1 DENNIS J.

HERRERA, State Bar #139669

City Attorney
2 ELECTRONICALLY
YVONNE MERÉ, State Bar #173594
Chief of Complex and Affirmative Litigation FILED
3 Superior Court of California,
KENNETH M. WALCZAK, State Bar #247389 County of San Francisco

4 Deputy City Attorney 06/12/2019

Fox Plaza Clerk of the Court
BY: BOWMAN LIU
5 1390 Market Street, Sixth Floor Deputy Clerk
San Francisco, California 94102-5408
6 Telephone: (415) 554-4206
7 E-Mail: kenneth.walczak@sfcityatty.org

8 Attorneys for Defendants

9
SUPERIOR COURT OF THE STATE OF CALIFORNIA
10
COUNTY OF SAN FRANCISCO
11
BAY AREA MOTIVATE, LLC, Case No. CGC-19-576554
12
Plaintiff, OPPOSITION TO EX PARTE APPLICATION
13 FOR TEMPORARY RESTRAINING ORDER
vs.
14 Hearing Date: June 12, 2019
CITY AND COUNTY OF SAN Department: 302
15 FRANCISCO, SAN FRANCISCO Time: 11:00 a.m.
MUNICIPAL TRANSPORTATION Judge: Ethan P. Schulman
16 AGENCY, and DOES 1-50,
Date Action Filed: June 7, 2019
17 Defendants. Trial Date: none assigned

18 Attached Documents:

19 Declaration of Edward D. Reiskin in Support of

Opposition to Ex Parte Application for Temporary
20 Restraining Order;

21 Request for Judicial Notice with Exhibits A-C;

22 Proof of Service

23

24

25

26

27

28
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576554
 1 INTRODUCTION

2 Plaintiff Bay Area Motivate, LLC, a subsidiary of Lyft, Inc. (hereafter “Lyft” or “Motivate”)

3 seeks emergency relief where no emergency exists. Lyft would have this Court issue an order

4 preemptively eliminating competition for its bike sharing service, and halting a public permitting

5 process, on a single day’s notice, and with no input from the competitors Lyft seeks to freeze out.

6 The Court should decline that request. No bike sharing permits have issued, to Lyft or to any

7 other applicant. The deadline to apply for permits has not even elapsed. The City and County of San

8 Francisco (the “City”) received Lyft’s moving papers—including 28 pages of argument and 419 pages

9 of purported evidence—four days after it learned of the existence of this lawsuit1 and 24 hours and 17

10 minutes before the scheduled hearing. Other permit applicants—including the Uber subsidiary

11 currently operating “JUMP” bikes in the City—have had no opportunity to respond to allegations that

12 their permit applications infringe upon Lyft’s alleged right to a bike-sharing monopoly.

13 No irreparable harm will befall Lyft if the Court denies the application for a Temporary

14 Restraining Order (TRO), either outright—because Lyft has no viable argument supporting its

15 purported monopoly—or in favor of a more fulsome preliminary injunction hearing, set for a date later

16 this month. (The San Francisco Municipal Transportation Agency [SFMTA] has no plans to issue

17 any bike-sharing permit before July 1.) Any urgency in this regard is of Lyft’s own making, as Lyft

18 declined to object when SFMTA announced the permit program at a noticed, public Board of

19 Directors hearing in April 2019. Should the Court ultimately find any merit in Lyft’s allegations that

20 it is harmed by the operations of other bike sharing entities or by the operation of an even-handed

21 permitting process, money damages provide Lyft with an adequate remedy.

22 But Lyft will not prevail on the merits of its contract-based claims. Hindsight cannot transform

23 the Coordination Agreement permitting Lyft to operate a docked bike system into a guarantee that

24 Lyft will have the sole authority to supply the City with its entire requirements for both docked and

25 dockless bikes. First, the express terms of that Agreement envision a docked system. Second, at the

26
1
27 Lyft has not yet served the City with its Complaint. Lyft sent a (PDF) courtesy copy to the
City Attorney’s Office, but only the Mayor’s Office may accept service of complaints naming the City
28 as a Defendant. (S.F. Charter, § 3.100.)
1
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 1 time San Francisco entered into the Coordination Agreement, it specifically limited its approval to a

2 docked or “point-to-point” system and, because dockless bikes were not contemplated in the

3 Agreement, did not bargain for any of the necessary protections to the right-of-way for a dockless

4 model. Third, any ambiguity in the contract language should be resolved to avoid anticompetitive

5 effects and potential conflict with antitrust laws.

