One of the ways that underlying problems or events can translate into a D&O claim is through a “follow-on” lawsuit alleging the defendant company’s board should be held liable for the underlying problem. In the latest example of this phenomenon, a plaintiff shareholder has filed a derivative lawsuit against the board of Uber, calling the company a “serial compliance offender,” and seeking to hold the board liable for allegedly recurring sexual assault and harassment claims and other alleged legal violations. As discussed below, the new lawsuit illustrates the frequently repeated catch phrase that sooner or later, everything becomes a D&O claim. A copy of the new Uber complaint can be found here.
Background
Uber is a ride-sharing company. The new complaint is based on a fundamental premise, which is that the company has a long “history of non-compliance.” The complaint recites various alleged measures the company has taken over time to evade regulatory oversight and that the company’s actions have set “a tone of non-compliance for the organization,” which, the complaint alleges, “inevitably led to harm to customers and massive legal and regulatory exposure to Uber.”
Specifically, the complaint alleges that the company’s failure to take measures to ensure customer safety led among other things to customers’ filing of thousands of lawsuits against the company alleging that they were victims of sexual assault and harassment. The complaint alleges that the company and its board failed to take corrective or remedial measures to prevent further problems of this kind.
The complaint further alleges that the company failed to implement adequate measures to protect the company from claims of discrimination from disabled customers, and related claims for violations of the Americans with Disabilities Act, and claims of alleged deceptive practices in connection with signing up customers and preventing cancellation of its Uber One subscription services.
The complaint alleges that the company’s liabilities for the sexual assault and harassment claims, as well as the other legal matters, could amount to “hundreds of millions, if not billions, of dollars.”
In support of its claims against the company’s board, the complaint sets out a separate section captioned “Board Culpability.” However, this section of the publicly available version of the complaint is almost entirely redacted. The complaint alleges “demand futility,” based on the allegation that, due to the board’s responsibility and potential liability for failure to address the alleged underlying violations, a litigation demand to the company’s board would be futile.
The Lawsuit
On June 22, 2026, a plaintiff shareholder filed a shareholder derivative lawsuit in the Northern District of California against 13 directors and officers of Uber, as well as against the company as nominal defendant.
The complaint asserts three substantive claims against all defendants: for breach of fiduciary duty; for corporate waste; and for unjust enrichment. The complaint asserts two additional substantive counts against the director defendants, alleging violations of Section 14 of the Securities Exchange Act of 1934 in connection with alleged misrepresentations in the company’s proxy statements; and seeking rescission of the directors’ incentive compensation and fees under Section 29(b) of the Exchange Act for alleged misrepresentations to investors.
The complaint seeks to recover damages; restitution or disgorgement of fees and other amounts; and an order requiring the company to take all necessary actions to reform and improve the company’s corporate governance.
Discussion
This complaint has only just been filed, and it remains to be seen how it will fare. The merits of the allegations against the company’s board are particularly hard to assess owing to the extensive redactions in the key “board culpability” section.
Regardless of how this lawsuit unfolds, the case does illustrate a recurring phenomenon, which is the way that matters that would not otherwise be covered under a D&O insurance policy can be translated into potentially covered D&O claims, through the medium of a follow-on lawsuit.
Here, the underlying allegations of sexual misconduct, discrimination against disabled persons, and violations of consumer protection laws would not typically be covered under a D&O insurance policy. However, by alleging that the company’s liabilities for these alleged underlying violations are the result of board misconduct or inaction, the liabilities for these otherwise noncovered matters potentially become matters for the D&O policy to address.
This “follow-on lawsuit” phenomenon is of course not anything new. For example, in April, we noted a new lawsuit against the technology company Adobe in which it is alleged that the company’s board violated its duties by allowing the company to build its AI model allegedly knowing that its model building processes would violate copyright holders’ intellectual property (IP) rights. In that case, the underlying IP lawsuits would not be covered under the typical D&O insurance policy, but the liability claims against the board for allegedly allowing the IP violations potentially could be covered.
Other examples of this follow on litigation phenomenon involve D&O lawsuits following in the wake of alleged antitrust violations (discussed, for example, here), or alleged FCPA violations (here) or even alleged trade sanctions violations (discussed here).
The pattern of follow-on D&O litigation filed in the wake of underlying allegations of regulatory or legal violations illustrates an often-repeated principle, that sooner or later everything becomes a D&O claim. The common thread among these kinds of claims is the allegation that the underlying problem was the board’s fault.
The way that these various other, presumably noncovered matters can become D&O claims is an obvious concern for D&O insurance underwriters. The underwriters may well feel that these underlying matters should not become the source of potential liability under the D&O insurance policy. In some instances, the insurers will seek to protect themselves from these instances of follow-on liability by including exclusions precluding coverage for claims based upon, arising out of, or in any way relating to various identified matters. However, these kinds of exclusions are more common in private company D&O insurance policies and are relatively uncommon in the public company context.
The challenge for underwriters is that companies’ potential liability for potential regulatory or legal violations, in the current legal and regulatory environment, is vast. Underwriters’ ability to try to underwrite for these various potential liabilities is quite limited. In the absence of detailed underwriting for potential regulatory or legal violations, underwriters’ only alternative is to try to underwrite the company itself – or rather, to underwrite the company’s compliance culture.
In that regard, it is not necessarily a new allegation that Uber’s compliance culture is challenged. But as a general matter it will be difficult for underwriters, on the outside of a company and with only a limited opportunity to try to see how the company operates, to assess any given company’s compliance culture. One thing I do recall from my days on the underwriting side was how important it is to determine the company’s approach – as in, is this a company that tries to play by the rules? While this may be difficult to assess, a company trying to do the right thing is less likely to violate legal norms or leave problems that do emerge uncorrected.
In any event, this new lawsuit is an important reminder of the breadth of liabilities that can arise out of alleged breakdowns in governance and compliance and the ways in which a variety of seemingly noncovered matters can turn into claims to which the D&O insurance policy potentially may respond.