Things At Uber Just Got Worse: Benchmark Is Now Suing Former CEO Travis Kalanick For Fraud
One of Uber's earliest and largest investors, Benchmark, is now suing both the company and former CEO Travis Kalanick, the latter for fraud, breach of contract, and breach of fiduciary duty.
The venture capital firm filed the lawsuit in Delaware Thursday, Aug. 10, accusing Kalanick of pulling strings to eventually return as the company's CEO. It claims Kalanick deliberately misled investors and found a way to remain involved with the company's decision-making via board seats that Benchmark alleges were "fraudulently procured."
Benchmark isn't actually suing Uber, the company itself. This is only due to Delaware's laws, according to Recode. It is not pursuing to any relief from Uber.
Why Benchmark Sued Kalanick
Benchmark claims that Kalanick is attempting to fill Uber's board with "loyal allies" to help him return to his former position. In doing this, Benchmark says Kalanick will bypass scrutiny for past actions and help "clear the path" to becoming once again Uber's leader.
This past June, Kalanick was forced to vacate his CEO position amid the company's series of scandals and workplace culture controversies. Though one of the most significant private companies in Silicon Valley, Uber has been facing allegations of sexism, misbehavior at the executive level, and others. Kalanick has been tied to these internal crises, with publications painting him as a "pugnacious" CEO with a relentless approach to dealing with business.
Shortly after the allegations put Uber in a bad light, Kalanick himself admitted he needed help with leadership.
Uber's Search For A New CEO
Uber's board members are presently searching for a new CEO after Kalanick's departure. For a while it was believed Hewlett-Packard Enterprise CEO Meg Whitman would take the job, but she later declined. Ample speculation suggested Uber will hire a woman for the position because that could somehow help with the sexist allegations, but with Whitman out, the selection is now only composed of men.
All throughout this process, several reports were published claiming Kalanick was planning to "Steve Jobs" the whole situation, referring to Steve Jobs's firing and eventual return that led Apple to later triumph.
Besides claims of fraudulent behavior, Benchmark's lawsuit also notes several controversies that have put Uber in a pickle, including its dispute with Waymo, a mishandled rape case in India, sexist allegations, and its alleged tracking program called Greyball. The lawsuit said Kalanick had known all these but failed to properly disclose them.
While including Uber, the company, in the lawsuit seems a mere formality, the claims stated therein will undoubtedly hurt Uber too and not just Kalanick because it details past actions performed while Kalanick was still the CEO.
A spokesman for Kalanick responded to Benchmark's lawsuit:
"The lawsuit is completely without merit and riddled with lies and false allegations."