to assert this arbitration, it is a complete bar under California laws, I recall it

[00:19:06] Speaker 02:
from 40 years ago if they have unclean hands?

[00:19:12] Speaker 01:
You're absolutely right, Your Honor.

[00:19:14] Speaker 01:
And the facts would totally support that in this case.

[00:19:18] Speaker 01:
By the way... Then why did you argue it?

[00:19:22] Speaker 01:
We were focused on delimited equitable, soluble doctrine.

[00:19:25] Speaker 01:
Perhaps we should have, Your Honor.

[00:19:27] Speaker 01:
The facts certainly would support it.

[00:19:30] Speaker 01:
By the way, as to the question about downloads,

[00:19:35] Speaker 01:
They have admitted it.

[00:19:38] Speaker 01:
The former CEO of their company has testified.

[00:19:42] Speaker 05:
What company are you talking about?

[00:19:44] Speaker 05:
Uber.

[00:19:45] Speaker 01:
Okay.

[00:19:46] Speaker 01:
Travis Kalanick has testified at that position that I took that he was told by Lewandowski that he did download files.

[00:20:01] Speaker 01:
To say we don't know at this point, it is not disputed.

[00:20:06] Speaker 01:
But recent testimony has shown that there was inequitable conduct here.

[00:20:11] Speaker 01:
But going to the limited exception of equitable estoppel, it is very limited.

[00:20:20] Speaker 01:
And basically, it says if Waymo was to rely on the Lewandowski Employment Agreement, maybe, for example, to say,

[00:20:31] Speaker 01:
The agreement says you can't take our confidential information, and therefore there's a breach of contract.

[00:20:37] Speaker 01:
Then they'd have an argument in this equitable estable that the arbitration clause would then apply.

[00:20:44] Speaker 01:
But we are not making that argument.

[00:20:47] Speaker 01:
Our claims are for trade secret misappropriation, and they're against a different party.

[00:20:51] Speaker 01:
They're against Uber.

[00:20:52] Speaker 01:
And we're alleging that Uber has misappropriated our trade secrets.

[00:20:56] Speaker 01:
The fact that the source of those trade secrets is a former employee

[00:21:01] Speaker 01:
is not pertinent to the doctrine of equitable and stable.

[00:21:06] Speaker 01:
The whole equity in this limited exception is that it would be inequitable for a party to rely on a contract provisions in its favor as a non-signatory, but be able to avoid the arbitration provision in that contract.

[00:21:22] Speaker 01:
Here, there's no question that we're not relying.

[00:21:26] Speaker 06:
But they're not trying to avoid the arbitration

[00:21:30] Speaker 06:
between Waymo and Lewandowski saying that they should be part of that and that should be how these disputes are resolved by that arbitrator.

[00:21:41] Speaker 01:
Well, if that's their argument, it's contrary to law.

[00:21:45] Speaker 01:
The law is if you're non-segutory, you can't be compelled to an arbitration agreement you didn't sign.

[00:21:51] Speaker 01:
And they don't challenge that.

[00:21:55] Speaker 01:
They accept that's the law.

[00:21:56] Speaker 01:
And all they point to, the only thing they point to, is this limited exception for equitable estoppel.

[00:22:05] Speaker 01:
And that is the doctrine under which, if you rely on a contract that contains an arbitration clause, you might have an argument that equity requires you to be

[00:22:20] Speaker 01:
bound by the arbitration.

[00:22:21] Speaker 05:
Now, they argue here that you are relying on the contract.

[00:22:23] Speaker 01:
But we're not.

[00:22:25] Speaker 01:
If you look at it, you can read the complaint yourself.

[00:22:27] Speaker 01:
I mean, there's no breach of contract claim.

[00:22:29] Speaker 01:
We're not.

[00:22:30] Speaker 01:
We never mentioned 11,000.

[00:22:31] Speaker 02:
But what they're saying is, if you hadn't had that contract, you never would have been an employee.

[00:22:39] Speaker 01:
Well, that's not relevant to anything on the effort board.

[00:22:42] Speaker 01:
That is their argument.

[00:22:44] Speaker 01:
It's hard to tell what their argument is.

[00:22:46] Speaker 01:
Earlier, they relied on the opening brief, they relied on the complaint.

[00:22:50] Speaker 01:
And then we pointed out that the complaint doesn't say anything about that contract.

[00:22:53] Speaker 01:
And then in their reply, they didn't re-argue that at all.

[00:22:56] Speaker 01:
Instead, they said that they mischaracterized our argument and said that we were making an argument that you must expressly rely, and that's not the law.

