That is the first time I've heard the theory that the lawsuit might be a sort of stealth way of Benchmark getting on the record as not having anything to do with the current Waymo issue. Does anyone know if a board member can separate themselves that way from a suit in order to shield themselves from damages?
If I understand the risk correctly it would be that Waymo prevails, gets a huge damage settlement which the company has to pay, but doesn't have the cash to pay so the board of directors have to go to their resources to pay. Is this understanding correct? Does anyone have a precedent for this? I'd be interested in reading it if they did.
Breaching the corporate veil is definitely possible. An article from 1991 mentions ~2000 cases where it was attempted, 40% of which were successful[1]. However, this is much more common with smaller and more closely held corporate entities. None of the piercings attempted against public companies were successful. If I were in Benchmark's shoes I would not be particularly worried about that.
I think personal liability for their director is a somewhat more likely concern in the same vein. Smith v Van Gorkam[2] is a relevant case for that. Intentional misconduct is definitely something that can trigger this. I'm not sure that getting their obliviousness on the record is a particularly helpful defense against this though.
Overall, I doubt this theory is a major motivation on Benchmark's part. Benchmark obviously has billions at stake here and has also obviously concluded Kalanick is toxic to those billions. Seems reason enough to me for scorched earth legal tactics.
It would be highly unusual and I dare say impossible for Uber shareholders to ever have to pay a settlement out of funds not already invested in the company. This is the essence of limited liability.
The exception here is if the firm is found guilty of criminal activity and evidence emerges to suggest that Benchmark knew about it. In that case I don't know that they would be financially liable, but directors and board members would stand the risk of jail time.
AIUI the "Limited" company in the UK limits a shareholder's liability to the value of the shares they hold - so if you hold £1M of shares that's your liability. I assume it works similarly in USA?
Maybe Benchmark is hoping for a situation like Zenefit's. Ousted the CEO and accused him of fraud. Then they effectively increased their investor and employee ownership stakes at the former CEO's expense.
If I understand the risk correctly it would be that Waymo prevails, gets a huge damage settlement which the company has to pay, but doesn't have the cash to pay so the board of directors have to go to their resources to pay. Is this understanding correct? Does anyone have a precedent for this? I'd be interested in reading it if they did.