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`Case 3:20-cv-07916 Document 1 Filed 11/10/20 Page 1 of 104
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`REICH RADCLIFFE & HOOVER LLP
`Marc G. Reich (SBN 159936)
`mgr@reichradcliffe.com
`Adam T. Hoover (SBN 243226)
`adhoover@reichradcliffe.com
`4675 MacArthur Court, Suite 550
`Newport Beach, CA 92660
`Phone: (949) 975-0512
`Fax: (949) 208-2839
`
`LIFSHITZ LAW FIRM, P.C.
`Joshua M. Lifshitz (Pro Hac Vice to be submitted)
`jml@jlclasslaw.com
`821 Franklin Ave., Suite 209
`Garden City, NY 11530
`Phone: (516) 493-9780
`Fax: (516) 280-7376
`
`Attorneys for Plaintiff
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`DIEGO FAZIO, Derivatively on Behalf of Nominal
`Defendant UBER TECHNOLOGIES, INC.,
`
`
`
`Plaintiff,
`
`v.
`
`DARA KHOSROWSHAHI, NELSON CHAI,
`GLEN CEREMONY, RONALD SUGAR, H.E.
`YASIR AL-RUMAYYAN, URSULA BURNS,
`GARRETT CAMP, MATT COHLER, RYAN
`GRAVES, ARIANNA HUFFINGTON, TRAVIS
`KALANICK, WAN LING MARTELLO, JOHN
`THAIN, and DAVID TRUJILLO,
`
`
`
`Defendants,
`and
`
`UBER TECHNOLOGIES, INC.,
`
`
`
`Nominal Defendant.
`
`
`
`
`
`VERIFIED SHAREHOLDER DERIVATIVE
`COMPLAINT FOR VIOLATIONS OF THE
`FEDERAL SECURITIES LAWS
`
`
`Demand for Jury Trial
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`COMPLAINT
`
`Case No: 3:20-cv-7916
`

`

`Case 3:20-cv-07916 Document 1 Filed 11/10/20 Page 2 of 104
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`Plaintiff Diego Fazio, by and through his undersigned attorneys, brings this shareholder
`derivative action for the benefit of Nominal Defendant Uber Technologies, Inc. (“Uber,” or the
`“Company”), against certain of the Company’s current and former officers and members of the Board
`of Directors (the “Board”) for violations of the Securities Act of 1933 (the “Securities Act”).
`Plaintiff makes these allegations upon personal knowledge and the investigation of counsel,
`which includes without limitation: (a) review and analysis of public filings made by Uber and other
`related parties and non-parties with the United States Securities and Exchange Commission (“SEC”);
`(b) review of news articles, shareholder communications, and postings on Uber’s website; (c) review
`of the pleadings and other documents in the securities class action captioned Boston Retirement System
`v. Uber Technologies, Inc., Case No. 3:19-cv-06361-RS (N.D. Cal.) (the “Securities Class Action”);
`and (d) review of other publicly available information concerning Uber and the Defendants.1 Plaintiff
`believes that through reasonable discovery, substantial additional evidence will exist for the
`allegations and claims set forth herein
`1. INTRODUCTION
`1.
`Plaintiff brings this action derivatively for the benefit of Nominal Defendant Uber
`against certain of the Company’s current and former executive officers and directors aiming to rectify
`Defendants’ breaches of fiduciary duty, as well as, violations of the Securities Act from May 10, 2019
`through the present (the “Relevant Period”) for issuing false and misleading statements and/or
`omitting material information in the Company’s documents in connection with its Initial Public
`Offering (“IPO”) of Uber common stock.
`2. On or about May 10, 2019, Uber Technologies—founded and originally incorporated as
`transportation company Ubercab, Inc. (“Ubercab”)—conducted one of the largest and most hotly
`anticipated IPOs in American history.
`
`
`1 While Plaintiff’s counsel has conducted its own, independent investigation, many of the allegations
`herein (and, in particular, the allegations that relate to former employees (“FE”) accounts) are contained
`in a Amended Class Action Complaint for violation of the federal securities laws (the “Securities
`Complaint”) filed against the Company and certain of its officers and directors in the Securities Class
`Action which has been upheld by the United States District Court on August 7, 2020.
`
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`PAGE 1
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`3.
`For years, investors debated Uber’s dubious path to profitability and whether and at what
`price Uber should go public, but the Company lured investors into the IPO with a simple rationale:
`growth now, profits later. Uber committed as a public company to deliver unparalleled and rapid
`growth and scale, under the premise that the largest player dominates the market, winning both market
`share and profits. Investors took the bait.
`4. Uber was also a Company scarred by scandal. In 2017, for example, Uber was caught
`utilizing proprietary software tools, called “Greyball,” to evade authorities seeking to enforce laws,
`rules, and regulations applicable to the Company’s ridesharing operations. In another example, a
`former Uber software engineer came forward with allegations that she and fellow colleagues had been
`sexually harassed by superiors at Uber. After the software engineer reported such misconduct to
`Uber’s human resources (“H.R.”) department, she was berated by managers and retaliated against for
`reporting such incidents to H.R. According to the software engineer, Uber’s H.R. department
`conspired with senior executives to protect abusive managers because they were “high performers.”
`5.
`The software engineer’s story, which spread like wildfire, helped catalyze the viral
`#MeToo movement. These scandals led to Defendant Travis Kalanick’s ousting as Uber’s Chief
`Executive Officer (“CEO”), as well as a viral #DeleteUber campaign that prompted hundreds of
`thousands of Uber users to stop using Uber’s platform within days. Uber purports to have reformed its
`culture “fundamentally” by, among other things, replacing Defendant Kalanick as CEO with
`Defendant Dara Khosrowshahi and developing a new set of “cultural norms,” which includes: “Do the
`right thing. Period.” Indeed, the Offering Documents trumpet: “It is a new day at Uber.”
`6.
`Through the IPO, Uber raised more than $8.1 billion by offering and selling over 180
`million shares of its common stock to the public at a price of $45.00 per share. The Offering was an
`incredible financial windfall for Defendants. The banks that underwrote the Offering collected over
`$106 million in fees. The Offering valued the Company at a whopping $75.5 billion and catapulted the
`value of Uber stock held by corporate insiders, including many of the IPO Defendants (as defined
`herein).
`7. While the Offering was a success for the Company, and indeed for all Defendants, it
`became what one prominent venture capitalist dubbed a “train wreck” for investors, and it turned
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`“what should have been a climactic moment for a transportation colossus instead [into] an
`embarrassment.”
`8. Headquartered in San Francisco, California, Uber is a multinational ride-hailing
`company that offers its passengers peer-to-peer (“P2P”) ridesharing (“UberX”), shared peer-to-peer
`ridesharing (“UberPOOL”), and black car transportation (“UberBLACK” and collectively with UberX
`and UberPOOL, “Uber Rides” or “Rides”). UberBLACK drivers have commercial registration and
`commercial insurance. By contrast, the Company does not require its P2P ridesharing drivers to have
`commercial licenses or commercial registration. Uber also offers on-demand food delivery (“Uber
`Eats” or “Eats”) as well as on-demand shipping that matches freight shippers with truckers (“Uber
`Freight” or “Freight”), among other “Personal Mobility” and on-demand services. Each of Uber’s
`platforms can be accessed via its website or through one of the Company’s mobile applications
`(“apps”).
`9. Uber depends on incentives—e.g., $10 per trip for each of a driver’s first 100 trips—and
`brand advertising and direct marketing—e.g., promotional campaigns such as television
`advertisements, discounts, promotions, and referrals—to attract both drivers and customers and to
`grow Uber Rides and Uber Eats.
`10. Unbeknownst to investors, Uber and its executives premised the Company’s growth on
`an undisclosed, unsustainable, and often illegal “growth at any cost” business model, putting growth
`first above profits, the law, and even its own passengers’ safety.
`11. As disclosed post-IPO in recent civil litigation, criminal indictments and plea
`agreements, governmental and regulatory press releases, and countless news and media reports, and as
`evidenced by former Uber employee statements, Uber systematically violated local laws by launching
`and operating its Rides services in new domestic and international jurisdictions— irrespective of
`whether the Company was licensed or lawfully permitted to operate there. Uber Rides became popular
`harnessing the trendy power of mobile app-based consumerism, and Uber secretly bet that it could
`grow and continue to operate in those jurisdictions above or outside the law, sanctioned by mass
`consumer approval if not by local authorities.
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`PAGE 3
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`12. Along with the growing number of Rides bookings and trips came an increasing number
`of passengers reporting violent and often criminal instances of physical and sexual assault and
`harassment, including non-consensual kissing, touching, and even rape. In 2018 alone (the calendar
`year immediately preceding the Offering), there were more than 3,000 reported instances of sexual
`assault—an average of eight sexual assaults a day.
`13. For years and through the Offering, Uber concealed these reports from the public and
`investors, even as the number of instances of physical and sexual assault reported to the Company
`continued to grow. Uber upheld its growth at any cost business model to such a degree that it adopted
`and maintained investigative and safety enforcement policies designed to put the Company’s interests
`ahead of passenger safety.
`14. According to more than 20 current and former investigators in Uber’s passenger call
`center, for example, the Company uses a “three-strikes” system that allows bad actors to continue
`using the Uber Rides app until three allegations are made, but executives can overrule investigators. In
`one such case, a male driver was allowed to continue picking up passengers until a fourth incident,
`where a rider reported she had been raped by that driver.
`15.
`In 2018, 92% of Uber Rides rape victims were passengers and 89% of Uber Rides rape
`victims were female. Yet Uber’s policies were designed to silence rather than protect these victims:
`Company investigators could be reprimanded or even terminated if they contacted the police or
`advised victims to do so. At most, Uber would notify victims that they would not be matched with the
`accused driver again—and they might receive a refund.
`16. Uber also concealed that its growth at any cost business model was negatively impacting
`its financial condition, resulting in slowing (not accelerating) growth and billions of dollars in losses.
`Statements from a former Uber employee support these allegations.
`17. For the quarter ended June 30, 2019 (“Q2 2019”), the same quarter as the Offering, for
`example, Uber reported, after the IPO closed, a staggering $5.2 billion loss—the largest loss in the
`Company’s history. Uber blamed the loss on stock-based compensation paid to early investors ($3.9
`billion), but even excluding that figure, the Company’s $1.3 billion loss was still its largest loss ever.
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`PAGE 4
`COMPLAINT
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`18. Perhaps even more shocking, Uber’s Q2 2019 financial results showed it was not
`growing as the Company had represented in the Offering Documents. In fact, Uber recorded its
`slowest growth ever, on both a Generally Accepted Accounting Principles (“GAAP”) Revenue (14%)
`and Adjusted Net Revenue (12%) basis. Underlying these figures, Uber also concealed that the
`Company was experiencing its slowest ever growth in terms of trips (“Trips,” the number of
`completed rides and food deliveries) as well as monthly active platform consumers (“MAPCs,” the
`number of unique consumers who completed a ride or received food at least once in a given month)—
`two key measures of Uber’s financial condition. For Q2 2019, Uber’s Trips and MAPCs grew by only
`35% and 30%, respectively—the slowest growth in Trips and MAPCs in Company history.
`19. As a result, the Offering Documents—which Uber and the other Defendants used to
`secure more than $8.1 billion from investors—concealed serious, disturbing, and deeply material
`problems plaguing the Company behind its “new day at Uber” facade. As further alleged below,
`during the Relevant Period, the Individual Defendants breached their fiduciary duties by failing to
`maintain internal controls, as well as, personally making and/or causing the Company to make a series
`of materially false and misleading statements of fact and omitted material facts required to be
`disclosed in order to make the statements in the Offering Documents not misleading. There are three
`categories of misstatements: (i) illegal business model; (ii) passenger safety; and (iii) financial
`condition.
`20. First, Uber’s past and present “success” was premised on an undisclosed, unsustainable,
`and often illegal growth at any cost business model.
`21. Uber’s growth at any cost business model was principally manifested in a deceptive and
`patently illegal business model: knowingly breaking and thwarting existing laws, rules, and
`regulations in many of the jurisdictions in which the Company operates, and betting that the weight of
`consumer support will reach a critical mass before governmental authorities and regulators are able to
`act on or enforce such laws and regulations.
`22.
`In Boston, Massachusetts, for example, internal Company emails dating back to 2013
`(disclosed in a late-July and early-August 2019 bench trial) revealed that Uber executives knew the
`Company was breaking the law by launching and continuing operations without required licenses.
`
`PAGE 5
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`This was not a “grey” area. In one email, a Company executive expressly acknowledged that Uber was
`“launch[ing] P2P ride-sharing in a market where we do not have formal or tacit approval from
`regulators.” On June 4, 2013, the Company illegally launched Uber Rides in Boston, and over the next
`several years, Uber paid approximately $200,000 in tickets its drivers received for violating a Boston
`ordinance and Massachusetts State regulations.
`23. On November 14, 2019, Bloomberg Law reported that the New Jersey Department of
`Labor and Workforce Development was seeking $642 million in unpaid unemployment and disability
`insurances taxes, because Uber had been misclassifying its drivers as independent contractors rather
`than as employees. Uber was assessed $523 million in past-due taxes for the four preceding years
`(2015-2018), as well as $119 million in interest and penalties on the unpaid amounts, after Uber
`refused to comply with existing employment laws during each of those four years. According to
`records obtained by Bloomberg Law, the State of New Jersey obtained a court judgment in 2015
`ordering Uber to pay about $54 million in overdue unemployment and temporary disability insurance
`contributions, but as of November 2019, it remained unclear whether Uber ever complied with that
`court order.
`24.
`In Tallahassee, Florida, the U.S. Department of Justice (“DOJ”) reached a plea
`agreement on August 6, 2019 with a former Tallahassee mayor and his business associate, a former
`head of the Downtown Improvement Authority, stemming from charges that the pair accepted cash
`bribes from Uber in 2015 in exchange for a favorable result on a local ride-share ordinance that would
`affect the Company’s future profitability.
`25.
`In Colombia—where drivers caught working for Uber face a 25-year driver license
`suspension—the Superintendencia de Industria y Comercio (the “Colombian SIC,” or
`Superintendency of Industry and Commerce, akin to the U.S. Federal Trade Commission (“FTC”))
`announced on August 12, 2019 that it was fining Uber COL$2.1 billion (more than US$625,000) for
`blocking administrators’ access to information and obstructing a 2017 regulatory site visit. A few
`months later, the Colombian SIC ordered Uber to cease operations, effective February 1, 2020.
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`26. A former Uber employee (“FE”) also substantiates the allegations concerning Uber’s
`illegal business model and growth strategy.2
`27. According to Former Employee 1 (“FE-1”), for example, Uber had a “playbook”—that
`came from Defendant Ryan Graves and the whole operations team that he ran—for how to launch
`UberX peer-to-peer ridesharing in new territories. Specifically, FE-1 stated that Uber had a team of
`“launchers,” or a group of people tasked with helping a new city go “live.” FE-1 explained that
`launchers move quickly from city to city and follow Uber’s playbook globally: move into a new
`territory, secure office space, hire local staff, launch the business, and then let the people on the
`ground deal with issues such as skirting local regulations.
