Judge rebukes Uber for hiring investigator to find dirt on Yale scientist Says company hired investigator to dig up dirt after suit filed

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Officials of the Uber ride service hired a private investigator to dig up potentially damaging information about a Yale researcher who is suing Uber for alleged antitrust violations.

That was the finding of U.S. District Judge Jed S. Rakoff of the Southern District of New York, who rebuked Uber Technologies and its co-founder and CEO, Travis Kalanick, for hiring the investigator to look into the personal life of Spencer Meyer, an associate research scientist at the Yale School of Forestry and Environmental Studies.

“It is a sad day when, in response to a commercial lawsuit, a corporate defendant feels compelled to hire unlicensed private investigators to conduct secret personal background investigations of both the plaintiff and his counsel,” Rakoff wrote in a July 25 order, in which he severely criticized Kalanick and its outside investigator, Global Precision Research LLC, doing business as Ergo.

“It is sadder yet when these investigators flagrantly lie to friends and acquaintances of the plaintiff and his counsel in an (ultimately unsuccessful) attempt to obtain derogatory information about them,” Rakoff wrote.

Rakoff barred the use of materials uncovered by Ergo; the antitrust lawsuit, which was filed on Dec. 16, has yet to be decided.

Meyer is seeking a class action against Uber, claiming that the company fixes prices among its drivers, who are independent contractors. According to Meyer’s complaint, “Kalanick designed Uber to be a price fixer. Kalanick has long insisted that Uber is not a transportation company and that it does not employ drivers. Instead, Uber is a technology company, whose chief products are smartphone apps. Those apps match riders with drivers.”

The complaint continues: “Drivers using the Uber app do not compete on price. Rather, drivers charge the fares set by the Uber algorithm. Those fares surge at times to extraordinary levels, which are uniformly charged by drivers using the Uber app.”

Uber drivers differ from taxi drivers, whose prices are regulated by city or state authorities.

Rakoff wrote that certain facts in the case are “undisputed”: that Uber’s chief security officer, Joe Sullivan, asked the company’s director of investigations, Mat Henley, to “Please do a careful check on this plaintiff.” Henley then hired Ergo to conduct the investigation. Ergo’s managing partners are past employees of the CIA and the State Department.

The company investigated both Meyer and his lawyer, Andrew Schmidt of Portland, Maine, whom they suspected was “the driving force behind the complaint,” the judge wrote.

A total of 28 sources were contacted and asked for information under false pretenses, Rakoff wrote. In some instances, the investigator wrote, “sources believe that I am profiling Meyer for a report on leading figures in conservation.”

On May 19, Meyer gave the court “a sufficient basis to suspect that Ergo had committed a fraud in investigating plaintiff through the use of false pretenses, and to suspect that communications from Uber — which had hired Ergo to conduct an investigation of the plaintiff … had furthered such a fraud.”

For their part, Rakoff wrote, “Both Uber and Mr. Kalanick have repeatedly represented — accurately or not — that Uber commissioned the investigation of plaintiff (Meyer) in order to determine whether plaintiff constituted a safety threat to Mr. Kalanick or other Uber employees.”

Rakoff found that Ergo was not legally licensed as an investigator in New York state and that its investigator recorded phone calls in apparent violation of state laws.

As a result, the judge found it appropriate to issue an order “enjoining defendants from making use of the fruits of their own troubling conduct.” He did not assess a fine on Uber because the company agreed to pay Meyer an undisclosed amount. However, Rakoff wrote, “the Court cannot help but be troubled by this whole dismal incident.”

Schmidt wrote in an email to the Register: “Even though the deceptive investigation only highlighted Mr. Meyer’s sterling personal and professional reputation, we are pleased with the court’s opinion.”

Peter M. Skinner, a partner in the New York law firm of Boies, Schiller and Flexner, referred the Register to Uber’s communications office, which did not respond to a request for comment. Ergo also did not respond to a request for comment.

In his original lawsuit, Meyer claims to have paid surge pricing to Uber drivers in New York City and elsewhere. Uber, founded in 2009, had more than 20,000 drivers operating in the city, Meyer claims.

According to a Bloomberg report, Uber became profitable in the United States and Canada this year and earns 19 cents per ride. Bloomberg reported that Uber booked 169 million rides in March, 50 million in the United States.

On Monday, Uber announced it was merging with the Chinese ride service Didi Chuxing, which has given Uber stiff competition in that country.

Call Ed Stannard at 203-680-9382.