As Uber Attempts to Turn the Page, Ex-CEO Hit With Fraud Lawsuit

Image: Uber CEO Travis Kalanick
Uber CEO Travis Kalanick delivers a speech at the Third Netease Future Technology Conference on June 28, 2016 in Beijing, China.VCG / Getty Images

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By Alyssa Newcomb

SAN FRANCISCO — As Uber attempts to move past a year of scandals, the company was walloped with a fresh bit of drama this week.

Former CEO Travis Kalanick is being sued by Benchmark, an early investor that owns 13 percent of Uber, in the hope of kicking him off the board of directors.

Benchmark is suing Kalanick over allegations of "fraud, breaches of fiduciary duty, and breaches of contractual obligation," according to a complaint filed in Delaware Chancery Court. Axios was first to report on the lawsuit.

Uber CEO Travis Kalanick delivers a speech at the Third Netease Future Technology Conference on June 28, 2016 in Beijing, China.VCG / Getty Images

The venture capital firm alleges Kalanick "fraudulently" obtained the power in 2016 to name three additional members to the company's board of directors. After Kalanick resigned in June, he appointed himself to one of those seats.

Related: With Travis Kalanick Out, Uber Searches For a New CEO

The complaint alleges Kalanick's motive was to pack the board with allies, eventually paving the way for him to return as Uber's CEO. Two of those seats remain unfilled.

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Benchmark said it never would have granted Kalanick control over the additional seats had it been aware of the "gross mismanagement of Uber and several other significant matters."

Benchmark has a 20 percent stake in the company's voting rights, according to the lawsuit. The privately-held Uber is believed to be worth approximately $70 billion.

A representative for Kalanick said 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," the representative said. "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.”

A representative for Uber declined to comment on the lawsuit. Benchmark could not immediately be reached for comment, though the firm has declined comment to other outlets.

Uber has dealt with several problems this year, including issues of gender bias and harassment in the workplace and a trade-secret-theft lawsuit from self-driving car company Waymo. A tape of Kalanick arguing with an Uber driver over falling fares was also released in February, prompting the CEO to apologize and admit that he needs leadership help.

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Kalanick announced an indefinite leave of absence in June, following the recommendation of an independent report from former attorney general Eric Holder regarding the company's culture. Eight days later, under pressure from the board, he resigned.

Benchmark general partner Bill Gurley, a former Uber board member who helped lead the effort to oust Kalanick, struck a diplomatic tone in June about the resignation. The former Kalanick confidant was said to be one of the key people who urged for him to resign.

While he may be out as CEO, reports have been swirling that Kalanick may have been plotting a return to his old position. On Monday, after hearing "confusion" around the CEO search process, Uber co-founder and board member Garrett Camp said that won't be the case.

"It’s time for a new chapter, and the right leader for our next phase of growth," he told employees. "Despite rumors I’m sure you’ve seen in the news, Travis is not returning as CEO. We are committed to hiring a new world-class CEO to lead Uber."

Yet another sign Uber is looking to move on to its next phase: Ryan Graves, an early Uber employee and the only other person to serve as the company's chief executive, resigned on Thursday as senior vice president of global operations. Graves said he plans to focus on his role as a member of the board, which includes choosing a new CEO.

"In some ways my focus going forward will not actually change very much — it remains all about people, and it’s clear to me the stability of our board of directors, the selection of our new CEO, and the empowerment of our management team is what is needed most," he said.