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Uber Defeats Suit by Investors Who Blamed Scandals for Losses

Joel Rosenblatt
Pedestrians walk past the Uber Technologies Inc. headquarters building in San Francisco, California, U.S., on Wednesday, June 21, 2017. Travis Kalanick has resigned from his job leading Uber Technologies Inc., giving up his effort to hold onto power as a torrent of self-inflicted scandals enveloped him and the global ride-hailing leviathan he co-founded.

Uber Technologies Inc. and its former Chief Executive Officer Travis Kalanick defeated a lawsuit claiming the company swept illicit business practices under the rug that cost investors billions of dollars.

U.S. District Judge Haywood S. Gilliam Jr. in Oakland, California, on Friday agreed with Uber’s and Kalanick’s bid to toss the class-action claims by a Texas city’s firefighter pension fund while allowing the fund to revise and refile the complaint.

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The lawsuit "does not specifically tie any particular misrepresentation by defendants to a decline in Uber’s stock price," Gilliam wrote in his ruling. Instead it "lumps together" scandals and asserts a “vague and attenuated connection” to the devaluation of Uber’s stock, he said.

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The Irving, Texas-based fund alleged in its September 2017 complaint that the startup and its ex-CEO failed to reveal at least six instances of malfeasance while “successfully soliciting billions of dollars in private investment.” Kalanick was ousted as CEO in June 2017 after a series of allegations that the ride-hailing company had engaged in misconduct.

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The case is Irving Firemen’s Relief & Retirement Fund v. Uber Technologies Inc., 17-cv-05558, U.S. District Court, Northern District of California (San Francisco).

Update with judge’s reasoning in third paragraph.

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