6 A TRO is also unwarranted because the balance of harms favors the City and the public, not

7 Lyft. The public is best served by allowing the SFMTA to receive and consider the bike sharing

8 permit applications it solicited in April. An order directly restraining competition in the marketplace

9 cannot possibly serve the public interest. And a TRO would be unfair to the permit applicants,

10 including JUMP, who have prepared their applications in good faith.

11 RELEVANT FACTS

12 A. December 2015: The Program and Coordination Agreements Create a Docked

Bike Sharing Program.
13

14 Lyft’s recitation of the facts surrounding the December 2015 contracts—a “Program

15 Agreement” creating a regional bike-sharing system and a “Coordination Agreement” governing the

16 City’s relationship with Lyft—omits the provisions of those agreements indicating that the parties

17 envisioned only the creation of a docked bike system.

18 The Coordination Agreement:

19  begins from the presumption that Motivate will expand its existing “bike share pilot”

20 consisting of “70 docking stations and 700 bicycles” in five cities (Lyft’s Ex. B p. 1);

21  defines “Equipment” as “Stations, Kiosks, Docks and Bicycles, either individually or in

22 any combination thereof” (id. p. 4); and

23  includes provisions for station permitting, planning criteria, station activation, de-

24 activation, and reinstallation (id. pp. 18-22, 25-26).

25 The “Program Agreement2” creates a Program based around “Stations, Kiosks, Docks and

26 Bicycles” (Lyft’s Ex. C, p. 10) and obligates Motivate to provide “Services”, namely “the installation,

27 2
The City ultimately withdrew from the Program Agreement between Motivate and the
28 Metropolitan Transportation Commission (MTC), approving only the Coordination Agreement.
2
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 1 operation and maintenance of the Stations and the acquisition, placement, maintenance and rental to

2 users of the Bicycles.” (Id. p. 11.)

3 Neither Agreement makes any mention of bike racks, locking freestanding bicycles, or any of

4 the sidewalk structures or equipment necessary for a dockless system. Because Motivate’s bikes are

5 only permitted to park at their designated docking stations (see San Francisco Transportation Code,

6 division 1, section 7.2.110), neither Agreement includes parking requirements for freestanding bikes,

7 of the sort contained in JUMP’s current operating permit and referred to in the SFMTA’s current

8 permitting process for dockless bike sharing (Lyft’s Ex. U). Neither Agreement discusses an

9 envisioned number of dockless bikes, distribution of dockless bikes, permissible use, range, parking of

10 dockless bikes, or provisions for removal of improperly parked dockless bikes.

11 B. March 2017: Amendments to the Transportation Code Authorize a Permit

Process for Approval and Regulation of Dockless Bikes.
12

13 The Coordination Agreement speaks purely in terms of Motivate’s right “to operate a bike

14 share program in the public rights-of-way” (Lyft’s Ex. B p. 36) because at that time, the City had not

15 anticipated or contemplated the unique challenges posed by dockless bike sharing. Neither the

16 Coordination Agreement nor any City permit program contained the necessary right-of-way

17 protections for a dockless model. (See Request for Judicial Notice [“RJN”] Ex. A p. 3.)

18 With the emergence of dockless bike share systems like the one operated by Bluegogo, City

19 officials became concerned that authority over the use of public streets did not sufficiently protect

20 against the potential for low-quality bicycles to proliferate, “impede pedestrian travel and … fall into

21 disrepair[.]” (RJN Ex. A, p. 3.) Contrary to Lyft’s representations, SFMTA reported in March 2017

22 that Bluegogo had “put several hundred of their bicycles into service,” without the need for any

23 permit. (Id.)

24 To close this loophole, on March 21, 2017, the SFMTA Board adopted Resolution No.

25 170321-035, amending the San Francisco Transportation Code and establishing the existing permit

26 program for dockless bikes. (RJN Ex. A.) The San Francisco Board of Supervisors acted in concert

27 with the SFMTA, adopting legislation prohibiting the parking of a dockless shared bicycle in the

28 public right of way without a permit. (See RJN Ex. B.) Motivate Chief Executive Officer Jay Walder
3
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 1 was fully aware of the City’s efforts to create a permit program for stationless bikeshare and spoke in

2 favor of the measure at its public hearing. (Id. p. 4.)

