Judge: Uber Settlement Needs Work

A federal judge refused Thursday to approve the $100 million Uber driver class action settlement without more information and gave lawyers until July 15 to convince him the deal is fair.

“The court does not foreclose the possibility that the proposed settlement as clarified or modified may prove sufficiently fair and adequate to warrant preliminary approval,” wrote U.S. District Judge Edward Chen. “At this juncture, however, the court needs additional information to complete its analysis and assessment,” he said.

After three years of litigation, in April, Uber agreed to settle class actions by drivers in California and Massachusetts, but the deal didn’t change the drivers’ central status challenge: they wanted to be treated as employees not independent contractors.

The class cases accused Uber of misclassifying its drivers as independent contractors and that prevents them from the right to tips, minimum wage, overtime and reimbursement for expenses from driving, such as gas and insurance.

The settlement called for total payments of $84 million to $100 million, depending on Uber  stock price. Uber agreed to modify its rules for dropping drivers from the program, although they would still be considered independent contractors. And it would meet regularly with elected representatives of the Uber Driver Association to discuss issues.

Chen raised concerns regarding the class method for drivers to opt-out of the deal to pursue their claims independently and said there was insufficient information about due process rights of drivers who did not opt out of a December 2015 arbitration agreement and whether they would get a second chance to opt out.

The plaintiffs have also not shown they could qualify as a class for minimum wage and overtime claims and there was inadequate information on how the plaintiffs calculated to $2.4 million in estimated overtime claims, or how a potential full verdict value was calculated.

Chen also called the estimates of a potential $1 billion in liability for Uber for alleged violation of the Public Attorney General Act to be inaccurate and “arbitrary.”

Case: O’Connor v. Uber, No. 13-cv-3826

 

 

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