Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 1 of 22
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`IN RE LYFT INC. SECURITIES
`LITIGATION
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`Case No. 19-cv-02690-HSG
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`ORDER GRANTING IN PART AND
`DENYING IN PART DEFENDANTS'
`MOTION TO DISMISS
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`Re: Dkt. No. 78
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`This is a consolidated securities class action brought by Plaintiff Rick Keiner against
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`Defendant Lyft Inc. (“Lyft” or “the Company”), Logan Green, Co-Founder, Chief Executive
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`Officer, and Director on Lyft’s board of directors (the “Board”), John Zimmer, Co-Founder,
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`President and Vice Chairman of the Board, Brian Roberts, Chief Financial Officer, Prashant
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`(Sean) Aggarwal, Chairman of the Board, Board Members Ben Horowitz, Valerie Jarrett, David
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`Lawee, Hiroshi Mikitani, Ann Miura-Ko, Mary Agnes (Maggie) Wilderotter, and Former Board
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`Member Jonathan Christodoro (“Individual Defendants,” and collectively with Lyft,
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`“Defendants”). In his complaint, Plaintiff alleges violations of Sections 11, 12(a)(2) and 15 of the
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`Securities Act of 1933 (the “Securities Act”): making untrue statements and misleading statements
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`under Section 11, and control person liability under Section 15. See Dkt. No. 74 (Consolidated
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`Class Action Complaint or “CCAC”) ¶¶ 213–34.1 Pending before the Court is Defendants’ motion
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`to dismiss the consolidated class action complaint, for which briefing is complete. Dkt. Nos. 78
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`(“Mot.”), 84 (“Opp.”), and 88 (“Reply”). For the following reasons, the Court GRANTS IN
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`PART and DENIES IN PART Defendants’ motion to dismiss.2
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`1 Plaintiff no longer asserts any Section 12(a)(2) claim against Defendants. See Dkt. No. 84 at 29
`n.48.
`2 The Court finds this matter is appropriate for disposition without oral argument and the matter is
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`Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 2 of 22
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`I. BACKGROUND
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`Lyft is a rideshare company that “sought to revolutionize transportation by launching its
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`peer-to-peer marketplace for on-demand ridesharing.” CCAC at ¶ 4. Lyft registered its issuance
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`of common stock “under the Securities Act of 1933, as amended, pursuant to Lyft’s registration
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`statement on Form S-1 (File No. 333-229996) declared effective on March 28, 2019.” Id. at ¶ 3.
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`Lyft offered 32.5 million shares to the public through an initial public offering (“IPO”) at a price
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`of $72.00 per share, generating total proceeds of $2.34 billion. Id. at ¶ 5.
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`According to Plaintiff, Lyft made representations in the Registration Statement and
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`Prospectus filed in connection with the IPO that “were materially misleading, omitted information
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`necessary in order to make the statements not misleading, and omitted material facts required to be
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`stated therein.” Id. ¶ 6. “Specifically, the Registration Statement misled investors with respect to:
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`(1) the potential for severe reputational damage and legal liability due to rampant sexual assaults
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`committed by Lyft drivers; (2) the Company’s actual national market share; (3) the key metrics
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`promoted by the Company to investors as important measurements of the Company’s financial
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`performance and growth were about to be abandoned; (4) the Company was days away from
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`closing its first quarter with a massive loss; (5) safety issues regarding the Company’s bike sharing
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`business jeopardized the Company’s growth plans; and (6) labor conflicts with the Company’s
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`drivers, all of which were known to, but concealed by Defendants at the time of the IPO.” Id.
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`II. REQUEST FOR JUDICIAL NOTICE
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`Defendants request that the Court take judicial notice of or consider incorporated by
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`reference the following 15 documents: (1) U.S. Securities Exchange Commission (“SEC”) filings
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`(Exs. 1, 2, 3); (2) news articles (Exs. 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14); and (3) Plaintiff’s
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`amended certification (Ex. 15). Dkt. No. 79; Dkt. No. 78-1 (“Smith Decl.”), Exs. 1–15. Plaintiff
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`filed no objection to Defendants’ request for judicial notice.
