Facts

On March 28, 2019, when Lyft Inc. went public, Rick Keiner and others purchased common stock shares through an initial public offering (IPO). Later, they brought a securities class action lawsuit against Lyft and some of its officers and directors in regards to representations made in Lyft's IPO registration statement.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended that the Registration Statement misrepresented and failed to disclose certain information such as: the potential for reputational damage and legal liability due to sexual assault allegations against certain drivers; that Lyft's market share was shrinking because of a price war with competitor Uber; and safety issues with Lyft's bike sharing program.

DEFENDANT'S CONTENTIONS: Defendant denied all allegations, contending that its loss/negative causation defense was strong as there were several other factors that could have caused the decline in the shares' prices, especially given the volatility of the market. Moreover, there was no clear information disclosing that Lyft was engaged in a price war with Uber nor was losing market share on the three dates of the supposed corrective disclosures.

Settlement Discussions

In November 2021, the parties participated in mediation with David Murphy but did not reach an agreement at that time. The parties, continuing settlement discussions, came to an agreement in February 2022 to settle for $25 million and the agreement was finalized in September 2022. During the settlement approval process, plaintiffs from a parallel state court action that also raised Securities Act claims arising from the IPO objected to the settlement on the grounds that it was too low, failed to account for theories presented in their parallel case, and was the result of a collusive "reverse auction" between Defendant and the Plaintiffs.

Result

The court denied all objections and granted final approval of the $25 million settlement, which was inclusive of $6.25 million in attorneys' fees and $478,683.75 in costs. However, the court denied the motion for costs for lead plaintiff because of failure to provide documentation or evidence of actual costs, expenses, or lost wages attributable to the litigation.