Uber board sued by pension fund over compliance failures

A lawsuit led by a Detroit pension fund accuses Uber’s management and its board of directors of putting corporate profits ahead of compliance and safety. Filed on Monday in the U.S. District Court for the Northern District of California in San Francisco, the complaint alleges that the ride-hailing company is a “serial compliance offender” that has “knowingly” cut corners. According to the lawsuit, this systemic lack of a compliance culture has directly resulted in thousands of lawsuits by victims who have alleged sexual assault and harassment by drivers, exposing the company and its shareholders to significant risk.

The lawsuit, which names CEO Dara Khosrowshahi, claims board members breached their fiduciary duty to the company and its shareholders by ignoring repeated warnings of compliance and safety failures. The plaintiffs want Uber’s leaders to personally compensate the company for the alleged harm, return certain compensation they received, and implement stronger oversight and compliance measures. According to the complaint, the victims of this lack of compliance culture include sexual assault and harassment victims, customers with disabilities, and unwary consumers looking to subscribe to Uber One. The legal action seeks to hold these individual directors and executives accountable for the decisions that have exposed the company and its shareholders to risk.

Uber has pushed back against the accusations. An Uber spokesperson stated: “This suit ignores important facts and is based on misleading, false narratives from other meritless lawsuits that we have already addressed publicly and in the courtroom,” asserting that the company has already addressed these issues in public and legal forums. The spokesperson characterized the lawsuit as being based on meritless narratives.

This legal action is structured as a derivative lawsuit, which is a legal action where a shareholder sues the company’s directors on behalf of the corporation itself. It is not unusual for companies like Uber to face such litigation. Shareholders have filed similar derivative lawsuits against other technology companies, including Adobe, Apple, and Intel, this year, reflecting a broader trend of investor-led legal actions targeting corporate boards over compliance and governance issues.

Why it matters

This case highlights the growing trend of shareholders holding corporate boards directly accountable for culture and compliance failures. The legal strategy represents a significant risk for technology firms, where governance and oversight are increasingly scrutinized by institutional investors.