UPDATED, 6:37 p.m., Dec. 29: It’s underdog versus underdog in this office-lease spat.
In a lawsuit filed Wednesday in New York State Supreme Court, WeWork rival Coworkrs alleges that struggling ride-sharing startup Lyft tried to renege on a one-year lease at 60 Broad Street in the Financial District.
According to the suit, Lyft agreed to lease 23 desks and two conference rooms from Coworkrs for $17,527 a month — which ended up being $175,527 for the year after Coworkrs sweetened the pot with several discounts.
But it didn’t take long for the San Francisco-based ride-sharing company to try to back out of the contract it signed in November, Coworkrs claims. It says Lyft first downsized its space and later sent two lease termination letters. In the second letter, Lyft accused Coworkrs of turning over confidential information to the companies’ shared broker at Cushman & Wakefield, which it said represented a violation of the lease terms.
Coworkrs denied sharing confidential information, but said it contacted the agent to disclose that Lyft was taking a smaller space, and that the agent’s commission would be adjusted accordingly.
The co-working firm says Lyft’s claim was made to hide the fact that it’s underperforming in the New York market and needed to reduce expenditures.
In a statement, Alexandra LaManna, a spokesperson for Lyft, said, “This is a blatant attempt by CoWorkrs to distract from their own breach of an agreement by making negative insinuations about Lyft’s market viability and extract leverage where there is none. We will defend ourselves vigorously against these baseless allegations.”
A spokesperson for Coworkrs declined to comment on pending litigation.
Both venture-backed startups are dwarfed by their respective industry rivals.
Coworkrs, founded in 2012 by CEO Shlomo Silber, has five locations in New York City compared to WeWork’s 36. (Coworkrs has 40,000 square feet at 60 Broad and it recently took on another 30,000 square feet in Bushwick.) As for Lyft, the company has raised $2 billion from investors to date — a far cry from Uber’s $8.7 billion.
But while Coworkrs seems to be growing — Silber told TRD in May it was looking to raise $20 million to expand in the Northeast— Lyft has struggled to gain traction in a market saturated with ride-sharing competitors like Via, Gett and Juno.
This summer, the Wall Street Journal reported that Lyft had hired an investment bank known for helping tech companies find a buyer.
In October, Lyft’s co-founder and president John Zimmer denied the company was for sale, and said Lyft had doubled its ridership to 17 million rides since a year earlier. Lyft has $1.3 billion in the bank out of the $2 billion it has raised from investors, Zimmer said at the time.