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`In Khoja v. Orexigen Therapeutics, the Ninth Circuit clarified the judicial notice rule and
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`incorporation by reference doctrine. 899 F.3d 988 (9th Cir. 2018). Under Federal Rule of
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`Evidence 201, a court may take judicial notice of a fact “not subject to reasonable dispute because
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`deemed submitted. See Civil L.R. 16-5.
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`Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 3 of 22
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`it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be
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`questioned.” Fed. R. Evid. 201(b)(2). Accordingly, a court may take “judicial notice of matters of
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`public record,” but “cannot take judicial notice of disputed facts contained in such public records.”
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`Khoja, 899 F.3d at 999 (citation and quotations omitted). The Ninth Circuit has clarified that if a
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`court takes judicial notice of a document, it must specify what facts it judicially noticed from the
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`document. Id. Separately, the incorporation by reference doctrine is a judicially created doctrine
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`that allows a court to consider certain documents as though they were part of the complaint itself.
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`Id. at 1002. This is to prevent plaintiffs from cherry-picking certain portions of documents that
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`support their claims, while omitting portions that weaken their claims. Id. However, it is
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`improper to consider documents “only to resolve factual disputes against the plaintiff’s well-pled
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`allegations in the complaint.” Id. at 1014.
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`The Court will consider Lyft’s Form S-1 Registration Statement that Plaintiff alleges
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`contained false and/or misleading statements for the purpose of determining what was disclosed to
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`the market. See Dkt. No. 78-2 (“Registration Statement). Because “the plaintiff refers extensively
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`to the document [and] the document forms the basis of the plaintiff’s claim,” the Court GRANTS
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`the motion as to Exhibit 1, finding this document incorporated by reference. Khoja, 899 F.3d at
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`1002 (quoting United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003)); see also In re
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`Restoration Robotics, Inc. Sec. Litig., 417 F. Supp. 3d 1242, 1253 (N.D. Cal. 2019) (finding
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`incorporated by reference a prospectus filed with the SEC in a Section 11 and 15 securities case).
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`The Court next GRANTS Defendants’ motion for judicial notice of Exhibit 15, Plaintiff’s
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`Amended Certification. The Private Securities Litigation Reform Act (“PSLRA”) requires a
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`plaintiff’s certification to be filed with the complaint to establish standing to bring a suit under
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`Section 11, 15 U.S.C. § 77z-1(a)(2), and thus the Amended Certification is appropriately
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`considered “part of the complaint,” such that the incorporation by reference doctrine applies.
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`Defendants also request that the Court take judicial notice of Exhibits 6 and 11, news articles
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`specifically referenced in the complaint, and Exhibits 2 and 3, the Company’s 10-Q filed May 14,
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`2019 and Uber’s Form S-1 Registration Statement. Although the documents do not contain
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`allegedly misleading statements themselves, they form the basis of Plaintiff’s allegations as to
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`Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 4 of 22
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`why representations in the Registration Statement are misleading. Accordingly, the Court
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`GRANTS Defendants’ request for judicial notice as to Exhibits 2, 3, 6, and 11.
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`Defendants’ Exhibits 4, 5, 7, 8, 9, 10, 12, 13, and 14 are not specifically referenced in the
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`CCAC or relevant to the Court’s analysis. Therefore, Defendants’ request as to those exhibits is
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`DENIED AS MOOT.
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`III. LEGAL STANDARD
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`A. Rule 12(b)(6) Standard
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`Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain
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`statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A
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`defendant may move to dismiss a complaint for failing to state a claim upon which relief can be
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`granted under Federal Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is
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`appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support
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`a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th
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`Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a
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`claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
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`A claim is facially plausible when a plaintiff pleads “factual content that allows the court to draw
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`the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
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`556 U.S. 662, 678 (2009).
