Thinking About Suing Uber? Let This Be a Warning.

http://www.nytimes.com/2016/07/26/n...ossed-the-line-judge-rules.html?src=recg&_r=0
Thinking About Suing Uber? Let This Be a Warning.
By BENJAMIN WEISER JULY 25, 2016
New York Times

When Uber's chief executive was sued last winter in an antitrust case, the company's general counsel, Salle Yoo, wanted a bit of intelligence on the opposition.

She wrote to Uber's chief security officer, asking, "Could we find out a little more about this plaintiff?"

Uber ultimately hired an outside agency, Ergo, to begin investigating the background of the plaintiff, a conservationist associated with Yale University named Spencer R. Meyer.

Ergo told Uber that it would start digging and would ultimately prepare a report that "highlights all derogatories."

While it may not be rare for companies to conduct research on the people who sue them or their executives, the outside investigation commissioned by officials at Uber - the ride-hailing company known for using aggressive tactics when it enters communities - crossed the line, a federal judge in Manhattan ruled on Monday.

Mr. Meyer's lawsuit, filed on Dec. 16 and seeking class-action status, accused Uber and its chief executive and co-founder, Travis Kalanick, of price-fixing, a claim Mr. Kalanick and Uber both deny. The suit is still pending.

After learning of Mr. Meyer's background as a conservationist, Ergo's investigator, Miguel Santos-Neves, misrepresented himself as he conducted interviews, claiming he was checking the records of "up-and-coming researchers in environmental conservation," the judge wrote.

All the "sources believe that I am profiling Meyer for a report on leading figures in conservation," Mr. Santos-Neves said in a message to a superior.

"Litigation is a truth-seeking exercise," the judge, Jed S. Rakoff of Federal District Court, wrote, "in which counsel, although acting as zealous advocates for their clients, are required to play by the rules."

"The court cannot help but be troubled by this whole dismal incident," the judge added, later noting that the secret investigation had also delved into the background of Mr. Meyer's lawyer, Andrew Schmidt.

A spokesman for Uber and Mr. Kalanick declined to comment. In a hearing this month, Uber said that it was not looking for negative information about Mr. Meyer and that it was unaware Mr. Santos-Neves had been misrepresenting himself. Mr. Kalanick's lawyer added that his client was not even aware of the investigation.

Ergo did not respond to a request for comment. Its lawyer said in court that Ergo was not trying to do a "hatchet job" on Mr. Meyer and never intended "to improperly impact this litigation."

Ms. Yoo, the Uber general counsel, sent her email to Joe Sullivan, the company's chief security officer, seeking more information about Mr. Meyer. Mr. Sullivan forwarded the note to Mat Henley, Uber's director of investigations, saying, "Please do a careful check on this plaintiff," according to the opinion and copies of the emails that are part of the court record.

Mr. Henley retained Global Precision Research, which does business as Ergo, the opinion said. "I have a sensitive, very under the radar investigation that I need on an individual here in the U.S.," Mr. Henley wrote to two Ergo officials, Todd Egeland and Matthew Moneyhon. They had once held jobs in the Central Intelligence Agency and the State Department, respectively, the opinion said.

Ergo's investigators, the opinion noted, were not licensed to conduct private investigations in New York. Nevertheless, it said, Mr. Egeland sent Mr. Henley a proposal for an initial "'light-touch' reputational due diligence," which, he said, should highlight "any issues for further digging."

Ergo also included in the proposal its statement that it would prepare a report highlighting "all derogatories."

"All looks good guys, thanks," Mr. Henley responded, accepting the proposal, the opinion said.

Judge Rakoff made it clear in the opinion that he believed "the purpose of the investigation was to try to unearth derogatory personal information about Mr. Meyer and his counsel that could then be used to try to intimidate them or to prejudice the court against them."

In carrying out the inquiry, the investigator, Mr. Santos-Neves, made contact with 28 acquaintances or professional colleagues of Mr. Meyer and his lawyer, Mr. Schmidt, according to the opinion.

Mr. Santos-Neves, the judge said, made "blatant misrepresentations to individuals that he contacted in order to gain information" about Mr. Meyer and Mr. Schmidt.

"Mr. Santos-Neves was not acting as any kind of rogue investigator," the judge said. "His misrepresentations were condoned by the highest levels of Ergo leadership."

Mr. Santos-Neves conducted phone interviews with eight people, recording the calls without their knowledge or consent, the judge noted.

"Let me tell you a little bit about the research project," Mr. Santos-Neves told one source, according to the opinion, which quoted from a recorded conversation.

"It's actually pretty straightforward, pretty simple," Mr. Santos-Neves told the source. "A client hired us to profile up-and-coming people in environmental conservation."

In his ruling, Judge Rakoff barred Uber and Mr. Kalanick from using in the lawsuit any of the information that was obtained through the investigation.

Mr. Schmidt said, "Even though the deceptive investigation only highlighted Mr. Meyer's sterling personal and professional reputation, we are pleased with the court's opinion."

Judge Rakoff did not rule on a request by Mr. Meyer that he impose sanctions on the defendants, noting that they had agreed to pay "a reasonable" settlement (the amount has not been disclosed) to reimburse Mr. Meyer's legal fees and expenses in connection with the issue.

Nonetheless, the judge underscored his disapproval of the tactics in the case. "The processes of justice before the court require parties to conduct themselves in an ethical and responsible manner, and the conduct here fell far short of that standard," he wrote.

A version of this article appears in print on July 26, 2016, on page A20 of the New York edition with the headline: Investigation of Conservationist Conducted for Uber Crossed Line, Judge Rules.