Executive Leaves Lyft for Uber and a Lawsuit Ensues [e116]

November 10, 2014

Nasir and Matt talk about the COO who left Lyft for Uber and is now being accused of breaching confidentiality agreements and soliciting employees. They then answer, “What is some good advice to avoid copyright infringement issues?”

Full Podcast Transcript

NASIR: All right. Welcome to our business podcast where we cover business legal news and answer some of your business legal questions that you, the listener, can send in to our email address which is the following… Go ahead, Matt. What is it? I guarantee you; Matt doesn’t know what it is.

MATT: No, I’ve got it – ask@legallysoundsmartbusiness.com.

NASIR: Okay. You’ve got it. Well, my name’s Nasir Pasha.

MATT: And I’m Matt Staub, and I don’t think I actually even have access to that email now that I think about it. You’re the one that looks at all the who-knows-what emails we’re getting other than you.

NASIR: Oh, yeah. I try to keep that to myself for my guilty pleasure reading before I go to bed.

MATT: Extreme screening process that you do for everything we do.
What do we have? We’ve got something I know you’re going to like today.

NASIR: Is it about pizza?

MATT: No, it’s not about pizza, but it is about one of the topics that are highly talked about on this podcast. We’re combining a few things here. We’ve got a dispute between Lyft and Uber.

NASIR: Oh, nice.

MATT: I know you are anti-Uber and I think this is actually going to probably make it worse for you because…

NASIR: Worse or better? I think it’s going to be more support. Like, people are going to join my cause after today.

MATT: Yeah, I’m saying you’re going to dislike Uber more after this.

NASIR: Yeah.

MATT: I need to get this guy’s name too because he had a pretty awesome name. I want to make sure I find it before I get into the story.

NASIR: Travis VanderZanden.

MATT: Yeah, great name. So, he’s the former COO of Lyft and now Lyft is suing him for a breach of confidentiality. There’s a confidentiality agreement and then a breach of fiduciary duty. Basically, he was a COO of Lyft so pretty high up exec and he’s being accused of essentially taking all this confidential information from Lyft before he then went to Uber. So, a few things that he’s done here that are obviously still accusations so I don’t want to say he’s done it or not but downloading non-public documents to his personal Dropbox before leaving so we’re talking confidential strategic product plans, financial info, forecasts, growth data. I guess they had a meeting set-up right before he was about to leave on – I believe – a Friday about his resignation. He cancelled a meeting last minute and then went home and backed up a number of emails and confidential documents to his home computer and cell phone.

NASIR: Oh, man.

MATT: Synched personal Dropbox to the company for up to three months out. So, those are a few of the things. I’m sure there’s more than that but, obviously, it’s accusations. But the problem with this is Lyft hired someone to go back and look at what happened and that’s how they know this happened because they can look at his computer and see that he pulled this information from his work computer and work phone and synched that to his personal accounts. Not looking good for old VanderZanden.

NASIR: Gosh! There’s so many issues here. Well, one thing I was looking at the complaint – this was filed in California – they have only named him as the defendant so Uber has yet to be included in that and I say “yet” because either it’s a strategic decision not to include them or they don’t have the prerequisite fact allegations to do so. I would even imagine that, once this is filed now, they can start doing discovery and I don’t know what his position is at Uber. I mean, he was COO of Lyft and now he’s going to Uber. How does that confidential information not fall in the hands of Uber to not be included in the lawsuit? Maybe they wanted the discovery to see if that’s actually the case and see what culpability, if any, Uber may have in this. I don’t know. One thing that you mentioned was that they requested him to sign an agreement to turn over confidential information which seems strange to me. If he had a confidentiality agreement already, most of those is pretty boiler plate actually is to include a provision that, after the employment’s over, especially if the confidentiality agreement’s connected to that, that the employee would turn over all confidential information back to the company and destroy all the copies that they have. But some of these files that are alleged to have been taken include, like, profit and loss statements and internal processes – pretty heavy stuff.

MATT: Yeah. Basically, it looks like he swiped or just took everything that he could just like a smash and grab, a virtual smash and grab where he just ran in and starts taking stuff at a furious pace and runs out with everything they have because, if you look at what Lyft is asking for in terms of relief, it’s a ton of different injunctions.

