Malig v. Lyft, Inc.

MATIAS MALIG, AS TRUSTEE FOR THE MALIG FAMILY TRUST, Plaintiff, v. LYFT, INC., et al., Defendants.

No. 19-cv-02690-HSG

United States District Court, N.D. California

August 20, 2021

ORDER DENYING MOTION FOR JUDGMENT ON THE PLEADINGS AND DENYING ADMINISTRATIVE MOTIONS TO SEAL

Re: Dkt. No. 152, 169, 172

HAYWOOD S. GILLIAM, JR. United States District Judge

Pending before the Court is Defendants' motion for judgment on the pleadings. See Dkt. No. 152 (“Mot.”); Dkt. No. 159 (“Opp.”); Dkt No. 170 (“Reply”).^[1] Also pending are the parties' associated administrative motions to file under seal. Dkt Nos. 169, 172. The Court DENIES the motion for judgment on the pleadings and DENIES the motions to seal.

I. BACKGROUND

On April 16, 2021, Plaintiff Rick Keiner filed the operative consolidated complaint against Defendant Lyft Inc. (“Lyft”), Logan Green, Co-Founder, Chief Executive Officer, and Director on Lyft's board of directors (the “Board”), John Zimmer, Co-Founder, President and Vice Chairman of the Board, Brian Roberts, Chief Financial Officer, Prashant (Sean) Aggarwal, Chairman of the Board, Board Members Ben Horowitz, Valerie Jarrett, David Lawee, Hiroshi Mikitani, Ann Miura-Ko, and Mary Agnes (Maggie) Wilderotter (“Individual Defendants, ” and collectively with Lyft, “Defendants”).^[2] See Dkt. No. 74 (“CCAC”).

Lyft is a rideshare company that “sought to revolutionize transportation by launching its peer-to-peer marketplace for on-demand ridesharing.” CCAC at ¶ 4. Lyft registered its issuance of common stock “under the Securities Act of 1933, as amended, pursuant to Lyft's registration statement on Form S-1 (File No. 333-229996) declared effective on March 28, 2019.” Id. at ¶ 3. Lyft offered 32.5 million shares to the public through an initial public offering (“IPO”) at a price of $72.00 per share, generating total proceeds of $2.34 billion. Id. at ¶ 5. According to Plaintiff, Lyft made representations in the IPO Registration Statement and Prospectus filed in connection with the IPO that “were materially misleading, omitted information necessary in order to make the statements not misleading, and omitted material facts required to be stated therein.” Id. ¶ 6.

On May 14, 2020, Defendants moved to dismiss Plaintiff's consolidated amended class action complaint. Dkt. No. 78. On September 8, 2020, the Court granted in part and denied in part Defendants' motion. Dkt. No. 96. Following the hearing on Plaintiff's motion for class certification, Defendants moved for judgment on the pleadings as to a subset of Plaintiff's sexual assault allegations. Dkt. No. 152.

II. REQUESTS FOR JUDICIAL NOTICE

A. Legal Standard

In Khoja v. Orexigen Therapeutics, the Ninth Circuit clarified the judicial notice rule and incorporation by reference doctrine. See 899 F.3d 988 (9th Cir. 2018). Under Federal Rule of Evidence 201, a court may take judicial notice of a fact “not subject to reasonable dispute because it … can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b)(2). Accordingly, a court may take “judicial notice of matters of public record, ” but “cannot take judicial notice of disputed facts contained in such public records.” Khoja, 899 F.3d at 999 (citation and quotations omitted). The Ninth Circuit has clarified that if a court takes judicial notice of a document, it must specify what facts it judicially noticed from the document. Id. at 999. Further, “[j]ust because the document itself is susceptible to judicial notice does not mean that every assertion of fact within that document is judicially noticeable for its truth.” Id. As an example, the Ninth Circuit held that for a transcript of a conference call, the court may take judicial notice of the fact that there was a conference call on the specified date, but may not take judicial notice of a fact mentioned in the transcript, because the substance “is subject to varying interpretations, and there is a reasonable dispute as to what the [document] establishes.” Id. at 999-1000.

