OAKLAND, Calif. (CN) – A shareholder class action filed Tuesday claims Uber and its former CEO Travis Kalanick gained billions in capital by misleading investors about its misogynist workplace culture and corporate misconduct.
Uber courted more than $10 billion in investment dollars through 2016, reaching a value of nearly $70 billion. But its value has dwindled in the wake of a series of scandals revealed over the last year, including the company's alleged theft of trade secrets and use of technology to evade regulatory authorities, according to a lawsuit filed by a retirement fund for Irving, Texas, firefighters.
"While outwardly representing itself as a start-up darling fueled by technical innovation and entrepreneurial gumption in order to induce billions of dollars of investment, behind the scenes Uber was operating in violation of applicable law and driving its expansion by a company-wide commitment to short-term growth at all costs, no matter the legal, financial or reputational risks involved," the 54-page complaint says.
The lawsuit lays out a laundry list of scandals that rocked the ride-hail giant over the last year, including: the alleged theft of trade secrets from Google-owned competitor Waymo; use of a secret program called "Hell" to steal driver and rider data from its competitor Lyft; use of a covert program, "Greyball," to mislead regulators and evade local authorities; systemic discrimination against female employees; the alleged theft of medical records from a sexual assault victim that sued the company; and a federal investigation into potential violations of the Foreign Corrupt Practices Act.
The scandals forced Kalanick to step down as CEO in June, but he remains a member of the company's board of directors.
According to the lawsuit, Kalanick and the company used a series of misleading statements in media appearances and interviews to push a false narrative about the company's prospects for growth and future success.
The complaint cites Kalanick's statements during interviews in 2014 and 2016, in which he said "[w]e've been working in good faith with regulators" and that the company is "following all the rules."
A report by The New York Times revealed in March that the company used "Greyball" since at least 2014 to identify and circumvent government officials that tried to use the Uber app to investigate potential violations of law in Portland, Boston, Las Vegas, and in foreign cities and countries including Paris, Australia, China and South Korea.
The lawsuit also cites a July 2015 press release that stated, "For many women, Uber is a flexible, equitable opportunity."
In February, a former Uber engineer Susan Fowler wrote a blog post detailing how the company refused to discipline a male manager who sexually harassed her because he was considered a "high performer." Her blog post led other female employees to come forward about Uber's failure to properly investigate or address complaints of sexual harassment.
In response, Uber hired former U.S. Attorney General Eric Holder to investigate the company's corporate culture. Holder proposed a series of "sweeping changes to the company’s leadership, organization, management and culture, offering proscriptions that contradicted defendants’ prior representations about Uber’s culture and workplace," according to the complaint.
While Uber and Kalanick touted the company’s exponential and unprecedented growth to attract investment dollars, the retirement fund says they failed to disclose underlying issues that posed major risks for the company's future growth and profitability.
Investors like mutual fund companies Vanguard Group and T. Rowe Price have marked down the value of their Uber shares by as much as 15 percent, and the company is estimated to have lost $18 billion in market capitalization, according to the complaint.
The Irving Fireman's Relief & Retirement Fund seeks compensatory damages for a class of investors who purchased shares in Uber between June 6, 2014, and September 22, 2017.
It is is represented by Darren Robbins of Robbins Geller Rudman & Dowd in San Diego.
Uber did not immediately respond to an email seeking comment Tuesday afternoon.
Follow @NicholasIovino
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