NASIR: Yeah, it’s almost comical, right? I mean, as much as we represent clients that want to be very protective and even aggressive with competition, I know this is just one individual but, again, it’s another association of Uber and – you’re right – it just leaves a bad taste in your mouth. Like, there’s no reason for business to be conducted in such a way. You know, the non-solicitation of employees is interesting too because a lot of people think that, okay, non-competes in California, especially for employees, are very, if not impossible, to enforce unless they’re connected to trade secrets and, even then, it’s very narrowly tailored. The non-solicitation of co-workers or employees from your previous employer, that is enforceable. That’s a different kind. That’s not a non-solicitation of customers. That’s a non-solicitation of employees so that’s actually generally enforceable if drafted correctly and so it makes me wonder. It seems like they have a very – who knows if this guy is liable for all this but – they seem to be very detailed with how this person actually tried to solicit and, in some ways, successfully solicit employees of Lyft to come over to Uber. It’s really just almost frustrating to hear.

MATT: I just looked this guy up, by the way. So, his position with Uber is Vice President of International Growth so that’s something but this is real-time and this is a live update. In the last hour, he’s posted all of these things on Twitter. He only has 610 followers so I guess this could actually not be him but, “All the facts will come out, but I wanted to clear up the misinformation and protect against the audacious attack on my reputation.”

NASIR: I probably wouldn’t have said anything, but I can’t not say it now because, just looking at him, I don’t know what it is, but his photo – if you guys will just look – it almost seems like he’s the type of guy that would do this.

MATT: It’s funny you say that because – I’m not kidding – I thought the exact same thing. I searched him on Google then looked at Images to see what he looked like and, yeah, I mean, I don’t like to pass judgment on people I’ve never met.

NASIR: Especially based upon looks and a Twitter profile.

MATT: Yeah, just solely based on looks. I don’t know. We’ll see what happens with this, but it seems like they have some pretty good evidence on him.

NASIR: Yeah. Well, let’s just put it this way that he’s lucky that courts don’t consider the image of a person as being any kind of evidence of their character.

MATT: Yeah.

NASIR: But anyway.

MATT: It’s funny too, if you scroll down on his Twitter feed, he’s got all these posts about, you know, when he was with Lyft, obviously.

NASIR: Oh, that’s odd.

MATT: Those are still on there.

NASIR: So, maybe it wasn’t too long ago then it seems like, huh?

MATT: Yeah.

NASIR: “You should use Lyft.” This was December 31st. Oh, that was a while ago, but interesting, yeah. Well, I mean, this is the reality. You’re going to have employees that jump ship, but it is what it is, I guess.

MATT: We’ve talked about this before. I mean, I think we’ve said you can do everything in your power and you can have all the agreements in place to prevent this from happening, but the best thing you can do is try to cut off access as soon as you legally can because, if someone wants to steal stuff, they’re going to steal it.

NASIR: Yeah.

MATT: That’s just how it is. It’s office space.

NASIR: Well, here’s something interesting, and it looks like this is what his defense is going to be, he says, “Just to be crystal clear,” and this was an hour ago – obviously, this is a pretty hot topic coming out in the news right now – “Just to be crystal clear, I did not take any confidential data to Uber.” So, now, depending on what the confidentiality agreement says, obviously, we already know that it likely doesn’t say that he was supposed to return the confidential data. Keeping the confidential data for his records and his own use only is, I suppose, not against the contract agreement, depending on what it says. But then, I would argue, “Well, look, you are a senior management officer or vice president of whatever at a direct competitor. How can you not use that confidential information for those purposes?” and even that I think is defensible too because you can’t erase his brain, right? But the question is, is he going back home and referring to it and making strategic decisions based upon it? That has implications as well.

MATT: It sounds like you’re getting back on the Uber bandwagon.

NASIR: No, I’m defending him as an individual. I think he looks like he did it. I’m joking about that but he seems to be adamantly defending himself and there’s always two sides of the story as we always know, especially when it comes to this kind of stuff. One of the things that I also note is that, when you have an employee that leaves and takes data and does something like this, I don’t know what it is but every time I’ve experienced this, there’s always a culture problem too associated with that company. I’m telling you; people aren’t as vindictive to their employers when they leave in such a fashion if there was more of a positive culture and it’s just a frank argument that that’s what happens in the real world – that it doesn’t matter what you put on paper, unless you have an environment which is more positive, this stuff’s going to happen all the time.

