UBER 2016-04-21 [519] SLR Declaration (1)
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Transcript of UBER 2016-04-21 [519] SLR Declaration (1)
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC 1
SHANNON LISS-RIORDAN, pro hac vice ([email protected]) ADELAIDE PAGANO, pro hac vice ([email protected]) LICHTEN & LISS-RIORDAN, P.C. 729 Boylston Street, Suite 2000 Boston, MA 02116 Telephone: (617) 994-5800 Facsimile: (617) 994-5801 MATTHEW CARLSON (SBN 273242) ([email protected]) LICHTEN & LISS-RIORDAN, P.C. 466 Geary St., Suite 201 San Francisco, CA 94102 Telephone: (617) 994-5800 Facsimile: (617) 994-5801
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
DOUGLAS O’CONNOR, THOMAS COLOPY, MATTHEW MANAHAN, and ELIE GURFINKEL, individually and on behalf of all others similarly situated, Plaintiffs, v. UBER TECHNOLOGIES, INC, Defendant.
Case No. CV 13-3826-EMC DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Hon. Edward M. Chen Hearing: June 2, 2016 Time: 1:30 p.m. Courtroom: 5
HAKAN YUCESOY, ABDI MAHAMMED, MOKHTAR TALHA, BRIAN MORRIS, and PEDRO SANCHEZ, individually and on behalf of all others similarly situated, Plaintiffs, v. UBER TECHNOLOGIES, INC. and TRAVIS KALANICK, Defendants.
Case No. 3:15-cv-00262-EMC
Hon. Edward M. Chen Hearing: June 2, 2016 Time: 1:30 p.m. Courtroom: 5
Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 1 of 30
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC 2
DECLARATION OF SHANNON LISS-RIORDAN
I, Shannon Liss-Riordan, declare as follows:
1. I am a partner at the law firm of Lichten & Liss-Riordan, P.C., and am lead attorney
and class counsel for the Plaintiff class in the above-captioned matter. I submit this
declaration in support of Plaintiffs’ Motion for Preliminary Approval of Class Action
Settlement. I have personal knowledge of the information set forth herein.
Litigation History
2. In the nearly three years this case has been pending, the parties have engaged in
extensive discovery. Plaintiffs have propounded and Uber has responded to thirty-six
Requests For Production and thirty-six Interrogatories, while the named Plaintiffs have
collectively responded to 290 Requests For Production, 180 Interrogatories, and 71
Requests for Admission since the start of the case. To date, the parties have
collectively produced more than 36,000 pages of documents in discovery.
3. Plaintiffs have taken five depositions, including depositions of two Uber managers, two
separate Rule 30(b)(6) witnesses, and Uber’s Senior Vice President of Operations Ryan
Graves.
4. Defendants have deposed five named plaintiffs (in full-day depositions), including one
named plaintiff who this Court dismissed from the case following the Court’s Order
limiting the class to California drivers. See Dkt. 136 at 16 (limiting class to California).
5. The parties have presented five joint discovery letters to Magistrate Judge Ryu and
participated in four discovery hearings, and Judge Ryu has issued three separate
substantive decisions on discovery-related issues. My firm has also been in near-
constant contact with class members in this case. More than 2,000 class members have
contacted my firm about the case and I have personally been in email contact with
drivers on a daily (and often hourly) basis. I have been assisted in these
communications by associate attorneys and a team of paralegal staff (currently
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC 3
comprised of four paralegals, two of whom have been engaged primarily with
communicating with class members in this case).
6. Counsel have met and conferred countless times regarding discovery (lately on an
almost daily basis) and were in the midst of preparing additional letter briefs regarding
trial-related discovery disputes just prior to reaching agreement on this settlement.
7. In addition to in depth discovery, the parties have engaged in aggressive motion
practice regarding class certification issues and the substantive merits of Plaintiffs’
claims. There have been 23 substantive motions filed in this case (not to mention more
than sixty administrative motions), and the Court has issued 25 substantive rulings
(totaling more than 287 pages of legal opinions). The Court has held 18 hearings
(totaling more than 23 hours of court time).
8. A trial on both liability and damages is currently scheduled to begin in this case
approximately two months from now on June 20, 2016, and the parties have also
already expended tremendous effort in trial preparation.
9. When this settlement was reached, the parties were prepared to begin depositions of
trial witnesses, and the Court had allowed each side to take up to 80 hours of
depositions.
10. The parties attempted mediation early in the case in April 2014 with mediator Jeff Ross,
but made no significant progress.
11. Following the certification of an enlarged class and several months before trial, the
parties decided to attempt mediation again.
12. The parties agreed to mediate again with mediator Mark Rudy. They met with Mr.
Rudy on March 10, 2016, and again on April 1, 2016. On April 5, 2016, the Ninth
Circuit granted Uber’s Petition for Review Pursuant to Fed. R. Civ. P. 23(f). The
parties then met for an additional mediation session on April 8, 2016, and thereafter
finalized a written Memorandum of Understanding.
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC 4
13. Plaintiffs’ decision to accept the terms of this agreement was based upon Counsel’s
experience, in light of the known monetary and non-monetary benefits of the resolution,
and weighed against the risks of continued litigation, including the following:
Assessment of the Risks of Further Litigation
14. The Ninth Circuit granted Uber’s Petition for review of this Court’s Supplemental
Class Certification Order on April 5, 2016. See Ninth Cir. Appeal No. 16-15595,
Dkt. 1.
15. Based on the data and information I have received from Uber in this litigation, it is my
understanding that if the Supplemental Class Certification Order were to be overturned,
the class size would have diminished from more than 240,000 drivers to approximately
8,000 drivers (or fewer depending on the Ninth Circuit’s reasoning).
16. Moreover, by granting the Rule 23(f) petition, the Ninth Circuit agreed to review the
Court’s decision to certify Plaintiffs’ claim under Cal. Labor Code § 2802, the driving
force behind this case, and by far the most significant source of damages.
