On Monday, shareholders of Uber Technologies initiated a lawsuit against the company's board, alleging that management and directors have compromised compliance standards, resulting in numerous lawsuits related to sexual assault and harassment. The complaint, lodged in a federal court in San Francisco, claims that board members disregarded multiple warnings—both internal and external—regarding Uber's purported negligence in addressing sexual misconduct by its drivers.
Additionally, shareholders pointed out that the board's lack of oversight contributed to two lawsuits filed by the federal government last year. One of these lawsuits accused Uber of consistently denying service to disabled passengers, including those with service animals or foldable wheelchairs, while the other highlighted misleading billing practices associated with the Uber One subscription service.
The complaint described Uber as a "serial compliance offender," asserting that the company's reputation has been "irredeemably damaged" due to adverse media coverage. A representative from Uber responded, stating that the lawsuit overlooks critical facts and is based on misleading narratives from previously addressed lawsuits.
The lawsuit, categorized as a derivative action, aims to hold directors accountable for alleged breaches of fiduciary duties and violations of securities laws, with any recovered funds benefiting the shareholders. Among the defendants is CEO Dara Khosrowshahi, who shareholders claim has been less aggressive in pushing regulatory boundaries compared to his predecessor, yet still falls short on compliance.
As of June 1, Uber was facing 3,571 lawsuits in San Francisco related to allegations of sexual misconduct by drivers. Shareholders noted that less than 40% of users believe Uber prioritizes safety. Earlier this month, Uber and its competitor Lyft filed a lawsuit against New York City, challenging a new law that they argue would hinder their ability to remove unsafe drivers. Since reaching a peak on September 22, Uber's stock price has dropped by over 25%.
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