ridesharing

In Judge's Rejection of $100 Million Uber Settlement, Nobody Wins

Uber and 385,000 drivers liked the deal, but Judge Edward Chen determined it was "not fair."

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LUKAS COCH/EPA/Newscom

Both sides were left disappointed when a San Francisco judge on Thursday rejected a settlement agreement between ride-sharing giant Uber and 385,000 of its part time drivers.

Uber had agreed in April to pay up to $100 million to drivers in California and Massachusetts who were part of a class action lawsuit against the company. In return, lawyers representing the drivers agreed to drop their effort to get courts to recognize Uber drivers as employees, rather than independent contractors.

It was a mutually beneficial deal allowing the drivers to get paid for benefits they claimed were unfairly denied to them because of their status as contractors while maintaining their flexible working arrangement and letting Uber avoid the added cost of having thousands of new employees.

Judge Edward Chen tossed that mutually beneficial deal into the trash bin on Thursday. He said the payout was only a fraction of what the drivers could get if the case went to trial and ordered the two sides to reach a new deal by mid-September.

"The settlement as a whole as currently structured is not fair, adequate, and reasonable," Chen wrote.

In statements to multiple media outlets on Thursday night, both sides expressed disappointment with the ruling.

"The settlement, mutually agreed by both sides, was fair and reasonable," Matt Kallman, an Uber spokesman, said in a statement.

Shannon Liss-Riordan, one of the attorneys for the drivers, told the New York Times she was disappointed by the ruling and hoped to reach a new agreement before the case would have to go to trial.

That seems pretty likely, since both sides were in agreement here before Chen dissented. Uber in all likelihood will have to throw more money into the pot and will have to do so without attaching strings to some of it—one of Chen's major objections to the settlement was the fact that only $84 million would be paid up front, with the remaining $16 million to be delivered when and if Uber decided to become a public company.

Chen said the drivers could be entitled to as much as $850 million if the case went to trial. That's obviously a much larger amount of money, but the drivers faced an uphill battle in court. "Although recent National Labor Relations Board and Labor Department guidelines have muddied the waters, current labor law holds that ride-sharing drivers are independent contractors, not employees," Jared Meyer wrote for Reason when analyzing a similar settlement reached between Lyft and some of it's California-based drivers. Getting that law reversed in court would be difficult, which is why it made sense for the drivers to settle with Uber—just as the other group of drivers have reached a settlement with Lyft.

In fact, the April settlement with Uber was hailed as "historic" by the attorneys representing the drivers.

In addition to the monetary component, the settlement would have helped Uber drivers by limiting how and why Uber could deactivate or suspend them. Uber would no longer have been able to deactivate drivers simply because they had low ratings, for example. The settlement also made clear that drivers would be allowed to accept tips from passengers.

That's all good stuff that would have helped Uber drivers feel more secure in their jobs and make a little extra money—all without jeopardizing the flexibility that drivers get by being independent contractors rather than employees.

Yet, at least for now, all that has been tossed out the window and Uber drivers in California and Massachusetts are less certain about what the future holds for them. Uber's experimental roll-out of driverless cars this week certainly won't make them feel any better. Nobody wins here.

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  1. Took a cab ride and then an Uber ride recently in Boston. The cab ride cost twice as much, and the driver of the cab was kind of surly and unlikeable.

    1. But he’s got a medallion and a union, so go fuck yourself if you don’t like it.

      I used to be all for (private) unions. Free association and all that. I haven’t seen one yet that isn’t every bit as horrible as the big corporations the proggies love to hate so much. The fallout of big corp. and big union fighting each other is that the consumer gets the shaft. Can’t fire worthless employees who bring no value to the company and drive customers away.

      Private sector unions could still be made to work for the good of employees, but the government needs to withdraw support from them and let them stand or fall on their own merits. Public sector unions are unadulterated evil and must be abolished entirely. There is no good that comes from their existence at all.

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    2. Don’t forget the part where the cab took a half-hour to arrive, while the UberX took maybe five minutes.

      Bonus points if the cab driver gets lost on the way to your destination, or takes a “scenic” route to pad his fare, which can’t happen in the Uber model.

  2. WTF? A judge is supposed to be an impartial arbitrator in this kind of case. How the hell can he say, “the plaintiff should keep spending shitloads of money on lawyers because they could maybe get more”?

    1. And what happens if Uber gets a jury of people who side with them? They could get nothing.

    2. And what happens should the suit go to trial and the plaintiffs lose? Unless the outcome of the trial is already determined, which is also a problem.