17. Uber’s Rule 23(f) appeal is currently scheduled to begin briefing in July 2016.
Moreover, Uber has informed me that, in the absence of a Settlement, Uber would seek
an emergency stay of the district court proceedings in O’Connor so that the Ninth
Circuit could resolve Uber’s pending Rule 23(f) appeal before the start of the June 2016
trial in this case. While not required to do so, a number of Circuit Courts have stayed
district court proceedings following the grant of a Rule 23(f) petition. See, e.g., Arreola
v. Godinez, 546 F.3d 788, 794 (7th Cir. 2008); Wachtel ex rel. Jesse v. Guardian Life
Ins. Co. of Am., 453 F.3d 179, 183 (3d Cir. 2006); Andrews v. Chevy Chase Bank, 545
F.3d 570, 573 (7th Cir. 2008); Gregory v. Finova Capital Corp., 442 F.3d 188, 190 (4th
Cir. 2006). Thus, if the Ninth Circuit were to follow this precedent, the Ninth Circuit
would have heard and resolve Uber’s Rule 23(f) petition before trial begins here.
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
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18. Two other appeals of this Court’s rulings regarding Uber’s arbitration clauses are fully
briefed and scheduled for oral argument on June 16, 2016, just days before the trial in
this case has been scheduled to begin. See Ninth Circuit Appeal Nos. 14-16078, 15-
16178. An adverse decision reversing this Court’s rulings regarding the enforceability
of Uber’s 2013 and 2014 arbitration clauses could destroy the certified class in this case,
making recovery unfeasible for the vast majority of class members.
19. Moreover, Uber has made clear that, should this case not resolve, and should the Ninth
Circuit panel affirm the Court’s rulings regarding class certification and enforceability
of the arbitration clauses, the company would continue to aggressively appeal these
rulings by seeking en banc review and even certiorari from the U.S. Supreme Court.
The uncertainty created by these appeals was a major factor I took into account in
deciding to accept this settlement on behalf of the class.
20. A second major risk that I took into account was the risk of trying the all-important
employment status question to a jury.
21. This Court has stated that “numerous [Borello] factors point in opposing directions” on
the issue of employment classification, such that the employment misclassification test
“does not yield an unambiguous result.” Dkt. 251 at 26–27; see also Cotter v. Lyft, Inc.,
60 F. Supp. 3d 1067, 1081–82 ( “[s]ome [Borello]factors point in one direction, some
point in the other, and some are ambiguous . . . .”). Thus, there is serious risk that a
unanimous jury would not find that all drivers in the certified class are Uber’s
employees, a prerequisite to both of Plaintiffs’ claims in O’Connor.
22. In addition, I have adamantly maintained that the employment status question is a legal
question for the Court to decide. The multi-factor Borello test is complicated, and a
decision by a jury risks that the jurors would rely on their own lay understanding of
what constitutes an employee or an independent contractor. I am concerned that a jury
would give undue weight to the fact that drivers value their flexibility (something that
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC 6
Uber has made clear it intended to impress upon the jury even though I contend it is not
relevant) and would likewise give undue weight to the fact that the parties’ contract
states that drivers are independent contractors. Even with proper jury instructions,
there can be no avoiding the risk of jurors imposing their own beliefs and
understanding regarding this question.
23. I also view the Court’s decision to deny Plaintiffs’ request for a special verdict form as
a major risk, as it would make it very difficult for Plaintiffs to have appealed an adverse
verdict with a general verdict form.
Information Used to Assess the Fairness of This Settlement
24. I believe this settlement falls within the range of possible approval, and the Court
should grant the settlement preliminary approval.
25. The parties have exchanged extensive information necessary to make an informed
evaluation of the case, including detailed damages discovery during pre-trial
preparation and in advance of the parties’ three mediation sessions.
26. Likewise, the parties have aggressively litigated the issue of Uber’s independent
contractor defense in summary judgment and have studied this issue in depth in
preparation for trial. The parties have also litigated the issue of class certification
(including the enforceability of Uber’s arbitration clause) through multiple rounds of
supplemental briefing and hearings. See Dkt. 276, 298, 312, 359, 365, 370-1, 380, 381,
387, 388.
27. This information was discussed in depth over the course of three mediation sessions
with Mediator Mark Rudy as well as in additional negotiations between the parties.
28. Paragraphs 29 to 85 below set forth Plaintiffs’ analysis, based upon my review of
extensive confidential data provided by Uber of the potential value of each claim
asserted in this case, as well as some of Plaintiffs’ considerations regarding the
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC 7
likelihood of establishing liability on these claims, were Plaintiffs to prevail on the
threshold issue of whether Uber misclassified its Drivers as independent contractors.
Failure to Reimburse for Necessary Work-Related Expenses (Cal. Lab. Code § 2802)
29. Cal. Lab. Code § 2802 requires an employer to indemnify its employees for all
necessary expenditures or losses incurred by the employee in direct consequence of the
discharge of his or her duties.
30. If Plaintiffs were to prevail on the misclassification issue at trial, I believe a jury would
likely find that drivers’ expenditures for mileage and cellular phone data plans were
necessary business expenditures.
31. However, Uber has informed me that it intended to defend the Cal. Labor Code § 2802
claim on the merits at trial by asserting, among other arguments, that Uber has, in fact,
satisfied Section 2802 by structuring the fare to be an all-inclusive fare that takes into
account things like expenses, see Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th
554, 558–59 (2007) (“[A]n employer may satisfy its statutory reimbursement obligation
by paying employees enhanced compensation in the form of increases in base salary or
increases in commission rates . . . .”). Although I disagree with this argument, because
Uber did not expressly indicate that it was reimbursing for expenses, it is conceivable
that this argument may gain traction with a jury,, thus precluding recovery under
§ 2802.
32. Based on data that Uber produced showing the number of miles that class members
drove in California while transporting riders during the class period, and applying the
IRS fixed reimbursement rates that have been in effect each year during this period, I
calculated Plaintiffs’ claim for unreimbursed vehicle expenses in California to be worth
approximately $ .
33. However, Uber has vigorously contested this calculation and made clear that it intended
to argue at trial that Plaintiffs’ use of the fixed IRS reimbursement rate did not provide
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC 8
a proper or accurate estimate of drivers’ expenses and that instead the IRS “variable
rate” should be used instead.1
34. The variable rate for mileage reimbursement (favored by Uber) varied from 16.5 to 24
cents per mile during the applicable timeframe, whereas the fixed and variable rate for
mileage reimbursement (favored by Plaintiffs) varied from 50 to 56.6 cents per mile
during the applicable timeframe. Thus, using Plaintiffs’ figures, we calculated the
mileage reimbursement claim for the O’Connor certified class to be worth
approximately $ , while using Uber’s figures, it would be worth
approximately $ .
35. Although these damage calculations account for the certified class period, this
settlement would release claims through the date of preliminary settlement approval.
