The ruling is a partial victory for Travis Kalanick, Uber’s former C. E. O., who has been sued by Benchmark, an investor in the ride-hailing company.
GEORGETOWN, Del. — Travis Kalanick, the former chief executive of Uber, won a partial victory on Wednesday in his nasty legal clash the venture capital firm trying to oust him from the ride-hailing company’s board when a judge ruled that the dispute should be moved arbitration for now.
The decision, by Judge Samuel Glasscock III of Delaware Chancery Court, was the first in a high-profile case brought this month by the venture capital firm, Benchmark, one of Uber’s earliest and largest shareholders. The ruling will enable Mr. Kalanick to shield a portion of the squabble — and any potentially damaging disclosures — behind closed doors.
The judge declined to dismiss the complaint, instead sending it to an arbitrator to decide whether the full case should be handled in arbitration or moved partially back to court at a later date. Benchmark lawyers agreed that a major portion of the case could be discussed behind closed doors.
Judge Glasscock said he was concerned that stockholders excluded from the arbitration process still be able to seek legal recourse and said he would revisit the issue if any came forward.
In its suit, Benchmark has accused Mr. Kalanick of fraudulently obtaining control over board seats in 2016 by withholding information about internal company operations.
The judge said there was “overwhelming evidence” that Uber’s voting agreement was drawn up intending to have an arbitrator weigh whether disputes should continue in arbitration, rather than taking controversies straight to court.
“Mr. Kalanick is pleased that the court has ruled in his favor today and remains confident that he will prevail in the arbitration process, ” a representative for Mr. Kalanick said. “Benchmark’s false allegations are wholly without merit and have unnecessarily harmed Uber and its shareholders.”
On Tuesday Uber announced that Dara Khosrowshahi, the current head of online travel company Expedia, would be its new chief executive .
The battle over Uber — the world’s most valuable privately held company, at $68.5 billion — is being closely watched in Silicon Valley and beyond. The chancery court granted a request from Courtroom View Network to stream Wednesday’s proceedings live online from the court’s remote location in this small city in southern Delaware.
Mr. Kalanick resigned as chief executive in June amid a series of scandals, including a trade secrets lawsuit filed against Uber by the autonomous-car developer Waymo; accusations of a smear campaign against rape victim in India; a federal investigation into a secret software program and accusations of rampant sexism and bullying within the company. This week, Uber confirmed that it was cooperating with a Justice Department inquiry into whether company managers had violated the Foreign Corrupt Practices Act, an anti-bribery law.
Benchmark, which has also invested in tech firms like eBay and Twitter, wants to immediately remove Mr. Kalanick from the board.
Also on Wednesday, Mr. Khosrowshahi met members of the ride-hailing company’s staff at Uber’s San Francisco headquarters, in an effort to show the 16,000 employees that he would usher in a new era there.
Mr. Khosrowshahi, who plans to move into his new job next Tuesday, said Uber should go public in the next 18 to 36 months. He also alluded to Uber’s recent scandals, saying: “This company has to change. What got us here is not what’s going to get us to the next level.”
Mr. Khosrowshahi was accompanied at the staff meeting by Mr. Kalanick, who introduced his successor. Mr. Kalanick “choked up, ” according to the company; he had released a statement on Tuesday signaling his support of the new leadership.
“Casting a vote for the next chief executive of Uber was a big moment for me, ” Mr. Kalanick wrote. “And I couldn’ t be happier to pass the torch to such an inspiring leader.”
The Benchmark suit, filed on Aug. 10, accuses Mr. Kalanick of failing to inform investors about mismanagement at Uber. The venture capital firm argues that special powers Mr. Kalanick negotiated in 2016 — which gave him control over three board seats, including one he occupies — were bestowed under false pretenses and should be nullified.
Mr. Kalanick responded on Aug. 18 with a motion to dismiss the case or move it to arbitration, where he can avoid being forced to go on the record.
Benchmark responded a week later, excoriating Mr. Kalanick’s motion as a “facile response” that did “not dispute the overwhelming factual basis for Benchmark ’s allegations.”
On Monday, the day after Uber board members met to select Mr. Khosrowshahi as the company’s new chief executive, Mr. Kalanick filed another response urging arbitration. Denying the request, his lawyers wrote, “would expose the company to significant and unnecessary harm for no reason other than Benchmark’s desire to use this forum to publicly slander Mr. Kalanick with its fabricated allegations.”
The back-and-forth has also featured interjections from people loyal to Mr. Kalanick who are seeking Benchmark’s removal from the Uber board.
On Aug. 24, Shervin Pishevar and Stephen Russell, early investors in the company, filed a motion to intervene in Benchmark’s complaint against Mr. Kalanick, claiming that the venture capital firm was trying “to unscrupulously gain control of Uber’s board of directors and the Company at the expense of other investors for little more than the cost of a lawsuit.”
Benchmark, the motion said, has “benefited spectacularly” from its involvement in Uber, with its stake ballooning to $8.4 billion from $27 million under Mr. Kalanick’s leadership. Mr. Pishevar and Mr. Russell said in their motion that the firm was now orchestrating a greedy “power grab.”
Several of Uber’s mutual fund investors have downgraded their valuation estimates for the company in recent weeks.
