Kalanick Fights Back Against Benchmark Partners Lawsuit

Travis Kalanick. Photo: aradaphotography / Shutterstock.com

It’s not news that former Uber CEO Travis Kalanick is being sued by early investor Benchmark Partners.

What is news is that Kalanick isn’t going down without a fight.

Benchmark is suing Kalanick for fraud, breaches of fiduciary duty, and breaches of contractual obligations, according to a complaint filed on August 10 in Delaware. “Kalanick’s overarching objective is to pack Uber’s Board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO—all to the detriment of Uber’s stockholders, employees, driver-partners, and customers,” Benchmark said in the complaint. 

Benchmark wants to nullify a 2016 agreement that created three new board seats over which Kalanick would have control. It also wants Kalanick to be removed from Uber’s board and banned from participating in Uber’s CEO replacement process.

The investment firm said it would not have agreed to governance changes that gave Kalanick much more power over Uber’s board if it had known about the scandals that were about to come to the fore. “Kalanick intentionally concealed and failed to disclose his gross mismanagement and other misconduct at Uber,” Benchmark said in its complaint.

Last week, Benchmark (which holds one seat on Uber’s board) moved to expedite the case and asked Vice Chancellor Sam Glasscock III to issue an order that would reduce Kalanick’s voting rights and prevent him from filling the other two board seats he created while Uber is searching for a CEO. 

Kalanick fought back with an August 17 filing saying that the dispute over his control of the three board seats must be settled in arbitration, not in a lawsuit. In a 15-page court filing, Kalanick wants to strip the Delaware Court of Chancery of its jurisdiction over the lawsuit and move what Kalanick referred to as a “public and personal” attack into a confidential setting.

“Benchmark’s claims are subject to mandatory arbitration, and consequently this court lacks subject matter jurisdiction to resolve then,” Kalanick’s attorneys said in the filing. “Because Kalanick’s motion to dismiss goes to the jurisdiction of the court, it must be resolved before the court enters any scheduling order governing litigation of Benchmark’s claims, permits discovery or grants and relief against Kalanick.”

Kalanick and Benchmark have told Glascock that they want the dispute resolved quickly. However, they disagree on the order in which the motions should be handled.

Glasscock said to both parties that he wants to hear the competing motions to expedite and to dismiss the case “promptly.” Neither Benchmark nor Kalanick has agreed to a schedule, but the court papers seem to show that both parties could brief the issues by the end of the week.