A number of news agencies, including Axios, which broke the story, Reuters and The Wall Street Journal, reported that the suit’s intention is to remove Kalanick from the board and revoke his ability to fill three board seats that he had pushed for in June 2016. The venture firm occupies one seat.
Benchmark also alleged in the suit that had it would never have permitted the seat increase from eight to 11 had it been aware of the “gross mismanagement and other misconduct at Uber.” It claims that by hiding the wrongdoings, Kalanick defrauded the directors into expanding the board and devised a way to maintain control even after his resignation. In fact, Kalanick assumed one of the three seats when he left the company.
“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.”
Reuters also reported that the reaction among tech investors in Silicon Valley has been one of surprise as this is “the nuclear option” for a venture firm like Benchmark. The firm has a $9 billion stake in the $68 billion company.