3 C. November 2017: a Settlement Agreement Takes No Position on Exclusivity.

4 Motivate’s docked bicycles are non-electronic “pedal bikes.” (Motivate has attempted to

5 introduce electric-assist bikes into its program, but withdrew all of them from the system after

6 technical problems.) Late in 2017, Motivate invoked the Coordination Agreement’s Dispute

7 Resolution Process, which process resulted in the Settlement Agreement quoted on page 10 of Lyft’s

8 Memorandum of Points and Authorities (MPAs). (The Settlement Agreement also appears as Lyft’s

9 Exhibit D.)

10 That Agreement does not bolster Lyft’s claim to a monopoly. Rather, it explicitly declines to

11 resolve any dispute over the scope of Motivate’s “exclusivity” as set forth in Section 32 of the 2015

12 Coordination Agreement: “Motivate and the City do not otherwise waive, and do not intend to waive,

13 any of their rights under the [Coordination] Agreement, including but not limited to the parties’ rights

14 under Section 32.0 of the Agreement.” (Lyft’s Ex. D p. 1; see also Lyft’s Ex. B pp. 36-37.)

15 D. February 2019: Lyft Removes Any Mention of Exclusivity from Its Regional
Agreement to Provide E-Bikes.
16

17 Lyft is correct that it negotiated and signed an agreement to provide dockless e-bikes

18 throughout the Bay Area. (Lyft’s Ex. P.) As noted by the SFMTA last month, Lyft agreed to remove

19 any language about exclusivity from that agreement.

20 First, the SFMTA has made clear its position that, while the Coordination
Agreement contains language granting Motivate an exclusive right to
21 operate a docked, station-based bikeshare program in San Francisco and
other participating cities under the Coordination Agreement, that
22 exclusive right does not extend to stationless bikeshare, including the
23 hybrid stationless/station-based model Lyft proposes. Not only did we
directly discuss this point on several occasions, but Lyft agreed to
24 remove all references to “exclusivity” from the Regional Agreement.

25 (Lyft’s Ex. R p. 2 [emphasis added].)

26 E. April 2019: The City Solicits a Second Round of Applicants for Its Dockless Bike
Share Permit Program.
27
On April 16, 2019, SFMTA staff announced the opening of a second round of its permit
28
4
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 1 program for dockless bike share operators, at a publicly-noticed Board of Directors meeting. (See

2 Lyft Ex. R pp. 1-2.) Lyft “did not voice any objections to SFMTA’s announcement to reopen the

3 permit program.” (Id. p. 1.)

4 LEGAL STANDARD

5 Lyft is not entitled to a TRO unless it can establish three things: immediate and irreparable

6 injury, a likelihood of success on the merits of its contract claims, and the balance of equities in its

7 favor.

8 First, there must be a fire to put out. Lyft must prove a “threat of immediate and irreparable

9 injury” sufficient to justify injunctive relief. (Triple A Machine Shop, Inc. v. State of California

10 (1989) 213 Cal.App.3d 131, 138.) Lyft’s burden on this factor is greater because it seeks relief ex

11 parte—it must demonstrate that the irreparable injury will occur “before the matter can be heard on

12 notice.” (Cal. Code Civ. Proc., § 527(c)(l).)

13 Second, Lyft must demonstrate a reasonable probability that it ultimately will prevail on the

14 merits. (Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, 286.)

15 Third, even if Lyft satisfies its threshold burdens, the Court must balance the apparent harm

16 against Lyft with the harm to the City and the public interest if a TRO is issued. (Socialist Workers

17 Comm. v. Brown (1975) 53 Cal.App.3d 879, 888-889.)

18 Lyft’s overall burden is greater because it seeks an order restraining the government from

19 governing. “[W]here governmental action is involved, courts should not intervene unless the need for

20 equitable relief is clear, not remote or speculative.” (City of Vernon v. Central Basis Municipal Water

21 Dist. (1999) 69 Cal.App.4th 508, 517.)

22 ARGUMENT

23 I. THERE IS NO EMERGENCY JUSTIFYING EX PARTE RELIEF.

24 A. No Permits Have Issued.

25 There is no threat of immediate injury to Lyft, because no permits to operate dockless bikes

26 have issued. (Declaration of Edward D. Reiskin, filed herewith [“Reiskin Decl.”] ¶ 7.) The deadline

27 for applicants to seek a permit is June 24. (Id.) SFMTA anticipates needing at least a week to

28 complete its review process, meaning no permit will issue before July 1. (Id. ¶ 9.)
5
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 1 Lyft purports to seek a TRO to preserve the status quo, but under the status quo no entity will

2 receive a permit to operate dockless bikes for several weeks. That is enough time for the Court to set a

3 hearing (albeit on shortened time) on Lyft’s argument that it is entitled to an injunction restraining the

4 City from “issuing bike share permits … except to Plaintiff[.]” (Proposed Order pp. 2, 3.)

5 B. Other Stakeholders Have Not Yet Weighed In.

6 More time is necessary to brief the issue of injunctive relief, because the City received scant

7 notice of Lyft’s arguments before this ex parte proceeding and because the relief Lyft seeks would be

8 tremendously disruptive.

