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Saturday, 03 September 2016 08:03

Uber’s $ 1 0 0 M i l l i o n D r i v e r Pay Settlement Rejected by Judge Featured

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Uber Technologies Inc. may come
out ahead by failing to win court

approval of a $100 million settlement
with drivers.
A San Francisco federal
judge rejected the agreement on
Thursday, a turn of events that
would typically encourage the ridehailing
giant to sweeten the deal
with more cash or concessions. In
this case though, Uber may walk
away from further negotiations because
an appeals court has hinted it
might overrule a key pretrial ruling
in the fight over whether drivers
must be treated as employees, the
drivers’ lawyer has warned.
While acknowledging the
risk for drivers and Uber if the case
goes to trial, U.S. District Judge
Edward Chen concluded the deal
was unfair, partly because it lowballed
potential claims under California
law. He said he also wasn’t
convinced that changing the company’s
tipping policy would result
in the “substantially increased income”
as promised.
If the three-year-old lawsuit
collapses, the world’s most valuable
technology startup would escape
without significant changes to
its business model or financial sacrifice
while keeping 385,000 California
and Massachusetts drivers
classified as independent contractors.
While Uber faces driver lawsuits
elsewhere, as well as
challenges to its pricing and business
practices, the California case
was seen as the most likely to
upend its gig-economy workforce
model because of the state’s relatively
tough labor laws.
Before the appeals court
added a new wrinkle to the California
case, the biggest task for drivers’
attorney Shannon Liss-Riordan
was to convince Chen that the
agreement she reached with the
company in April was fair and reasonable.
Dozens of drivers and
other lawyers claimed the deal
would let Uber off the hook too
easily.
Liss-Riordan told Chen in a
June 17 filing that if the U.S. Court
of Appeals overturns a ruling by
him that invalidated Uber’s arbitration
agreements in a different case,
it would eviscerate her class action,
reducing it to “a few thousand
drivers.” The three-judge panel’s
comments and questions at a June
16 hearing showed that it may be
poised to overrule Chen, and even
that “leaning” may give Uber
leverage and dramatically diminish
her “ability to negotiate modifications
to the agreement,” Liss-Riordan
said.
Uber ‘Disappointed’
“The settlement, mutually agreed
by both sides, was fair and reasonable,”
Matt Kallman, a spokesman
for Uber, said in an e-mail.“We’re
disappointed in this decision and
are taking a look at our options.”
A legal scholar who’s been
following the case said Uber may
now decide it’s better off trying to
force the vast majority of drivers
covered by the accord into arbitration,
where the company can fight
them one-on-one.
“This order sends the parties
back to the settlement table,”
said Charlotte Garden, an associate
professor at Seattle University
School of Law. “But it seems likely
that Uber won’t want to go back to
the drawing board.”
The settlement was rejected
partly because of a provision that
would have valued potential California
labor code violations at just
$1 million. Liss-Riordan and other
lawyers proposed bringing the
claims at issue under California’s
so called bounty-hunter law. The
Private Attorneys General Act, or
PAGA, gives employees the right
to step into the shoes of the state
labor secretary to bring enforcement
actions.
Chen noted in his ruling
that a California agency concluded
that such penalties in the case before
him could amount to more
than $1 billion, with the settlement
providing only 0.1 percent of the
“estimated full worth.”
‘Bargaining Chip’
Liss-Riordan appears to
“treat the PAGA claim simply as a
bargaining chip in ob

taining a global settlement for
Uber’s benefit, even though the
PAGA claim alone is worth more
than half of the full verdict value
of all claims being released,” Chen
wrote.
PAGA claims are routinely
settled for a small fraction of their
theoretical value, Liss-Riordan
said in an e-mail.
“It is possible the parties
could reach a revised agreement
that satisfies the court’s concerns
regarding the PAGA claims,” she
said. “But if not, as I’ve said before,
I will take the case to trial
and fight my hardest for the Uber
drivers.”
Uber and Liss-Riordan
have been roundly attacked over
claims the agreement benefited
them at the expense of drivers.
While Liss-Riordan argued
that she negotiated the best deal
possible and faced a significant
risk of recovering nothing for drivers
at a trial, she later offered to
cut $10 million from her $25 million
fee request and earmark that
money for drivers.
Uber agreed as part of the
April deal to let drivers solicit tips
and allot payouts based on the
miles they’ve driven. Chen questioned
whether a broad provision
in the settlement releasing the
company from liability for violations
of labor laws “hijacked”
claims for minimum wage, overtime
and workers compensation
that drivers are pursuing in other
cases.
‘Global Peace’
Liss-Riordan has told the
judge that Uber wouldn’t have
gone along with the settlement
without a guarantee of “global
peace.” She said she made a strategic
decision to focus on mileage
reimbursement and tips claims because
they were most likely to succeed
if the case went to trial.
Ted Boutrous, a lawyer for
Uber, said at a court hearing that
“there’s no incentive for Uber to
settle” without releases extinguishing
all claims stemming from the
core dispute over whether the drivers
are employees or contractors.
In a separate ruling Thursday,
Chen rejected a bid by opponents
of the agreement to replace
Liss-Riordan as the lawyer
for drivers in the class action.
In July Uber sold its Chinese business
to competitor Didi Chuxing.
The deal put Didi’s value at
$35 billion after the acquisition
and gave investors in Uber China a
20 percent stake in Didi. As part of
the deal Didi invested $1 billion in
Uber, valuing Uber at $68 billion.
Uber is the largest private technology
startup. Fellow sharing economy
company, Airbnb recently
filed to raise $850 million at a $30
billion valuation. Chinese smartphone
maker Xiaomi Corp., at $46
billion, is the second most highly
valued private startup, according to
data from research firm CB Insights.
Lyft Settlement
Lyft Inc., the largest U.S.
ride-hailing company behind Uber,
moved a big step closer to sealing
its $27 million deal with drivers
that leaves them classified as independent
contractors on June 23
when its settlement won preliminary
approval from another judge
in the same courthouse as Chen.
U.S. District Judge Vince
Chhabria in April had rejected an
earlier $12.5 million offer, saying
it shortchanged drivers because it
didn’t properly account for the
company’s rapid growth. With
Chhabria’s approval, about
163,000 current and former California
drivers will be told they can
claim their share of the settlement,
object to it or opt out, before a
final settlement hearing.
The Uber case is O’Connor
v. Uber Technologies Inc., 13-cv-
03826, U.S. District Court, Northern
District of California (San
Francisco). The Lyft case is Cotter
v. Lyft Inc., 13-cv-04065, U.S.
District Court, Northern District of
California (San Francisco).
Ed. Note: Problems continue to plague
Uber. Lack of proper insurance, training,
increasing incidents of assault both
by UBER drivers and by passengers on
those drivers and a lack of accountability
and consistent consumer policies
have all been serving to erode public
confidence in UBER and LYFT. It
should also be noted that support for
UBER is seen as detrimental to the well
established taxi and professional driver
industry.
Joel Rosenblatt
Bloomberg

 

Read 1600 times Last modified on Tuesday, 06 September 2016 15:44

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