Uber Board Sued by Shareholders Over Alleged Failure to Oversee Sexual Assault Risks

WILMINGTON, Del. — A major shareholder has filed a lawsuit against the board of directors of Uber Technologies, Inc., including CEO Dara Khosrowshahi, alleging they breached their fiduciary duties by failing to adequately oversee the company's management of sexual assault and harassment risks. The derivative lawsuit was filed in Delaware's Court of Chancery around June 21 by the Employees' Retirement System of Rhode Island.

The complaint argues that the board consciously disregarded its responsibilities, ignoring numerous red flags and failing to implement meaningful safety measures despite years of public reports about thousands of sexual assaults involving drivers on its platform. This alleged inaction, the suit claims, has resulted in significant financial and reputational harm to the company, exposing it to costly litigation, regulatory scrutiny, and damage to its brand.

This lawsuit against Uber's board is a high-profile example of a lesson we see play out constantly with businesses of all sizes. In our experience, leadership teams often get so focused on growth, market share, and product development that they treat compliance and risk oversight as secondary functions—a box to be checked rather than a strategic imperative. This is a critical mistake. A failure to proactively manage operational and reputational risks doesn't just create legal exposure; it erodes company value, scares off potential investors, and can ultimately lead to costly, distracting, and damaging litigation. Proactive governance isn't just for publicly traded giants. For any growing company, establishing a clear framework for identifying and mitigating potential liabilities is essential for sustainable success. This is a core part of the financial risk management services we provide at C&S Finance Group LLC. We help clients build the internal controls and oversight processes necessary to protect their enterprise value. To learn more about strengthening your company's governance, visit us at csfinancegroup.com.

At the heart of the shareholder suit is the claim that Uber’s board failed in its oversight duty, a legal concept known as a Caremark claim, which requires plaintiffs to show that directors utterly failed to implement any reporting or information system or, having implemented such a system, consciously failed to monitor its operations. The lawsuit leverages Uber's own published safety reports, which have disclosed thousands of reports of sexual assault related to its U.S. rides in recent years, as evidence that the board was aware of the pervasive problem but failed to act decisively.

The legal action is structured as a derivative lawsuit, meaning the shareholder is suing on behalf of the corporation itself. Any financial recovery from the lawsuit would be returned to Uber's corporate treasury, not paid directly to the Rhode Island pension fund. The primary goal of such suits is typically to hold directors and officers accountable for alleged misconduct and to compel changes in corporate governance and oversight procedures.

This case represents the latest chapter in Uber's long and troubled history with safety and corporate culture. The company faced intense criticism for its aggressive, win-at-all-costs culture under co-founder and former CEO Travis Kalanick, which culminated in a series of scandals in 2017. The appointment of Dara Khosrowshahi as CEO was widely seen as an attempt to reform the company's image and practices. Under his leadership, Uber has invested in new safety features and began publishing its transparency reports.

However, the lawsuit filed by the Rhode Island pension fund suggests that these measures have been insufficient from a governance perspective. The complaint alleges that the board's oversight remained lax and that its public commitments to safety were not matched by effective internal controls and policies. By failing to adequately address the root causes of the safety issues, the suit contends, the board allowed the company to remain exposed to significant legal and financial liabilities, ultimately harming shareholder value.

The implications of the lawsuit extend beyond Uber. It underscores a growing trend of shareholder activism focused on non-financial risks, including environmental, social, and governance (ESG) factors. Corporate boards across all industries are facing increasing pressure to demonstrate active and informed oversight of issues like public safety, data privacy, and corporate culture. A failure to do so is increasingly viewed not just as a moral or ethical lapse, but as a direct breach of the fiduciary duty to protect the long-term value of the corporation.

For small and mid-sized businesses, the case serves as a critical cautionary tale. While they may not face derivative lawsuits from large pension funds, the underlying principles of risk management and board accountability are universal. Neglecting compliance and failing to address systemic operational risks can lead to devastating consequences, including employee lawsuits, customer litigation, regulatory fines, and an inability to attract capital or find a buyer.

The case will now proceed through the Delaware court system, known for its expertise in corporate law. Uber's board will be required to formally respond to the allegations in the coming weeks or months. Observers will be watching closely to see whether the court allows the case to proceed and how it interprets the board's responsibility in overseeing a persistent and well-documented public safety issue.