Uber Technologies’ shareholders have taken legal action against the company’s board, alleging negligence in compliance matters that have resulted in numerous lawsuits related to sexual assault and harassment. The lawsuit, filed in a San Francisco federal court by investors led by a Detroit pension fund, claims that the board disregarded warnings regarding Uber’s failure to address sexual abuse by its drivers.
The shareholders also pointed out that the board’s oversight failures played a role in two lawsuits brought against Uber by the federal government last year. One lawsuit accused Uber of discriminating against disabled passengers, while the other alleged deceptive practices in the company’s subscription service.
According to the complaint, Uber has gained a reputation as a “serial compliance offender” due to negative media coverage, leading to irreparable damage to its image. In response, a spokesperson for Uber refuted the allegations, stating that the lawsuit is based on misleading information from previous meritless lawsuits that have already been addressed.
The lawsuit, known as a derivative lawsuit, seeks to hold the directors accountable for breaching fiduciary duties and violating securities laws, with any monetary awards benefiting the shareholders. CEO Dara Khosrowshahi is named as a defendant in the lawsuit, with shareholders criticizing him for not adequately prioritizing regulatory compliance during his tenure.
As of June 1, Uber was facing over 3,500 lawsuits related to sexual misconduct by drivers. Shareholders have also highlighted concerns about user perceptions of Uber’s safety measures, with less than 40% of users believing that the company takes safety seriously.
Recently, Uber and its competitor Lyft filed a lawsuit against New York City to challenge a new law that they argue would hinder their ability to remove drivers who pose a safety risk to passengers. Uber’s stock price has declined by more than 25% since reaching its peak in September last year.