Benchmark is suing former Uber CEO Travis Kalanick, alleging violation of fiduciary duty and fraud by seeking to "increase his power over Uber for his own selfish ends". The lawsuit accuses Kalanick of knowingly misleading the board to agreeing to increase the board members to 11 from eight, with Kalanick exclusively involved in filling the extra seats.
Uber's board members are presently searching for a new CEO after Kalanick's departure. They are calling on Benchmark to remove itself from the board and sell at least 75 per cent of its stock, so the firm no longer has rights to appoint members to Uber's board of directors. It's also asking the court to suspend any board-level voting, such as hiring a new CEO, until the court rules on the status of the three additional board seats.
Uber wrote in a statement that the lawsuit is "without merit and riddled with lies". The venture capital firm says that would harm Uber's shareholders, employees, drivers and customers.
Benchmark Capital is saying they would never have approved the board expansion had it been aware of the controversy surrounding Kalanick and Uber's cultural problems, accusing the former CEO of mismanagement and packing the board with supporters.
"It has been publicly reported that Kalanick's behaviour has already interfered with Uber's CEO search: various potential candidates have withdrawn from consideration because of Kalanick's continued participation in the search and his efforts to re-assert influence over the company", Benchmark said in its complaint.
The letter's lead author Pishevar, a close friend of Kalanick, griped that Gurley filed the Thursday lawsuit "on a few hours' notice and within weeks of a personal tragedy, under threat of public scandal". The two remaining seats are vacant.
The letter was referring to a May boating accident that killed Kalanick's mother and injured his father even as the hard-charging Uber co-founder was losing his position as CEO of the company. The lawsuit seeks to invalidate three board seat appointments voted for in June 2016, which will effectively drop Kalanick from the board.
"To date, Kalanick's only response has been an email (sent on or around June 30, 2017) that he is "not ready to sign" the amended Voting Agreement", Benchmark said in the suit.
As a company that has come to be loathed, following a stream of bad publicity following allegations of sexual harassment and discrimination, spying, false advertising and a high-profile lawsuit from Google's parent Alphabet, it was hoped that getting rid of Kalanick would help the company turn the corner.