In re Lyft Inc. Sec. Litig.

Decision Date08 September 2020
Docket NumberCase No. 19-cv-02690-HSG
Citation484 F.Supp.3d 758
CourtU.S. District Court — Northern District of California


Re: Dkt. No. 78

HAYWOOD S. GILLIAM, JR., United States District Judge

This is a consolidated securities class action brought by Plaintiff Rick Keiner against Defendant Lyft Inc. ("Lyft" or "the Company"), Logan Green, Co-Founder, Chief Executive Officer, and Director on Lyft's board of directors (the "Board"), John Zimmer, Co-Founder, President and Vice Chairman of the Board, Brian Roberts, Chief Financial Officer, Prashant (Sean) Aggarwal, Chairman of the Board, Board Members Ben Horowitz, Valerie Jarrett, David Lawee, Hiroshi Mikitani, Ann Miura-Ko, Mary Agnes (Maggie) Wilderotter, and Former Board Member Jonathan Christodoro ("Individual Defendants," and collectively with Lyft, "Defendants"). In his complaint, Plaintiff alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (the "Securities Act"): making untrue statements and misleading statements under Section 11, and control person liability under Section 15. See Dkt. No. 74 (Consolidated Class Action Complaint or "CCAC") ¶¶ 213–34.1 Pending before the Court is Defendantsmotion to dismiss the consolidated class action complaint, for which briefing is complete. Dkt. Nos. 78 ("Mot."), 84 ("Opp."), and 88 ("Reply"). For the following reasons, the Court GRANTS IN PART and DENIES IN PART Defendantsmotion to dismiss.2


Lyft is a rideshare company that "sought to revolutionize transportation by launching its peer-to-peer marketplace for on-demand ridesharing." CCAC at ¶ 4. Lyft registered its issuance of common stock "under the Securities Act of 1933, as amended, pursuant to Lyft's registration statement on Form S-1 (File No. 333-229996) declared effective on March 28, 2019." Id. at ¶ 3. Lyft offered 32.5 million shares to the public through an initial public offering ("IPO") at a price of $72.00 per share, generating total proceeds of $2.34 billion. Id. at ¶ 5.

According to Plaintiff, Lyft made representations in the Registration Statement and Prospectus filed in connection with the IPO that "were materially misleading, omitted information necessary in order to make the statements not misleading, and omitted material facts required to be stated therein." Id. ¶ 6. "Specifically, the Registration Statement misled investors with respect to: (1) the potential for severe reputational damage and legal liability due to rampant sexual assaults committed by Lyft drivers; (2) the Company's actual national market share; (3) the key metrics promoted by the Company to investors as important measurements of the Company's financial performance and growth were about to be abandoned; (4) the Company was days away from closing its first quarter with a massive loss; (5) safety issues regarding the Company's bike sharing business jeopardized the Company's growth plans; and (6) labor conflicts with the Company's drivers, all of which were known to, but concealed by Defendants at the time of the IPO." Id.


Defendants request that the Court take judicial notice of or consider incorporated by reference the following 15 documents: (1) U.S. Securities Exchange Commission ("SEC") filings (Exs. 1, 2, 3); (2) news articles (Exs. 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14); and (3) Plaintiff's amended certification (Ex. 15). Dkt. No. 79; Dkt. No. 78-1 ("Smith Decl."), Exs. 1–15. Plaintiff filed no objection to Defendantsrequest for judicial notice.

In Khoja v. Orexigen Therapeutics , the Ninth Circuit clarified the judicial notice rule and incorporation by reference doctrine. 899 F.3d 988 (9th Cir. 2018). Under Federal Rule of Evidence 201, a court may take judicial notice of a fact "not subject to reasonable dispute because it ... can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b)(2). Accordingly, a court may take "judicial notice of matters of public record," but "cannot take judicial notice of disputed facts contained in such public records." Khoja , 899 F.3d at 999 (citation and quotations omitted). The Ninth Circuit has clarified that if a court takes judicial notice of a document, it must specify what facts it judicially noticed from the document. Id. Separately, the incorporation by reference doctrine is a judicially created doctrine that allows a court to consider certain documents as though they were part of the complaint itself. Id. at 1002. This is to prevent plaintiffs from cherry-picking certain portions of documents that support their claims, while omitting portions that weaken their claims. Id. However, it is improper to consider documents "only to resolve factual disputes against the plaintiff's well-pled allegations in the complaint." Id. at 1014.

