Benchmark Capital, one of Uber’s earliest investors and largest shareholders, is suing Uber co-founder and ex-CEO Travis Kalanick on claims of fraud, breach of fiduciary duty and breach of contract. It’s an unusual and dramatic move in Silicon Valley to see a venture firm sue one of the executives it backed.
Axios previously reported the suit.
The filing alleges that Kalanick made “material misstatements” and hid crucial information about company problems from the board in order to attain more power there.
It specifically claims, “Kalanick intentionally concealed and failed to disclose his gross mismanagement and other misconduct.” Among other things, it calls out “Kalanick’s personal involvement in…an Uber executive’s alleged theft of the medical records of a woman who was raped by her Uber driver in India.”
The suit revolves around a June 2016 decision by Kalanick to increase the size of the board by 3 seats, from 8 to 11. Kalanick named himself to one of those seats after stepping down as CEO earlier this year.
Benchmark now says they never would have allowed the expansion if they’d known about widespread allegations of sexual harassment within the company, and the pending conflict with Alphabet subsidiary Waymo over the alleged theft of trade secrets related to self-driving cars.
What Benchmark wants, the filing suggests, is to boot Kalanick from the board and Uber management for good, while kicking the number of board members back down to 8 total. The firm is also seeking “an award of related damages caused by Kalanick’s fraud.”
Earlier today, Uber’s first employee and original CEO, Ryan Graves, stepped down as the company’s senior vice president of global operations, but announced that he will maintain his board position there.
For now, Kalanick holds 10% of stock and 16% of voting rights in Uber, while Benchmark has 13% of stock and 20% of voting rights. The ride-hailing pioneer was valued around $70 billion in its last funding round, but is now reportedly considering selling shares at a price that would value it at $40 billion to $45 billion.
A spokesperson for Kalanick told CNBC in an emailed statement:
The lawsuit is completely without merit and riddled with lies and false allegations. This is continued evidence of Benchmark acting in its own best interests contrary to the interests of Uber, its employees and its other shareholders. Benchmark’s lawsuit is a transparent attempt to deprive Travis Kalanick of his rights as a founder and shareholder and to silence his voice regarding the management of the company he helped create. Travis will continue to act in the interests of Uber and all of its stakeholders and is confident that these entirely baseless claims will be rejected.
Benchmark declined to comment beyond what’s contained in the filing.
Here’s the full filing: