San Francisco: Uber Technologies failed to persuade a judge to approve a settlement offering 1.6 million California drivers an average of $1.08 (Dh3.90) apiece to dispense with alleged labour-code violations that their lawyer claimed might have been worth billions of dollars.
Los Angeles Superior Court Judge Maren Nelson issued a tentative ruling rejecting a deal aimed at resolving one of more than a dozen US lawsuits challenging the company’s contractor-based business model.
The judge said there’s merit to objections that the $7.75 million accord — most of which would go to state coffers, administrative costs and lawyer fees — shortchanges drivers who sued seeking the protections and benefits of employees. Nelson also said the settlement provides too broad a release of liability for Uber from labour-code claims.
“I need some analysis why it is fair and adequate,” she said during a hearing Friday.
While the judge allowed the company and lawyers for the drivers to revise the terms of the deal and resubmit it for approval, her ruling marks another setback for Uber in its effort to dispose of the most potent legal threat to its business model. Uber still faces a class-action case by California drivers in San Francisco after a federal judge in August rejected a $100 million settlement as inadequate. A critical appeals court hearing over the size and scope of that case is scheduled for June.
Tense argument
It’s already been a tough year for the San Francisco-based start-up, valued at $69 billion. Uber is facing calls from customers to #DeleteUber, reports of a toxic corporate culture, sexual harassment allegations, criticism from investors over the company’s response and the abrupt departure of a new senior executive over an undisclosed harassment claim from his previous job at Google.
The company is also contending with Alphabet Inc.’s high-profile lawsuit accusing it of copying technology for self-driving cars and Uber’s chief executive officer said this month he’s seeking “leadership help” in the form of a chief operating officer after his verbal altercation with a driver was caught on video.
An Uber spokesman declined to comment on Nelson’s tentative ruling. Christopher Morosoff and Douglas Caiafa, lawyers for the drivers, didn’t immediately respond to phone calls and email messages seeking comment.
The Los Angeles case was brought under a California law that gives employees the right to step into the shoes of the state labour secretary to bring enforcement actions. Under the 2004 Private Attorneys General Act, or PAGA, the state keeps 75 per cent of any penalties won. The remaining 25 per cent is a reward for the workers who bring the case. Thousands of so-called bounty hunter lawsuits have been filed in the past 12 years.
The drivers’ lawyers who negotiated the settlement touted it as the largest known PAGA settlement in history and Uber said it was a fair compromise in light of the “high likelihood” the company would win a trial over the claims if they aren’t settled.
But lawyers suing Uber in other cases objected in court filings, saying it’s a travesty for the drivers.
Troubling climate
“In a troubling political climate when the role of all branches of government are being undermined,” lawyers who bring claims in the shoes of state officials “have a duty to push back against businesses looking to exploit consumers,” attorney Mark Geragos said in a filing. He called the settlement “shameful and embarrassing.”
In last year’s rejection of the San Francisco settlement, a judge concluded that the $1 million allotted to resolve PAGA allegations was insufficient because it amounted to just 0.1 per cent of claims that state officials valued at $1 billion.
Nelson cited that finding in her ruling, adding that the settlement amount in the Los Angeles case is a only slightly higher recovery: 0.77 per cent.
The judge said she needs an explanation of how the settlement’s provision for dismissal of class-action claims in the lawsuit, which are separate from the PAGA claims, affects potential claims by Uber drivers.
“I don’t know if you’ve been flooded with calls from drivers asking ‘What about me?’” Nelson told Morosoff. She gave the lawyers two weeks to file more written arguments and scheduled another hearing for May 2.
The Los Angeles case is Price v. Uber Technologies Inc., BC554512, California Superior Court, Los Angeles County (Los Angeles). The San Francisco case is O’Connor v. Uber Technologies Inc, 13-cv-03826, US District Court, Northern District of California (San Francisco).
