A California appeals court on Wednesday upheld a decision dismissing a proposed investor class action against Uber Technologies Inc and its former CEO, saying the lawsuit failed to connect a series of scandals the ride-hailing technology company faced in 2017 to a decrease in its valuation.
A three-judge panel for the 9th U.S. Circuit Court of Appeals said that a Texas retirement fund could not revive its lawsuit claiming Uber and former CEO Travis Kalanick deceived investors by hiding a number of problems including claims of sexual harassment that prompted firings at the company and attempts to evade regulators that led to a criminal probe.
Joseph Daley of Robbins Geller Rudman & Dowd, who represents the investors, did not immediately return a request for comment. Neither did Uber’s lawyer, Matthew Ashley of Irell & Manella or Sarah Harris of Williams & Connolly, who represents Kalanick.
Irving Firemen’s Relief & Retirement Fund sued the San Francisco-based company in 2017 seeking damages on behalf of investors who acquired Uber securities in private offerings between 2014 and 2016. The fund alleged that a series of scandals reported by Reuters and other outlets caused a 30% decrease in the company’s valuation.
U.S. District Judge Haywood Gilliam Jr in Oakland granted Uber’s motion to dismiss the case in 2019, saying the fund had failed to allege the statements were false or misleading and to tie losses to public revelations about the scandals.
Judge Ronald Gould agreed.
Writing for the 9th Circuit, Gould noted that investors must show loss causation in cases involving privately traded securities.
Gould highlighted a chart included in the complaint that showed that some large Uber investors had maintained or even increased their valuation of the company after some of the scandals emerged.
Judge Ryan Nelson and Judge Paul Kelly Jr, sitting by designation from the 10th U.S. Circuit Court of Appeals, rounded out the panel.
The case was one of several that Robbins Geller brought in recent years on behalf of private investors alleging companies had defrauded them in violation of the California Corporations Code.
The law firm currently represents investors suing WeWork under that legal theory. In another case against Theranos Inc, investors settled for an unknown amount in 2018 after a judge denied their bid for class certification.
The case is Irving Firemen’s Relief Fund v. Uber Technologies Inc, 9th U.S. Circuit Court of Appeals, No. 19-16667.
For the fund: Joseph Daley of Robbins Geller Rudman & Dowd
For Uber: Matthew Ashley of Irell & Manella
For Kalanick: Sarah Harris of Williams & Connolly
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