[00:23:06] Speaker 01:
We never argued that.

[00:23:07] Speaker 05:
Let me ask you, one of the things they say is that you can't rely just on the common law doctrine.

[00:23:12] Speaker 05:
You're not going to be able to prove your case with just common law.

[00:23:14] Speaker 05:
You're going to have to rely on those appointment agreements.

[00:23:16] Speaker 05:
How do you respond to that?

[00:23:18] Speaker 01:
That's contrary to law as well.

[00:23:20] Speaker 01:
As Your Honors know, the Federal Arbitration Act is not applicable to a non-executory.

[00:23:27] Speaker 01:
You have to go to state law and look at the relevant contract and related doctrines under California law in this case.

[00:23:35] Speaker 01:
And California has

[00:23:37] Speaker 01:
clearly held in the, I think it was called the Wayne Key case, that the duty of loyalty is separate and aside from a contract.

[00:23:48] Speaker 01:
And the only way it doesn't apply is if the contract specifically and expressly addresses the duty of loyalty and says it doesn't apply.

[00:23:57] Speaker 01:
If the contract doesn't mention it under California law, that means the duty is still there.

[00:24:03] Speaker 01:
And as Judge Walch said,

[00:24:05] Speaker 01:
The trade secret statutes just requires that you've got the trade secrets with improper means.

[00:24:14] Speaker 01:
So beyond the duty of loyalty, it could be conversion.

[00:24:18] Speaker 01:
It could be misrepresentation.

[00:24:20] Speaker 01:
These are examples in the case law of obtaining trade secrets by improper means.

[00:24:24] Speaker 01:
It could be civil conspiracy.

[00:24:26] Speaker 01:
Well, a lot of different things.

[00:24:27] Speaker 01:
We pointed to the duty of loyalty because it's the most obvious thing.

[00:24:34] Speaker 01:
I hope that answers your question.

[00:24:35] Speaker 05:
It does.

[00:24:36] Speaker 05:
It does.

[00:24:36] Speaker 05:
And just quickly, your adversary was talking about the Uptown case quite a bit during an argument.

[00:24:44] Speaker 05:
How would you distinguish that case?

[00:24:45] Speaker 05:
Was that a case where there was reliance on the contract?

[00:24:48] Speaker 01:
In the Uptown case, the complaint was against both... Well, let me back up.

[00:24:56] Speaker 01:
The Uptown case involved a pharmacy group and a

[00:25:02] Speaker 01:
parent company Caremark RX, they merged together.

[00:25:07] Speaker 01:
And the contract with the arbitration clause was between Uptown Drug and one of those two defendants, Caremark RX.

[00:25:22] Speaker 01:
So one of the defendants was a signatory, first of all.

[00:25:27] Speaker 01:
Uptown Drug and Caremark RX were signatories to the contract that

[00:25:32] Speaker 01:
the arbitration clause.

[00:25:34] Speaker 01:
That's not this case.

[00:25:36] Speaker 01:
Moreover, the supposed non-signatory had merged with the signatory.

[00:25:44] Speaker 01:
And they had contractual relationships between the two that would require, in order for the retail pharmacy to have obligations, to bring in Caremark Rx.

[00:25:58] Speaker 01:
So necessarily, well first, number one,

[00:26:02] Speaker 01:
One of the defendants was a signatory.

[00:26:06] Speaker 01:
Number two, in order to get the other defendant to be liable, they would have to invoke the contract that contained the arbitration clause.

[00:26:14] Speaker 01:
So it's a completely different set of facts than in our case.

[00:26:19] Speaker 01:
I couldn't address some of the other cases that your honors would like.

[00:26:23] Speaker 01:
I mean, the Torbett case that they addressed isn't even good law.

[00:26:31] Speaker 01:
The Torber case did not invoke the current standard under Goldman for equitable estoppel.

[00:26:39] Speaker 01:
It didn't even mention California law.

[00:26:41] Speaker 01:
It didn't mention Goldman.

[00:26:42] Speaker 01:
It didn't mention Murphy.

[00:26:43] Speaker 01:
It didn't mention the Federal Court cases applying California law.

[00:26:48] Speaker 01:
It's completely irrelevant.

[00:26:50] Speaker 01:
Non-precedential citation that doesn't apply the right standard.

[00:26:55] Speaker 01:
Meadowclad, which they rely on,

[00:27:00] Speaker 01:
is a case where the plaintiff sued a parent company, Ventana, and the arbitration agreement was with Geologic, which was a subsidiary of the parent company.