Based upon data that Uber provided that is current through April 8, 2016, less than two
weeks ago, Plaintiffs’ estimate of mileage reimbursement for certified O’Connor class 1 The costs of owning and operating a vehicle fall into two categories: fixed and variable. Fixed expenses are those that do not vary over time from month to month, including depreciation and insurance, whereas variable expenses are costs that fluctuate month to month, such as the costs of gas, maintenance, and tires. Plaintiffs’ use of the IRS fixed rates (which are actually called the IRS “Fixed and Variable Rates”, but I refer to them here as the “fixed rates” for convenience) would compensate drivers for both types of costs, but Uber intended to argue at trial (had Plaintiffs succeeded on liability) that only variable costs attributable to driving for Uber should be used because Uber drivers would have incurred the fixed expenses even if they did not use their cars for Uber. In other words, a driver using his own car would have had to pay for insurance and depreciation whether or not he drove for Uber, whereas variable costs like gas and wear and tear are more directly attributable to driving for Uber. Plaintiffs would have disputed Uber’s reasoning because Uber drivers cannot perform their job without a car, and Uber requires them to have cars of a certain make and model and to have insurance, meaning that they cannot do the job without having to pay these fixed expenses. Furthermore, many drivers do upgrade their cars or even buy a brand new car in order to meet Uber’s standards, so Plaintiffs do not agree that all drivers were paying these fixed costs regardless. However, although Plaintiffs would have vigorously disputed Uber’s argument, they recognize that there was a serious risk that Uber’s argument could gain traction with the jury, and that if the variable rate were applied, the expense reimbursement claim would be worth far less than Plaintiffs had estimated.
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC 9
members (using the IRS fixed rate) would be approximately $ , while a
calculation using the IRS variable rate (as Uber had preferred) would place this number
at approximately $ .
36. In addition, the settlement includes drivers who were excluded from the O’Connor class
and drivers who used other platforms not at issue in O’Connor (e.g., UberTAXI).
Based on updated data that Uber has provided about these drivers, the mileage expense
reimbursement figures for these drivers (through April 8, 2016) would be
approximately (using Plaintiffs’ preferred IRS fixed rate), or
(using Uber’s preferred IRS variable rate).
37. Of course, these drivers faced much greater challenges in being able to prevail on their
claims, given that the Court had excluded many of these drivers from the class and
determined that their misclassification claim could not proceed on a class basis. In
addition, many of the excluded class members likely did not have as strong a claim for
expense reimbursement in the first place because some of the limo companies they
drove for provide partial reimbursement (such as for gas) and most provide a vehicle
for the drivers.2 Given these additional hurdles these drivers would have faced, the
settlement allocation formula gives these drivers one-half the credit for their miles as
compared to drivers who were class members in O’Connor.
38. The settlement also includes drivers in Massachusetts who were putative class members
in the Yucesoy case and other Massachusetts drivers. Based on updated data that Uber
has provided, the mileage expense reimbursement figures for these Massachusetts
2 See, e.g., O’Connor Dep. at 124:22-125:1.
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
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drivers (through April 8, 2016) would be approximately (using Plaintiffs’
preferred IRS fixed rate), or (using Uber’s preferred IRS variable rate).3
39. However, the Massachusetts drivers face much more significant risks in this litigation
than the drivers in California, given that there is not yet a certified class in the Yucesoy
case, and the case has not advanced nearly as far as O’Connor. Further, because there
is not an express expense reimbursement statute in Massachusetts analogous to Cal.
Labor Code § 2802, Plaintiffs’ recovery for expenses in Massachusetts is much less
certain. See Schwann v. FedEx Ground Package Sys., Inc., 2014 WL 496882, *3 (D.
Mass. Feb. 7, 2014) (in Massachusetts, “the question of whether business expenses and
deductions borne by employees are recoverable under the Wage Act is unsettled under
state law.”) (certifying this question to the Massachusetts Supreme Judicial Court).4
40. With respect to expense reimbursement for telephones, I received data from Uber
showing that California drivers who leased their phones from Uber were charged a total
of $13.8 million for the phones. Extrapolating half of this rate to all California
settlement class members (based on the assumption that drivers who used their own
phones to drive for Uber would not have to pay the full amount that drivers who leased
their phones would pay, and would also be able to use the phones for their own
purposes) brings the total estimate for phone expenses in California to approximately
3 This figure includes all Massachusetts drivers, including drivers that drove through third-party companies and under corporate or fictitious names, because Plaintiffs do not believe that the distinction that the Court drew in the California case would have been relevant under Massachusetts law. It also includes drivers who used Uber platforms not specifically at issue in Yucesoy (e.g., UberTAXI). In total, the settlement covers approximately 385,000 California and Massachusetts drivers. 4 Thus, in allocating the settlement funds between California drivers and Massachusetts drivers, I calculated the relative value of the claims of the two groups, ascribing one-half credit for the expense reimbursement claim.
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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
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$24.7 million. Extrapolating these figures for phone expenses to Massachusetts
settlement class drivers comes to approximately $4.6 million.
Unlawful Taking of Gratuities (Cal. Lab. Code § 351; Cal. Bus. & Prof. Code § 17200)
41. Cal. Lab. Code § 351 prohibits employers from taking any part of a gratuity given to its
employees. Section 351 does not provide for a private cause of action; however, a
violation thereof can be brought as a claim under Cal. Bus. & Prof. Code § 17200, et
seq.
42. Plaintiffs have argued that, if they were to prevail on the misclassification issue, and
prevailed on the claim that Uber has charged passengers a gratuity but without passing
it on in full to the drivers, then the jury would be asked to determine what amount of
the fare constituted a gratuity. I made calculations based on a conclusion that the jury
may have found that Uber included a 20% tip in the fare (a figure which Uber stated on
some occasions in communications with customers, see Dkt. 485-3 at 9, 20, 52). In
other words, under this theory, if a driver had a $10 fare, Uber should have set aside
20% of the fare ($2) to be remitted exclusively to the driver as a tip. Uber should then
have taken its commission (of, for example, 20%) out of the remaining $8. Uber would
then receive a commission of $1.60. Instead, Uber took its commission out of the
entire $10 fare and thus received $2. Thus, Uber would owe the driver the 40 cent
difference (which equals 20% of Uber’s commission).
43. Based on this theory and data produced by Uber (showing the total amount of fares in
California for certified class members), I calculated the total potential value of this
claim to be approximately . Based upon this same data, I calculated the
potential value of the claim for drivers who are not currently in the O’Connor certified
class to be approximately .
