Lyft Settlement Over Sexual Assaults By Drivers Results in Reforms to Address Safety Problems

The rideshare service Lyft has reached a preliminary settlement agreement to resolve an investor lawsuit brought over the company’s handling of reports involving sexual assaults by drivers, which will result in a number of company-wide reforms and improvements to promote passenger safety.

A group of investors filed the lawsuit against Lyft for breaching its fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and wasting corporate assets, by failing to take sufficient steps to prevent Lyft drivers from sexually assaulting, attacking and raping passengers in recent years.

The Lyft settlement agreement proposes a number of changes to make it easier for passengers to report misconduct, improve driver training and implement other measures designed to address systemic safety problems. The deal also includes a $700,000 payment to cover plaintiffs’ legal fees. However, the agreement does not settle any Lyft sexual assault lawsuits being pursued against the company by former passengers who have been attacked.

Lyft and Uber Passenger Sexual Assault Lawsuits

In recent years, both Lyft and Uber have faced a rapidly a growing number of driver sexual assault lawsuits, involving allegations that passengers were harassed, groped, or even abducted and raped by drivers. While Uber has faced the lion-share of complaints, a growing number of lawsuits are also now being filed against Lyft.

Those lawsuits also raise similar allegations to those presented by the Lyft investors, pointing out that the rideshare companies have actively marketed their services for young women to use to get home safely after having too much to drink, but claiming that the companies have failed to enact simple steps to identify sexual predators, even after thousands of women reported sexual assaults to Uber.

The investor lawsuit claims the company has failed to take sufficient action to prevent sexual assaults on passengers by its drivers, which has damaged the company’s reputation and led to reductions in the company’s value, along with its shares.

The complaint also claimed that the company failed to be fully transparent about its problems during its initial public offering in March 2019. Since the company went public, it’s stock value has dropped by about 83%.

Lyft Shareholder Settlement

On July 23, Lyft and the investor plaintiffs filed a motion for preliminary approval (PDF) of a settlement agreement to resolve the litigation. In addition to the $700,000 payment for legal fees, the company has agreed to put in place a number of reforms that will last for at least a period of three years.

These include a commitment to make passengers better aware of the safety functions already available on the Lyft app, such as a feature to silently alert call 911 or a Lyft representative. It would assign a member to an existing Culture of Ethics and Compliance Committee, to serve as a representative for driver and user safety. The company has agreed to more transparency for investors, and says it will improve training and update its business code of ethics.

The Lyft settlement agreement also includes provisions to address problems with the company’s electric bikes, which have led to rider injuries.

While the investors charged the company’s executives and directors with breaching their fiduciary duties by concealing the depths of the problems with driver sexual assaults on passengers, Lyft indicates the settlement is not an indication of wrongdoing, and claims the company just wanted to settle the issue to avoid unnecessary legal costs and effort.

The agreement does not resolve lawsuits brought against the company by passengers who have filed claims that drivers sexually harassed, assaulted or even raped them after ordering a ride through the company’s app.