The Court will consider Lyft's Form S-1 Registration Statement that Plaintiff alleges contained false and/or misleading statements for the purpose of determining what was disclosed to the market. See Dkt. No. 78-2 ("Registration Statement"). Because "the plaintiff refers extensively to the document [and] the document forms the basis of the plaintiff's claim," the Court GRANTS the motion as to Exhibit 1, finding this document incorporated by reference. Khoja , 899 F.3d at 1002 (quoting United States v. Ritchie , 342 F.3d 903, 907 (9th Cir. 2003) ); see also In re Restoration Robotics, Inc. Sec. Litig. , 417 F. Supp. 3d 1242, 1253 (N.D. Cal. 2019) (finding incorporated by reference a prospectus filed with the SEC in a Section 11 and 15 securities case).

The Court next GRANTS Defendantsmotion for judicial notice of Exhibit 15, Plaintiff's Amended Certification. The Private Securities Litigation Reform Act ("PSLRA") requires a plaintiff's certification to be filed with the complaint to establish standing to bring a suit under Section 11, 15 U.S.C. § 77z-1(a)(2), and thus the Amended Certification is appropriately considered "part of the complaint," such that the incorporation by reference doctrine applies. Defendants also request that the Court take judicial notice of Exhibits 6 and 11, news articles specifically referenced in the complaint, and Exhibits 2 and 3, the Company's 10-Q filed May 14, 2019 and Uber's Form S-1 Registration Statement. Although the documents do not contain allegedly misleading statements themselves, they form the basis of Plaintiff's allegations as to why representations in the Registration Statement are misleading. Accordingly, the Court GRANTS Defendantsrequest for judicial notice as to Exhibits 2, 3, 6, and 11.

Defendants’ Exhibits 4, 5, 7, 8, 9, 10, 12, 13, and 14 are not specifically referenced in the CCAC or relevant to the Court's analysis. Therefore, Defendants’ request as to those exhibits is DENIED AS MOOT .

A. Rule 12(b)(6) Standard

Federal Rule of Civil Procedure 8(a) requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). A defendant may move to dismiss a complaint for failing to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr. , 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when a plaintiff pleads "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."

Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

In reviewing the plausibility of a complaint, courts "accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, Courts do not "accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Secs. Litig. , 536 F.3d 1049, 1055 (9th Cir. 2008).

B. Section 11 of the Securities Act

"[S]ection 11 of the 1933 Securities Act creates a private remedy for any purchaser of a security if ‘any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.’ " In re Daou Sys., Inc. , 411 F.3d 1006, 1027 (9th Cir. 2005) (quoting 15 U.S.C. § 77k(a) ). To allege a Section 11 claim, a plaintiff must show "(1) that the registration statement contained an omission or misrepresentation, and (2) that the omission or misrepresentation was material, that is, it would have misled a reasonable investor about the nature of his or her investment." Rubke v. Capitol Bancorp Ltd. , 551 F.3d 1156, 1161 (9th Cir. 2009) (quoting In re Daou , 411 F.3d at 1027 ). Importantly, "[n]o scienter is required for liability under § 11; defendants will be liable for innocent or negligent material misstatements or omissions." In re Daou , 411 F.3d at 1027 (quoting In re Stac Elecs. Sec. Litig. , 89 F.3d 1399, 1404 (9th Cir. 1996) ).

Unlike Section 10(b) claims, the heightened pleading standards of the PSLRA do not apply to Section 11 claims. See Rubke , 551 F.3d at 1161. Instead, "only allegations of fraudulent conduct must satisfy the heightened pleading requirements of Rule 9(b)," and "[a]llegations of non-fraudulent conduct need satisfy only the ordinary notice pleading ...

To continue reading

Request your trial
3 cases
  • Golubowski v. Robinhood Mkts.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • 10 Febrero 2023
    ...standards of the PSLRA [Private Securities Litigation Reform Act] do not apply to Section 11 claims.” In re Lyft Inc. Sec. Litig., 484 F.Supp.3d 758, 765 (N.D. Cal. 2020) (citing Rubke v. Capitol Bancorp Ltd, 551 F.3d 1156, 1161 (9th Cir. 2009)). Plaintiffs claim that, in the pre-IPO Offeri......
  • Garcia v. Barr
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • 8 Septiembre 2020
    ...7/29/2020 Bernwanger, Bree 1.7 671.07 Not entitled to enhanced rate 7/30/2020 Bernwanger, Bree 1.4 552.65 Not entitled to enhanced rate 484 F.Supp.3d 758 7/30/2020 Bernwanger, Bree 5.1 2,013.22 Not entitled to enhanced 2/10/2020 Ross, Mary Tanagho 0.5 295.00 Unreasonably vague entry 2/18/20......
  • Malig v. Lyft, Inc.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • 20 Agosto 2021
    ...found the allegations about the alleged increase in sexual assault allegations sufficient under Item 303. In re Lyft Inc. Sec. Litig., 484 F.Supp.3d 758, 769 & n.4 (N.D. Cal. 2020) (citing CCAC at ¶¶ 92, 131, 133). Yet Defendants again argue that Plaintiff “has not established any fact or t......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT