Mayhall Fondren Blaize

Business litigation riddles top officers, shareholders of Uber

Lawsuits involving the owners of large business entities comprise a distinct area of litigation in Louisiana and other states. Shareholders often join together to sue the corporate entity that they assert is not being run in a proper or legal manner. In some instances, this kind of business litigation can get quite personal, as when major shareholders sue the CEO personally for mismanaging the company and/or regarding any number of fraud or concealment claims.

That is the kind of dynamic that is currently playing out within the upper echelons of Uber, the privately held corporate entity that created history by joining the digital world to the private ride-hailing industry. Travis Kalanick founded Uber and served as its chief executive officer since its founding just eight years ago. Various internal conflicts led to Kalanick's ouster as CEO of the company in June.

However, he managed to stay on the Board of Directors and to remain a key figure in the company's decision-making direction. He also managed to control two other seats on the Board in addition to his own. Recently, Benchmark, a venture capital firm that is a major stockholder in Uber, sued Kalanick in the Delaware Chancery Court, where the company is incorporated or otherwise registered. The lawsuit accuses Kalanick of fraud, breach of contract and breach of fiduciary duty regarding the former CEO's maneuvering to stay on the Board and control two seats in addition to his own.

Benchmark claims that Kalanick has plotted to hide the problems that developed at Uber and conspired fraudulently to retain the Board seats. The suit claims that Kalanick's maneuvers are geared to return him to power as CEO. Kalanick responded that the claims were baseless. Generally, such suits involve the fiduciary duty that top-echelon officers owe to the stockholders. The nature of such business litigation in Louisiana and other states can manifest in a wide variety of different factual settings.

Source: The New York Times, "Morning Agenda: Uber Investor Sues Ex-C.E.O. Travis Kalanick", Chad Bray, Aug. 11, 2017

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