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November 9, 2015 Vol. 139, No. 45

In clash of clients, Orrick strives to stay on sidelines ross toddrtodd@alm.com

in March, Orrick, Herrington & Sutcliffe’s chief legal officer typed out a few terse para-graphs cutting off the firm’s three-year relationship with

a Bay Area tech startup.The situation was clearly deli-

cate. “Because we are now aware that our clients are in litigation with each other, we believe it is ap-propriate to terminate” the repre-sentation, wrote Larry Low of Or-rick in an email. “This will confirm our withdrawal from our repre-sentation of Loop AI.”

The email was the easy part. Ex-tricating the firm from the ongo-ing litigation between its former clients has been trickier.

Loop AI Labs Inc. develops tech-nology that applies artificial intel-ligence to Big Data for analytics without human intervention. In February, Loop AI sued its former CEO, Anna Gatti, and Italian tech company Almawave S.r.l, claiming they conspired to sabotage Loop and frustrate its fund-raising ef-forts. John Bautista, a Valley Orrick partner, has represented Loop AI since its launch in early 2012 and drafted its employment contract with Gatti. A separate Orrick part-ner in New York helped Almawave hire Gatti as its CEO in 2014 under circumstances that are now at the core of the companies’ dispute. The firm’s conflict check system failed to flag any problem.

All of which has left Orrick in the awkward position of fending off subpoenas and allegations of double-dealing as its two former clients bash each other in court.

Discord between Loop, Gatti and Almawave recently got so heated that a magistrate judge forced the parties to record rou-tine discovery conversations to monitor attorney behavior. In its latest complaint, Loop AI claims that Orrick “breached its contrac-

cheryl Millercmiller@alm.com

SACRAMENTO — In the wake of this week’s election re-sults, here’s a question to pon-der: If liberal San Francisco voters won’t put the clamps on

the corpo-rate-sharing economy, can any ef-fort to regu-late the likes of Airbnb Inc. and Uber suc-ceed?

Chris Le-hane, Airbnb’s global policy chief, took a public victory lap after Tuesday’s definitive defeat of Measure F, telling reporters that the San Francisco election would unleash a political “movement” of support for the short-term rental platform around the world. Uber’s David Plouffe, though not involved in a ballot fight, also popped up online and at a Washington, D.C., tech incubator event to tout the ride-hailing company as a job creator and boon for the middle class.

Both seasoned political strat-egists, Lehane and Plouffe shared a common message: These well-funded, emerging companies have a large, devot-ed and easily accessible base of customers who politicians and opponents mess with at their own peril.

“You vote with your thumbs now,” said Tad Devlin, a busi-ness litigator at Kaufman Dolo-wich & Voluck in San Francisco. “If you get enough thumbs, enough followers, then you can move legislation.”

Whether Airbnb’s victory on election night scares away other

With ballot win, airbnb flexes political muscle

Steering Uber case has thrust Judge edward chen into the spotlight

Designated Driver

Marisa kendallmkendall@alm.com

the scene in U.S. District Judge Edward Chen’s courtroom this past week would have been unacceptable to some

judges. Arguments veered off course

and left the briefs far behind—at one point neither Chen nor the lawyers could tell which

motion was being argued. The lawyers delved into brand-new arbitration case law, some of which threatened to under-mine a prior ruling from Chen and force him to reverse him-self.

Surprisingly, the judge looked pleased.

In fact, Chen instigated some of the chaos himself. He kicked off the Nov. 4 hearing by an-nouncing he was taking “a sec-

ond look” at his decision inval-idating Uber Technologies Inc.’s 2014 arbitration agreement in light of an August ruling from the California Supreme Court. His reconsideration could have major consequences for the class action challenging Uber’s classification of drivers as inde-pendent contractors—a case that has pointed a national spotlight on Chen’s courtroom

The complications of crowdfunding cases

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November 9, 2015 Vol. 139, No. 45

The complications of crowdfunding cases

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New GC onbirth of HP Inc.

New GC onbirth of HP Inc.

See CHEN page 11

from aclU to Uber, chen draws admiration, suspicion

and, fairly or not, will be the cru-cible that forges his reputation as an Article III judge.

Depending on who you talk to, 62-year-old Chen is an open-minded jurist committed to the right result or a liberal-leaning judge who still wears the Amer-ican Civil Liberties Union badge that nearly wrecked his pros-pects for a judicial appointment. His decisions in the Uber case, which forces Chen into the po-litically charged position of bal-ancing workers’ rights against innovative business practices in an imperfect legal framework, offer fuel for both narratives.

