In re Lyft Inc. Securities Litigation

District Court, N.D. California·Decided August 20, 2021·No. 4:19-cv-02690·Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MATIAS MALIG, AS TRUSTEE FOR Case No. 19-cv-02690-HSG THE MALIG FAMILY TRUST, 8 ORDER DENYING MOTION FOR Plaintiff, JUDGMENT ON THE PLEADINGS 9 AND DENYING ADMINISTRATIVE v. MOTIONS TO SEAL 10 LYFT, INC., et al., Re: Dkt. No. 152, 169, 172 11 Defendants. 12 13 Pending before the Court is Defendants’ motion for judgment on the pleadings. See Dkt. 14 No. 152 (“Mot.”); Dkt. No. 159 (“Opp.”); Dkt. No. 170 (“Reply”).1 Also pending are the parties’ 15 associated administrative motions to file under seal. Dkt. Nos. 169, 172. The Court DENIES the 16 motion for judgment on the pleadings and DENIES the motions to seal. 17 I. BACKGROUND 18 On April 16, 2021, Plaintiff Rick Keiner filed the operative consolidated complaint against 19 Defendant Lyft Inc. (“Lyft”), Logan Green, Co-Founder, Chief Executive Officer, and Director on 20 Lyft’s board of directors (the “Board”), John Zimmer, Co-Founder, President and Vice Chairman 21 of the Board, Brian Roberts, Chief Financial Officer, Prashant (Sean) Aggarwal, Chairman of the 22 Board, Board Members Ben Horowitz, Valerie Jarrett, David Lawee, Hiroshi Mikitani, Ann 23 Miura-Ko, and Mary Agnes (Maggie) Wilderotter (“Individual Defendants,” and collectively with 24 Lyft, “Defendants”).2 See Dkt. No. 74 (“CCAC”). 25 26 1 The Court finds this matter appropriate for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). 27 2 On October 14, 2020, the parties stipulated to the voluntary dismissal of Former Board Member 1 Lyft is a rideshare company that “sought to revolutionize transportation by launching its 2 peer-to-peer marketplace for on-demand ridesharing.” CCAC at ¶ 4. Lyft registered its issuance 3 of common stock “under the Securities Act of 1933, as amended, pursuant to Lyft’s registration 4 statement on Form S-1 (File No. 333-229996) declared effective on March 28, 2019.” Id. at ¶ 3. 5 Lyft offered 32.5 million shares to the public through an initial public offering (“IPO”) at a price 6 of $72.00 per share, generating total proceeds of $2.34 billion. Id. at ¶ 5. According to Plaintiff, 7 Lyft made representations in the IPO Registration Statement and Prospectus filed in connection 8 with the IPO that “were materially misleading, omitted information necessary in order to make the 9 statements not misleading, and omitted material facts required to be stated therein.” Id. ¶ 6. 10 On May 14, 2020, Defendants moved to dismiss Plaintiff’s consolidated amended class 11 action complaint. Dkt. No. 78. On September 8, 2020, the Court granted in part and denied in 12 part Defendants’ motion. Dkt. No. 96. Following the hearing on Plaintiff’s motion for class 13 certification, Defendants moved for judgment on the pleadings as to a subset of Plaintiff’s sexual 14 assault allegations. Dkt. No. 152. 15 II. REQUESTS FOR JUDICIAL NOTICE 16 A. Legal Standard 17 In Khoja v. Orexigen Therapeutics, the Ninth Circuit clarified the judicial notice rule and 18 incorporation by reference doctrine. See 899 F.3d 988 (9th Cir. 2018). Under Federal Rule of 19 Evidence 201, a court may take judicial notice of a fact “not subject to reasonable dispute because 20 it … can be accurately and readily determined from sources whose accuracy cannot reasonably be 21 questioned.” Fed. R. Evid. 201(b)(2). Accordingly, a court may take “judicial notice of matters of 22 public record,” but “cannot take judicial notice of disputed facts contained in such public records.” 