Is the Uber Settlement a Win or Loss for Drivers?
April 28, 2016 | Commercial Litigation & Class Actions
As many are aware, on April 21, 2016, Uber reached a $100 million settlement with its drivers in California and Massachusetts. Although the settlement amount seems high, Uber and the firm representing the drivers in California and Massachusetts were the real winners of this settlement.
It was only a few months ago when Shannon Liss-Riordan, the lead attorney for the Plaintiffs in the class actions brought on behalf of Uber drivers in California and Massachusetts, was quoted as saying that companies like Uber “save massively by shifting many costs of running a business to the workers, profiting off the backs of their workers” and that if she succeeded in these cases, “maybe that will make companies think twice about steamrolling over laws.” However, by agreeing to the announced settlement, Liss-Riordan is allowing Uber to continue to shift its costs to its drivers and steamroll over labor laws.
When reviewing the proposed settlement, there are many issues that quickly come to mind, but below are five major issues with the proposed settlement.
First, although many see the proposed settlement as a guaranteed $100 million, only $84 million is guaranteed to be distributed at this time. The additional $16 million will only be distributed if Uber goes public. Second, the proposed settlement agreement contains redactions of information that is important to determine whether the proposed settlement is reasonable. Third, there are varying reimbursement amounts being reported, but on average, it is being reported that Uber drivers in California could receive as little as $10 and as much as $1,950. Uber drivers in Massachusetts could receive as little as $12 and as much as $979. Fourth, Uber drivers will continue to be misclassified as independent contractors, and therefore drivers will still incur expenses, will not receive meal breaks, and will not be ensured minimum wage. Fifth, Liss-Riordan stands to walk away with up to $25 million in fees.
The proposed settlement is not the only controversial settlement involving Liss-Riordan. Liss-Riordan is also representing Lyft drivers in California in a separate suit. On January 26, 2016, Liss-Riordan reached a $12.25 million settlement with Lyft in which the drivers would also continue to be misclassified as independent contractors and continue to evade labor laws. However, Judge Vince Chhabria, United States District Judge for the Northern District of California, rejected the proposed settlement stating that “the settlement agreement does not fall within the range of reasonableness.” Liss-Riordan originally estimated damages at approximately $65.15 million plus an additional $5.43 million due to California’s Private Attorneys General Act (“PAGA”) penalty, totaling $70.58 million. Instead, the settlement figure was $12.25 million, including $122,250 allocated to PAGA penalties, with the State of California receiving 75% of the PAGA penalty amount. This settlement would result in an average payout of $53.02 to part-time drivers and an average payout of $676.19 to full-time drivers. Additionally, in Judge Chhabria’s decision, he makes note that Liss-Riordan used outdated information when determining mileage figures, which were used to determine reimbursement amounts to drivers.
Unfortunately, Uber drivers in California and Massachusetts came out as the losers in the proposed settlement agreement. However, Uber drivers will have an opportunity to object to the proposed settlement and potentially opt-out of the proposed settlement if the court permits the settlement. It would be unfortunate if the court permitted this proposed settlement, because the proposed settlement does not accomplish any of the goals initially sought by Liss-Riordan.
Currently, Napoli Shkolnik PLLC represents over 350 drivers in class action lawsuits filed in ten states.