v3.19.3

COMMITMENTS AND CONTINGENCIES | 9 Months Ended
--- | ---
Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating and Finance Leases The Company’s operating leases are primarily comprised of office facilities, with the most significant leases relating to corporate headquarters in San Francisco and an office in New York. The Company's leases have remaining lease terms of 1 year to 12 years, some of which include options to extend for 5 year terms, or include options to terminate the leases within 1 year. None of the options to extend the leases have been included in the measurement of the right of use asset or the associated lease liability. The Company elects to apply the short-term lease measurement and recognition exemption to its leases where applicable. Operating lease right-of-use assets and operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date for each lease. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate because the interest rate implicit in most of the Company's leases is not readily determinable. The Company's incremental borrowing rate is estimated to approximate the interest rate that the Company would pay to borrow on a collateralized basis with similar terms and payments as the lease, and in economic environments where the leased asset is located. Operating lease right-of-use assets also include any prepaid lease payments and lease incentives. Operating lease expense is recognized on a straight-line basis over the lease term. The Company's lease agreements generally contain lease and non-lease components. Non-lease components, which primarily include payments for maintenance and utilities, are combined with lease payments and accounted for as a single lease component. The Company includes the fixed non-lease components in the determination of the right-of-use assets and operating lease liabilities. In December 2018, the Company entered into a lease arrangement for 355,762 square feet of office space in Oakland, California for a term of 12 years with options to extend the lease term for two 5 year terms. The lease commencement date is expected to be in January 2020 with total lease payments over the term of approximately $276 million. Under the terms of this lease, the Company is required to make certain payments during the construction stage of the office space, which the Company will record as a prepaid lease asset. In July 2019, the Company entered into a lease arrangement for 226,258 square feet of office space in St Louis, Missouri, with an affiliate of one of the Company’s co-founders, Mr. Jim McKelvey, who is also a Company stockholder and a member of its board of directors, for a term of 15.5 years with options to extend the lease term for two 5 year terms. The Company also has an option to terminate the lease for up to 50% of the leased space any time between January 1, 2024 and December 31, 2026, as well as an option to terminate the lease for the entire property on January 1, 2034. Termination penalties specified in the lease agreement will apply if the Company exercises any of the options to terminate the lease. The lease commencement date is expected to be in April 2020 with total future minimum lease payments over the term of approximately $42.7 million. Additionally, the Company has finance leases for data center equipment, with remaining lease terms of approximately 2 years. The components of lease expense were as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2019
Fixed operating lease costs | $ | 7,449 |  |  | $ | 21,626 |
Variable operating lease costs | 1,646 |  |  | 3,871 |
Sublease income | (1,468 | ) |  | (1,570 | )
Finance lease costs |  |  |
Amortization of finance right-of-use assets | 1,284 |  |  | 3,861 |
Interest on finance lease liabilities | — |  |  | — |
Total lease costs | $ | 8,911 |  |  | $ | 27,788 |
For the periods presented, costs associated with short-term leases were not material. Other information related to leases was as follows:
| September 30, 2019
Weighted Average Remaining Lease Term: |
Operating leases | 4.5 years |
Finance leases | 0.9 years |
Weighted Average Discount Rate: |
Operating leases | 4 | %
Finance leases | — | %
Cash flows related to leases were as follows (in thousands):
| Nine Months Ended September 30,
| 2019
Cash flows from operating activities: |
Payments for operating lease liabilities | $ | 24,580 |
Cash flows from financing activities: |
Principal payments on finance lease obligation | $ | 3,860 |
Supplemental Cash Flow Data: |
Right-of-use assets obtained in exchange for operating lease obligations | $ | 31,013 |
Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2019 are as follows (in thousands):
| Finance |  | Operating
Year: |  |  |
2019 (remaining 3 months) | $ | 1,178 |  |  | $ | 5,942 |
2020 | 2,446 |  |  | 40,388 |
2021 | — |  |  | 59,459 |
2022 | — |  |  | 61,005 |
2023 | — |  |  | 54,842 |
Thereafter | — |  |  | 270,872 |
Total | $ | 3,624 |  |  | $ | 492,508 |
Less: amount representing interest | — |  |  | 13,245 |
Less: leases executed but not yet commenced | — |  |  | 344,202 |
Less: lease incentives and transfer to held for sale | — |  |  | 2,825 |
Total | $ | 3,624 |  |  | $ | 132,236 |
