×

Judge sends Benchmark’s lawsuit against Travis Kalanick to arbitration

  • It's a win for Uber CEO Travis Kalanick: An explosive lawsuit brought by his investors will not play out publicly in the courtroom, Recode reports.
  • The decision is the latest dramatic turn in an rift between Uber and once of his closest allies.
  • Arbitration rulings are typically binding and if Kalanick loses he won't be able to appeal.

A judge has granted former Uber CEO Travis Kalanick a legal win on Wednesday by sending an explosive lawsuit brought by his investors to arbitration rather than ordering it to play out in his courtroom.

The decision is the latest dramatic turn in an rift between Uber and once of his closest allies, Benchmark Capital, and moves the ugly fight between them out of the spotlight as Uber's new CEO tries to assert control.

"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 Kalanick spokesperson said. "Benchmark's false allegations are wholly without merit and have unnecessarily harmed Uber and its shareholders."

More from Recode:
Travis Kalanick's new lawyers say the Uber-Benchmark lawsuit belongs in arbitration
A top venture capital lobbyist says more sexual harassment allegations will emerge from Silicon Valley
Some startup founders are 'nervous' about dealing with Benchmark after it sued Uber

The arguments were made in a courtroom in Georgetown, Del., before Judge Samuel Glasscock of Delaware's Court of Chancery.

Benchmark sued Kalanick after ousting him as CEO of the world's most valuable privately held company, claiming that he defrauded them. The firm asked the court to remove him from Uber's board, among other actions. Kalanick, Uber's founder, says he is the victim of a malicious slander brought by disgruntled investors.

Benchmark was seeking a status quo order that would effectively freeze Kalanick's involvement in Uber business. Kalanick's lawyers tried to move the case to arbitration, allowing him to avoid a possibly damaging deposition.

The judge did not immediately rule on the status quo order.

There is still risk with such a move. Arbitration rulings are typically binding and if Kalanick loses he won't be able to appeal.

By Theodore Schleifer, Re/code.net.

CNBC's parent NBCUniversal is an investor in Recode's parent Vox, and the companies have a content-sharing arrangement.

WATCH: Group of investors want Benchmark off board