Separately, the incorporation by reference doctrine is a judicially-created doctrine that allows a court to consider certain documents as though they were part of the complaint itself. Id. at 1002. This is to prevent plaintiffs from cherry-picking certain portions of documents that support their claims, while omitting portions that weaken their claims. Id. Incorporation by reference is appropriate “if the plaintiff refers extensively to the document or the document forms the basis of plaintiff's claim.” Khoja, 899 F.3d at 1002. However, “the mere mention of the existence of a document is insufficient to incorporate the contents” of a document. Id. at 1002. And while a court “may assume [an incorporated document's] contents are true for purposes of a motion to dismiss … it is improper to assume the truth of an incorporated document if such assumptions only serve to dispute facts stated in a well-pleaded complaint.” Id.

B.Analysis

Defendants request that the Court take judicial notice of or consider incorporated by reference the following three documents:

• Lyft's Form S-1 Registration Statement (Ex. 1);

• an April 9, 2019 San Francisco Chronicle news article titled “Uber, Lyft safety in spotlight after student's slaying” (Ex. 2); and

• a January 5, 2017 Business Insider article titled “Lyft tripled its rides in 2016” (Ex. 3).

Dkt. No. 153 (“RJN”); Dkt. No. 152-1 (“Smith Decl.”), Exs. 1-3. Plaintiff generally argues that Defendants' requests are improper, but raises a specific objection only as to Exhibit 3. Opp. at 6.

The Court previously found Exhibit 1 incorporated by reference because it formed the basis of Plaintiff's claim. For the same reason, the Court GRANTS the motion as to Exhibit 1 and will again consider Lyft's Form S-1 Registration Statement for the purpose of determining what was disclosed to the market. Defendants argue that Plaintiff's complaint also relies on Exhibit 2 because “Plaintiff's losses under that claim allegedly resulted from the public's reaction to” the San Francisco Chronicle news article. RJN at 2-3. The Court agrees. Because “the plaintiff refers extensively to the document [and] the document forms the basis of the plaintiff's claim, ” the Court GRANTS the motion as to Exhibit 2, finding this document incorporated by reference. Khoja, 899 F.3d at 1002 (quoting United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003)). As to Exhibit 3, the Court agrees with Plaintiff that Defendants offer it for the truth of its contents. Defendants argue that the Business Insider article is “relevant to the amount of sexual assaults that occurred on the platform as compared to overall rides.” RJN at 4. The Court thus DENIES the motion as to Exhibit 3.

Defendants' briefing otherwise discusses matters outside of the pleadings, such as Plaintiff's discovery responses. See Mot. at 7 & n.1. Defendants contend that they attach such documents “for the purpose of giving the Court sufficient context to understand why Defendants are raising this issue at this juncture.” See Id. In opposing the motion, Plaintiff also references evidence obtained through discovery, as well as emails between counsel. See, e.g., Opp. at 16, 19 n.14. Notwithstanding these tactics, the parties appear to understand that the Court is limited to the pleadings and matters properly incorporated by reference or subject to judicial notice. The parties' extensive references to extraneous matters underscore the essential purposelessness of another pleadings motion seven months after the Court ruled that Plaintiffs' surviving claims implicate disputed factual issues.

III. ADMINISTRATIVE MOTIONS TO SEAL

A. Legal Standard

Courts generally apply a “compelling reasons” standard when considering motions to seal documents. Pintos v. Pac. Creditors Ass'n, 605 F.3d 665, 678 (9th Cir. 2010) (quoting Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006)). “This standard derives from the common law right ‘to inspect and copy public records and documents, including judicial records and documents.' ” Id. (quoting Kamakana, 447 F.3d at 1178). “[A] strong presumption in favor of access is the starting point.” Kamakana, 447 F.3d at 1178 (quotations omitted). To overcome this strong presumption, the party seeking to seal a judicial record attached to a dispositive motion must “articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process” and “significant public events.” Id. at 1178-79 (quotations omitted).

Records attached to nondispositive motions must meet the lower “good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure, as such records “are often unrelated, or only tangentially related, to the underlying cause of action.” Id. at 1179-80 (quotation omitted). This requires a “particularized showing” that “specific prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210-11 (9th Cir. 2002); see also Fed. R. Civ. P. 26(c). “Broad allegations of harm, unsubstantiated by specific examples of articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (quotation omitted).

B.Analysis

Because the motion for judgment on the pleadings is more than tangentially related to the underlying action, the Court applies the “compelling reasons” standard in evaluating the motions to seal. Plaintiff moves to seal the portions of opposition and Declaration of Jeffrey C. Block Declaration, Dkt. No. 159-1, that reference the parties' joint letter brief and...