Lyft reaches $25 million settlement for claims it hid security issues before IPO
Lyft Inc has reached a $25 million settlement to resolve shareholder claims that the ride-hailing company covered up safety issues, including sexual assaults by drivers, before its IPO in 2019.
The preliminary cash settlement was filed Thursday in federal court in Oakland, Calif., and requires the approval of U.S. District Judge Haywood Gilliam Jr.
Lyft denied wrongdoing in agreeing to settle.
The San Francisco-based company raised $2.34 billion in its IPO, becoming the first ride-hailing company to go public.
But its stock price fell below the IPO price of $72 less than two weeks after it began trading on March 29, 2019, and has never recovered.
Shareholders have accused Lyft of trying to appear more socially responsible than rival Uber Technologies Inc. by failing to disclose known issues in its listing statement, and that its stock price has fallen as the issues appeared.
Shareholders said dozens of people filed complaints against Lyft for driver sexual misconduct in the months after the IPO, an “existential risk” to its brand that should have been disclosed.
Lyft has also been accused of covering up braking issues plaguing its bike-sharing program, which surfaced in April 2019 when the company pulled its fleet of e-bikes from markets in New York, San Francisco and Washington, DC.
Shareholders said Lyft also hid its reliance on promotions to increase market share, leading to a price war that saw Uber claw back lost market share.
Attorneys for the shareholders called the settlement an “excellent” outcome given the “extremely unlikely” prospect of recovering up to $777 million in potential damages at trial.
They expect to seek up to $6.25 million from the settlement for legal fees.
Interested in Complaints?
Receive automatic alerts for this topic.