9 Five entities—JUMP, Scoot, Lime, Bird, and Ridecell—attended a “Q & A” session on

10 SFMTA’s permit program, suggesting that they will apply for dockless bike share permits. (Reiskin

11 Decl. ¶ 8.) Those entities are not parties to this lawsuit, but Lyft seeks to enjoin their participation in

12 the process entirely. For JUMP, the stakes are particularly high—the injunction Lyft seeks would

13 prevent JUMP from seeking renewal of its current dockless bike share permit, and force it to remove

14 500 bikes from the streets.

15 C. Any Urgency Is of Lyft’s Own Making.

16 Lyft knew of the City’s intent to issue permits for dockless bike share programs as far back as

17 March 2017, when Motivate’s CEO spoke in favor of the Transportation Code amendments enabling

18 SFMTA to create its permit program. (RJN Ex. B p. 4.) Early this year, Lyft agreed to participate in

19 the upcoming permit program. (Reiskin Decl. ¶ 4.) Nearly two months ago, Lyft (and the general

20 public) knew that the City had opened the second round of its permit application process, with a

21 deadline of June 24, 2019. (Id. ¶ 5.)

22 Despite all of this, Lyft waited until June 11 to file an ex parte application for injunctive relief.

23 That “the urgency with which the trial court [is] forced to decide plaintiffs’ motion may have been, to

24 some extent, of plaintiffs’ own making” is “a fact that the trial court, as a court of equity, should have

25 taken into account in determining what weight to give plaintiffs' claim of imminent irreparable injury.”

26 (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452 [“O’Connell”], 1481 [citations omitted].)

27

28
6
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 1 D. Money Damages Will Suffice to Redress Any Injury Lyft Might Demonstrate.

2 Even if Lyft could demonstrate a threat of immediate injury, it cannot show a threat of

3 irreparable harm.

4 All of Lyft’s allegations of harm dovetail with its claim that the City may ultimately “breach”

5 its purported “right to exclusivity[.]” (See, e.g., MPAs 15.) But that is the same as a claim that Lyft

6 may lose business, or market share, if it is forced to compete in the market for dockless shared bikes.

7 That harm can be reduced to money. The loss of profits related to transportation services is

8 susceptible to calculation. (See, e.g., Palo Alto-Menlo Park Yellow Cab Co. v. Santa Clara County

9 Transit Dist. (1976) 65 Cal.App.3d 121, 130 [injunction unnecessary where damages from end of

10 transit district’s “Dial-A-Ride” service could be ascertained].) (See also San Miguel Community

11 Association v. State Farm General Insurance Company (2013) 220 Cal.App.4th 798, 809 [monetary

12 damages are the quintessential remedy at law, cannot constitute irreparable harm] [citation omitted].)

13 Lyft’s cases on this point are unpersuasive. The Sixth District Court of Appeal in DVD Copy

14 Control Assn., Inc. v. Kaleidescape, Inc. (2009) 176 Cal.App.4th 697, remanded for a determination of

15 whether any breach occurred. “Only after the trial court determines whether Kaleidescape has

16 breached the agreement can it determine the nature and extent of the harm and whether it could have

17 been remedied in damages.” (Id. at 727.) While the Court in Berkeley Lawn Bowling Club v. City of

18 Berkeley (1974) 42 Cal.App.3d 280 considered the difficulty of measuring harm from “curtail[ing] or

19 eliminat[ing]” participation “in the sport” of lawn bowling (id. at 291)—hardly an injury analogous to

20 the loss of business revenue. Here, Lyft’s goals are clear: to “recoup its investment in the [docked]

21 bike share program[.]” (MPAs 16.) The extent to which Lyft can or cannot do so is measurable and

22 (if Lyft ultimately succeeds on the merits) redressable with money.

23 II. LYFT WILL NOT PREVAIL ON THE MERITS OF ITS CONTRACT CLAIMS.

24 A. The Coordination Agreement Applies Only to Docked Bike Systems.

25 Under California law, courts read a contract as a whole and harmonize its provisions.

26 (Brobeck, Phleger & Harrison v. Telex Corp. (9th Cir. 1979) 602 F.2d 866, 872, cert. denied, 444 U.S.

27 981; Sunset Securities Co. v. Coward McCann, Inc. (1957) 47 Cal.2d 907, 911.) “The language of a

28
7
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 1 contract is to govern its interpretation, if the language is clear and explicit, and does not involve an

2 absurdity.” (Cal. Civ. Code, § 1638.)