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`In reviewing the plausibility of a complaint, courts “accept factual allegations in the
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`complaint as true and construe the pleadings in the light most favorable to the nonmoving party.”
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`Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless,
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`Courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of
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`fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir.
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`2008).
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`B.
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`Section 11 of the Securities Act
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`“[S]ection 11 of the 1933 Securities Act creates a private remedy for any purchaser of a
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`security if ‘any part of the registration statement, when such part became effective, contained an
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`untrue statement of a material fact or omitted to state a material fact required to be stated therein
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`Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 5 of 22
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`or necessary to make the statements therein not misleading.’” In re Daou Sys., Inc., 411 F.3d
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`1006, 1027 (9th Cir. 2005) (quoting 15 U.S.C. § 77k(a)). To allege a Section 11 claim, a plaintiff
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`must show “(1) that the registration statement contained an omission or misrepresentation, and (2)
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`that the omission or misrepresentation was material, that is, it would have misled a reasonable
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`investor about the nature of his or her investment.” Rubke v. Capitol Bancorp Ltd., 551 F.3d
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`1156, 1161 (9th Cir. 2009) (quoting In re Daou, 411 F.3d at 1027). Importantly, “[n]o scienter is
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`required for liability under § 11; defendants will be liable for innocent or negligent material
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`misstatements or omissions.” In re Daou, 411 F.3d at 1027 (quoting In re Stac Elecs. Sec. Litig.,
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`89 F.3d 1399, 1404 (9th Cir. 1996)).
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`Unlike Section 10(b) claims, the heightened pleading standards of the PSLRA do not apply
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`to Section 11 claims. See Rubke, 551 F.3d at 1161. Instead, “only allegations of fraudulent
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`conduct must satisfy the heightened pleading requirements of Rule 9(b),” and “[a]llegations of
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`non-fraudulent conduct need satisfy only the ordinary notice pleading standards of Rule 8(a).” In
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`re Daou, 411 F.3d at 1027 (citing Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1103–04 (9th
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`Cir. 2003)).
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`IV. ANALYSIS
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`Defendants argue that Plaintiff fails to adequately plead that any materially false or
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`misleading statement or omission was made in the Registration Statement. Mot. at 8–22.
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`Defendants also argue that Plaintiff has not adequately alleged Section 11 damages for the safety,
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`first quarter, and driver benefits statements given that the decline in stock price occurred after the
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`first-filed complaint was brought. Mot. at 24–25. The Court addresses Defendants’ arguments by
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`analyzing the categories of statements identified in the CCAC.
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`A. Rider Safety and Related Risk Factors
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`According to Plaintiff, “[f]rom its inception, Lyft cultivated an image of a Company built
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`on trust, safety, and dedication to social responsibility—particularly in relation to women.”
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`CCAC at ¶92. Plaintiff alleges that “the Registration Statement repeatedly emphasized Lyft’s
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`culture, values, and brand reputation,” id. at ¶102, pointing to the following statements:
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`To advance our mission, we aim to build the defining brand of our
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`Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 6 of 22
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`generation and to promote a company culture based on our unique
`values . . . These values have given rise to a unique company culture
`that fosters an amazing community of drivers, riders and employees,
`and has helped establish Lyft as a widely-trusted and recognized
`brand. We believe many users are loyal to Lyft because of our values,
`brand and commitment to social responsibility.
`. . .
`Culture and Values. Our core values are Be Yourself, Uplift Others
`and Make it Happen. Our team members, who uphold our values and
`live our mission every day, are at the forefront of cultivating and
`spreading this culture across the drivers, riders and communities we
`serve. This continuous interaction across the entire Lyft community
`creates a virtuous cycle which further reinforces our culture and fuels
`our growth.