44. Using the same logic, based on data produced by Uber providing the total amount of
fares in Massachusetts, the total value of the analogous claim in for Massachusetts
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drivers under Mass. Gen. L. c. 149 § 152A is approximately .
45. Plaintiffs recognize the risks in proving this claim, including the risk that the jury could
find that Uber’s communications that “tip is included” in Uber’s fare were too variable
or not widespread enough to warrant a finding that a tip was actually included. In
addition, in order to succeed on this claim, Plaintiffs would have to prove employee
status for the drivers. And, even if Plaintiffs succeeded on the claim, the jury could
conclude that a lesser amount of tip than 20% was included (such as 15% or 18%). For
example, Uber was prepared to argue that, even if Plaintiffs succeeded on this claim, its
research demonstrates that 16% is a more usual tip left for taxicab drivers and, if
liability were established, damages could not exceed that amount.
46. The claims described above are the statutory claims that Plaintiffs pursued in this
lawsuit. For settlement purposes, Plaintiffs have agreed to a release of additional
employment-misclassification and wage-and-hour claims that have been brought
against Uber in California and Massachusetts, in order to effectuate the final resolution
of all employment-misclassification and wage-and-hour disputes in these states up to
the date of preliminary approval. However, for the reasons discussed below, Plaintiffs
did not value these claims as posing significant risk to Uber and thus contributing any
appreciable increase in likely damages that drivers may have been able to obtain.
47. In particular, a number of these claims require a finding of “willfulness”. Given the
heated dispute regarding whether Uber drivers are employees or independent
contractors, and the lack of any definitive court rulings on this question, I believe the
drivers would have been unlikely to prevail on claims requiring a finding of
“willfulness.” See, e.g., Dalton, 2011 WL 1045107, *5 (granting summary judgment to
defendant on Cal. Lab. Code § 203 claim, which requires a finding of willfulness, on
grounds that there was a good faith dispute that plaintiff was an independent
contractor).
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Failure to Pay Wages When Due (Cal. Lab. Code §§ 201-203, 204, 210)
48. Cal. Lab. Code §§ 201 and 202 require employers to page wages earned and unpaid
within a certain time frame if an employee quits (within 72 hours) or is discharged
(immediately). Cal. Lab. Code § 203 provides for “waiting time” penalties assessed
only when such failure to pay wages when due is “willful,” and a finding of willfulness
is precluded when there is a “good faith dispute” as to whether a plaintiff is subject to
the Labor Code provisions at all, i.e. when there is a good faith dispute as to whether a
plaintiff is in independent contractor rather than an employee.
49. As discussed above, even if Plaintiffs prevail on the misclassification issue, I expect
that it would be difficult for Plaintiffs to overcome Uber’s good faith defense to
liability with respect to this claim.
50. Accordingly, I believe there would be a substantial risk of no recovery on this claim.
Unlawful Deductions (Cal. Labor Code § 221-224, 227)
51. Cal. Labor Code §§221 and 224 provide that an employer may only lawfully withhold
amounts from an employee’s wages when (1) required or empowered to do so by state
or federal law; (2) when a deduction is expressly authorized in writing by the employee
to cover insurance premiums, benefit plan contributions, or other deductions not
amounting to a rebate on the employee’s wages; or (3) when a deduction to cover
health, welfare or pension contributions is expressly authorized by a wage or collective
bargaining agreement. Here, Defendant’s conduct as alleged herein has violated Cal.
Labor Code §221-224 insofar as Defendant has deducted the costs of equipment (i.e.
telephones). However, because the telephone expenses are part of Plaintiffs’ Cal.
Labor Code § 2802 claim, Plaintiffs do not think that this claim adds any value. Thus,
although Plaintiffs added this claim for settlement purposes in an effort to give Uber
global peace, Plaintiffs do not believe that this claim has any additional value.
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Failure to Pay Minimum Wages (Cal. Lab. Code §§ 1182.12, 1194, 1194.2, 1197, 1197.1)
and FLSA (29 U.S.C. § 201, et seq.)
52. Cal. Lab. Code § 1194 permits an employee receiving less than the legal minimum
wages (currently $10.00 per hour under California law) to recover the unpaid balance
of minimum wage in a civil action. Section 1194.2 further provides for an award of
liquidated damages in a minimum wage action unless an employer can show that the
violation was in good faith and that it had reasonable grounds for believing it was not
subject to minimum wage requirements. Likewise, the federal Fair Labor Standards
Act requires that employers pay at least the federal minimum wage of $7.25 per hour
for all hours worked. See 29 U.S.C. § 201, et seq.
53. Significantly, this Court dismissed Plaintiffs’ minimum wage claim under
Massachusetts law in the Yucesoy case, see Yucesoy, Civ. A. No. 3:15-00262-EMC,
Dkt. 194 at 9-10 (after several attempts to amend), and dismissed similar minimum
wage claims under the FLSA in the Del Rio case, see Del Rio, Civ. A. No. 3:15-cv-
03667-EMC Dkt. 84 at 4. Furthermore, I believe that Plaintiffs faced a significant
hurdle in resolving this claim on a class-wide basis, as discovery has not revealed that
Uber has had a uniform policy or practice that would support a finding of liability (or
no liability) on this claim for all drivers and may well have required individualized
analysis.
54. Accordingly, I believe there would be a substantial risk of no recovery on this claim.
Failure to Pay Overtime Wages (Cal. Lab. Code §§ 510, 1198, 1194) and Fair Labor
Standards Act (29 U.S.C. §207(a)(1))
55. Cal. Lab. Code § 1198 and Wage Order 9 require employers to pay their employees at
their overtime rate of pay for hours worked in excess of eight per day and/or 40 per
week. Cal. Lab. Code § 1194 permits an employee receiving less than his or her
overtime wages to recover the unpaid balance of such wages in a civil action.
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Likewise, the Fair Labor Standards Act requires that an employer pay time-and-a-half
an employee’s regular rate of pay for all hours worked beyond forty in a workweek.
See 29 U.S.C. §207(a)(1).
56. As with the minimum wage claim, the Court already dismissed Plaintiffs’ overtime
claim under Massachusetts law in the Yucesoy case, see Yucesoy, Civ. A. No. 3:15-
00262-EMC, Dkt. 194 at 9-10 (again, after several attempts at amendment), and
dismissed similar overtime claims under the FLSA in the DelRio case, see DelRio, Civ.
