IN RE LYFT, INC. DERIVATIVE LITIGATION

District Court, N.D. California·Decided March 28, 2025·No. 4:20-cv-09257·Unknown

Opinion

RON CHENOY, Case No. 20-cv-09257-HSG

Plaintiff, ORDER GRANTING FINAL APPROVAL OF SHAREHOLDER v. DERIVATIVE ACTION SETTLEMENT

LYFT, INC., et al., Re: Dkt. No. 68 Defendants.

Pending before the Court is Plaintiffs’ unopposed motion for final approval of shareholder derivation action settlement, attorneys’ fees and expenses, and service award allocations. See Dkt. No. 68 (“Mot.”).1 The Court held a final fairness hearing on February 6, 2025. For the reasons stated below, the Court GRANTS the motion and applies a downward adjustment to the attorneys’ fee award. A. Factual Allegations This is a shareholder derivative action on behalf of nominal defendant Lyft, Inc. (“Lyft”) against several Lyft officers and directors (collectively “Individual Defendants”).2 Plaintiffs allege that the Individual Defendants breached their fiduciary duty by failing, among other things, to: “(1) prevent or remediate the rampant sexual and physical assault committed by Lyft drivers against Lyft passengers; (2) provide an adequate reporting mechanism, oversight of personnel, 1 For ease of reference, the Court refers to PDF page numbers rather than documents’ internal pagination unless otherwise noted. 2 The “Individual Defendants” include Logan Green, John Zimmer, Brian Roberts, Prashant (Sean) Aggarwal, Jonathan Christodoro, Ben Horowitz, Valerie Jarrett, David Lawee, Hiroshi training, or disciplinary avenues to prevent or at least remedy the known problem of sexual and physical assault; or (3) implement an adequate background check system to effectively screen Lyft drivers, particularly drivers with known histories of committing past acts of sexual misconduct and/or harassment.” Dkt. No. 60 at 9–10; Verified Shareholder Derivative Complaint (“Compl.”) ¶ 19. Plaintiffs further allege that these Individual Defendants made “a series of false and misleading statements in connection with Lyft’s March 28, 2019 initial public offering (“IPO”).” Dkt. No. 60 at 10; Compl. ¶¶ 1, 16. According to Plaintiffs, the alleged false and/or misleading statements failed to disclose that: “(1) passengers had reported to Lyft being verbally and physically assaulted, sexually harassed, and raped by Lyft drivers even prior to the IPO; (2) it was likely that Lyft would sustain damage to its reputation and also be subject to legal liability as a consequence of numerous and still increasing sexual assaults perpetrated by the Company's drivers; (3) numerous riders of the Company's electronic bikes were caused to sustain injuries such as scrapes, bruising, broken bones, and damaged limbs as a result of a defect in the braking system of Lyft's electronic bikes; (4) riders injured by the defective braking system had complained to the Company before Lyft went public on March 28, 2019; (5) Lyft’s transformation into a multimodal transportation network was being disrupted by safety issues with their bikes; and (6) Lyft failed to maintain internal controls.” Compl. at ¶ 16. Based on this alleged misconduct, Plaintiffs assert claims on behalf of Lyft against the Individual Defendants for alleged breaches of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and for contribution under Section 11(f) of the Securities Act of 1933 and Section 21D of the Securities Exchange Act of 1934. Dkt. No. 60 at 7. B. Procedural Background This consolidated action combines four federal shareholder derivative actions filed against the Individual Defendants on behalf of nominal defendant Lyft between September 2020 and February 2021. In January 2021, then-Magistrate Judge Jacqueline Scott Corley consolidated three of these actions: Mehta v. Green, Case No. 1:20-cv-01326 (D. Del.) (later Case No. 4:20-cv- Green, Case No. 3:20-cv-09272 (N.D. Cal.). Dkt. No. 60 at 11; Dkt. No. 9. In February 2021, Plaintiff Brad Shuman filed a similar shareholder derivative action, Shuman v. Green, Case No. 4:21-cv-01263 (N.D. Cal.), which the Court also consolidated into the above-captioned action. Dkt. No. 37. In February 2021, the Court granted the parties’ request to stay this consolidated case in light of In re Lyft, Inc. Securities Litigation, No. 4:19-cv-02690 (“Federal Securities Action”), a factually-related securities class action then pending before the Court. See Dkt. No. 34. The parties in that case reached a class-wide settlement, which the Court approved in August 2023, and the Federal Securities Action was dismissed in October 2023. Dkt. No. 60 at 13. Following the Court’s approval of the parties’ class action settlement in the Federal Securities Action, the parties reached a settlement in this matter. Dkt. No. 51. In July 2024, Plaintiffs filed an unopposed motion for preliminary approval of the settlement, Dkt. No. 60, and in October 2024, the Court “preliminarily [found] that the Settlement Agreement is fair, reasonable, and adequate” and granted that motion. Dkt. No. 62; In re Lyft, Inc. Derivative Litig., No. 20-CV-09257-HSG, 2024 WL 4505474, at *6 (N.D. Cal. Oct. 16, 2024). The Court also directed the parties to finalize and implement the proposed notice plan. Id. C. Settlement Agreement The key terms of the Stipulation of Settlement, Dkt. No. 60-2 (“Settlement Agreement” or “SA”), are as follows: Settlement Benefits: Lyft will keep the corporate governance reforms set forth in Exhibit A of the Settlement Agreement in place for at least three years. See Dkt. No. 60-2, Ex. A. These reforms include, among other things, Lyft’s amended Clawback Policy, changes to Lyft’s Code of Business Conduct and Ethics, amendments to Lyft’s Compensation Committee Charter, and changes to Lyft’s Corporate Governance Guidelines. Id. Lyft will also post a link to its Compliance and Ethics Hotline on the Lyft website within 90 days of the settlement’s final approval. Id. Consistent with Exhibit A of the Settlement Agreement, Lyft will undertake efforts to improve safety compliance and awareness by (1) adding a user safety executive to Lyft’s 911 Safety Feature” and “Safety Phone Calls.” Id. Within 12 months of the settlement’s final approval, Lyft will also make at least one further post on its blog (https://www.lyft.com/blog) about in-app safety features available to riders and drivers. Id. Releases: Under the terms of the Settlement Agreement, the “Releasing Persons shall be deemed to have fully, finally, and forever released, relinquished, and discharged the Released Claims (including Unknown Claims) against the Released Persons and any and all derivative claims arising out of, relating to, or in connection with the defense, settlement, or resolution of the Federal Derivative Actions against the Released Persons.” SA § 5.1. • The Releasing Persons are “Plaintiffs (individually, collectively, and derivatively on behalf of Lyft), all other Applicable Lyft Shareholders, Plaintiffs' Counsel, and Lyft.” Id. § 1.23. • The Released Persons are “Lyft, the Individual Defendants, and their Related Persons.” Id. § 1.22. • Released Claims means “[A]ny and all actions, suits, claims, debts, rights, liabilities, and causes of action, whether under federal, state, local, statutory, common law, foreign law, or any other law, rule or regulation, including both known and Unknown Claims (as defined in paragraph 1.26 below), that: (a) were asserted or could have been asserted by any shareholder derivatively on behalf of Lyft, or by Lyft, against any Released Person; and (b) concern, arise out of, or relate to (i) the allegations asserted in the Federal Derivative Actions or the matters and occurrences that were alleged in the Federal Derivative Actions, or (ii) the Settlement, defense or resolution of the Federal Derivative Actions, except for any claims to enforce the Settlement. Excluded from the term ‘Released Claims’ are all claims alleged in the Federal Securities Action and the State Securities Action.” Id. § 1.21. Notice: Lyft provided notice of the Settlement Agreement consistent w

Free access — add to your briefcase to read the full text and ask questions with AI

IN RE LYFT, INC. DERIVATIVE LITIGATION, (N.D. Cal. 2025).

IN RE LYFT, INC. DERIVATIVE LITIGATION (IN RE LYFT, INC. DERIVATIVE LITIGATION) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related