A California federal judge has rejected a proposed $100 million class action settlement with Uber drivers who allege they were shorted tips and work expenses. U.S. District Judge Edward M. Chen stated the settlement isn’t fair, adequate and reasonable. He ruled that, while the drivers in the suit face litigation risks because of an arbitration provision that may be enforced by the Ninth Circuit, the settlement favors Uber Technologies Inc. in more ways than it should. Clearly, this is a major setback to Uber.
The settlement doesn’t clarify whether drivers should be classified as employees or independent contractors. It also provides for the release of a claim under the state’s Private Attorneys General Act for just $1 million, even though the Plaintiffs’ lawyer had claimed earlier in the suit such a claim would be worth $1 billion. Judge Chen wrote in his order:
Although the litigation risks to the plaintiffs are substantial, absent the sweeping releases conferred by the settlement agreement, Uber faces significant risks and costs, regardless of the outcome of pending interlocutory appeals. The settlement as a whole as currently structured is not fair, adequate, and reasonable.
Uber announced the proposed $84 million settlement in April, seeking to end the two class actions alleging the ride-hailing company misclassified drivers as independent contractors and denied them proper tips. The proposed agreement sought to keep drivers listed as independent contractors while changing a few policies around how drivers are rated and deactivated from the service.
The settling classes of drivers are represented by Shannon Liss-Riordan and Adelaide Pagano of Lichten & Liss-Riordan PC and Matthew D. Carlson of Carlson Legal Services. The cases are O’Connor et al. v. Uber Technologies Inc. et al., and Hakan Yucesoy v. Uber Technologies Inc. et al., in the U.S. District Court for the Northern District of California.
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