A. No. 3:15-cv-03667-EMC Dkt. 84 at 4. Moreover, it is not certain whether the Court
would certify a claim for those drivers who worked these hours.
57. However, if the Court did certify this claim, and if Plaintiffs were to prevail on the
misclassification issue, I believe a jury would determine that certain drivers worked in
excess of eight hours per day or 40 hours per week without being compensated at their
applicable overtime rates of pay. Based on data provided by Uber, I estimate that if this
claim were to succeed, its value would be approximately $2 million for California
drivers and $400,000 for Massachusetts drivers.
58. However, given the Court’s skepticism of this claim in the Yucesoy case, and the
hurdles to its certification, I believe it would have been very difficult to achieve
recovery on this claim for the plaintiff class.
Failure to Provide Meal Periods and Failure to Authorize and Permit Rest Periods (Cal.
Lab. Code §§ 226.7, 512, Wage Order 9
59. Cal. Lab. Code §§ 226.7, 512 and Wage Order 9 generally require employers to provide
all employees with one 30-minute duty-free meal period if such employee works more
than five hours in a day. Additionally, § 226.7 and Wage Order 9 generally require
employers to provide all employees with one 10-minute duty-free rest period for every
four hours worked each day, or major fraction thereof.
60. If Plaintiffs were to prevail on the misclassification issue, I believe a jury would likely
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determine that Uber has met its obligation to provide meal and rest periods. While
drivers might feel pressure to accept ride requests and therefore skip meal and rest
periods, given the way that I understand Uber’s application works, I believe that Uber
will be able to argue that drivers can take breaks whenever they wish, including by not
accepting a ride request or by logging out of the Uber App and going “off-line”
whenever the driver wishes to take break. For example, when drivers are not logged in
to Driver Mode, they do not receive ride requests, and, therefore, cannot be punished by
Uber for declining ride requests or be pressured into missing or cutting short their
breaks. I believe that such facts would likely preclude liability for meal and rest period
violations.
Failure to Keep Accurate Records (Cal. Lab. Code §§ 1174.5, 353)
61. Cal. Lab. Code § 1174 requires employers to maintain payroll records pertaining to its
employees, and Cal. Lab. Code § 1174.5 provides for penalties for willful failures to
maintain such records. A finding that an employer’s failure to comply with § 1174 was
in good faith precludes liability for the violation. Dalton, 2011 WL 1045107, *6
(granting summary judgment on § 1174 claim because of a good faith dispute that
employees were independent contractors).
62. Even if Plaintiffs were to prevail on the misclassification issue, I believe it would be
difficult for Plaintiffs to show that Uber does not maintain all information required by
§1174, and, even if it does not, it would be difficult for Plaintiffs to overcome Uber’s
good faith defense to liability with respect to this claim.
63. Accordingly, I believe there would be a substantial risk of no recovery on this claim.
Failure to Furnish Accurate Wage Statements (Cal. Lab. Code § 226)
64. I believe that Uber would likely argue that their weekly driver summary emails
constitute pay statements that show all information required by § 226(a), except for the
information required by § 226(a)(7) (drivers’ last four digits of their social security
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numbers). Thus, I believe Plaintiffs may be able to show a technical violation of §
226(a)(7).
65. However, to recover under § 226, an employee must also show injury. Injury exists
under § 226 when an employee is not provided with a pay statement at all, § 226(e)(2),
or when there is a deficient wage statement and an employee cannot promptly and
easily determine from the statement alone the information required by § 226(a)(2) (total
hours worked), (a)(3) (piece rate units earned, if applicable), (a)(4) (all deductions),
(a)(6) (inclusive dates of the pay period), and (a)(9) (all applicable hourly rates in effect
during the pay period and the corresponding number of hours worked at each hourly
rate by the employee). Courts have determined that this injury requirement generally
requires that the employee be unable to “quickly verify earnings when looking at the
wage statements.” Holak v. K Mart Corp., 2014 WL 4930762, *7 (E.D. Cal. Sept. 30,
2014); see also Price v. Starbucks Corp., 192 Cal.App.4th 1136, 1143, 122 Cal.Rptr.3d
174 (2011) (recognizing that an injury exits where “inaccurate or incomplete wage
statements ... require [ ] ... plaintiffs to engage in discovery and mathematical
computations to reconstruct time records and determine if they were correctly paid”).
66. I believe it would have been difficult for Plaintiffs to show injury here, including
because Uber would likely argue that its pay statements set forth the information
required by §226(a)(2) (statements show hours online), (a)(3) (inapplicable because
drivers are not paid on a piecework basis), (a)(4) (Uber did not make any deductions),
(a)(6) (statements show dates of the pay period), and (a)(9) (inapplicable because there
have not been hourly rates “in effect” for drivers). Additionally, Uber would likely
argue that the weekly statements clearly set forth earnings during each pay period,
hours worked and substantial additional information, which allow drivers to “quickly
verify earnings when looking at the wage statements.”
67. Moreover, even assuming that Plaintiffs can show injury arising from a violation of
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§226, such a violation of § 226 is actionable only if it is “knowing and intentional,” and
therefore courts have permitted employers to assert a good faith defense to the claim at
or after trial. Dalton, 2011 WL 1045107, *5 (finding that good faith dispute as to
whether plaintiffs were independent contractors exempt from Section 226 precludes a
finding that defendant acted “with the requisite scienter” of knowing and intentional);
Hurst v. Buczek Enterprises, LLC, 870 F.Supp.2d 810, 829 (N.D.Cal.2012) (“when a
party makes a good faith claim that a worker [has been properly classified as exempt],
its failure to provide accurate wage statements is not knowing and intentional.”)
Accordingly, Plaintiffs recognize they would face a challenge in overcoming Uber’s
defenses to this claim, including that it had a good faith belief that drivers were
properly classified and therefore not subject to the requirements of § 226.
68. Accordingly, I believe there would be a substantial risk of no recovery on this claim.
One in Seven Day’s Rest (Cal. Labor Code §§ 551, 552, and 558)
69. Cal. Lab. Code § 551 provides that every person in every occupation is entitled to one
day’s rest in seven, and Cal. Lab. Code § 552 prohibits employers from requiring an
employee to work more than six days out of seven. Here, some Uber drivers worked
seven days per week (although based on data from Uber it appears that this was true
only for a minority of drivers). In any case, Plaintiffs believe they would face difficult
hurdles in proving this claim on a class-wide basis given that many drivers drove only
occasionally, and given that it is undisputed that drivers are able to sign on and off the
Application whenever they wish and can drive as much or as little as they wish.
