by Ben Hancock
SAN FRANCISCO—A federal judge has rejected an $84 million settlement that aimed to resolve major class actions against Uber Technologies Inc. in California and Massachusetts.
U.S. District Judge Edward Chen of the Northern District of California in an order recently concluded that the settlement—which covers roughly 400,000 drivers— “as a whole is not fair, adequate, and reasonable” and denied a motion for preliminary approval of the settlement deal.
The decision is a blow to Shannon Liss-Riordan, the lawyer who brought the class actions on behalf of Uber drivers and later came under attack from a slew of other lawyers in the plaintiffs bar for reaching a deal they criticized as selling drivers short. Liss-Riordan could not immediately be reached for comment.
Uber spokesman Matt Kallman said in a statement: “The settlement, mutually agreed by both sides, was fair and reasonable. We’re disappointed in this decision and are taking a look at our options.”
Chen, in his order, said that the monetary value of the settlement—while large—reflects only about 10 percent of the $854 million estimated value of the class actions. He wrote that this “substantial discount” is illustrated by the case of an Uber driver who was awarded $3,878 in unreimbursed expenses by the California Labor Commissioner, but who would get at most $455 under the settlement.
The judge also said the settlement’s “non-monetary relief is not as valuable as the parties suggest, limiting their worth in considering the amount being offered in settlement.”
He particularly attacked a part of the deal removing restrictions on Uber drivers asking for tips—noting that Uber has refused to include an in-app tipping function—and the fact that a new appeal process the company agreed to create would not allow review of deactivations for low star ratings.
Moreover, Chen expressed strong misgivings about a part of the settlement agreement that would strike his own orders making Uber’s most recent version of its arbitration agreement with drivers unenforceable until the company issued a new opt-out notice. Uber did not do so.
He noted that this would force drivers into arbitration to litigate any claims—even those not related to the issue of driver classification at the center of this litigation.
“To retroactively revoke the protection that this court imposed to protect the rights of drivers without affording drivers a right to now opt-out would be to put a driver in a worse position than if the court had not issued the Rule 23(d) Orders at all,” Chen wrote.
Uber, represented by Theodore Boutrous Jr. of Gibson, Dunn & Crutcher, did not immediately respond to a request for comment.
Ben Hancock can be reached at bhancock@alm.com. On Twitter: @benghancock.
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