WEBVTT - Benchmark Sues to Kick Kalanick Off Board (Audio) 0:00:00.080 --> 0:00:02.880 It's only getting uglier in the boardroom at Uber. A 0:00:02.920 --> 0:00:06.160 new lawsuit seeks to oust former chief executive Officer Travis 0:00:06.280 --> 0:00:09.600 Kalanik from the board, saying he duped a major investor 0:00:09.640 --> 0:00:12.600 into letting him fill three new seats. The suit was 0:00:12.640 --> 0:00:16.800 filed Thursday in Delaware Chancery Court by Benchmark Capital, which 0:00:16.800 --> 0:00:21.400 ownstent of Uber. Earlier this year, Benchmark led the revolt 0:00:21.400 --> 0:00:25.120 that caused Kalanick to lose his job as CEO. With 0:00:25.160 --> 0:00:27.680 me to talk about this new lawsuit is Bloomberg News 0:00:27.720 --> 0:00:32.160 is Delaware Courthouse reporter Jeff Feely. Jeff, thanks for joining 0:00:32.200 --> 0:00:35.000 me here. UM walk us through. Just give us kind 0:00:35.000 --> 0:00:38.080 of the brief version of the history. How did these 0:00:38.360 --> 0:00:41.319 board seats get created in the first place, and what 0:00:41.400 --> 0:00:46.919 was Benchmark's involvement at the time. Mr Kalinak has been 0:00:47.040 --> 0:00:52.040 with The longtime CEO and founder of Uber. Approached Benchmark 0:00:52.720 --> 0:00:55.720 last year saying that he needed to expand the board 0:00:55.840 --> 0:00:59.040 to help, you know, I think it easier to run 0:00:59.040 --> 0:01:03.520 the company attract outside vests. Benchmark agreed to allow him 0:01:03.560 --> 0:01:06.240 to expand the board from eight to eleven and give 0:01:06.319 --> 0:01:11.520 him the authority to fill those three new seats. Um 0:01:11.920 --> 0:01:17.360 come this year, Benchmark has learned about some problems that 0:01:17.440 --> 0:01:20.600 Mr Kounick ran into at Uber, including a fight with 0:01:20.640 --> 0:01:26.000 a rider, a trade secrets lawsuit filed by a unit 0:01:26.040 --> 0:01:30.399 of alphabet and some other problems, and they basically have 0:01:30.480 --> 0:01:35.200 sued now saying that they were misled. He misled them 0:01:35.240 --> 0:01:39.319 about his management skills, and they would have never allowed 0:01:39.400 --> 0:01:42.479 him the power to expand the board and fill these 0:01:42.480 --> 0:01:45.640 three seats had they known how badly things were going 0:01:45.640 --> 0:01:49.880 at the company. The suit is against Klink or Uber 0:01:50.440 --> 0:01:53.320 are both of them? Uber suit is a nominal defendant, 0:01:53.360 --> 0:01:57.240 that the suit is really against Klink. He's the actor here. Okay, So, 0:01:57.320 --> 0:01:59.880 so tell us a little more about about these allergy 0:02:00.000 --> 0:02:05.040 Stan's um uh pick whichever one uh strikes you as 0:02:05.080 --> 0:02:08.320 being the most worthy of discussion. But but but how 0:02:08.400 --> 0:02:11.639 is it that that Benchmark says that they were deceived 0:02:11.680 --> 0:02:14.679 so badly that that they ought to be able to 0:02:14.680 --> 0:02:17.919 win this lawsuit? Well, I think the I think that 0:02:18.600 --> 0:02:21.919 one of the tougher issues from Mr Kalinak is this 0:02:22.040 --> 0:02:26.280 trade secrets case. Uh, the secrets that are involved our 0:02:26.360 --> 0:02:30.560 technology governing self driving cars. The folks at Alphabets say 0:02:30.560 --> 0:02:33.200 that some of their former employees that went to work 0:02:33.440 --> 0:02:39.760 for UM. Uber's self driving unit took the ideas and 0:02:39.800 --> 0:02:43.400 some of the technology with them. They sued the company. 