Lyft will implement several safety and governance reforms to settle a shareholder lawsuit accusing the ride-sharing company’s officers and directors of not doing enough to stop drivers from sexually and physically assaulting passengers.
A preliminary settlement was filed on Tuesday night in the Oakland, Calif., federal court, and requires a judge’s approval.
Lyft agreed to boost passenger awareness of the “Alert 911 Silently” feature on its app for reporting misconduct, and make it easier to report problems 24/7 to a live human. It also said it has also improved training and its code of business conduct and ethics.
The changes would last at least three years. Officers and directors would pay no money to the company, and their insurers would pay $700,000 to cover the plaintiffs’ legal fees.
Shareholders claimed that Lyft’s reputation suffered from the company’s inadequate training and background checks for drivers, including those with histories of sexual misconduct.
They also said Lyft concealed the shortfalls before its March 2019 initial public offering, and also concealed defects in its electronic bikes that led to numerous injuries.
Lyft officials denied wrongdoing in agreeing to settle.
In a statement, the San Francisco-based company said it settled “solely to avoid the disruption and cost of litigation.”
Lyft has said the lawsuit was the last shareholder case arising from the IPO. Through Tuesday, Lyft’s share price had fallen 83% since the offering. Lyft shares were down 4% on Wednesday.
Many ride-share passengers have also accused Uber drivers of sexual assault.
More than 300 lawsuits against Uber alleging such conduct have been combined into a federal class action pending in San Francisco. The number of plaintiffs could reach the thousands.
The case is In re Lyft Inc Derivative Litigation, U.S. District Court, Northern District of California No. 20-09257.
