Waymo LLC v. Uber Technologies, Inc.
252 F. Supp. 3d 934, 2017 WL 1957010, 2017 U.S. Dist. LEXIS 72346 (2017)
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Rule of Law:
Under California law, a non-signatory to an agreement containing an arbitration clause cannot compel a signatory to arbitrate claims under the doctrine of equitable estoppel unless the signatory's claims either rely on the terms of that agreement or allege concerted misconduct that is founded in the obligations of the agreement.
Facts:
- Anthony Levandowski worked for Waymo LLC.
- In 2009 and 2012, Levandowski signed two employment agreements with Waymo.
- These agreements contained a broad arbitration clause covering all employment-related disputes with anyone, including the company.
- Waymo alleged that Levandowski misappropriated its trade secrets for the benefit of Uber Technologies, Inc., Ottomotto LLC, and Otto Trucking LLC (collectively 'Uber').
- The Uber entities were not signatories to the employment agreements between Waymo and Levandowski.
- Waymo initiated separate arbitration proceedings against Levandowski based on the agreements, but these proceedings concerned employee poaching, not the trade secret claims brought against Uber.
Procedural Posture:
- Waymo LLC initiated two arbitration proceedings against its former employee, Anthony Levandowski, for claims related to employee poaching.
- Waymo LLC then filed a lawsuit in the United States District Court for the Northern District of California against Uber Technologies, Inc., Ottomotto LLC, and Otto Trucking LLC, alleging trade secret misappropriation and unfair competition.
- The defendants (Uber, et al.) filed a motion in the district court to compel arbitration, seeking to force Waymo's claims against them into arbitration based on Levandowski's employment agreements.
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Issue:
Does the doctrine of equitable estoppel require a signatory to an employee's arbitration agreement (Waymo) to arbitrate its trade secret misappropriation claims against a non-signatory (Uber) when those claims can be proven without relying on the terms of the employee's agreement?
Opinions:
Majority - William Alsup
No. The doctrine of equitable estoppel does not require Waymo to arbitrate its claims against Uber because its claims are not dependent on the arbitration agreements it had with Levandowski. Under California law, a non-signatory may only compel arbitration via equitable estoppel under two narrow circumstances: (1) when the signatory's claims against the non-signatory rely on or are intimately intertwined with the underlying contract, or (2) when the signatory alleges concerted misconduct by the non-signatory and another signatory that is founded in the obligations of the contract. Here, neither circumstance is met. Waymo's trade secret claims do not rely on Levandowski's employment contracts; they can be proven independently by showing a breach of common law duties of loyalty and by demonstrating other reasonable measures taken to maintain secrecy. Merely referencing the agreements is insufficient to trigger estoppel. The policy behind estoppel—to prevent a party from seeking to hold a non-signatory liable via duties in an agreement while simultaneously trying to avoid the agreement's arbitration clause—is not implicated because Waymo is not relying on the agreements to establish its claims against Uber.
Analysis:
This decision reinforces the narrow application of equitable estoppel for compelling arbitration by non-signatories under California law, solidifying the two-prong test from Goldman and Kramer. It clarifies the critical distinction between merely 'referencing' a contract and 'relying on' it for a claim, setting a high bar for non-signatories. By rejecting the broader federal 'touch matters' standard, the court prevents companies from using tangentially related employment agreements to force trade secret and other tort claims into private arbitration. This preserves a signatory's right to litigate claims against third parties in court, even when those claims involve a current or former employee who is subject to an arbitration agreement.
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