Venture firm defends surprise lawsuit against Uber, Kalanick

Uber’s biggest investor on Monday pushed back against three board members — saying it waited a month before filing a lawsuit seeking to keep ousted Chief Executive Travis Kalanick from meddling in the search for his replacement.

Silicon Valley venture firm Benchmark Capital, responding to accusations that it unfairly blitzed Kalanick and fellow investors in the $68.5 billion ride-hailing app with last week’s suit, said it had held off legal action for a month because it was promised by the board that changes would be made.

But no action was taken to ring fence Kalanick’s interference, Benchmark said in a letter to Uber employees.

Benchmark’s suit last week alleged that Kalanick, by trying to control the board on its CEO search, was committing fraud and breaching his fiduciary responsibility out of his own “selfish needs.”

Benchmark was promised Uber’s board would be composed of “diverse, independent, qualified” directors — in other words, board members not beholden to Kalanick, it said in the letter.

“Despite agreeing in writing to sign these amendments, [Kalanick] has still not done so,” Benchmark wrote. “We waited and waited, watching as things deteriorated even further … Eventually we felt that we could wait no longer and took action.”

The suit seeks to strip Kalanick of his board seat, alleging he withheld information that would have allowed the directors to block him from stacking the board with three more friendly directors.

Kalanick received sole appointment rights over the extra seats — one of which he took for himself after giving up in June the directorship reserved for Uber’s CEO.

On Friday, a group of Uber investors revolted against Benchmark and blasted its Thursday legal salvo — calling it a “fratricidal” move against Kalanick that could jeopardize Uber’s ability to raise funds.

In its response on Monday, the VC firm accused Kalanick of creating a “power vacuum” on the board to pave the way for him to seize power over the ride-sharing behemoth.

Benchmark also pointed to the 13 pages of recommendations by former Attorney General Eric Holder and Tammy Albarrán — known as the “Holder Report” — that received unanimous approval by Uber’s board in June.

“To describe it as hard-hitting would be an understatement,” Benchmark wrote.

Kalanick countered on Monday that Benchmark’s claims should be considered in mandatory arbitration, as detailed in the voting agreement the VC firm is trying to retract.

Litigating claims about Kalanick’s alleged misconduct in arbitration could keep developments from public scrutiny, according to Bloomberg, which first reported about Kalanick’s Monday arbitration request.

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Source : https://nypost.com/2017/08/15/venture-firm-defends-surprise-lawsuit-against-uber-kalanick/

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