In Open Letter to Uber Employees, Benchmark Calls Ex-CEO Kalanick's Behavior 'Unacceptable'

It looks like the battle between Benchmark and Kalanick is just getting started. 

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Investment firm and major Uber shareholder Benchmark is suing ex-CEO Travis Kalanick, accusing him of fraud and of packing Uber's board with acolytes. But Benchmark's disdain for Kalanick apparently doesn't stop there. On Monday, the firm published an open letter to Uber employees explaining its actions. In it, Benchmark claims Kalanick has "undermined" the search for a new Uber CEO, accuses Kalanick of trying to engineer his own return to that position, and warns that this should not be allowed to happen.

The lawsuit centers around a June 2016 decision that expanded Uber's board from eight seats to 11, and gave Kalanick the power to fill those three new seats. Kalanick initially gave one of those seats to himself, while the other two remain unfilled. Benchmark holds a seat on Uber's board, and supported the decision at the time.

According to Business Insider, Benchmark alleges that Kalanick agreed to turn over control of the two open seats when he resigned in June, but refused to complete paperwork formalizing that. In the letter, Benchmark said it warned Kalanick a month ago that it would sue if he didn't sign that paperwork.

The letter goes on to criticize Kalanick's handling of Uber's various crises, including allegations of sexual harassment by a female former employee. Benchmark said it pushed for Kalanick's resignation because "failing to act would have meant endorsing behavior that was utterly unacceptable in any company, let alone a company of Uber's size and importance."

Elsewhere in the letter, Benchmark indicated that the situation at Uber may be worse than it seems.

"While most of you have not had the opportunity to read the full 'Holder Report' written by Tammy Albarrán and Eric Holder at Covington, Benchmark's representatives on Uber's board have," the letter said. "To describe it as hard-hitting would be an understatement."

Benchmark claims it is this poor performance, not a power struggle, that motivated the lawsuit. While other shareholders have accused Benchmark of fomenting another scandal for no reason, in the letter the firm insisted that "this isn't about Benchmark versus Travis," and said that "we are sorry that it has taken us so long to do the right thing."

Kalanick issued his own statement in response to the lawsuit, saying he was "baffled" by Benchmark's "hostile actions." He said he will "continue to work tirelessly with the board to identify and hire the best CEO to guide Uber into its next phase of growth and ensure its continued success."