`Authentic Brand. We believe the authenticity of our culture and
`values positions us to build the defining brand of our generation. Our
`brand embodies a commitment to exceptional offerings and social
`responsibility. We have built a brand that balances our mission-driven
`ethos with a friendly, hospitality-oriented personality. The strength of
`our brand is a key driver of our ability to attract and retain users and
`serves as a strategic differentiator. We believe that affinity for our
`brand will continue to strengthen as consumers increasingly gravitate
`towards brands that are purpose-driven and emphasize corporate
`social responsibility.
`. . .
`Consumers, especially millennials, are gravitating towards brands
`that value community engagement and embrace social and
`environmental responsibility. 88% of millennials expect companies
`to produce and communicate the results of corporate social
`responsibility efforts, and 89% of consumers are likely to switch
`brands to one that is associated with a good cause, given similar price
`and quality.
`. . .
`Safety is our top priority, and establishing a community built on trust
`and safety is paramount to our success.
`. . .
`Although we face intense competition, our values, brand, innovation
`and focused execution have driven increased ridesharing market share
`in the United States . . . We believe we have differentiated our
`business from these competitors by building a multimodal TaaS
`network at scale while upholding our culture and values and creating
`a brand that embodies a commitment to exceptional offerings and
`social responsibility, but we must continue to respond to competitive
`pressures.
`. . .
`We believe that the principal competitive factors in our market
`include . . . brand; trust, safety, reliability and privacy
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`CCAC at ¶¶103–109; see also Registration Statement at 2, 3, 5, 7, 87, 158.3
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`3 Plaintiff also identifies an entire section of the Registration Statement titled, “Our Commitment
`to Trust & Safety,” which similarly emphasizes Lyft’s efforts to promote safety. CCAC at ¶109.
`Specifically, it identifies the following safety features: “Critical Reponses Line,” “Driving Record
`and Background Checks,” “Two-Way Ratings,” and “Zero-Tolerance Policy.” Id.; see also
`Registration Statement at 155–56.
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`Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 7 of 22
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`Plaintiff alleges that these statements regarding safety were materially false or misleading
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`“because they failed to disclose that (1) the Company faced serious reputational damage and legal
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`liability from pervasive incidents of assault, both physical and sexual, perpetrated by Lyft drivers
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`prior to the IPO; and (ii) the Company’s safety and response policies were wholly inadequate.”
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`CCAC at ¶110.
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`Plaintiff also alleges that the related “Risk Factor[s]” identified in the Registration
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`Statement “omitted . . . other facts necessary to make the statements made not misleading.” Id. at
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`¶116. Specifically, none of the disclosures made any “mention of sexual assault at all,” and
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`“[g]iven the severe risk of brand damage that could arise from sexual assault allegations, Lyft’s
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`failure to mention anything related to the issue is glaring.” Id. at ¶117. Plaintiff points to the
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`following statements:
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`We believe that building a strong reputation and brand as a safe,
`reliable and affordable platform and continuing to increase the
`strength of the network effects among the drivers and riders on our
`platform are critical to our ability to attract and retain qualified drivers
`and riders. The successful development of our reputation, brand and
`network effects will depend on a number of factors, many of which
`are outside our control. Negative perception of our platform or
`company may harm our reputation, brand and networks effects,
`including as a result of: • complaints or negative publicity about us,
`drivers on our platform, riders, our offerings or our policies and
`guidelines, even if factually incorrect or based on isolated incidents;
`. . . • a failure to operate our business in a way that is consistent with
`our values and mission; • inadequate or unsatisfactory user support
`service experiences; • illegal or otherwise inappropriate behavior by
`our management team or other employees or contractors;
`. . .
`Our company culture has contributed to our success and if we cannot
`maintain this culture as we grow, our business could be harmed. We
`believe that our company culture, which promotes authenticity,
`empathy and support for others, has been critical to our success. We
`face a number of challenges that may affect our ability to sustain our
`corporate culture . . . If we are not able to maintain our culture, our
`business, financial condition and results of operations could be
`adversely affected.
`. . .
`We could be subject to claims from riders, drivers or third parties that
`are harmed whether or not our platform is in use, which could
`adversely affect our business, brand, financial condition and results
`of operations. We are regularly subject to claims, lawsuits,
`investigations and other legal proceedings relating to injuries to, or
`deaths of, riders, drivers or third parties that are attributed to us
`through our offerings. We may also be subject to claims alleging that
`we are directly or vicariously liable for the acts of the drivers on our
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`platform. We may be subject to personal injury claims whether or not
`such injury actually occurred as a result of activity on our platform.
`For example, third parties have in the past asserted legal claims
`against us in connection with personal injuries related to the actions
`of a driver or rider who may have previously utilized our platform,
`but was not at the time of such injury. We have incurred expenses to
`settle personal injury claims, which we sometimes choose to settle for
`reasons including expediency, protection of our reputation and to
`prevent the uncertainty of litigating, and we expect that such expenses
`will continue to increase as our business grows and we face increasing
`public scrutiny.
`. . .
`In the ordinary course of our business, various parties have from time
`to time claimed, and may claim in the future, that we are liable for
`damages related to accidents or other incidents involving drivers or
`riders using or who have used services offered on our platform, as
`well as from third parties. We are currently named as a defendant in
`a number of matters related to accidents or other incidents involving
`drivers on our platform, other riders and third parties.
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`Id. at ¶¶113–15, 117; Registration Statement at 27, 33 44, 163.
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`Defendants argue that these allegations fail to plead a Section 11 claim. First, Defendants
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`argue that the safety statements in paragraphs 103–109 of the complaint constitute non-actionable
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`puffery. Mot. at 14. Second, they contend that the related risk factor statements cannot support a
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`claim because the warned-of risks had not actually materialized at the time of the IPO. Id. at 13.
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`Third, Defendants argue that Lyft specifically disclosed driver safety incidents and potential
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`liability from the incidents, contrary to Plaintiff’s allegations. Id. at 9. Defendants point to the
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`following statements in the Registration Statement:
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`Illegal, improper or otherwise inappropriate activity of users, whether
`or not occurring while utilizing our platform, could expose us to
`liability and harm our business, brand, financial condition and results
`of operations
`. . .
`Illegal, improper or otherwise inappropriate activities by users,
`including the activities of individuals who may have previously
`engaged with, but are not then receiving or providing services offered
`through, our platform or
`individuals who are
`intentionally
`impersonating users of our platform could adversely affect our brand,
`business, financial condition and results of operations. These
`activities may include assault, theft, unauthorized use of credit and
`debit cards or bank accounts, sharing of rider accounts and other
`misconduct.
`. . .
`The Company is currently named as a defendant in a number of
`litigation matters related to accidents or other trust and safety
`incidents involving drivers or passengers using the Lyft Platform
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`Registration Statement at 11, 28, 163, F-31. Finally, Defendants argue that the occurrence of
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`assaults involving Lyft drivers was widely reported by the media, such that Plaintiff cannot base a
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`Section 11 claim on the omission of publicly available information. Mot. at 11.
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`As noted, Defendants argue that Lyft was not required to explicitly disclose the sexual
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`assault allegations and litigation, and that the legal disclosures identified were sufficient. The
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`Court recognizes that “Section 11 does not require the disclosure of all information a potential
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`investor might take into account when making his decision.” Rubke, 551 F.3d at 1163. However,
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`at the pleading stage, “Section 11 ‘places a relatively minimal burden on a plaintiff’[:] . . . ‘he
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`need only show a material misstatement or omission to establish his prima facie case.’” Hildes v.
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`Arthur Andersen LLP, 734 F.3d 854, 859 (9th Cir. 2013) (quoting Herman & MacLean v.
