Judge Sends Benchmark’s Lawsuit against Former Uber CEO to Arbitration

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Summary: Benchmark’s attempt to remove Travis Kalanick from Uber’s board of directors has been moved to arbitration.

Uber CEO Travis Kalanick was granted a legal victory on Wednesday when a judge ruled that the case against him was to be moved to arbitration.

  

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Kalanick was sued by Benchmark Capital, a venture capital firm that was an early investor in the billion dollar company he founded, Uber. At first a close ally, Benchmark was behind Kalanick’s forced resignation in June, and in August, the company filed a lawsuit against Kalanick, asking that he remove himself from the board of directors.

Kalanick’s spokesperson said that he was “pleased” with the court’s decision to move the case to arbitration.

“Mr. Kalanick is pleased that the court has ruled in his favor today and remains confident that he will prevail in the arbitration process,” a Kalanick spokesperson said. “Benchmark’s false allegations are wholly without merit and have unnecessarily harmed Uber and its shareholders.”

Benchmark said that it was looking forward to proving its position.

“We look forward to presenting the facts as the case proceeds,” a spokesperson for Benchmark said. “This case is fundamentally a question of integrity and values and the facts will fully support Benchmark’s position.”

Lawyers for both sides met in Georgetown, Delaware to give their arguments in front of Judge Samuel Glasscock, who eventually sided with the controversial ex-CEO.

In Benchmark’s lawsuit, the company said that Kalanick had defrauded them by not disclosing Uber’s numerous problems, including complaints of rape by drivers in India and sexual harassment in the management ranks. Benchmark said they were misled by Kalanick into giving him the power to appoint three board seats, and Benchmark asked that the power be restricted and that he be removed.

Kalanick responded to the lawsuit by saying this was a personal attack. His lawyers successfully argued that all problems not involving intellectual property were to be submitted to arbitration, according to the Voting Agreement at Uber.

The fight between Benchmark and Kalanick has divided those in power at Uber, but one investor Shervin Pishevar took Kalanick’s side. On Wednesday, he released a statement that Benchmark took advantage of Kalanick’s mother’s death and forced him to resign while he was mourning.

“We write with the spirit of Bonnie Kalanick, who raised her son with deep unconditional love and unfading faith in his ability to do good for the world. Whose tragic and untimely death was used against her son at his most vulnerable, unspeakable time of pain,” Pishevar wrote. “They chose to strike at a moment of a devoted son’s retreat and leave of absence to mourn the absence of the inviolable love of his mother. In doing so, they join the very corruption her son had devoted such a fervent passion to fight.”

While Pishevar was more outspoken, investors who support Benchmark spoke to The Los Angeles Times anonymously. They said that they believed that removing Kalanick would provide a clean slate for Uber’s new CEO, Dara Khosrowshahi, who took the helm of the company this week.

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