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Updated Friday
In a blockbuster lawsuit, Uber Technologies Inc. investor Benchmark Capital today sued embattled former Chief Executive Travis Kalanick for fraud and breach of contract and fiduciary duty in an effort to remove him from the board.
The 38-page complaint, filed today in Delaware Chancery Court, was first reported by Axios. It’s a surprising move by a venture capital firm, but it comes amid a constant stream of news about sexual harassment, gender discrimination, a lawsuit by Google Inc. self-driving car unit Waymo Inc. charging that a former Google executive’s self-driving truck startup Otto acquired by Uber involved stolen trade secrets, and other issues.
Update: Axios today reported that a group of Uber investors has asked Benchmark to give up its board seat and sell enough shares to eliminate its right to appoint directors. Those who signed the petition are Shervin Pishevar of Sherpa Capital, Ron Burkle of Yucaipa Cos. and Adam Leber of Maverick Management.
The move is highly unusual for a VC firm to take against one of its portfolio companies, though Uber itself is not the subject of the lawsuit. Although Benchmark partner Bill Gurley has publicly defended the company, it’s clear that he and Benchmark want Uber to cut all ties with Kalanick.
As some observers have pointed out, it’s hard to believe that the board wasn’t aware of many of the incidents of misconduct, especially since some of them were very prominently in the news. So although it may have been deceived by Kalanick about some aspects of his management, the lawsuit’s implication that Benchmark didn’t know about some of the problems seems more legal positioning than reality.
In other news, a top Uber executive also stepped down today. Ryan Graves, the first Uber employee who briefly was its first CEO before becoming senior vice president of global operations, said Thursday he’s vacating that position, though he will remain on the board. That’s interesting in part because Graves, Kalanick and co-founder Garrett Camp have voting control of Uber.
However the lawsuit plays out, and it could take a very long time to play out, the move would seem to make it nearly impossible for Kalanick to return — leaving Uber’s fate squarely in the hands of the board.
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