[00:27:27] Speaker 01:
The claim, so Plaintiff sued Geologic, or the arbitration agreement between Plaintiff and Geologic, and Vantana was the parent.

[00:27:37] Speaker 01:
And the claim against Vantana was that it caused Geologic to breach the arbitration contract.

[00:27:44] Speaker 01:
So even to state the claim requires the invocation of the arbitration contract.

[00:27:50] Speaker 01:
So that's a completely different set of facts than in this case.

[00:27:54] Speaker 01:
And it's apparent from the very claim that an element to prove their case was breached of the contract.

[00:28:02] Speaker 01:
So these cases that are being relied on are clearly factually distinguishable.

[00:28:09] Speaker 01:
And notably, the cases that are precedential and that apply here, you don't hear any discussion of by the appellant.

[00:28:17] Speaker 01:
The Goldbent case is a California case that sets forth the standard.

[00:28:21] Speaker 01:
If you read that case, it clearly shows that our facts don't apply.

[00:28:25] Speaker 01:
And then this standard is followed in the federal court by the Kramer case and the Murphy case.

[00:28:32] Speaker 01:
And both of those cases also, their analysis makes clear that in our situation equitable stoppable does not apply.

[00:28:40] Speaker 06:
Well, they don't deal with your situation.

[00:28:44] Speaker 06:
Not exactly.

[00:28:45] Speaker 06:
In the situations in those cases, I agree equitable stoppable did not apply.

[00:28:50] Speaker 06:
But they recognized

[00:28:51] Speaker 06:
that there is such a concept and that the court looks at the equities in order to decide.

[00:28:58] Speaker 01:
Yes, Your Honor.

[00:28:58] Speaker 06:
And that's what they're telling us, is that the equities are such that no matter what, this relationship is going to have to be brought out.

[00:29:08] Speaker 06:
He's saying the district court and all of the other aspects which do depend on the employment agreement.

[00:29:16] Speaker 06:
Therefore, this is the confusion

[00:29:21] Speaker 06:
we're asked to reach, therefore, let's put it all together before the arbitrator.

[00:29:28] Speaker 01:
Well, that's what they're arguing, absolutely, but those cases say in order to succeed in that argument, you have to rely, the non-signatory has to rely

[00:29:42] Speaker 01:
on the arbitration agreement.

[00:29:44] Speaker 01:
Or in our case, the signatory pursuing the non-signatory has to rely on the arbitration agreement.

[00:29:51] Speaker 01:
And that simply doesn't happen in this case.

[00:29:52] Speaker 05:
Otherwise it wouldn't be equitable?

[00:29:55] Speaker 01:
Yes.

[00:29:55] Speaker 01:
Well, the inequity would be if we relied on it and then said the arbitration clause doesn't apply.

[00:30:03] Speaker 01:
That's what the doctrine says.

[00:30:04] Speaker 01:
It would be unfair for a non-signatory to rely on it.

[00:30:08] Speaker 01:
Either way, the signatory to the arbitration agreement who's suing the non-signatory, if the signatory relies on it, then the signatory might be bound by the arbitration clause in fairness.

[00:30:24] Speaker 01:
In this case, that simply doesn't apply.

[00:30:26] Speaker 01:
We are not relying on the employment agreement with Mr. Lewandowski.

[00:30:31] Speaker 01:
Therefore, the equitable estoppel doctrine is inapplicable.

[00:30:36] Speaker 01:
under the standards set forth in Goldman, Kramer, and Murphy.

[00:30:41] Speaker 01:
Waymo, or excuse me, Uber, if you read their briefs carefully, they're conflating.

[00:30:49] Speaker 01:
There's two things that I'd like to mention real quickly.

[00:30:51] Speaker 01:
One is they're conflating a similarity of facts.

[00:30:57] Speaker 01:
So they say the facts that we're asserting, but also

[00:31:01] Speaker 01:
established breach of contract under the, if we had Sue Lewandowski and if we had a certain breach of contract.

[00:31:09] Speaker 01:
But that's not the standard.

[00:31:11] Speaker 01:
The standard, if you look at Goldman, is are we relying on arbitration agreement?

[00:31:18] Speaker 06:
It's the legal standard, but they're saying the equitable standard is that these facts, they overlap, they all come out, and therefore we should arbitrate.

[00:31:28] Speaker 01:
But that is the misstatement of the equitable doctrine.

[00:31:31] Speaker 01:
The equitable doctrine only comes into place if the claim you're asserting requires you to look at the obligations in the arbitration contract.

[00:31:44] Speaker 01:
And in this case, that's simply not the case.

