Uber Beats Lawsuit Blaming Scandals for Investor Losses
A judge threw out a lawsuit against Uber and ex-CEO Travis Kalanick claiming the company withheld information from investors.
Uber and ex-CEO Travis Kalanick beat a lawsuit claiming the company did not properly disclose the financial impact of scandals to investors. An Irving, Texas-based firefighter pension fund filed a class-action lawsuit against the company, but a California judge tossed out the claims on Friday, Bloomberg reported.
The lawsuit "does not specifically tie any particular misrepresentation by defendants to a decline in Uber's stock price," U.S. District Court Judge Haywood S. Gilliam Jr. wrote in his ruling. The lawsuit only made a "vague and attenuated connection" between Uber's various scandals and a decline in stock price.
U.S. law prohibits companies from withholding information that may affect finances. The lawsuit alleged that, under Travis Kalanick, Uber hid at least six scandals while "successfully soliciting billions of dollars in private investment."
Kalanick stepped down in June 2017 after a series of scandals, including accusations of widespread tolerance of sexual harassment within the company. He was replaced by current CEO Dara Khosrowshahi in late 2017. Khosrowshahi, who has taken a more diplomatic approach to running the company, was left with the task of addressing scandals from Kalanick's tenure, including a massive breach that exposed the data of 57 million users.
Investors have other reasons to grumble about Uber. Despite efforts to streamline the company's operations, Uber remains unprofitable. Nonetheless, the company is expected to undertake an initial public offering (IPO) in 2019, and is expanding beyond its core ride-hailing business with a foray into scooter sharing, and a renewed focus on the Uber Freight trucking business.