23 Khoja, 899 F.3d at 999 (citation and quotations omitted). The Ninth Circuit has clarified that if a 24 court takes judicial notice of a document, it must specify what facts it judicially noticed from the 25 document. Id. at 999. Further, “[j]ust because the document itself is susceptible to judicial notice 26 does not mean that every assertion of fact within that document is judicially noticeable for its 27 truth.” Id. As an example, the Ninth Circuit held that for a transcript of a conference call, the 1 may not take judicial notice of a fact mentioned in the transcript, because the substance “is subject 2 to varying interpretations, and there is a reasonable dispute as to what the [document] establishes.” 3 Id. at 999–1000. 4 Separately, the incorporation by reference doctrine is a judicially-created doctrine that 5 allows a court to consider certain documents as though they were part of the complaint itself. Id. 6 at 1002. This is to prevent plaintiffs from cherry-picking certain portions of documents that 7 support their claims, while omitting portions that weaken their claims. Id. Incorporation by 8 reference is appropriate “if the plaintiff refers extensively to the document or the document forms 9 the basis of plaintiff’s claim.” Khoja, 899 F.3d at 1002. However, “the mere mention of the 10 existence of a document is insufficient to incorporate the contents” of a document. Id. at 1002. 11 And while a court “may assume [an incorporated document’s] contents are true for purposes of a 12 motion to dismiss … it is improper to assume the truth of an incorporated document if such 13 assumptions only serve to dispute facts stated in a well-pleaded complaint.” Id. 14 B. Analysis 15 Defendants request that the Court take judicial notice of or consider incorporated by 16 reference the following three documents: 17 • Lyft’s Form S-1 Registration Statement (Ex. 1); 18 • an April 9, 2019 San Francisco Chronicle news article titled “Uber, Lyft safety in 19 spotlight after student’s slaying” (Ex. 2); and 20 • a January 5, 2017 Business Insider article titled “Lyft tripled its rides in 2016” (Ex. 21 3). 22 Dkt. No. 153 (“RJN”); Dkt. No. 152-1 (“Smith Decl.”), Exs. 1–3. Plaintiff generally argues that 23 Defendants’ requests are improper, but raises a specific objection only as to Exhibit 3. Opp. at 6. 24 The Court previously found Exhibit 1 incorporated by reference because it formed the 25 basis of Plaintiff’s claim. For the same reason, the Court GRANTS the motion as to Exhibit 1 and 26 will again consider Lyft’s Form S-1 Registration Statement for the purpose of determining what 27 was disclosed to the market. Defendants argue that Plaintiff’s complaint also relies on Exhibit 2 1 San Francisco Chronicle news article. RJN at 2–3. The Court agrees. Because “the plaintiff 2 refers extensively to the document [and] the document forms the basis of the plaintiff’s claim,” the 3 Court GRANTS the motion as to Exhibit 2, finding this document incorporated by reference. 4 Khoja, 899 F.3d at 1002 (quoting United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003)). As 5 to Exhibit 3, the Court agrees with Plaintiff that Defendants offer it for the truth of its contents. 6 Defendants argue that the Business Insider article is “relevant to the amount of sexual assaults that 7 occurred on the platform as compared to overall rides.” RJN at 4. The Court thus DENIES the 8 motion as to Exhibit 3. 9 Defendants’ briefing otherwise discusses matters outside of the pleadings, such as 10 Plaintiff’s discovery responses. See Mot. at 7 & n.1. Defendants contend that they attach such 11 documents “for the purpose of giving the Court sufficient context to understand why Defendants 12 are raising this issue at this juncture.” See id. In opposing the motion, Plaintiff also references 13 evidence obtained through discovery, as well as emails between counsel. See, e.g., Opp. at 16, 19 14 n.14. Notwithstanding these tactics, the parties appear to understand that the Court is limited to 15 the pleadings and matters properly incorporated by reference or subject to judicial notice.

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In re Lyft Inc. Securities Litigation, (N.D. Cal. 2021).

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