While Chen already has drawn criticism for some of his rulings that sided with drivers against Uber, lawyers who actually ar-gue in Chen’s courtroom tend to describe him as even-handed, commending him for showing up to hearings exceptionally well prepared and with no built-in bias.

Chen declined to be interviewed or to answer questions by email.

Conversations with more than two dozen of his close friends and colleagues, lawyers who have ap-peared before him and those that know him by reputation only—as well as a look at Chen’s back-ground and his history on the bench—suggest there’s more to the judge than what one Republi-can critic famously decried as the “ACLU chromosome.”

Chen’s willingness to admit a mistake, which he’s already done once before in the Uber case, speaks to the pains he takes to reach decisions that are both just and legally sound, lawyers said.

“It’s a rare thing for a judge uni-laterally to do that,” said defense-side employment attorney Ste-phen Hirschfeld of Hirschfeld Kraemer in San Francisco. “It goes to show that this is a judge who is extremely thoughtful.”

It may also signal Chen is taking a meticulous approach to the case that could define him, acutely aware that whatever he decides ul-timately will be closely reviewed on appeal.

“He knows this is a high-profile case,” said Hirschfeld. “He wants to get it right.”

yoUth anD conSeQUenceSChen, an Oakland native born

to Chinese immigrant parents, started his career as a passionate civil rights advocate. He special-ized in discrimination cases, drawn in particular to issues that affected the Asian-American com-munity.

After graduating from UC-Berkeley School of Law, Chen worked briefly at the firm now known as Coblentz Patch Duffy & Bass before starting a 16-year stretch with the American Civil Liberties Union.

“Ed was just somebody who was sensitive to people’s rights and the needs of ordinary people,” said re-tired U.S. District Judge Charles Renfrew, for whom Chen clerked

from 1979 to 1980. (Chen went on to clerk for Judge James Browning of the U.S. Court of Appeals for the Ninth Circuit from 1981 to 1982.)

While at Coblentz, Chen had a hand in reopening the Supreme Court’s landmark 1944 ruling in Korematsu v. United States that approved the internment of Japa-nese Americans in internment camps during World War II.

San Francisco attorney Dale Minami, who led the effort to over-turn the conviction of Fred Kore-matsu, said Chen was the team’s “go-to guy” for researching tough questions.

Today Chen comes across as brainy in a low-key way. But he hadn’t always seemed destined for a position of influence, said Min-ami, founder of Minami Tamaki.

As an undergrad at UC-Berkeley in the 1970s Chen was “pretty dorky,” recalled Minami, his Asian-American studies professor. “When he wrote his first papers, I said ‘Who wrote these?’” said Min-ami. “They were brilliant.”

Chen joined the Northern Dis-trict of California’s bench as a magistrate judge in 2001 at the prodding of U.S. District Judge Charles Breyer, a former Coblentz partner. He was the court’s first Asian-American judge.

Eight years later, Chen’s ACLU background became the political equivalent of a scarlet letter as he pursued confirmation to a district court seat. Sen. Jeff Sessions, R-Alabama, famously worried Chen carried the “ACLU chromosome.” After a bruising fight, Chen finally was confirmed in May 2011.

Chen kept his sense of humor throughout the ordeal, according to his friends, who say he’s never been one to take himself too seri-ously.

Consider “The Recusals,” a goofy rock band of glitter bow-tie-wearing judges that Chen orga-

nized to perform at this year’s Northern District judicial confer-ence. While the gig was purely for fun, Chen’s friends swear he’s re-ally a brilliant musician.

(“Thanks to him we actually weren’t terrible,” Judge Breyer said.)

intellectUal SParrinGOn the bench, Chen is known

for putting counsel through their paces. Lawyers who have spent time in his San Francisco court-room described the experience as “fun,” as well as intellectually rig-orous.

One lawyer who recently ap-peared in Chen’s courtroom said the judge allowed arguments to flow like a freewheeling debate, encouraging the lawyers to butt in and interrupt.

“The oral argument was more like a television oral argument than a traditional oral argument,” said the lawyer, who asked not to be named. He added, “I found my-self having to fight to get in to re-spond to some of the points [op-posing counsel] would make.”

Steve Berman of Hagens Ber-man Sobol Shapiro, who repre-sented plaintiffs in privacy liti-gation over tracking software in cellphones, said Chen came to court impeccably prepared.

“The other side was quoting a few cases they thought were key, and several times Judge Chen interrupted them and said ‘Wait you need to read the rest of the sentence, because that changes the meaning,’” Berman wrote in an email. “So he has the key cas-es nailed.”