70. Accordingly, I believe there would be a substantial risk of no recovery on this claim.
Requiring Drivers To Agree to Unlawful Terms (Cal. Labor Code § 432.5)
71. Cal. Lab. Code § 432.5 makes it unlawful for an employer to require an employee or
applicant to agree, in writing, to a term or condition that the employer knows to be
prohibited by law. Here, there is an argument Uber required drivers to accept its
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agreements, which contained numerous illegal provisions. However, Plaintiffs believe
that they would face a challenge in overcoming Uber’s defenses to this claim, including
that it had a good faith belief that the provisions of its agreements were lawful.
72. Accordingly, I believe there would be a substantial risk of no recovery on this claim.
Failure to Provide Paid Sick Leave (Cal. Labor Code §§ 245-249)
73. Cal. Labor Code § 246 provides that an employer must provide any employee who, on
or after July 1, 2015, works in California for the same employer for 30 days or more
within a year from the start of employment, with paid sick days. If Plaintiffs succeed in
proving employee status, then drivers who drove more than 30 days in a calendar year
arguably accrued a certain number of paid sick days and were entitled to use these
accrued paid sick days for purposes enumerated in Labor Code section 246.5(a)(l)-(2).
74. However, Plaintiffs likely would face serious challenges in proving liability under
section 246 because they must first prove the employees’ hourly rate of pay, a figure
that the Court might find to be incalculable in the case of drivers who use Uber. See
Cal. Labor Code § 246(k). Even if calculable, a Court may conclude that individual
issues predominate for purposes of class certification. Moreover, because employees
must be employed for at least 90 days before being able to use paid sick leave, a Court
may conclude that many of the drivers who use Uber infrequently may not be entitled
to paid sick leave at all. See Cal. Labor Code § 246(c).
Failure to Pay Wages Due Upon Termination (Cal. Labor Code §§ 201-04, 206.5, 208,
210)
75. Cal. Labor Code § 204 requires that an employer pay all wages due upon the
termination of any employee. Plaintiffs ascribe little value to this claim because they
have not seen evidence that Uber delays final payment to drivers who have been
deactivated.
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Failure to Pay Worker’s Compensation Insurance (Cal. Labor Code §§ 3700.5, 3712,
3715 Brought Pursuant to Cal. Bus. & Prof. Code § 17200)
76. These sections of the Labor Code require employers to provide worker’s compensation
insurance to employees injured on the job. Cal. Lab. Code § 3700.5 provides that “the
failure to secure the payment of compensation as required by this article by one who
knew, or because of his or her knowledge or experience should be reasonably expected
to have known, of the obligation to secure the payment of compensation” is punishable
by fines and imprisonment. I believe that recovering on these claims pose
challenges. First, I believe that it is highly questionable whether drivers could bring
such a claim in a private lawsuit as I believe that Uber would argue the claim is
preempted by the exclusivity of the Worker’s Compensation Act, Cal. Labor Code
§§ 3600, 3602, and that a UCL claim cannot be utilized as a backdoor way to avoid this
exclusivity. See Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund, 24 Cal. 4th
800, 828 (2001); Hughes v. Argonaut Ins. Co., 88 Cal. App. 4th 517, 522 (2001)
(dismissing claim “on behalf of the general public, asserting violations of California's
unfair competition law (UCL)” where the underlying challenged conduct was a
violation of the Worker’s Compensation Act because the WCAB had “exclusive
jurisdiction”); Koszdin v. State Comp. Ins. Fund, 186 Cal. App. 4th 480, 495 (2010).
Accordingly, I believe there would be a substantial risk of no recovery on this claim.
Failure to Pay Reporting Time (Wage Order 9)
77. Wage Order 9, § 5, requires that for each workday that a California employee is
required to report for work and does report, but is either not put to work or is furnished
less than half of that employee’s usual or scheduled day’s work, each such employee
must be paid an amount equal to half of his or her usual or scheduled day’s pay, or in
any event must be paid an amount equal to 2 hours at the employee’s regular rate of
pay. Here, the claim would presumably apply where drivers signed onto the App but
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received no ride requests and gave no rides. I believe there is a substantial risk of no
recovery on this claim because drivers can indisputably work as often as they like and
are not required to “report” or sign onto the App at any particular time. Thus, because
Uber drivers are arguably never “required” to report for work, I do not ascribe any
value to this claim.
Willful misclassification of drivers as independent contractors (Cal. Labor Code §§ 226.8,
2753)
78. Cal. Lab. Code § 226.8 defines “willful misclassification” as “avoiding employee status
for an individual by voluntarily and knowingly misclassifying that individual as an
independent contractor.” Here, even if Plaintiffs were to prevail on the
misclassification issue, I believe that there be a significant challenge in overcoming
Uber’s defenses to this claim, including that it had a good faith belief that its drivers
should be classified as independent contractors rather than employees, and that it did
not knowingly misclassify drivers as a way of avoiding the law. Accordingly, I believe
there would be a substantial risk of no recovery on this claim because of the willfulness
requirement.
Penalties Pursuant to PAGA (Cal. Lab. Code § 2698, et seq.)
79. PAGA, Cal. Lab. Code § 2698, et seq., generally provides for penalties arising from
violations of the California Labor Code. Penalties are assessed per employee and per
pay period. Id.
80. Here, Plaintiffs have moved to have PAGA claims added to their case, but the Court
has yet to rule, so there remained a risk that these claims would not go forward in this
case. However, assuming that Plaintiffs were successful in having these claims added
to this case, Plaintiffs have made the following assessment of this claim.
81. Given that much of the work that Uber drivers have performed has been spread out over
time, there have been a considerable number of weeks in which Labor Code violations
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may be at issue.5 In light of this fact, if Plaintiffs were successful in establishing Labor
Code violations for all of these drivers during all of these workweeks, potential PAGA
penalties would be astronomical and far beyond the potential damages at issue in this
case.
82. For example, assuming that the Court or jury were to find that Uber is subject to PAGA
penalties for their failure to reimburse Drivers for work related expenses (e.g., mileage),
Uber would be subject to a PAGA penalty of $100 per driver for the first pay period in
which there was a violation, and $200 per driver for each subsequent pay period in
which there was a violation. Cal. Lab. Code § 2699(f). Thus, for only the penalties
associated with the California Labor Code violations in this case, §§ 2802 and 351, the
penalties could exceed one billion dollars.6 This is to say nothing of other potential
PAGA penalties arising from the numerous other Labor Code violations set forth herein.
