No feed items found.
Benchmark Capital may have just given another Uber investor some legal ammo by filing a bombshell complaint against the company and its former CEO Travis Kalanick. Central to Benchmark’s allegations that Kalanick committed fraud and breach of fiduciary duty is Alphabet’s self-driving lawsuit against Uber.
According to the complaint, Kalanick did not disclose to the board what he knew about Alphabet’s allegations of trade secret misappropriation before the board signed off on Uber’s acquisition of self-driving startup Otto.
“In sum, the Waymo lawsuit presents significant legal, financial, and reputational risks to Uber — risks that could have been reduced or avoided if Kalanick had disclosed crucial facts about his own apparent knowledge at the time of the Otto acquisition,” the complaint reads. “Instead, as noted above, Kalanick repeatedly emphasized to [Bill] Gurley and others at the time that Uber’s acquisition of Otto and employment of Levandowski — who appears to have taken information from Waymo — would be transformative for Uber’s business.”
The timing of Benchmark’s complaint may prove to be material for Alphabet and its case as the company is scheduled to depose Benchmark partner and former Uber board member Bill Gurley at the end of the month. In deposing Gurley, as well as fellow board member Arianna Huffington, Alphabet is attempting to find out what the board knew about former Uber engineer Anthony Levandowski’s alleged theft of important files.
Alphabet is claiming Levandowski stole 14,000 files from Alphabet before starting Otto, which Uber later acquired.
The complaint lays out in part what Gurley and the board knew and when, so it stands to reason that Alphabet will use it in its questioning of Gurley. The complaint further alleges that Kalanick tried to block the termination of Levandowski before he left, even after Alphabet sued the company. Alphabet has previously argued that Levandowski’s continued employment at Uber signaled the company was okay with his alleged infractions.
Benchmark’s complaint also brings up a document that has become a major point of contention in the Alphabet suit.
Before Uber acquired Otto, the company commissioned security firm Stroz Friedberg to conduct a due diligence report to assess, among other things, whether any of the employees took files from Alphabet. Benchmark claims Kalanick did not disclose the findings of that report to the board or partner and former company board member Bill Gurley.
Alphabet has asked the court to compel Uber to produce the Stroz document as part of discovery. Uber has refused. Since Levandowski asserted his Fifth Amendment rights in the case, his as well as Uber’s attorneys have argued that the document is privileged and should not be turned over to Alphabet.
The board has since seen the document and it’s clear Benchmark, at least, thinks it would have made a material difference on some of its decisions. Specifically, the complaint is seeking to reverse a 2016 decision that allowed Kalanick to create three additional seats on the board.
“Upon information and belief, if the contents of Stroz’s interim findings and the Stroz Report had been disclosed to Benchmark at the time, they would have had a material impact on Benchmark’s decision to authorize the creation of the three new Board seats and grant control over them to Kalanick,” the complaint reads.
The two companies expect to hash out whether Uber has to produce the Stroz report in court again tomorrow. It’s likely Alphabet will use Benchmark’s complaint to bolster its argument to obtain the document.
“As we have long said, there is significant and direct evidence that Uber is using stolen Waymo trade secrets,” a Waymo spokesperson said in a statement. “There is also significant evidence that Uber leadership knew about Levandowski’s misconduct and, rather than do the right thing, tried to conceal it.”
Uber declined to comment.