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`Huddleston, 459 U.S. 375, 382 (1983)). Here, Plaintiff argues that Defendants’ legal disclosures
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`omitted clear reference to the sexual assault litigation that Lyft faced, which he contends was
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`materially misleading in light of Lyft’s touted “values.” The parties disagree as to whether
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`references to “assault” and “trust and safety issues” adequately disclosed the sexual assault
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`litigation. The adequacy of the disclosures is not “so obvious” that the Court may resolve this
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`dispute at the motion to dismiss stage. See Pirani v. Slack Techs., Inc., 445 F. Supp. 3d 367, 386
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`(N.D. Cal. 2020) (denying dismissal of Section 11 claims where “the adequacy of [defendant’s]
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`disclosures [was] not so obvious that reasonable minds [could] not differ”) (internal citation
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`omitted). Under the standard that applies at this stage of the case, Plaintiff’s allegation that the
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`omission of any mention of potential liability from sexual assaults perpetuated by drivers against
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`riders made Lyft’s statements regarding safety materially misleading is sufficient. See Berson v.
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`Applied Signal Tech., Inc., 527 F.3d 982, 987 (9th Cir. 2008) (“Absent undisputed evidence that
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`these were terms of art that investors would have understood to refer to [the omitted facts], we
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`cannot find, as a matter of law, that defendants disclosed [the omitted facts].”). 4
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`4 Plaintiff’s allegations under 17 C.F.R. § 229.303(a)(3)(iii) (“Item 303”) and 17 C.F.R. § 229.105
`(“Item 105”) similarly meet the standard applicable at this stage. Item 303 requires a company to
`provide disclosures about “any known trends or uncertainties that have had or that the registration
`reasonably expects will have a material favorable or unfavorable impact on net sales or revenues
`or income from continuing operations.” 17 C.F.R. § 229.303(a)(3)(iii). Item 105 requires a
`company disclose a “discussion of the most significant factors that make the offering speculative
`or risky.” Id. at § 229.105. Plaintiff alleges that “Lyft saw an increase in the number of sexual
`assaults its drivers committed” and that the “[s]exual assault complaints against Lyft drivers were
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`Defendants also argue that the market knew of the sexual assault complaints and litigation
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`at the time of the IPO. Mot. at 11–12. Although “[p]ublicly available information cannot be a
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`material omission under federal securities laws,” Sanchez v. IXYS Corp., No. 17-cv-06441-WHO,
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`2018 WL 4787070, at *3 (N.D. Cal. Oct. 2, 2018), Defendants do not establish as a matter of law
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`that the complaints and litigation were in the public domain. Plaintiff alleges that the majority of
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`sexual assault complaints and litigation “were not publically known until after the IPO,” even
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`though assault victims often lodged individual complaints with Lyft. CCAC at ¶111. Specifically,
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`Plaintiff points to the “pervasive” nature of the problem and the limited information available to
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`the public. Id. at ¶¶111–113. Defendants’ reliance on exemplary news reports does not rebut
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`Plaintiff’s allegations. For this reason, the cases cited by Defendants do not support their
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`sweeping argument. In Sanchez, the court found that the specific analyst projections that the
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`plaintiff contended were omitted from the proxy were easily accessible on Bloomberg. 2018 WL
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`4787070, at *3. Similarly, in Vignola v. FAT Brands, Inc., the plaintiff alleged that the offering
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`documents at issue failed to disclose that a defendant’s stock was previously delisted. No. 18-cv-
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`7469-PSG (PLAx), 2019 WL 6138473, at *14 (C.D. Cal. June 14, 2019). The Vignola court
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`found that such information was available to investors because “the delisting was publically
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`disclosed at the time it occurred.” Id. But here, Defendants do not show that the underlying
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`information allegedly omitted (including individual complaints and litigation) was specifically
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`disclosed to the public.
