Lyft Okays $25-Million Deal With Shareholders Over Safety-Related Claims

Lyft has agreed to a $25 million settlement with shareholders in response to allegations that it failed to adequately disclose threats to its reputation and business before going public, Sara Ashley O’Brien reported for CNN Business.

Photo Insert: In the months following the IPO, scores of reports emerged of Lyft drivers sexually assaulting their passengers, and dozens of individuals filed claims against Lyft related to driver sexual misconduct.

The "misstatements and omissions" made prior to its initial public offering included failing to disclose the "existential risk" posed by reports of drivers assaulting passengers on the platform, as well as safety concerns with its bikeshare business.

According to the shareholders, Lyft failed to disclose this information in its IPO registration paperwork. Lyft eventually issued its first-ever safety report in October 2021, revealing that it received 4,158 reports of sexual assault on its platform between 2017 and 2019.

The preliminary settlement agreement, which was detailed in a court filing Thursday (Friday, June 17, 2022, in Manila), is awaiting approval by Northern District of California Judge Haywood S. Gilliam, Jr.

Notably, the funds would be distributed to shareholders rather than to individuals who have been victims of and reported such incidents.

"This settlement resolves a shareholder class action related to statements in Lyft's initial public offering and its financial impact on investors— it is not about safety-related claims on the platform," Lyft spokesperson Gabriela Condarco-Quesada told CNN Business on Thursday evening.

The shareholders also questioned Lyft's claims about its market share growth in the run-up to its IPO. The securities suit, which was first filed in 2019 after Lyft went public, claimed a disconnect between Lyft's public image and its handling of sexual assault incidents.

According to the filing, "Lyft cultivated a brand image as a safer, more socially conscious rideshare alternative with a focus on appealing to female passengers…However, in the months following the IPO, scores of reports emerged of Lyft drivers sexually assaulting their passengers, and dozens of individuals filed claims against Lyft related to driver sexual misconduct."

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