      1. Unless the outcome of the trial is already determined

        In ‘Murica?! That could never happen, not here! /sarc

    3. How the hell can he say, “the plaintiff should keep spending shitloads of money on lawyers because they could maybe get more”?

      Class actions very rarely start with some actually aggrieved person hiring lawyers to start a suit. It’s usually the other way around–a well-heeled law firm spots some issue with a company that they think they can make a case out of, then they find some patsy who meets the requirements and get them to serve as the actual plaintiff for the case, in exchange for a large payout when the settlement is ultimately approved. The fees for the lawyers come out of the settlement; I don’t have the documents on hand for the Uber case, but out of a $100 million settlement, I’d imagine $30-40 million of that would have gone straight to the lawyers, with the rest divvied up among the many thousands of claimants.

      If this is starting to sound like a pretty sweet deal for the lawyers, and that maybe most of class action law is a scam to funnel money into powerful law firms, well…

      I’ll also note that it’s quite common, especially in California, for the government to get some cut of the settlement money as well. There’s something called the California Workforce Development Agency, the actual purpose of which is a mystery to me, that usually gets cut a check in these worker dispute cases.

      1. Yeah, I was coming to edit Eric’s sub headline.

        Uber and 385,000 drivers the lawyers purporting to represent 385,000 drivers liked the deal, but Judge Edward Chen determined it was “not fair.”

        1. MIsleading headline aside, the judge is telling the lawyers “Hey, you might be able to get even more so your agreed-upon and amicable settlement is null and void.”

      2. Yeah, I don’t know the details of this particular suit but plenty of the class-action settlements should be shit-canned by judges on the basis of them being lawyer payoffs and nothing more. When most of the members of your class don’t know they’re members of the class and don’t feel aggrieved and they get some useless coupon for future purchases while the lawyers get millions in cold, hard cash instead of coupons like they got for their “clients”, it’s a scam. This particular suit does sound like it’s got some real plaintiffs, though, and it sounds like the judge was shit-canning the settlement not because it was a lawyer payoff scam but because it wasn’t.

        And btw, it would be nice to know if this particular judge (or any judge, for that matter) has ever shit-canned a plea bargain on the grounds that if the defendant really is the menace to society the prosecutor says he is he should go to trial on the greater charges and be locked away for a very long time or if the defendant isn’t the great menace to society the prosecutor seems to be admitting he’s not by allowing him to plead to lesser charges then why are we locking the guy up at all?

        1. Those Evuul Koch Brothers have stirred up some shit about class-action settlements if you’re interested in that sort of thing. The recent Netflix coupon settlement, for example.

        2. And btw, it would be nice to know if this particular judge (or any judge, for that matter) has ever shit-canned a plea bargain on the grounds that if the defendant really is the menace to society the prosecutor says he is he should go to trial on the greater charges and be locked away for a very long time or if the defendant isn’t the great menace to society the prosecutor seems to be admitting he’s not by allowing him to plead to lesser charges then why are we locking the guy up at all?

          Hey now, that’s just crazy talk!

        3. One of the reasons this judge nixed the deal is that the full payout was contingent on Uber having a certain valuation after its IPO. So essentially there would be a tiny payout right now, with a chance for more money if Uber continues to do well.

          The judge does have a point, especially since assholes like him are going to do everything in their power to shut down Uber and ensure that no CA driver gets their final payout.

          (FWIW, this entire thing is stupid as shit. The idea that a driver for Uber is an employee of their company is batshit stupid, but whatever.)

          1. The idea that a driver for Uber is an employee of their company is batshit stupid

            There are three reasons Uber drivers are employees:
            1. If they are employees they can be unionized, like every good worker should be, so they can pay dues to union officials who will lead them in work actions and strikes to get higher wages and restrictive work rules. At least until the business they’re working for goes belly-up.
            2. If they are employees the labor cops can put an end to such unfair practices as “letting them set their own hours” and “working part-time.” Everyone should work a standard 40-hour week with lunch hours and overtime and paid vacation and sick leave.
            3. If they get a W-2 instead of a 1099 then it’s much easier for the IRS to collect the income taxes they voluntarily pay.

            [/sarc]

        4. What gives you the idea that “judges”, who are nothing but glorified lawyers, aren’t focused, laser-like, on their former colleagues getting more money?
          If you have been involved in any kind of lawsuit, it becomes clear that lawyer’s making money is one of the main goals of the “legal system”.
          Virtually every state has laws on the books that judges can use to declare a lawsuit as frivolous, and impose sanctions of the lawyers, who bring them, BUT THEY ARE NEVER ENFORCED, because making lawyers into judges is like making an athlete the referee in a game involving his old teammates.
          In this case: I am pretty sure that a lawsuit, even a “class action” can be dropped by the plaintiffs, at any time. Why not here? Uber, and the lawyers for the drivers, enter into a private contract that sets out the same conditions as the settlement, and the plaintiffs drop their suit. How does a judge get to become a slaver?