[00:31:47] Speaker 01:
Whether you state it as reliance or inextricably intertwined or any of the formulations of this equitable doctrine, our claims stand

[00:31:58] Speaker 01:
alone without any reference to this particular arbitration contract.

[00:32:04] Speaker 01:
And therefore, just pointing to facts being interrelated is asking the court to look in the wrong direction.

[00:32:13] Speaker 05:
Can I ask you a standard review question?

[00:32:16] Speaker 05:
Let's just assume for a minute that this was just a straight up appeal, OK?

[00:32:21] Speaker 05:
And that there was a final judgment.

[00:32:23] Speaker 05:
Let's just assume that for a minute.

[00:32:25] Speaker 05:
This is an equitable doctrine.

[00:32:27] Speaker 05:
Now, there's an argument, I think, in the blue brief that the standard of review would be de novo, but because this is an equitable doctrine, is it de novo or is there some other standard that would apply?

[00:32:38] Speaker 01:
The equity would be a different standard.

[00:32:45] Speaker 01:
I'm off the top of my head.

[00:32:47] Speaker 05:
I don't think you disputed it in your brief, but I was just curious because it's an equitable doctrine.

[00:32:51] Speaker 05:
It seems like maybe some deference should be given.

[00:32:53] Speaker 01:
Yes, I agree.

[00:32:54] Speaker 01:
I agree with that.

[00:32:55] Speaker 01:
off the top of my head.

[00:32:56] Speaker 06:
Does your colleague know the answer?

[00:32:58] Speaker 06:
He's trying to write you a note.

[00:33:09] Speaker 01:
He breezes me.

[00:33:15] Speaker 06:
Okay.

[00:33:16] Speaker 06:
Thank you.

[00:33:17] Speaker 01:
Thank you.

[00:33:19] Speaker 06:
Okay, let's have three minutes for rebuttal.

[00:33:23] Speaker 04:
Your Honor, quickly on the standard of review.

[00:33:34] Speaker 04:
It wasn't disputed.

[00:33:38] Speaker 04:
And I think another course of appeals, and all but one, they apply de novo.

[00:33:42] Speaker 04:
And the Metalclad case, which was a state case, admittedly, but on page 17, 16, 15 to 16, discusses standard of review in both federal and state cases.

[00:33:53] Speaker 04:
on this very doctrine and says it should be de novo.

[00:33:57] Speaker 04:
I'd like to try to simplify the argument and just briefly respond.

[00:34:02] Speaker 04:
Mr. Verhoeven said that the source of the misappropriation from Mr. Lewandowski is irrelevant.

[00:34:10] Speaker 04:
That's totally false.

[00:34:12] Speaker 04:
Under the misappropriation statute, the definition of misappropriation, which is found in both the Defense of Trade Secrets Act and the California

[00:34:22] Speaker 04:
They have to show that Uber acquired trade secrets with knowledge that the person they acquired them from used improper means.

[00:34:30] Speaker 06:
You're not arguing that you can't get a full day in court, in the district court, on these issues.

[00:34:38] Speaker 06:
Is that right?

[00:34:39] Speaker 06:
It's entirely whether Uber, as for the reasons you're telling us, is entitled to participate in the arbitration or in the interest of justice.

[00:34:51] Speaker 06:
that that's how it should be resolved?

[00:34:53] Speaker 04:
That's correct.

[00:34:58] Speaker 04:
They have to show that Uber acquired and Automotive acquired the trade secrets with knowledge that they came through improper means.

[00:35:06] Speaker 04:
The improper means here are obviously the actions of Mr. Lewandowski.

[00:35:11] Speaker 04:
So the source is highly relevant.

[00:35:13] Speaker 04:
Mr. Roehoven admitted that they are not arguing that reliance

[00:35:18] Speaker 04:
that the reliance or the intertwined standard has to be explicit reliance.

[00:35:23] Speaker 04:
That's very helpful, because our argument is principally that they are implicitly and inescapably relying on the contract.

[00:35:31] Speaker 04:
And I'd like to try one more time to explain why.

[00:35:33] Speaker 04:
Number one, the contract clearly governs the subject matter of who owned what and what Mr. Lewandowski's obligations were.

[00:35:44] Speaker 04:
The title of the contract is At Will Employment

[00:35:47] Speaker 04:
confidential information, invention, assignment, and arbitration agreement.

[00:35:53] Speaker 04:
The title of the contract includes reference to confidential information and invention assignment, and paragraph three deals with which inventions are assigned and which are not.

[00:36:05] Speaker 04:
Appendix 315 to 25, 327 to 337 are the two contracts.