See supra, n. 4. 5 The Labor Code provisions that have been alleged in various litigation against Uber are sections 201, 202, 203, 204, 206.5, 207, 208, 210-14, 221-224, 226, 226.7, 226.8, 227, 245-49, 351, 353, 432.5, 450, 510, 512, 550, 551, 552, 558, 1174.5, 1182.12, 1194, 1197, 1197.1, 1198, 2753, 2802, 3700, 3700.5, 3712, and 3715, although Plaintiffs recognize that it would be difficult to prove underlying liability on a number of these statutory provisions for the reasons discussed above. Additionally, it is not entirely clear under California law whether it is permissible to “stack” PAGA penalties on top of underlying violations, as the California Supreme Court has yet to weigh in on the issue. Thus, it is possible that Plaintiffs would not have been able to obtain more than a single PAGA penalty per pay period, even if there had been multiple violations in that pay period. 6 Plaintiffs estimated the total number of pay periods for the California class by assuming that every class member drove every month between their first month and their last month with Uber for a total of approximately 1,253,954 months. Because Uber pays drivers weekly, that would equate to 5,392,002 pay periods. When each pay period is multiplied by $100 for every violation of Cal. Labor Code § 2802, the total is $530 million. Likewise, when each pay period is multiplied by $100 for every violation of Cal. Labor Code § 351, that yields an additional $530 million. Thus, for violations of just Cal. Labor Code §§ 2802 and 351 alone, the PAGA penalties could top $1 billion. However, this estimate is likely a large overestimate because all drivers certainly did not drive every week starting with their first week and ending with their last week.
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83. However, whatever the ultimate figure, if Plaintiffs were to prevail on the
misclassification issue and PAGA claims, it appears likely that the Court would
dramatically reduce the award pursuant to Cal. Lab. Code § 2699(e)(2), which permits
the court to reduce awarded PAGA penalties if, based on the facts and circumstances of
the particular case, to do otherwise would result in an award that is unjust, arbitrary and
oppressive, or confiscatory, and to comport with due process. See York v. Starbucks
Corp., 2012 WL 10890355, *10 (C.D. Cal. Nov. 1, 2012) (“PAGA's section 2699(e) (2)
provides the Court with the ability to fashion an appropriate penalty in this case that
will not offend notions of due process.”); see also Amaral v. Cintas Corp. No. 2, 163
Cal. App. 4th 1157, 1214 (2008) (holding that a PAGA penalty in the amount of one-
third of damages award was “proportional to [defendant’s] misconduct.”).
84. Uber would no doubt argue that these penalties should be dramatically reduced
pursuant to § 2699(e)(2) and to comport with due process. Given that PAGA penalties
would arise purely from Uber’s alleged misclassification of drivers, and given that Uber
may well establish that it had a good faith belief that its drivers were properly classified,
I believe there is a good chance that the Court would reduce PAGA penalties (as
occurred in Amaral) to an amount no greater than approximately one-third of the
damages, if that much. See Harris v. Radioshack Corp., 2010 3155645, at *3-4 (N.D.
Cal. Aug. 9, 2010) (Chen, J.) (granting motion for final settlement approval and finding
that although Plaintiffs “could arguably get more . . . because they [were] entitled to
penalties under the PAGA, it [was] not clear that they could get a significant amount”
more because of Section 2699(e)).
85. Moreover, most settlements provide only modest allocations for PAGA claims and
have not analyzed actual potential recoveries. Indeed, there is no requirement that a
PAGA allocation be proportional to the value of a PAGA claim, as many courts have
approved settlement agreements that provide for less than the one percent allocation to
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PAGA penalties made here (75 percent of which goes to the LWDA), notwithstanding
the potential value of the PAGA claim. Hopson v. Hanesbrands Inc., 2009 WL 928133,
*9 (N.D. Cal. Apr. 3, 2009) (approving total PAGA allocation that was .49% of
$408,420.32 gross settlement; Moore v. PetSmart, Inc., 2015 WL 5439000, *8 (N.D.
Cal. Aug. 4, 2015) (approving total PAGA allocation that was .5% of $10,000,000
gross settlement); Lusby v. Gamestop Inc., 297 F.R.D. 400, 407 (N.D. Cal. 2013)
(approving total PAGA allocation that was .67% of $750,000 gross settlement), final
approval granted, Lusby v. GameStop Inc., 2015 WL 1501095, *2 (N.D. Cal. Mar. 31,
2015). In fact, this Court conditionally granted final settlement approval under such
circumstances just last week. See Alexander v. Fedex Ground Package Sys., 2016 WL
1427358, *2 n.5 (N.D. Cal. Apr. 12, 2016) (conditionally approving PAGA allocation
that was 0.7% of $173 million net settlement amount).7
86. These exposure numbers assume that Uber would not be successful in proving that
drivers are properly classified as independent contractors at trial and would not be
successful in any of its numerous appeals before the Ninth Circuit on the arbitration
issue, thereby preserving the integrity of the class.
7 Indeed, a significant number of courts have approved PAGA allocations that are simply $10,000 or less, regardless of the settlement value of the case and regardless of the valuation (if any) of the PAGA claim. Chu v. Wells Fargo Investments, LLC, 2011 WL 672645, *1 (N.D. Cal. Feb. 16, 2011) (approving PAGA settlement payment of $7,500 to the LWDA out of $6.9 million common-fund settlement); Franco v. Ruiz Food Products, Inc., 2012 WL 5941801, *13 (E.D. Cal. Nov. 27, 2012) (approving PAGA settlement payment of $7,500 to the LWDA out of $2.5 million common-fund settlement); Schiller v. David's Bridal, Inc., 2012 WL 2117001, *14 (E.D. Cal. June 11, 2012) (approving PAGA settlement payment of $7,500 to the LWDA out of $518,245 common-fund settlement). If Plaintiffs were to consider the actual penalties that could be awarded under PAGA, this case would not be capable of being settled at all. It could not have been the intention of the California legislature for PAGA to be a weapon that makes settlements of highly contested litigation impossible.
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Benefits of the Settlement
87. The allocation formula distributes the settlement funds among drivers on a proportional
basis based on number of miles while On Trip, transporting a passenger in the car.