`28. FE-1 explained that from 2017 to 2019, Uber knowingly allowed its drivers to operate
`without commercial licenses and without commercial vehicle registrations in his territory, which is
`illegal and a crime in Tanzania. FE-1 recalled one instance when the police came to Uber’s Tanzania
`office, arrested four or five of his employees, and held those employees in detention for a weekend for
`operating illegally. FE-1 stated that, in Tanzania, detention is worse than jail. According to FE-1,
`nothing changed after his employees were arrested and put in detention by Tanzanian authorities.
`29. FE-1 described how this was typical of Uber globally: the Company enters markets and
`disregards local regulations in order to launch and operate in those markets. FE-1 stated that countries
`have their own laws, and companies cannot just disregard them in order to do business, but that was
`Uber’s playbook for launching in new cities: getting drivers and cars on the road, even if that violated
`local laws.
`30. FE-1 advised that Uber wanted “growth at all costs.” FE-1 explained that in Tanzania,
`there is a clear distinction between cars registered for personal versus commercial use. FE-1 stated that
`Tanzanian law requires commercial drivers to have a specific commercial license that takes one month
`to get. Tanzanian law also requires commercial drivers to have their private vehicles registered as
`commercial vehicles, and after a vehicle has been registered for commercial use, the driver must
`
`
`2 For ease of comprehension and readability, the Securities Complaint uses the pronoun “he” and
`possessive “his” in connection with former Uber employees. This convention, however, is not meant to
`identify the actual gender of any of the former employees.
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`upgrade their license to a commercial license in order to be compliant. According to FE-1, however,
`Uber’s drivers in Tanzania had neither proper commercial licenses nor commercially-registered
`vehicles.
`31. FE-1 warned and expressed his concerns about Uber’s illegal operations to the launcher,
`the launcher’s manager, and Alon Lits, the top General Manager for Sub-Saharan Africa. FE-1
`explained that he participated in local Policy Communications Legal (“PCL”) call on a monthly or bi-
`monthly basis, where they discussed concerns related to Uber drivers operating without properly
`registered commercial vehicles.
`32. Although Defendant Kalanick and Defendant Graves did not attend the PCL meetings
`that FE-1 attended, there were higher level calls attended by all the general managers—who reported
`to Defendant Graves—during which the same concerns regarding Uber’s illegal operations were
`addressed. These higher levels meetings were held at the same frequency as the local level PCL
`meetings that FE-1 attended, as often as twice a month. FE-1 stated that Uber exposed itself to such
`issues and risks that these higher level calls sometimes had to happen more frequently. For example,
`FE-1 explained, other countries had similar issues with commercial license and commercial vehicle
`registration non-compliance, specifically Greece and Croatia. FE-1 added that Uber’s lack of
`compliance in those countries led to alarming consequences, including Uber employees having to flee
`those countries with private security.
`33.
`In addition, FE-1 explained that Uber followed the same playbook of operating illegally
`in a lot of markets, including all the high growth regions. FE-1 advised that similar situations occurred
`in India, Latin America, Brazil, Singapore, and China.
`34. According to FE-1, Uber executives made a “strategic decision” to launch only UberX
`peer-to-peer ridesharing in Africa because it was faster, easier, and cheaper to find peer-to-peer drivers
`than to find commercially licensed drivers with commercially-registered vehicles. FE-1 stated that
`skirting local regulations helped Uber expand quickly in many new territories including Tanzania. FE-
`1 also confirmed that Uber drivers frequently had to pay fines related to these illegal activities, and
`Uber reimbursed its drivers the following week.
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`35. FE-1 stated that Uber saw reimbursement of its drivers’ fines as a “cost of doing
`business.” According to FE-1, Uber drivers would come into the office with their tickets, support staff
`would upload a picture of the fine or ticket into Uber’s system, and then drivers would be reimbursed
`the following week. FE-1 explained that Uber reimbursed its drivers for these fines or tickets once per
`week. FE-1 added that Uber did not reimburse its drivers for other types of tickets and fines, such as
`speeding. Rather, Uber only reimbursed its drivers for violations of local laws such as lack of
`commercial license or lack of commercial vehicle registration.
