Uber investor escalates Kalanick clash over CEO search

2017-08-29 09:50 - Chris Dolmetsch, Bloomberg
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New York - Venture-capital firm Benchmark asked a Delaware judge to temporarily block Uber co-founder Travis Kalanick from filling two vacant company board seats, claiming his interference hampers the search for his successor as chief executive officer.

Kalanick, who resigned as CEO in June but remains a board member, “continues to interfere with critical decisions at Uber,” including the executive search, Benchmark said on Thursday in court papers filed in Delaware Chancery Court. Benchmark sued Kalanick earlier this month accusing him of duping the firm to gain access to three additional board seats.

READ: Uber's Kalanick calls Benchmark lawsuit a 'fabrication'

In its filing, the firm asked the judge to bar Kalanick from filling the seats while the lawsuit is pending. Benchmark says the block is needed so that he doesn’t cast a decisive vote on any matter involving Uber’s board, including the CEO search.

“It has been widely reported that Mr. Kalanick’s behavior has caused potential CEO candidates to withdraw from consideration,” Benchmark said in the filing. “Mr. Kalanick’s actions are chilling the search process and threatening harm to Uber (and Benchmark’s investment) by keeping Uber a ‘leaderless, and therefore foundering, corporation.’”

The suit is the latest development in an escalating battle between Kalanick and Benchmark, one of Uber’s early investors which has a 13% stake. One of the firm’s partners, Bill Gurley, led the effort to oust Kalanick as CEO. Kalanick resigned after a series of controversies, including allegations of sexual harassment by his employees and the use of software designed to bypass regulators.

Kalanick has called the lawsuit a “fabrication” and accused the firm of using threats and intimidation to remove him from the company. He said Benchmark was aware of all the events on which its claims are based. The two parties are scheduled to appear in court in Georgetown, Delaware, August 30.

“Benchmark’s suit relies on meritless personal attacks against Travis Kalanick that have no basis in law or fact," Jimmy Asci, a spokesman for Kalanick, said in response to Thursday’s filings. "Benchmark’s shameful tactics and unfounded claims punish Uber, its employees and its investors at a critical time when the company most needs stability and leadership.”

Shervin Pishevar, a friend of Kalanick’s who holds a small stake in Uber, has been taking steps to defend the former chief. Pishevar has detailed his intentions to oust Benchmark from the board through a series of published letters, including one on Thursday.

The latest letter coincided with a formal request to join in the Delaware lawsuit so he can be heard. He alleges that Benchmark is using the suit to gain control of Uber, according to a copy of a filing obtained by Bloomberg. The document couldn’t immediately be verified in court records.

Benchmark countered a contention by Kalanick, and echoed by Pishevar, that the firm picked the “most shameful of times” - less than two weeks after his mother’s funeral - to force him to sign his resignation letter. During that time, the firm said, he continued to give directions and remained “extensively involved” with the company - including helping determine strategy on a report concerning alleged sexual harassment and gender discrimination.

"Indeed, Mr. Kalanick was in Chicago to interview candidates for the chief operating officer position when he was presented with the letter signed by Benchmark and four other major investors representing approximately 40 percent of Uber’s voting power," Benchmark said in the filing.

Benchmark also asked the judge to deny Kalanick’s request to have the suit heard in private arbitration.

"Working with the board, Benchmark is focused on selecting Uber’s new CEO as quickly as possible and without improper interference by Mr. Kalanick," the firm said. "Expediting this action and entering a status quo order are necessary to ensure Uber is protected from Mr. Kalanick’s corrosive influence and can promptly obtain the new leadership it needs to move forward."

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