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`Defendants next argue that the related risk factor statements cannot support a claim
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`because Plaintiff fails to plead that the warned-of risks had actually materialized at the time of the
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`IPO. Mot. at 13. However, Plaintiff’s allegation is that the Registration Statement failed to warn
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`of reputational risk due to the sexual assault allegations and litigation and that such reputational
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`risk had already materialized by the time of Lyft’s IPO:
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`[T]he Company faced serious reputational damage and legal liability
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`abundant and increasing.” CACC at ¶¶131, 133. Plaintiff also alleges that Lyft faced “severe risk
`of brand damage that could arise from sexual assault allegations,” due to its historical “cultivat[ion
`of] an image of a Company built on trust, safety, and a dedication.” Id. at ¶92. These allegations
`are sufficient at this stage.
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`Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 11 of 22
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`from pervasive incidents of assault, both physical and sexual,
`perpetrated by Lyft drivers prior to the IPO
`. . .
`The “Risk Factors” provided in the Registration Statement were
`materially misleading, omitted to state other facts necessary to make
`the statements made not misleading, and omitted material facts
`required to be stated therein because they described the risks as
`hypothetical possibilities, despite the fact that the warned of risks had
`already occurred and continued to occur
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`CCAC at ¶¶110, 116. Accordingly, the Court disagrees with Defendants’ argument and finds that
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`the Plaintiff’s allegations as to the related risk factor statements sufficiently plead a Section 11
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`action.5
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`Finally, Defendants argue that the rider safety statements, CCAC at ¶¶103–109, amount to
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`non-actionable puffery. Here, the Court agrees. “In the Ninth Circuit, vague, generalized
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`assertions of corporate optimism or statements of mere puffing are not actionable material
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`misrepresentations under federal securities laws because no reasonable investor would rely on
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`such statements.” In re Restoration Robotics, Inc. Sec. Litig., 417 F. Supp. 3d 1242, 1255 (N.D.
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`Cal. 2019) (internal quotations omitted); see also Retail Wholesale & Dep’t Store Union Local
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`338 Ret. Fund v. Hewlett-Packard Co., 845 F.3d 1268, 1276 (9th Cir. 2017) (finding a company’s
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`statements expressing a “commitment to doing the right thing” and striving to be “a company
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`known for its ethical leadership” aspirational and not capable of objective verification). The rider
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`safety statements do not make specific representations regarding rider safety. Tellingly, Plaintiff
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`does not argue that the description of any safety measure highlighted in the Registration Statement
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`was false or misleading, but instead argues that Lyft’s statements regarding its commitment to
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`safety were misleading because “Lyft knew that it was doing poorly in this area.” Opp. at 16
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`(citing In re Apple Inc. Sec. Litig., No. 19-cv-02033-YGR, 2020 WL 2857397, at *14 (N.D. Cal.
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`June 2, 2020)). In Apple, the court found actionable defendant’s statement that its product was
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`“off to a really great start,” where the complaint detailed that defendant was about to cut
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`5 Additionally, while Defendants appear to argue that Plaintiff fails to sufficiently plead that the
`sexual assault allegations or litigation existed at the time of the IPO, see Mot. at 11 (citing Wong v.
`Arlo Techs., Inc., No. 19-cv-00372-BLF, 2019 WL 7834762, at *7 (N.D. Cal. Dec. 19, 2019)), the
`Court disagrees. Although Plaintiff points to news stories disclosing sexual assault allegations and
`litigation that were published after the IPO, he also alleges that “Lyft knew” of these allegations
`prior to the IPO, and points to incidents occurring prior to the IPO which were not disclosed. See
`CACC at ¶¶111, 135.
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`Case 4:19-cv-02690-HSG Document 96 Filed 09/08/20 Page 12 of 22
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`productions lines and witnesses reported that “sales were weak and that preorders were lower than
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`for previous [versions of the product].” 2020 WL 2857397 at *14–15, 25 n.15. However,
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`Plaintiff does not make comparable allegations here. Plain