`36. FE-1 advised that although Uber carefully tracked its drivers’ fines and reimbursements,
`Uber entered reimbursements for fines under “miscellaneous expenses” on Uber’s balance sheet.
`According to FE-1, driver reimbursements came from Uber B.V. (Uber’s subsidiary in the
`Netherlands), which oversaw all African operations for Uber. FE-1 added that fines for lack of a
`commercial license were not as problematic for Uber financially, at about $10 per fine, whereas the
`more hefty fines resulted from UberX drivers operating private vehicles that were not commercially
`registered, at up to $200 per fine, or even jail time. Drivers were especially susceptible to arrest at
`airports, where police were often on standby. FE-1 estimated that from 2017 to 2019, for Tanzania
`alone, Uber paid over $250,000 in fines. FE-1 also specified that Uber paid the fines knowing that
`getting the vehicles properly registered for commercial use would impede the growth of the business.
`37. FE-1 recalled how, in 2017, Uber’s Head of Compliance put 24 to 48 hour staggered
`deactivations in place for drivers that lacked proper commercial licensing or vehicle registration, but
`this practice did not last for long. Uber quickly realized the adverse business impact and negative
`financial impact these deactivations were having, and Uber would reinstate the drivers despite their
`still lacking proper licensing and vehicle registration.
`38. FE-1 stated that, among the reasons that led him to leave Uber, he was not comfortable
`continuing to operate Uber Tanzania where 90% of Uber’s drivers had neither commercial licenses nor
`commercial registration for their private vehicles. FE-1 explained that he was not comfortable with
`Uber condoning these practices.
`39. Around March or April 2019, FE-1 advised that Uber finally began enforcing
`compliance with local laws such as the requirement for drivers to have commercial licenses and
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`commercially registered vehicles. FE-1 explained that, by then, Uber had a saturated market of drivers,
`so they were able to be more particular about who they allowed to drive in Tanzania. FE-1 noted,
`however, that Uber still does not have 90% of their drivers properly licensed, because the fines are not
`that expensive. Drivers have to spend a month in school to be properly licensed, but this rule was not
`enforced at Uber. FE-1 added that Uber has a proven track record of disregarding compliance issues.
`40. These are but a few of the countless instances that exemplify Uber’s undisclosed,
`unsustainable, and often illegal growth at any cost business model.
`41. Second, in furtherance of its growth at any cost business model, Uber deliberately
`ignored and failed to disclose rampant, dangerous, and even lethal passenger safety issues across the
`Company’s ridesharing platform.
`42.
`In the two calendar years immediately preceding the Offering, for example, Uber
`received reports of 5,981 instances of sexual assault (including 464 instances of rape), 107 deaths
`across 97 fatal crashes, and 19 instances of fatal physical assaults—in the United States alone.
`43. The Company kept these facts and statistics from investors, belatedly disclosing them in
`a post-Offering “US Safety Report” released December 5, 2019 (the “U.S. Safety Report”). The
`Company has not released corresponding data for any other country across its global operations, even
`though the Offering Documents touted how Uber operates across six continents and more than 700
`cities, and even though the Company professes in its U.S. Safety Report that people have a “right to
`know” about Uber’s safety records.
`44. The U.S. Safety Report followed on the heels of a September 25, 2019 article published
`by The Washington Post (the “WaPo Article”), which reveals how investigators in the Company’s
`Special Investigations Unit (“SIU”)—Uber’s call center for passenger complaints— are trained to act
`first to shield Uber from liability and negative publicity, putting Company interests ahead of passenger
`safety. Reporting on information gathered from more than 20 current and former Uber investigators,
`the WaPo Article describes how Uber uses a “three-strikes” system that permits drivers and passengers
`to keep using Uber’s ridesharing platform until three separate allegations are made, but even then,
`Company executives can make exceptions in order to, for example, keep high earning drivers on the
`road collecting fares. The WaPo Article also describes how SIU investigators are “forbidden” from
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`directing allegations to police or from advising victims to contact police or even seek legal counsel—
`even where investigators receive confessions of felonies. Many investigators said they could be
`reprimanded or fired if they contacted the police or urged victims to do so.