      3. Bingo. So each driver would be getting less than $200 out of this settlement (other than the named plaintiffs who would get a few thousand, most likely). Which is a very lousy amount for the plaintiffs’ allegations. It’s justifiably unfair and judges are not under any obligation to approve settlements.

        While individual class members can opt out of the settlement and pursue likely far more lucrative individual actions, how many actually will do that? I am not even aware I’m part of many class actions until I receive a a check for a few bucks from the class administrator, at which point it’s usually too late to opt out.

      4. There’s something called the California Workforce Development Agency, the actual purpose of which is a mystery to me, that usually gets cut a check in these worker dispute cases.

        WOW.

  3. Honestly, maybe this sounds petty, but I hope the case goes to trial and Uber is able to win. And I hope it also takes the liberty of distributing Judge Chen’s address and telephone number to all of the drivers who lose out as a result.

    1. Uber deserves a win. If you enter into a contract with a company as an independent contractor, abide by the contract or quit. You’re entitled to no more than your contract stipulates. We need more options where people can work in free association with one another, not fewer.

      1. You don’t understand Zero. All those drivers are too stupid to know what’s good for them. They’re lucky a progressive elite like Chen is around to make decisions for them.

        1. The article states that “nobody wins”, but that is wrong.

          Chen and the other assholes who decry the “gig economy” get to feel smug and self-righteous.

          Nothing is so self-satisfying to a progressive than this sort of thing.

    2. If that happens Chen will be at fault but Uber will get the blame. This was a win-win for Chen. He gets his name in the newspapers and kudos at all of his cocktail parties, but if the drivers get nothing only the big, bad corporation will be derided.

      1. Yeah, but at least under my scenario Chen might have to deal with a few days of gummed up phone lines and protesters outside of his house. As you suggested, otherwise, there’s no consequence to this sort of thing whatsoever.

    3. Judge Chen’s address and phone number are already freely available.

      1. No, I mean home address and phone. Let his private life be inconvenienced a little out of this.

      2. No, I mean home address and phone. Let his private life be inconvenienced a little out of this.

        1. Ah, you must be one of those keyboard kommados who thinks that doxxing and swatting and revenge pr0n and death threats are a reasonable response to someone having the gall to do or say something you disagree with.

          1. So, I guess you really damn Saul Alinsky, right Hugh?

            I mean, after all, he actually organized protests outside of the homes of government officials he disagreed with. I’m sure you think he was a real turd, right?

            Or are you a hypocrite who values principals over principles?

            1. Gathering an angry mob outside of someone’s home is no more acceptable than calling a SWAT team on them or threatening to rape and behead their children. That’s not how civilized people behave.

              And your cliched bumpersitcker slogan was all the more wounding for being an utter non sequitur.

              1. Gathering an angry mob outside of someone’s home is no more acceptable than calling a SWAT team on them or threatening to rape and behead their children. That’s not how civilized people behave.

                Bullshit. Don’t confuse your aesthetic tastes for a moral code. An angry mob outside someone’s home, assuming they are not trespassing, has committed no aggression. Angrily calling someone a jackass may hurt their feelings, but it’s the height of mendacious to claim that the act is not qualitatively different than a death threat or calling armed agents of the state to bear against someone.

                1. First, gathering a crowd of people outside someone’s home may not be a direct act of aggression, but it is certainly intimidating, which is part of the reason people do it.

                  Second, doxxing in the 21st century is different beast from protests in the first half of the 20th century. When you publicize the information of people you don’t like, you do so with the full knowledge that emotionally disturbed assholes will use that information to threaten or carry out acts of violence on them.

                  Third, “height of mendacity” is a bit hyperbolic. You can accuse me of dishonesty without turning your thesaurus up to 11.

                  1. First, gathering a crowd of people outside someone’s home may not be a direct act of aggression, but it is certainly intimidating, which is part of the reason people do it.

                    And….?

                    Second, doxxing in the 21st century is different beast from protests in the first half of the 20th century. When you publicize the information of people you don’t like, you do so with the full knowledge that emotionally disturbed assholes will use that information to threaten or carry out acts of violence on them.

                    That may be true, but unrelated to your original argument.

                    Third, “height of mendacity” is a bit hyperbolic. You can accuse me of dishonesty without turning your thesaurus up to 11.

                    What’s hyperbolic is to compare a group of people exercising their right to assemble to a target death threat or actual attempt to harm through fraudulent reports to the police. That’s mendacious, dishonest, untruthful, deceitful, fallacious, misleading, and insincere.

                    1. Other than leaving out a few more ways Hugh is wrong, I agree with you.

                  2. First, gathering a crowd of people outside someone’s home may not be a direct act of aggression, but it is certainly intimidating, which is part of the reason people do it.

                    So, in other words, it violates no one rights. But it makes the person feel bad.

                    Thank you for the stunning reminder of why I attach so little value to your commentary.

                    Second, doxxing in the 21st century is different beast from protests in the first half of the 20th century. When you publicize the information of people you don’t like, you do so with the full knowledge that emotionally disturbed assholes will use that information to threaten or carry out acts of violence on them.

                    Because you could always be sure of the sanity of each and every member of a live crowd.

                    1. Many of these responses would make more sense if REASON would spend a fucking buck and include, in their commenting programming: WHO THE RESPONSE IS AIMED AT.
                      Trying to figure out, through the level of “indent”, especially when the number of responses, and re-responses, is large and all the “indents” end up the same, doesn’t solve the problem.
                      It gets even more confusing when someone uses a quote from a prior comment, that is a quote from one, even further in the past.

                    2. “Many of these responses would make more sense “if REASON would spend a fucking buck and include, in their commenting programming: WHO THE RESPONSE IS AIMED AT.
                      Trying to figure out, through the level of “indent”, especially when the number of responses, and re-responses, is large and all the “indents” end up the same, doesn’t solve the problem.
                      It gets even more confusing when someone uses a quote from a prior comment, that is a quote from one, even further in the past.”

                      You mean like switch to facebook comments? 😛

  4. Who are these “parties” to decide what they prefer? I’m glad the judge was able to rule in their true best interests.

  5. Uber and 385,000 drivers liked the deal, but Judge Edward Chen determined it was “not fair.”

    You know what? Good. Fuck them drivers and especially fuck the class action lawyers pushing this. I hope the case drags on long enough that when Uber prevails they get their attorney fees and the law firm is bankrupted.

    Live by the sword of government intervention, die by it.

    1. when Uber prevails

      If the trial’s in San Fransisco, I wouldn’t bet on that outcome. They’re a big EVUL KKKORPROAYSHUN, after all.

    2. Didn’t sound like the “judge” thought Uber would be better served by this going to trial. More like he had already decided to rule in favor of the drivers.

  6. Since when does the fucking justice system get to decide when a mutually agreed upon private contract is fair or not?

    1. Since FYTW. Judge Chen decided to alter the contract. Pray he doesn’t alter it further.

      1. “This deal is getting worse all the time…”

  7. This just in: 385,000 drivers about to be fired. Definitely not the governments fault!

  8. That’s all good stuff that would have helped Uber drivers feel more secure in their jobs and make a little extra money

    What? It most certainly is not. Good lord, we can’t even insist on the most basic premises of at-will employment like performance standards?

    1. Honestly, with the system they have in place, if a zero star driver with a lot of reviews tries to take my fair I’ll say ‘no thanks’ which is exactly how that system is supposed to work. It naturally culls out the weakest in the herd, but leave it California to prop up the lowest common denominator at the publics expense.

  9. I don’t understand why this is being handled by a big lawsuit anyway. So I guess the standard now is if anybody has a less than perfect job, they go to court over it? Fuck, I would have spent my entire life in court if I handled my employment that way.

  10. I figured Uber/Lyft/etc would eventually be replaced with a distributed ride share app with no centralized company. Looks like it may, sort of, exist with LaZooz.

  11. Damn, what we really need is a court case ordering Uber to stop forcing these poor illiterate drivers to work for them.

  12. Another judge deserving of the Fargo treatment.

    1. You have lit the Prosecutor who shall not be named but it rhymes with Deet.

      1. signal. Can’t even finish my own sentences. I should just go home for the day.

  13. I missed the part where Uber was holding a gun to the heads of these people forcing them to work for them.

  14. Give me an break. As an temp employee I had to sign a contract with a non compete clause that says I cannot work for another temp firm at the client site. Yet Uber drives can Click in for Lyft while clocked in with Uber. That and Uber drivers set the hours say independent contractors not employees.

  15. Isn’t this the definition of judicial activism? Logic would imply that if you have two parties voluntarily making an economic agreement, presuming that a third party with no economic stake in said agreement would somehow be better equipped to discern the utility is absolutely asinine.

