A new shareholder lawsuit has placed Uber Technologies (UBER) under fresh scrutiny, accusing the company’s board of repeatedly failing to address compliance problems that allegedly contributed to thousands of lawsuits involving driver misconduct and passenger safety.
The lawsuit, filed in federal court in San Francisco, claims Uber directors ignored warnings about alleged sexual abuse by drivers, treatment of disabled passengers, and concerns over subscription billing practices.
Shareholders led by the Police and Fire Retirement System of the City of Detroit said these failures damaged Uber’s reputation and exposed the company to significant legal and financial risks.
According to the complaint, Uber faced 3,571 lawsuits as of June 1 accusing drivers of sexual misconduct. Shareholders also alleged that fewer than 40% of users believe the company takes safety seriously.
Corporate Compliance Under Scrutiny
The lawsuit describes Uber as a “serial compliance offender” and argues that directors failed in their oversight responsibilities.
The shareholders are seeking reimbursement from board members for alleged breaches of fiduciary duties and alleged securities law violations, with any recovered funds going back to the company.
The complaint also references two federal lawsuits filed last year. One accused Uber of routinely refusing service to disabled passengers, including people with service animals and wheelchair users. Another challenged billing and cancellation practices tied to the Uber One subscription service.
CEO Dara Khosrowshahi Named as Defendant
Chief Executive Dara Khosrowshahi is among the defendants named in the case.
Shareholders acknowledged that Khosrowshahi has been less aggressive in testing regulatory boundaries than former management but alleged that compliance shortcomings continued during his leadership.
Uber strongly rejected the claims.
“The lawsuit ignores important facts and is based on misleading, false narratives from other meritless lawsuits that we have already addressed publicly and in the courtroom,” a company spokesperson said.
The legal battle comes during a difficult period for investors. Uber shares have fallen more than 25% since reaching a peak last September, adding to concerns about governance, reputation management, and long-term regulatory risks.
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