Why Uber's board is being sued by shareholders
What's the story
Uber's board of directors has been sued by shareholders for allegedly allowing the company to bypass compliance protocols. The lawsuit, filed in a San Francisco federal court, accuses management and directors of ignoring warnings about sexual abuse by drivers. The plaintiffs are led by a Detroit pension fund and are seeking to hold Uber's directors accountable for their alleged breaches of fiduciary duties and violations of federal securities law.
Allegations detailed
'Serial compliance offender'
The lawsuit also highlights oversight failures that led to lawsuits by the federal government last year. These included allegations of refusing service to disabled passengers as well as deceptive billing practices. The complaint describes Uber as a "serial compliance offender" with an "irredeemably damaged" reputation due to negative media coverage.
Company response
Uber responds to lawsuit
Uber has responded to the lawsuit, saying it "ignores important facts and is based on misleading, false narratives from other meritless lawsuits that we have already addressed publicly and in the courtroom." The shareholders are seeking a derivative lawsuit which would require directors to reimburse Uber for their alleged breaches of fiduciary duties. Chief Executive Dara Khosrowshahi is among those named as defendants in this case.
Safety concerns
Shareholders point to declining user perception of safety
The shareholders have also highlighted that less than 40% of users believe Uber takes safety seriously. This comes after Uber and Lyft sued New York City earlier this month over a law they claimed would prevent them from removing unsafe drivers. The lawsuit comes at a time when Uber's share price has dropped by over 25% since its peak last September.