`45. While Uber’s SIU investigators work to insulate and distance the Company from
`liability, Uber also consistently seeks to settle related cases quickly to keep the truth from the public,
`according to several attorneys interviewed for the WaPo Article.
`46. The alarming facts concerning Uber passenger safety, manifest in the U.S. Safety Report
`and the WaPo Article, demonstrate that the Company has premised its growth and reputation on the
`jeopardy of countless thousands of nameless, silenced victims.
`47. Third, Uber sold itself to investors promising growth now, profits later, but its growth at
`any cost business model was defective, and Uber concealed its true financial condition.
`48. Prior to and at the time of the Offering, Uber had sustained—and would continue to
`sustain—massive losses and deteriorating growth. Unbeknownst to investors, the Company planned to
`mitigate its ongoing losses by cutting costs in fundamental areas of its business that would further
`hinder growth. On August 8, 2019, for example, Uber released its financial results for Q2 2019—the
`same quarter in which Uber conducted its May 10, 2019 IPO. The Company stunned investors by
`simultaneously disclosing a $5.2 billion net loss (its largest ever loss) and a 14% year-over-year
`(“YoY”) quarterly revenue growth rate (its slowest ever growth rate). Even excluding one-time
`expenses related to the Offering ($3.9 billion in stock-based compensation paid to early investors),
`Uber’s Q2 2019 $1.3 billion loss was still (and remains) the Company’s largest ever quarterly loss.
`49. About a month later on July 29, 2019, Uber announced the first of three waves of layoffs,
`terminating 400 marketing employees—about one third of its critical marketing team—in a desperate
`attempt to cut costs. As a vital source of brand advertising and direct marketing, Uber’s marketing
`team is responsible for driving growth through, for example, promotional campaigns, discounts, and
`referrals. With a one-third reduction to this key workforce, Uber reduced its opportunities to deliver
`the rapid growth it had committed to.
`50. On September 10, 2019, Uber announced the second wave of layoffs, terminating 435
`employees across its product and engineering teams (about 8% of the two teams). Uber maintains that
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`its success depends “in large part” on its ability to attract and retain high-quality engineering
`personnel, but this second round of layoffs—a pure cost cutting measure—stifled the very team and
`talent that the Company depends on to ensure such success and growth.
`51. And on October 14, 2019, Uber announced the third wave of layoffs, terminating 350
`employees across a variety of teams (about 1% of its workforce).
`52. Former Uber employees or FEs also substantiates the allegations concerning Uber’s
`defective business model and deteriorating growth.
`53. According to FE-1, for example, it was clear throughout his tenure that Uber’s pricing
`was unsustainable in the long-run. FE-1 specified that, historically, Uber had incentivized their
`drivers, but immediately before the IPO in early 2019, Uber was under massive pressure to lower their
`operational expenses and cut their spending by reducing incentives to drivers because the price points
`they had set were unsustainable.
`54. FE-1 added that Uber senior leadership had taken advantage of their driver employees,
`especially in the emerging markets where drivers are making extremely low wages, as low as $2 per
`day. FE-1 explained that Uber was able to “strong arm” those drivers, as drivers in emerging markets
`had to take out loans to cover gas and other expenses to meet the criteria for incentives, some of which
`were “impossible” to achieve. FE-1 stated that Uber was intentionally condoning very unethical and
`often illegal practices.
`55. According to Former Employee 2 (“FE-2”), when he started working on Uber Eats, it
`seemed like it was the clear market leader, but as time went on, it became clear that competitors were
`doing really well compared to Uber Eats. FE-2 also confirmed there were periods during which his
`Uber Eats-focused marketing team struggled.