Mark Burton of the plaintiffs firm Audet & Partners remembers Chen carefully scrutinizing a $228 million settlement FedEx Corp. reached with drivers in a wage-and-hour suit earlier this year. Chen’s concerns that class mem-

bers were being shortchanged prompted the parties to amend the agreement and provide drivers additional compensation.

“He definitely didn’t just accept what the parties presented to him initially,” said Burton.

Judge Richard Seeborg, who sits down the hall from Chen on the 17th floor of the San Francisco fed-eral courthouse, said he pays at-tention if a lawyer cites one of Chen’s decisions.

“I may not agree with it,” See-borg said. “But I know it is really thoughtful and thoroughly re-searched, so it is one that be-hooves you as a judge to read.”

Not everyone has been pleased with Chen’s rulings, however, and those on the political right are usu-ally the ones aggrieved.

In a September blog post, the conservative Washington Legal Foundation criticized Chen’s de-cision in a case that pit cellphone retailers against the city of Berke-ley. Chen’s order upholding a Berkeley statute that required re-tailers to warn customers of the radiation dangers of cellphones, the blog post stated, is part of a “disturbing trend” that threatens constitutional protections against compelled government speech.

‘not knee-Jerk’In the Uber case, Chen has been

tough on the company from the start.

He twice foiled Uber’s attempts to block the employment suit. He’s rejected one of Uber’s central ar-guments—that it’s a technology company that markets an app, not a transportation business that em-ploys drivers. And he was unim-pressed with the 400 declarations Uber submitted from drivers who said they don’t want to be employ-ees. In September, he certified a portion of plaintiffs’ prospective class.

Some court watchers say they’ve spotted a pattern—and it doesn’t look good for Uber.

UC-Berkeley law professor Ste-ven Davidoff Solomon is among them. He said Chen seems “favor-ably disposed” to the plaintiffs.

“He is giving plaintiffs the ben-efit of the doubt in almost every circumstance,” Solomon said.

Mark Chenoweth, general coun-sel for the Washington Legal Foun-dation, called Chen’s class certifi-cation order “troubling.” Uber’s own claim that all workers are in-dependent contractors suggested that common issues predominate the case, Chen wrote, finding that factor weighed in favor of class certification.

“Every defendant in Uber’s shoes will claim that the plaintiff-workers are independent contrac-tors,” Chenoweth wrote in an email. “By the court’s strained log-ic, this contested fact would al-ways make class certification ap-propriate, regardless of other rel-evant and significant differences among putative class members.”

In October the U.S. Chamber of Commerce accused Chen of view-ing Uber’s arbitration agreements through an overly harsh “anti-ar-bitration lens.”

His finding that Uber’s arbitra-tion agreements are unenforce-able “reflects the very judicial hos-tility to arbitration that Congress enacted the [Federal Arbitration Act] to prevent,” the Chamber’s lawyers wrote in an amicus curiae brief backing Uber before the Ninth Circuit. “If allowed to stand, the ruling would potentially un-settle many millions of arbitration agreements.”

But Boston-based attorney Shannon Liss-Riordan, who rep-resents Uber drivers, hasn’t al-ways been happy with Chen’s de-cisions either. Last year he nixed plaintiffs’ bid for a nationwide class action, instead allowing them to bring claims only on be-half of California drivers. And he denied certification to a large chunk of plaintiffs’ proposed class—a cut Uber claimed re-duced the class size by as much as 90 percent.

Before rejecting the nation-wide class action, however, Chen had approved it. Last year, after reviewing a second judge’s ruling on a nearly identical question, he acknowledged he’d erred by al-lowing out-of-state Uber drivers to pursue claims under Califor-nia law.

Chen owned up to another possible mistake this past week when he agreed to rethink his ruling tossing out Uber’s 2014 ar-bitration agreement. In light of the California Supreme Court’s August opinion in Sanchez v. Va-lencia, Chen conceded that he may have judged Uber’s agree-ment too harshly.

To Liss-Riordan that proves crit-ics taking shots from afar don’t ap-preciate the care Chen takes in reaching the right decisions. “He’s certainly not knee-jerk ruling for the plaintiffs on anything.”

MiXeD revieWS: Critics are pouncing but litigators describe U.S. district Judge edward Chen as even-handed and conscientious. “He knows this is a high-profile case. He wants to get it right,” said Stephen Hirschfeld of San Francisco’s Hirschfeld Kraemer.

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