[00:36:11] Speaker 04:
I ask the court to look at them to recognize that they govern the subject matter.

[00:36:16] Speaker 04:
of Mr. Lewandowski's ability to use trade secrets, take trade secrets, what he owned, what he did not own.

[00:36:25] Speaker 04:
Second, in light of that, given that the contract governed the subject matter, if the contract permitted Mr. Lewandowski to do anything he's alleged to have done, any part of it, it would directly impact their ability to win their case.

[00:36:44] Speaker 04:
So the contract governs the subject matter,

[00:36:46] Speaker 04:
If the contract permitted him to do anything, to take either one of those files, it changes the case.

[00:36:51] Speaker 06:
Isn't that something that he is entitled to bring out in the arbitration?

[00:36:57] Speaker 04:
Yes.

[00:36:57] Speaker 04:
If we were in arbitration, this would clearly all be openly discussed.

[00:37:02] Speaker 04:
Third point.

[00:37:03] Speaker 04:
The contract, therefore, must prohibit what he did for them to have a claim against Uber.

[00:37:10] Speaker 04:
If it does prohibit him, there are other things that might also come into play.

[00:37:15] Speaker 04:
misappropriation of violation of a trade secret statute, et cetera.

[00:37:19] Speaker 02:
No.

[00:37:21] Speaker 02:
You've got it backwards.

[00:37:23] Speaker 02:
The contract must permit in order for you to assert, not prohibit.

[00:37:33] Speaker 04:
If it permitted, those other claims wouldn't exist.

[00:37:40] Speaker 04:
I think we're saying the same thing, Judge.

[00:37:42] Speaker 04:
If the contract permitted him to do any of these things, then the common law and the statutes wouldn't be violated.

[00:37:49] Speaker 04:
If the contract doesn't permit it, then it would violate both the contract and other sources of law.

[00:38:00] Speaker 04:
But the point is, that makes the contract inescapably relevant and implicitly relied upon.

[00:38:07] Speaker 04:
If we were to ever say... What have you done?

[00:38:09] Speaker 05:
I want to ask you a question.

[00:38:11] Speaker 05:
I mean, you can even let me answer.

[00:38:12] Speaker 05:
It's an important question.

[00:38:15] Speaker 05:
So what I want to know is why can't they make a tactical decision that they're not going to rely on it, which seems to be what they've done.

[00:38:26] Speaker 04:
It is absolutely what they've done because, Your Honor, it's implicitly part of the case.

[00:38:32] Speaker 04:
They can't make it not part of the case.

[00:38:34] Speaker 04:
They chose to have a contract.

[00:38:35] Speaker 04:
It exists.

[00:38:37] Speaker 04:
And it's gamesmanship for them.

[00:38:39] Speaker 04:
What are they giving up?

[00:38:39] Speaker 04:
They're not giving up anything.

[00:38:40] Speaker 04:
If we stand up in court and say, they took no measures to protect this information.

[00:38:45] Speaker 04:
They never had a contract.

[00:38:46] Speaker 04:
Then they've said, well, then we'll stand up and say it.

[00:38:49] Speaker 04:
So they are litigating a case where we know we can't say that because we know they do have these contracts.

[00:38:55] Speaker 04:
And by the way, all their employee contracts have arbitration agreements.

[00:38:59] Speaker 04:
So they are getting the benefit of those contracts in this case.

[00:39:02] Speaker 04:
Believe me, we will not be able to stand up in court and say, they didn't take measures.

[00:39:07] Speaker 04:
Ladies and gentlemen, the jury, they didn't ask for the argument.

[00:39:10] Speaker 00:
Of course not.

[00:39:11] Speaker 00:
Of course we can't say that.

[00:39:12] Speaker 04:
So that means they're getting the benefit of the contract.

[00:39:14] Speaker 04:
That they exist.

[00:39:16] Speaker 04:
And not just that they exist, that they have extensive confidentiality provisions.

[00:39:20] Speaker 04:
They get the benefit of that because we can't stand up and make that argument.

[00:39:24] Speaker 00:
Because it's not true.

[00:39:25] Speaker 04:
It would be false, yeah.

[00:39:26] Speaker 04:
It would be a violation of the rules.

[00:39:28] Speaker 04:
That's correct.

[00:39:29] Speaker 04:
That gives them the benefit of the contract.

[00:39:32] Speaker 06:
Can we move on?

[00:39:33] Speaker 06:
Wait, wait, wait.

[00:39:36] Speaker 06:
the arguments and the issues I hope we have.

[00:39:40] Speaker 06:
Thank you.