0:02:43.919 --> 0:02:47.240 The self driving unit had been one of the you know, 0:02:47.280 --> 0:02:51.160 the crown jewels of the company UM and that came 0:02:51.200 --> 0:02:54.320 to light, you know, after Mr Kalnik made the request 0:02:54.400 --> 0:02:57.800 to span the board. UM that is going to be 0:02:57.880 --> 0:03:00.920 a major issue in the case aces whether or not 0:03:01.720 --> 0:03:04.680 you know that was hidden and you know, whether he 0:03:05.800 --> 0:03:08.720 used that self driving unit as one of the things 0:03:08.760 --> 0:03:11.560 to show how he was gonna make Cooper you know, 0:03:11.600 --> 0:03:14.760 the best things to slice bread and uh so it'll 0:03:14.800 --> 0:03:19.480 be very interesting. So how how unusual is it for 0:03:19.880 --> 0:03:25.280 an investor like this, a major investor to file a 0:03:25.360 --> 0:03:30.240 lawsuit over the composition of a board. It's unusual. We've 0:03:30.240 --> 0:03:33.720 had suits where major investors would sue companies like Fairness, 0:03:34.360 --> 0:03:38.520 seeking to recoup investments in companies, saying they were duped 0:03:38.520 --> 0:03:42.520 into making the investment. Fairness is well known um as 0:03:42.520 --> 0:03:49.440 having problems over touting its blood testing capabilities. UM It's uh, 0:03:49.600 --> 0:03:55.320 it's it's not common. Let's say that some some people 0:03:55.360 --> 0:03:58.920 have made the comparison you and I were discussing earlier 0:03:58.960 --> 0:04:03.400 with Viacom in sum to Redstone. Is that an apt comparison. 0:04:03.400 --> 0:04:08.440 That's really not an apt um um example, because Mr 0:04:08.520 --> 0:04:10.720 Ridstone was the founder of the company and he was 0:04:10.760 --> 0:04:14.480 the one who removed uh some board folks in a 0:04:14.520 --> 0:04:19.280 fight for control. Here we have the board removing the 0:04:19.279 --> 0:04:22.760 CEO and founder. This may be more like the situation 0:04:23.400 --> 0:04:27.039 with the former CEO of American Apparel, Dug Charne, who 0:04:27.200 --> 0:04:31.440 was shown the door over some personal misconduct issues at 0:04:31.480 --> 0:04:34.920 his company. So this that may be more analogy has 0:04:34.960 --> 0:04:42.719 given Mr Kuni's history of um volcanic eruptions. Jeff, you 0:04:42.760 --> 0:04:44.960 spent a lot of time covering that that courthouse there. 0:04:45.000 --> 0:04:47.240 How how quickly do lawsuits moved there? Do you have 0:04:47.240 --> 0:04:52.280 any or of sense about a time frame for well? 0:04:52.480 --> 0:04:56.720 Chance of court was set up to provide speedy decisions, 0:04:56.760 --> 0:05:00.440 and these corporate matters, these particular cases where someone is 0:05:00.520 --> 0:05:04.360 challenging the appointment or election of a director, are by 0:05:04.360 --> 0:05:08.920 statute put on a fast track basis. So some commentators 0:05:08.920 --> 0:05:10.640 have said, this could be we could have a decision 0:05:10.640 --> 0:05:13.840 in this case within two months. Fantastic. I hope you'll 0:05:13.880 --> 0:05:15.440 be around for two months, Jeff, because we have you 0:05:15.480 --> 0:05:19.000 back on to talk about it. Um what hope springs 0:05:19.000 --> 0:05:22.800 eternal on that score. Greig all right, um, And and briefly, 0:05:22.800 --> 0:05:25.800 Travis kalin Nick, Uh, what have you heard from him 0:05:25.800 --> 0:05:31.560 about the lawsuit? His representatives have said that the lawsuits, 0:05:32.400 --> 0:05:36.440 the lawsuit is filled with inaccuracies and personal innuendos, and 0:05:37.240 --> 0:05:40.880 he will he wants to have his day in court. Okay. 0:05:40.920 --> 0:05:44.800 That was Bloomberg's Jeff Feely talking about new lawsuit filed 0:05:44.839 --> 0:05:49.120 against former Uber CEO Travis kal Nick, saying that he 0:05:49.200 --> 0:05:53.120 duped a major investor into letting him fill three new seats, 0:05:53.400 --> 0:05:55.880 create three new seats and fill them on the board 0:05:55.920 --> 0:05:58.040 of Uber. Jeff, Well, look forward to talking to you 0:05:58.080 --> 0:06:01.520 again about this in the future. Coming up on Bloomberg Law, 0:06:01.520 --> 0:06:04.040 we're going to talk about the big business of litigation 0:06:04.080 --> 0:06:07.080 finance with the managing director of the biggest company in 0:06:07.080 --> 0:06:07.560 the business.