  16. I don’t get this — if the plaintiffs and the defendants both agree to drop the case, how does the judge have any say in it?

    Can a judge actually compel a plaintiff to sue someone?

    1. IANAL, but doesn’t the judge have to enforce (aka compel) the terms of the contract settlement? Sounds like the judge is saying “I don’t want to enforce THOSE contract terms.”

      Too fucking bad, judge. It’s your sworn duty. I don’t have a problem with the judge saying “Are you sure you want to settle for that?” as a check against possible strong-arming, but it seems like the most he should be doing is saying “OK, I going to enforce the terms of this asinine settlement; you schmucks coulda got a shit ton more that what you settled for, But that’s your business.”

      But soviet judges gonna soviet. The more sand they throw on the wheels of justice, the better the remuneration.

    2. Because in a class action, the plaintiffs’ counsel represents the whole class, including people not actively participating in the case. The court can reject a settlement that it feels is unfair to the unrepresented members of the class.

    3. In the US “legal system” we are all slaves of our masters – the “judges”.

  17. I am making $89/hour working from home. I never thought that it was legitimate but my best friend is earning $10 thousand a month by working online, that was really surprising for me, she recommended me to try it. just try it out on the following website.

    ??? http://www.NetNote70.com

  18. “President Barack Obama nominated Chen to a seat on the United States District Court for the Northern District of California.”

    But of course he did. Imagine my surprise.

  19. RE: In Judge’s Rejection of $100 Million Uber Settlement, Nobody Wins
    Uber and 385,000 drivers liked the deal, but Judge Edward Chen determined it was “not fair.”

    What a better way to cripple, if not destroy, any capitalist enterprise if not through court action? If our ruling elitist filth cannot destroy such vile capitalist enterprises such as Uber, at least they have the option to bankrupt them through litigation, appeals, court costs and attorney fees.
    Killing free enterprise one court case at a time.
    Isn’t big government wonderful?

  20. The government will not be happy until we are all slaves. And even then…

  21. “Uber would no longer have been able to deactivate drivers simply because they had low ratings, for example. The settlement also made clear that drivers would be allowed to accept tips from passengers. That’s all good stuff.”

    How is that ‘all good stuff’? As a consumer, I definitely want Uber to be able to get rid of drivers that suck. The way to have job security with Uber is the same as with my own — namely, don’t suck and don’t piss off your clients. As for tips, one of the great things about Uber is the no tips policy. If that is changed, drivers won’t end up making more, because potential riders will start factoring tips into the cost and supply/demand will drive down ride prices by the average tip percentage.

  22. If and when Uber wins at the court, the workers will be left with probably nothing. And someone has to pick up the legal tab, and who knows how much that will be.

    And if Uber is forced to unionize, then thousands of people will be out of work.

    Nobody “wins” with this decision, but the losers are almost certainly American workers looking to make money in this downturn of an economy.

    1. “And if Uber is forced to unionize, then thousands of people will be out of work.”

      That would just prove that the greed of evil corporations is much greater than anticipated and therefore we need even more government oversight to ensure that workers get a living wage, health insurance, and paid maternity leave!

  23. It further erodes my faith in humanity that Uber drivers were willing to participate in this lawsuit and potentially destroy Uber’s business model.

    I write articles for a “gig” site, and it’s a great way to make extra money without the time constraints of getting a second job. The pay is low; it sometimes doesn’t even rise to the minimum wage (although I’ve averaged $40 per hour before on good days). But you know what? I’d be worse off without that opportunity. It’s mind-boggling to think that someone would get all pissy and sue the company if they were unhappy with their pay.

  24. It was a mutually beneficial deal…

    I doubt it. In class action lawsuit settlements, lawyers collect millions and plaintiffs collect pennies.

    This deal was probably written by Uber, they pay to be exempt from California employment laws. Fuck that. Sure it’s horrible law, but crony capitalism ain’t any better.

  25. I am making $89/hour working from home. I never thought that it was legitimate but my best friend is earning $10 thousand a month by working online, that was really surprising for me, she recommended me to try it. just try it out on the following website.

    ??? http://www.NetNote70.com

  26. Uber, I’d like you to meet the better folks who know what’s good for the riff-raff.

  27. $89 an hour! Seriously I don’t know why more people haven’t tried this, I work two shifts, 2 hours in the day and 2 in the evening?And i get surly a chek of $1260??0 whats awesome is Im working from home so I get more time with my kids.
    Here is what i did

    ===============>>>>>>>>>>>>>> http://www.factoryofincome.com

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