MATT: Yeah, and I guess this is a pretty hot topic. At the time we’re recording it, the lawsuit was filed yesterday.

NASIR: Oh, okay.

MATT: We’ll find out more once I guess he answers.

NASIR: Cutting edge stuff here at Legally Sound Smart Business even though it’s coming out later.

MATT: Yeah, it’ll be old news by the time this comes out, but that’s fine.

NASIR: All right. Let’s get to our question of the day before the day’s over.

MATT: Question of the day before this goes out of style or out of topic. Copyrights are going to go out of style soon.
“What is some good advice to avoid copyright infringement issues?”
That’s a pretty loaded question.

NASIR: Yeah, stop copying people, that’s what you start with.

MATT: Yeah, I mean, register your copyright, that’s a good start.

NASIR: Well, it depends. I don’t know what they mean. Basically, they want to avoid getting into copyright infringement issues, I think, infringing on other people, right?

MATT: Yeah.

NASIR: That’s what I got out of it.

MATT: Yeah.

NASIR: I think, a lot of times, where that happens unintentionally. Obviously, if you’re just plagiarizing and copying stuff on the internet then that’s one way to start. But, a lot of times, when it happens unintentionally is, if you have other people working for you – you know, whether they’re content producers, whether they’re somewhere in the creative field where they’re using images for y our website or whatever, or you have third parties submitting content to you – that’s when stuff happens, you know? If you have a website, for example, where the content is being submitted by the users, you do have some safe harbor provisions, but you do have to make sure that you comply with the DMCA requests and so forth and I think we’ve talked about it in the past and, Matt, you can probably speak more to that. But, secondarily is that, when you hire independent contractors or employees that produce content for you, you have to go above and beyond to make sure that that content that they’re using is either produced by them and that you own the rights to it and not grabbed somewhere else on the internet which is very common when you hire a web developer or what-have-you. I even suggest, if the web developer has images that they want to use, that you purchase them directly so that you know that you own the rights and that you have a record for it so that, if down the line, a year from now, that publisher says, “Hey, you’re using our copyright or you’re infringing upon our copyright. Where did you get this image?” you can reference it and be able to justify it.

MATT: You know, it’s all about taking the correct precautions upfront. Accidents happen too, I suppose, and it gets a little bit different if you were relying on someone and they give you an image that you thought they had the rights to and they don’t.

NASIR: Yeah.

MATT: Different things come into play. But, I guess from the defense perspective, it’s just be smart about it and I don’t know what else to really say that you haven’t.

NASIR: Thanks a lot.

MATT: Maybe register your DMCA agent with the copyright office. That’s something different.

NASIR: I was just thinking about that. Yeah, that’s one idea is that, if you have people that are submitting content, that you register your DMCA agent. Basically, you register with a copyright and so they know who to notice. But the problem with that is that you do have to maintain that so, if you hire a third-party agent which is probably the best way to do it, especially if you’re getting a lot of requests, then do that. But, if you’re doing it yourself, then you have to make sure that the contact information is updated because, if things change and then the notice goes there and you don’t do anything about it, then that safe harbor provision could be removed and you could become liable. So, keep that in mind, too. But that’s good advice though.

MATT: All right. Is that it?

NASIR: Uh, no, let’s just sit here for a little bit longer.

MATT: Just dead time, dead air.

NASIR: Instead of just actually waiting for dead time, Chris, can you just add, like, ten minutes of dead time to the end of this episode? That’d be great.

MATT: Yeah, I don’t want to actually sit here for ten minutes in silence.

NASIR: All right. Well, thanks for joining us, everyone. Don’t forget to leave some positive reviews to iTunes. I know you guys are listening but then you also have to support us, too. This is how we make our big bucks – with every positive iTunes reviews, we get a billion dollars. So far, we’ve gotten only, like, $20 billion so we need some help.

MATT: We need those numbers to increase. All right. Keep it sound and keep it smart.

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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
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