The current portion of the finance lease liability is included within other current liabilities while the non-current portion is included within other non-current liabilities on the condensed consolidated balance sheets. The associated finance lease assets are included in property and equipment, net on the condensed consolidated balance sheets. Litigation The Company is currently a party to, and may in the future be involved in, various litigation matters (including intellectual property litigation), legal claims, and government investigations. The Treasurer & Tax Collector of the City and County of San Francisco (Tax Collector) has issued a decision for fiscal years 2014 and 2015, that the Tax Collector believes the Company’s primary business activity is financial services rather than information, and accordingly, the Company would be liable for the Gross Receipts Tax and Payroll Expense Tax under the rules for financial services business activities. The Company paid the liability of $1.3 million for fiscal years 2014 and 2015 in the first quarter of 2018, as assessed by the Tax Collector, even though the Company strongly disagrees with the Tax Collector’s assessment of the Company’s primary business activity. Additionally, in connection with a tax audit for the fiscal years 2016 and 2017, the Company received a notice of tax audit deficiency with respect to San Francisco Gross Receipts Tax and Payroll Expense Tax for those years on October 16, 2019. The Company believes its position has merit and intends to vigorously pursue all available remedies. On September 6, 2019, the Company filed a lawsuit against the Tax Collector and the City and County of San Francisco in San Francisco County Superior Court for a refund of the liability for the fiscal years of 2014 and 2015. While the Company believes it has strong arguments, there is no assurance that courts will rule in the Company’s favor. Should the Company not prevail, the Company could be obligated to pay additional taxes together with any associated penalties and interest for subsequent years that in aggregate could be material. Moreover, a San Francisco ballot measure approved on November 6, 2018 increased taxes on gross receipts beginning January 1, 2019, which further increases the Company’s tax exposure. Should the Company not prevail in its legal challenge against the application of San Francisco’s Gross Receipts Tax to its business, the Company estimates that it could become liable to pay additional taxes, interest, and penalties that range from approximately $0 to $56 million in the aggregate for the fiscal years 2016, 2017, and 2018 and for the nine months ended on September 30, 2019, over and above the taxes the Company has already paid under the information classification. Additional taxes, interest, and penalties for future periods could be material as well. The Company regularly assesses the likelihood of adverse outcomes resulting from tax disputes such as this and examinations for all open years to determine the necessity and adequacy of any tax reserves. Given the uncertainty of the possible outcome, the Company has not recorded reserves for the exposure related to the dispute with the Tax Collector on San Francisco’s Gross Receipts Tax. In connection with the sale of Caviar to DoorDash, we have agreed to indemnify DoorDash for certain liabilities, including certain litigation related to Caviar, such as the Woodle and Cole cases mentioned below, that DoorDash assumed upon the closing of the sale. On May 14, 2018, Joshua Woodle, on behalf of a class of couriers who have delivered with Caviar in California, filed a lawsuit in San Francisco County Superior Court against the Company doing business as Caviar, which alleges that Caviar misclassified Mr. Woodle and other similarly situated couriers as independent contractors and, in doing so, violated various provisions of the California Labor Code and California Business and Professions Code. Plaintiffs seek damages and injunctive relief. The Court compelled arbitration of Mr. Woodle’s arbitrable claims on November 5, 2018. On August 24, 2018, Mervyn Cole, on behalf of the State of California and similarly situated couriers who have delivered with Caviar in California filed a lawsuit in Los Angeles County Superior Court against the Company doing business as Caviar. The complaint alleges that Caviar misclassified Mr. Cole and other similarly situated couriers as independent contractors and, in doing so, violated certain provisions of the California Labor Code. The action is being brought as a representative action under the Private Attorneys General Act (“PAGA”). Plaintiffs seek civil penalties and injunctive relief. Given the early stage of these proceedings, it is not yet possible to reliably determine any potential liability that could result from these matters. In addition, from time to time, the Company is involved in various other litigation matters and disputes arising in the ordinary course of business, including similar claims as those referenced above, alleging misclassification of couriers as independent contractors. The Company cannot at this time fairly estimate a reasonable range of exposure, if any, of the potential liability with respect to these other matters. While the Company does not believe, at this time, that any ultimate liability resulting from any of these other matters will have a material adverse effect on the Company's results of operations, financial position, or liquidity, the Company cannot give any assurance regarding the ultimate outcome of these other matters, and their resolution could be material to the Company's operating results for any particular period.

X
- References No definition available. + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -URI http://asc.fasb.org/topic&trid=2127136 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI http://asc.fasb.org/topic&trid=2144648 + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration