Federal Judge to Decide Tentative Approval of Uber Labor Settlement

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An Uber driver in San Francisco's downtown neighborhood on Aug. 31, 2015.  (Ericka Cruz Guevarra/KQED)

Update, 6:19 p.m.: Judged Edward Chen expressed a number of concerns about the settlement, questioning how some key provisions would be enforced.

After a nearly four-hour hearing in a packed federal courtroom, Chen said he would take the settlement under submission and issue a ruling later.

Chen questioned the definition of "sufficient cause," which would be required for Uber to deactivate a driver from the platform, under the terms of the settlement.

"During an extremely heated mediation session, those are the words we agreed to," the drivers attorney, Shannon Liss-Riordan responded, saying it would ultimately be up to an arbitrator.

Chen also had concerns about how asking for tips could affect a driver's rating. Under the agreement, Uber would clarify that tips are not included in the fare, but would be appreciated.


"A simple answer is to say, put it in the app, and it's a sanctioned option and won't be perceived as a greedy driver trying to extract a last dollar," Chen suggested.

Uber has resisted calls to put a tipping function on its app, like its competitor Lyft, and the company's attorney, Theodore Boutrous, rigorously defended the company's discouragement of tips.

Boutrous said it's one of the features that allows Uber "to thrive and succeed the way it is." But he added, "We wanted to make clear, there's no ban on tipping."

Liss-Riordan said "thousands of drivers" have already posted signs requesting tips, "and the benefit of this provision is already starting to unfold."

Chen also expressed concerns about the drivers association and an appeals panel that would be set up. It's not known how soon he plans to issue a ruling.


A San Francisco federal judge will begin weighing arguments today over whether to preliminarily approve a tentative settlement struck on behalf of Uber drivers in California and Massachusetts, who claimed in class-action suits that they were misclassified as independent contractors, instead of employees.

The deal reached in April would keep drivers as independent contractors, a win for Uber, whose business model depends on drivers picking up their own expenses. But it would award as many as 385,000 drivers up to $100 million, which would be calculated by a driver's mileage on the Uber platform.

Under the terms, drivers couldn't be deactivated without "sufficient cause." Drivers have long complained that Uber can remove them from the platform arbitrarily. The settlement would set up an appeals process, including an independent arbitrator, if needed.

It would also make clear to riders that tips are not included in the fare, but "would be appreciated." It would set up a drivers association with leaders elected by drivers who would air grievances to management.


The settlement has drawn criticism from more than 20 drivers and their attorneys, who have sent emails and requests to Judge Edward Chen to reject it. Some accused the plaintiffs' attorney, Shannon Liss-Riordan, of "selling out" and said the deal doesn't change their status as independent contractors.

The lawyers for one of the original plaintiffs has gone as far as requesting that Liss-Riordan be removed from the case for a "collusive and disastrous settlement, tantamount to a $1 billion wage theft."

One of the most notable objections comes from a group of former and current Uber drivers represented by UC Hastings Law Professor Veena Dubal. In legal documents, Dubal contends the proposed drivers association would undermine and threaten efforts for drivers to organize independent of Uber, and questioned the appeals process for deactivated drivers.

"How will these panels be constituted? By whom? How will adjudicators be compensated? How long will an appeal take?" Dubal wrote. "If the settlement is approved, the answers to these questions will necessarily be determined by Uber, who, without oversight, has little incentive to formulate anything more equitable or sophisticated than a kangaroo court."

'Monumental' Settlement

Liss-Riordan is staunchly defending what she calls a "monumental settlement," and explained in an interview that she moved into settlements talks after an appeals court agreed to hear Uber's challenge of a decision by Judge Chen rendering the company's previous arbitration clauses unenforceable.

"That was most likely going to lead to a postponement for the trial, this trial that everyone, including myself, had been looking forward to, and reading the writing on the wall, that was just not a good sign for us," she said.

Also, Liss-Riordan said there was no guarantee that a San Francisco jury would side with the drivers in Uber's hometown. In their arguments in favor of the settlement, Uber's lawyers agreed there are uncertainties if the case proceeds to trial.

"If this settlement is scuttled, there is no guarantee that Uber drivers will get anything, because anything could happen," they wrote.

Liss-Riordan said drivers objecting to the settlement are a "small but vocal minority" and called attempts by other attorneys to derail the deal "opportunistic." She said more than 2,500 drivers have contacted her firm, and only about 33 have expressed disappointment.

Though the vast majority of drivers -- about 200,000 -- will receive small settlement amounts, those drivers with the most mileage will receive thousands of dollars, according to Liss-Riordan. She also believes more riders will tip, knowing now that the tip is not included in the fare.

"I'm very proud of the settlement, and I think it will make a major impact on drivers' lives," Liss-Riordan said. "It was my judgement that it was the best thing to do. It was the most prudent thing to do, and it was in the best interests of the class for us to accept this deal."

Even if the settlement is not approved by Chen, Liss-Riordan said, "I'm going to keep fighting."

That includes taking the case all the way to the U.S. Supreme Court, if necessary, she said.