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Uber Investor Sues Travis Kalanick for Fraud

A lawsuit filed against Travis Kalanick, Uber’s former chief executive, claimed that he failed to disclose a pattern of misbehavior and impropriety inside the company while he was its leader.

SAN FRANCISCO — Travis Kalanick, who built Uber into a transportation behemoth, was ousted as chief executive of the ride-hailing company in June by unhappy investors. Now, one of those investors has escalated the battle by suing Mr. Kalanick, claiming fraud and other transgressions, in an attempt to remove him from Uber’s board of directors.

Benchmark, a Silicon Valley venture capital firm that is one of Uber’s largest shareholders, filed suit against Mr. Kalanick on Thursday in Delaware Chancery Court, accusing the former chief executive of fraud, breach of contract and breach of fiduciary duty.

At the heart of the suit is how Mr. Kalanick obtained outsize control of several Uber board seats in 2016, which Benchmark said he achieved through “material misstatements and fraudulent concealment” of information. Mr. 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 C.E.O. — all to the detriment of Uber’s stockholders, employees, driver-partners, and customers,” the suit said.

The suit added that Mr. Kalanick’s position on Uber’s board “is thus improper and inequitable, and should be invalidated.”

The move signaled a new level of power politicking over the fate of Uber, the privately held company that is valued at nearly $70 billion. Mr. Kalanick, who had built Uber up over the last eight years, stepped down in June after pressure from investors, leaving no clear successor, though he remained on the company’s board. Uber’s directors have since fought behind the scenes over matters including potential candidates for chief executive, with the dissension hampering decision-making.

The suit shines a spotlight on governance issues at Silicon Valley start-ups. Most young technology companies are built atop the partnerships of entrepreneurs and the venture capitalists who fund them. In recent years, start-up founders have gained more control over their companies as investors have agreed to give up more of their authority to get a piece of the hottest firms. Mark Zuckerberg, a founder of Facebook, and Snap’s founders, Evan Spiegel and Bobby Murphy, all control voting rights at their companies, for example.

Benchmark’s suit shows that the balance of power is delicate. Investors will go to great lengths to undercut a company founder if they believe their investment is endangered.

“This is a power struggle over management,” Steven Hill, author of a book on Uber’s economic impact, said of Benchmark’s lawsuit. “The board looked the other way for years while Travis engaged…

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