“Reckless” Uber Sued Once Again

By: Bridget Clerkin December 22, 2017
An investor is suing Uber for reckless business practices that have landed the ridesharing giant in court and the crosshairs of federal investigators.
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When most people are accused of reckless driving, they receive a pricey ticket and points on their license. But Uber may be on the hook for much more.

The ridehailing giant was sued late last week for recklessly driving the company toward the $680 million acquisition of technology start-up Otto—the same purchase that landed Uber in hot water over allegations of trade secret theft by corporate rival Waymo, Google’s self-driving division.

This time, the legal challenge came from within Uber’s own ranks. The suit—officially filed on December 14 in Delaware Chancery Court—was issued by investor Lenza McElrath III, who is also a former senior engineer at the company.

In it, the ex-employee accuses Uber of “an improper and potentially criminal raiding of Google’s assets,” and ignoring “red flags” during the purchasing process that may have pointed toward illegal behavior taking place at Otto.

The start-up was created in the spring of 2016 by former Waymo engineer Anthony Levandowski and acquired by Uber weeks later. Shortly after the transaction took place, Waymo lawyers accused Levandowski of stealing more than 14,000 files from the company before his abrupt departure—and opening Otto as a front in order to pass the information on to Uber. (The Silicon Valley behemoths are currently dueling over those charges in federal court—and Uber is simultaneously dealing with a Justice Department investigation into the claims.)

At least some Uber officials knew about the ill-gotten information that came with the Otto purchase, McElrath alleges. For their part, Uber officials have declined to comment on the development, although a company spokesman pointed out that it’s not the first time McElrath has sued the rideshare corporation.

Dealing with yet another ugly legal situation seems a fitting way for Uber to close out 2017—a tumultuous 12-month ride that saw the company suffer through a litany of crises, including everything from the unceremonious ouster of its bombastic CEO to widespread claims of sexual harassment to allegations of shorting thousands of employees by millions of dollars.

As the year wound on, Uber’s troubles increasingly originated from insiders, including the McElrath suit, the unearthing of a damning letter from another former employee, which may have a huge impact on the Waymo case, and news that early and important investors, Benchmark Capital and Menlo Ventures, were looking to sell their shares in the company at a huge discount.

While some of those issues will linger in the new year, Uber is undoubtedly hoping for a 2018 that follows the first line of Auld Lang Syne: “Should old acquaintance be forgot, and never thought upon.” 

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