Chicago Business Litigation Lawyer Blog
Despite stepping down as CEO of Uber, the ride-sharing start-up he founded, Trevor Kalanick’s troubles are far from over. On top of allegations that the company mistreats its drivers, discriminates against and sexually harasses women at work, and stole trade secrets from another ride-sharing service, Kalanick is now being sued by Benchmark, one of Uber’s investors.
In 2016, Kalanick proposed an amendment to Uber’s charter, giving him the right to nominate three new directors to the start-up’s eight-member board. At the time, Kalanick got Benchmark to approve the amendment, but Benchmark is now saying Kalanick deliberately misrepresented key information regarding the company and the amendment, and is now asking for the amendment to be voided.
Six years ago, Benchmark invested in what was then a tiny ride-sharing start-up, called Uber. It bought a 20% stake in the company, which has since grown to be worth billions of dollars. Kalanick and Gurley (and, by extension, Uber and Benchmark) remained close for years until Kalanick and Uber started getting hit by one scandal after another. At that point, Gurley began to put some distance between himself and Kalanick, finally joining other investors to push Kalanick out as CEO of the company.
Although he was forced to give up his seat on the board when he stepped down as CEO, Kalanick immediately reappointed himself to one of the board seats he controls as a result of the amendment he had added last year, and he still holds a 10% stake in the company. It’s not as much as Benchmark’s 13% stake, but it’s enough to make life at Uber difficult for anyone who opposes Kalanick – something he has allegedly set out to do.
In addition to refusing to give up control of the three board seats, Kalanick has also allegedly interfered with Uber’s search for a new CEO and potential investments from other companies.
In addition to its charges of fraud, misrepresentation, and failure to do his fiduciary duty by his investors, Benchmark’s lawsuit is also seeking a judgment to void last year’s amendment that gave Kalanick so much control over Uber’s board, as well as an injunction against Kalanick participating on the company’s board and interfering with its affairs.
With Kalanick out of the way, Uber’s board would finally have a chance to replace him as CEO, look for new investors, address the company’s scandals, and get back to business as usual.
As the situation stands right now, Benchmark alleges Kalanick is hurting the company by preventing the board from moving forward on initiatives he does not like and allegedly waging war on those involved in ousting him from his CEO position.
As an example, several members of Uber’s board of directors liked the idea of hiring Meg Whitman to replace Kalanick as CEO. Whitman, who is currently working as Hewlett Packard Enterprise’s chief executive, not only has the necessary experience but bringing in a female executive would have helped the company address its sexual harassment allegations, including changing the company culture accordingly, if necessary.
But Kalanick is allegedly uninterested in dealing with the company’s allegedly sexist atmosphere and reportedly blocked Whitman’s appointment in favour of his own list of preferred CEO candidates according to the breach of fiduciary duty. It’s no longer about what’s good for the company or its investors, but what Kalanick, personally, wants according to the lawsuit shareholders filed against him.Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex shareholder, LLC member, class action, copyright, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Skokie and Lincolnwood business dispute lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.