Venture capital firm Benchmark Capital, one of the investors in Uber, is suing former Uber Chief Executive Officer (CEO) Travis Kalanick to force him off the board of the ride-services company and rescind his ability to fill three board seats, according to the lawsuit.
The lawsuit filed on Thursday accuses Kalanick of concealing a range of misdeeds from the board and scheming to retain power at the company, even after he was forced to resign as chief executive of Uber Technologies Inc in June following a series of scandals.
The company is currently seeking a new CEO, a search that has proved difficult.
Benchmark's lawsuit marks a rare instance of a Silicon Valley investor suing the central figure at one of its own start-ups. The well-regarded venture firm was an early investor in Uber and said in the lawsuit that it owns 13 percent of Uber and controls 20 percent of the voting power.
Kalanick issued a statement calling the lawsuit "completely without merit and riddled with lies and false allegations." The statement accused Benchmark of "acting in its own best interests contrary to the interests of Uber," and denounced the legal action as a "transparent attempt to deprive Travis Kalanick of his rights as a founder and shareholder."
Uber and Benchmark Capital declined to comment.
Around Silicon Valley, the case surprised many technology investors, who deemed it "the nuclear option" for a venture firm.
At the $68 billion valuation that Uber achieved last year, Benchmark’s stake would be worth almost $9 billion.
Bill Gurley, the venture capitalist who led Benchmark's investment into Uber, was once a mentor to Kalanick and one of his closest confidants.
Gurley resigned from Uber's board in June after he grew increasingly unhappy with Kalanick's behavior, according to sources close to the situation.
In its lawsuit, Benchmark argued that Kalanick was aware of these problems when Uber's board in 2016 agreed to expand the number of voting directors from eight to 11, with Kalanick having the sole right to fill those seats.
Benchmark, which still holds one of the seats on the Uber board, said that it never would have given Kalanick the three extra seats if it had known about his "gross mismanagement and other misconduct at Uber," the lawsuit said.
Kalanick appointed himself to one of the seats after he was ousted as CEO, and the other two remain vacant.
Uber is seeking not only a CEO but also a number of other senior executives, and for now is being run by a group of 14 employees
Benchmark's lawsuit alleged that Kalanick was scheming to regain power by attempting to "pack the board."
The lawsuit seeks an injunction to block Kalanick’s right to appoint new directors, asserting he had agreed to give up those rights when he stepped aside as CEO.
Kalanick's continued role at the company has complicated the CEO search and scared off some good candidates, according to one Uber investor.
The lawsuit was first reported by news website Axios.
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