Ex-Uber CEO Kalanick defends right to board seat
Fighting back against an explosive lawsuit filed by a prominent investor, ex-Uber CEO Travis Kalanick has defended his right to remain on the ride-hailing company’s board, calling the litigation a “personal attack” against him.
Kalanick filed his first substantive response to the lawsuit in the Delaware Court of Chancery on Thursday night, further escalating the contentious and unusual legal battle between the world’s most valuable private company and the investor poised to rake in billions from its IPO or sale. Uber investor Benchmark sued last week to further distance Kalanick — who already has been forced to give up his CEO role — from the company he founded, by kicking him off the board and preventing him
from filling two additional board seats with his supporters.
The contentious legal battle comes as Uber is dealing with a host of other challenges — the company is searching for a new CEO, fighting a separate lawsuit in which rival Waymo is accusing Uber of stealing its self-driving car technology, and struggling to turn its image around after multiple reports surfaced detailing a culture of sexual harassment and sexism within the company.
In the Thursday filing Kalanick claimed Benchmark “initiated this action as part of a public and personal attack,” and fabricated its fraud claim against him. Kalanick also attacked the firm for taking advantage of him, forcing him to resign as CEO “at the most shameful of times” — while he was mourning his mother’s death.
Benchmark — which holds an investment in Uber now worth $8.4 billion, according to one report — sued Kalanick and Uber last week, accusing Kalanick of fraudulently revising the company’s voting agreement in 2016 to secure control of three board seats. The firm says Kalanick concealed many of the problems that have now erupted into scandals, including the events leading up to the Waymo lawsuit and the culture of sexual harassment and gender discrimination within Uber.
The lawsuit claims that Kalanick knew Benchmark would never approve his grab for three board seats if the investors knew about his “gross mismanagement and other misconduct.”
Kalanick called Benchmark’s fraud claim a “fabrication.” “Indeed, in the 14 months since the challenged amendments were signed, Benchmark never suggested that the amendments were ‘fraudulently induced,’ or in any way unenforceable,” his lawyers wrote, “although all of the events on which it bases its claim of fraud were well known to Benchmark.”
Kalanick also attacked the Benchmark partners for making moves to oust him while he was still grieving his mother’s sudden death in a boating accident last May.
“Through May 2017, Benchmark outwardly supported Kalanick as CEO of the company,” his lawyers wrote. “At some point, however, it began secretly planning an effort to oust him. It executed its plan at the most shameful of times: immediately after Kalanick experienced a horrible personal tragedy.”
On June 20, a week after expressing support for Kalanick as CEO, and a week and a half after his mother’s funeral, Benchmark investors appeared at Kalanick’s Chicago hotel room with a letter demanding that he resign, according to the filing. In that letter, Benchmark made no mention of being defrauded into giving Kalanick the disputed board seats, Kalanick’s lawyers claimed. Instead, they wrote, Benchmark acknowledged that he had control over those seats.
Kalanick nabbed those three board seats in 2016, when shareholders amended Uber’s voting agreement to reflect a new $3.5 billion investment by Saudi Arabia’s investment fund. Kalanick took one for himself in June, when he resigned as CEO and was forced to give up the CEO board seat. The other two seats remain vacant.
Kalanick’s filing attempts to paint Benchmark’s lawsuit — not his own conduct — as detrimental to the company. He points to a recent statement the Uber directors not involved in the lawsuit made, saying they were “disappointed” that the board in-fighting had led to litigation.
“Thus, contrary to Benchmark’s suggestion that its lawsuit is ‘in the best interests of Uber,’ every other member of the board disagrees,” Kalanick’s lawyers wrote.
Kalanick’s legal team on Thursday also made a push to force the lawsuit out of court and into private arbitration — where the proceedings would be kept hidden from the public eye. The lawyers claim the voting agreement between Kalanick and Benchmark contains an arbitration provision that applies to the case.