US: Judge overturns Uber’s $100 million settlement with drivers

Uber Technologies may come out ahead by failing to win court approval of a $100 million settlement with drivers.

A San Francisco federal judge rejected the agreement on Thursday, a turn of events that would typically encourage the ride-hailing giant to sweeten the deal with more cash or concessions. In this case though, Uber may walk away from further negotiations because an appeals court has hinted it might overrule a key pretrial ruling in the fight over whether drivers must be treated as employees, the drivers’ lawyer has warned.

While acknowledging the risk for drivers and Uber if the case goes to trial, U.S. District Judge Edward Chen concluded the deal was unfair, partly because it low-balled potential claims under California law. He said he also wasn’t convinced that changing the company’s tipping policy would result in the “substantially increased income” as promised.

If the three-year-old lawsuit collapses, the world’s most valuable technology startup would escape without significant changes to its business model or financial sacrifice while keeping 385,000 California and Massachusetts drivers classified as independent contractors. While Uber faces driver lawsuits elsewhere, as well as challenges to its pricing and business practices, the California case was seen as the most likely to upend its gig-economy workforce model because of the state’s relatively tough labor laws.

Before the appeals court added a new wrinkle to the California case, the biggest task for drivers’ attorney Shannon Liss-Riordan was to convince Chen that the agreement she reached with the company in April was fair and reasonable. Dozens of drivers and other lawyers claimed the deal would let Uber off the hook too easily.

Liss-Riordan told Chen in a June 17 filing that if the U.S. Court of Appeals overturns a ruling by him that invalidated Uber’s arbitration agreements in a different case, it would eviscerate her class action, reducing it to “a few thousand drivers.” The three-judge panel’s comments and questions at a June 16 hearing showed that it may be poised to overrule Chen, and even that “leaning” may give Uber leverage and dramatically diminish her “ability to negotiate modifications to the agreement,” Liss-Riordan said.

Full Content: NY Times

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