3 The contract read as a whole is clear and explicit. It contemplates the parties’ cooperation in

4 establishing a docked bicycle share program. The Coordination Agreement expressly defines

5 “Equipment” as bicycles and their accompanying stations, kiosks, and docks. (Lyft’s Ex. B p. 4.) It

6 makes no provision for parking Motivate’s bikes anywhere other than docking stations, and contains

7 none of the provisions for dockless bikes in, for example, the permit under which JUMP now operates.

8 The City’s only significant responsibility under the contract is to provide the station siting criteria and

9 necessary permits necessary for Motivate to install docking stations on City sidewalks and streets.

10 (See Lyft’s Ex. C pp. 11-12.) Motivate’s responsibilities to the City similarly relate to installing docks

11 in approved locations. (Id. pp. 18-20, 22.)

12 A court will not read into a contract duties that are not specifically enumerated. (See Vons

13 Cos., Inc. v. U.S. Fire Ins. Co. (2000) 78 Cal.App.4th 52, 59 [“We do not have the power to create for

14 the parties a contract that they did not make and cannot insert language that one party now wishes

15 were there”]; Cal. Code Civ. Proc. § 1858.) The Coordination Agreement gives the City no

16 affirmative duty to stop a bike share program that does not require a permit to operate in the right of

17 way. It does not provide that Motivate is the sole bike share operator allowed to operate in San

18 Francisco, or that the City will take affirmative steps to exclude competitors who do not need a

19 station-based permit to operate in the public right-of-way.

20 B. The City Could Not Have Conferred the Monopoly Lyft Claims.

21 Courts also interpret contracts to determine what the parties meant in light of all the

22 circumstances. (See Pac. Gas & Elec. Co. v. G. W. Thomas Drayage & Rigging Co. (1968) 69 Cal.2d

23 33, 38.)

24 Here, the relevant circumstances include the fact that in 2015, the City perceived its authority

25 to approve bike sharing as an extension of its right to approve docking stations in the public right of

26 way. When approving the Coordination Agreement, the San Francisco Board of Supervisors

27 specifically described the Motivate program (then the Bay Area Bike Share pilot) as a pilot consisting

28 a “35-station, 350-bicycle sharing bike sharing system” and indicated that the agreement would grant
8
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 1 Motivate an exclusive right to a “point to point” system, language that indicates the right is confined to

2 a docked system. Dockless programs are not point-to point. (RJN Ex. C pp. 1, 2.)

3 When dockless systems arose in 2017, the City granted SFMTA separate authority to regulate

4 those systems, including the authority to create the current permit process.

5 C. The Coordination Agreement Should Be Construed to Avoid Anticompetitive

Effects.
6

7 California law also requires that contracts be read, if it may be done without violating the

8 parties’ intent, in such a way as to make them “lawful, operative, definite, reasonable, and capable of

9 being carried into effect.” (Cal. Civil Code, § 1643.) “An interpretation which gives effect is

10 preferred to one which makes void.” (Cal. Civil Code, § 3541.)

11 Lyft’s interpretation of the Coordination Agreement, granting it a complete monopoly over all

12 bike sharing in the City, including the right to exclude all competitors using a system or technology

13 not envisioned by the drafters of the agreement, risks implicating federal and/or state antitrust laws.

14 (See, e.g., Cal. Retail Liquor Dealers Assoc. v. Midcal Aluminum, Inc. (1980) 445 U.S. 97 [where

15 state has neither directed nor authorized creation of a monopoly, local entities are subject to federal

16 antitrust laws].)

17 III. THE BALANCE OF HARMS FAVORS THE CITY AND THE PUBLIC.

18 When deciding whether to issue any interim relief, “a court must weigh and balance both the

19 likelihood the moving party will succeed in the litigation on the merits of its claim, and also the

20 relative interim harm to the parties if the injunction is granted, or not granted.” (O’Connell, 141

21 Cal.App.4th at 1467-1468, citing Butt v. State of California (1982) 4 Cal.4th 668, 677–678.) “The

22 ultimate goal of any test to be used … is to minimize the harm which an erroneous interim decision

23 may cause.” (Id. at 1468, quoting White v. Davis (2003) 30 Cal.4th 528, 554 [italics omitted].)

24 Lyft’s assertion that a TRO would “cause no harm to San Francisco[ ]” (MPAs 18) disregards

25 the anticompetitive effects of the order it seeks, as well as the considerable time and effort SFMTA

26 invested in the creation of its permit process. It also ignores the public interest. “It is well established

27 that when injunctive relief is sought, consideration of public policy is not only permissible but

28 mandatory.” (Teamsters Agricultural Workers Union v. International Brotherhood of Teamsters

9
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