Drivers who are members of the certified class in O’Connor will receive double weight
for their mileage (relative to those drivers who were excluded from the class and
Massachusetts drivers), in recognition of the stronger claims of these drivers on the
reimbursement claim, as well as the much greater likelihood of these claims being
pursued, given that they had been included in a certified class. The formula also
awards double weight for the mileage of drivers who timely opted out of Uber’s 2013
and 2014 arbitration clause (in either California or Massachusetts) relative to those
drivers who did not opt out, reflecting their greater chance of remaining in the class in
this case, should the Court’s rulings holding Uber’s arbitration clauses invalid be
overturned on appeal.
88. Attached hereto as Exhibit 1 is a breakdown of my calculations of the approximate
expected net settlement distributions (after the subtraction of fees and expenses) for the
various categories of drivers discussed above in ¶ 87.
89. As shown in this exhibit, drivers who drove a substantial amount of miles will receive
significant payments. For example, class members in California who drove in the
highest category of miles (more than 25,000) may recover on average close to $2,000,
which would double to $4,000 if they opted out of the arbitration clause, and could
double again to $8,000 (assuming a 50% claim rate for the settlement). In contrast, the
settlement class members who drove a minimal number of miles will receive more
nominal payments.
90. Further, I believe the non-monetary relief in the settlement provides significant and
meaningful benefit to drivers. First, Uber’s agreement that it will make deactivation
decisions only for sufficient cause is both legally and practically significant. Under the
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settlement, this provision will preclude Uber from deactivating drivers for any reason at
all and will specifically eliminate deactivation for failing to accept a sufficient number
of ride requests while using the app. Additionally, Uber will now provide drivers with
notice and the right to cure many deactivations prior to permanent deactivation, will
provide greater transparency regarding the reasons for deactivations, and will create an
appeals process for many deactivations (not related to safety, fraud, customer ratings or
other limited reasons).
91. Legally, these modifications address one of Plaintiffs’ core arguments in this case – that
it is a company’s right to terminate at will, and not the actual exercise of that control,
which is “perhaps the strongest evidence” of an employer-employee relationship,
because “[t]he power of the principal to terminate the services of the agent gives him
the means of controlling the agent's activities.” Ayala v. Antelope Valley Newspapers,
Inc., 59 Cal. 4th 522, 531 (2014); see also O'Connor v. Uber Techs., Inc., 2015 WL
5138097, at *19-21 (N.D. Cal. Sept. 1, 2015) (noting that the majority of Uber’s
contracts “contain express language that provides Uber with a right to terminate any
and all drivers without cause” and that “a putative employer's right to discharge a hiree
at will, without cause, is perhaps the strongest evidence of the right to control”)
(emphasis in original).
92. Moreover, on a practical level, I believe these changes in the deactivation policy will be
meaningful for drivers who must confront these issues on a regular basis. Indeed,
scores of drivers have contacted my firm on a regular basis stating they are concerned
about being deactivated for numerous and wide-ranging reasons or without any
explanation at all. These changes will help alleviate this widespread problem in several
ways by providing drivers with: (1) at least two warnings and an opportunity to cure
many types of deficiencies prior to deactivation; (2) a written explanation of the reasons
for their deactivation; and (3) an appeals process for many types of deactivations,
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overseen by fellow drivers for those who believe they have been unjustly deactivated.
Creating more transparency while also restricting the reasons that Uber can deactivate
drivers will go a long way towards addressing this problem.
93. In addition, the creation of the Driver’s Association will allow drivers to continue to
work towards additional non-monetary programmatic relief for drivers in California
and Massachusetts by polling their fellow drivers to create an agenda for further change
and meeting regularly with Uber management to engage in good faith discussions to
address issues of concern to drivers. Drivers have regularly expressed to Plaintiffs’
counsel their desire to have more of a voice in the way Uber operates and have
expressed frustration at feeling the company is unaware of their needs. I believe the
Driver’s Association could go a long way towards addressing these issues as well.
94. The drivers will also have the benefit of challenging some of these issues in arbitration
at the company’s expense. As this Court has already held, Uber’s current agreements
require an even split of arbitration-related costs (except where required by law). See
Mohamed v. Uber Techs., Inc., 109 F. Supp. 3d 1185, 1209 (N.D. Cal. 2015). Thus,
even in a misclassification case where drivers allege they are employees and should be
subject to the Employment Rules, Uber can (and has) readily argue that the
Commercial Rules would apply.
95. The Commercial Rules require claimants to pay substantial initial and final fees (a
minimum of $1,550 depending on the value of the case) and requires the parties to split
all other costs of arbitration, including arbitrator fees. In other cases I have litigated in
which workers have challenged their misclassification as independent contractors, but
in which the workers have been compelled to pursue individual arbitration under the
AAA Commercial Rules, the arbitration service has made an initial determination that
the claimants would be required to split the arbitration fees. For example, in McKean
v. Caviar, Inc., JAMS No. 1100082951, the claimant brought a misclassification claim
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in arbitration, since a plaintiff in a related case against this company was compelled to
individual arbitration under the AAA Commercial Rules. In this case, the office of the
arbitrator indicated that the Employment Rules (under which the respondent would pay
the bulk of the fees) did “not apply because of the independent contractor relationship.”
See Exhibit 2, attached hereto. While I protested this determination, and the respondent
agreed in that case to pay the arbitration fees, it is not certain that the claimant would
not have been required to pay the fees if the respondent had not agreed to pay them.
Similarly, in Ribeiro v. System4, LLC, AAA No. 01 15 0003 8637 (another case in
which a plaintiff in a related case against the same company had been compelled to
individual arbitration under the AAA Commercial Rules), the AAA made an
administrative determination that, because the AAA Commercial Rules applied, the
arbitration fees would need to be split between the parties. See Exhibits 3 and 4,
attached hereto. I protested this determination and persuaded the arbitrator to make a
threshold ruling on who would pay the fees (or whether they would be split). Id.
However, because the agreement stated that the AAA Commercial Rules would apply,
my client was still billed for his share of the $7,500 cost of even obtaining this
preliminary determination. See Exhibit 5, attached hereto. It required significant
briefing on this issue for me to obtain a ruling from the arbitrator that my client would
not have to split arbitration fees. However, this result was not assured and could well
have gone the other way.
96. In short, it has been my experience that, even when a claimant is challenging what he or
she alleges to be misclassification as an independent contractor, when an arbitration
provision provides that the AAA Commercial Rules will apply, there is a real risk that
the claimant may be required to split arbitration fees. As a practical matter, this
deterrent would essentially eliminate the possibility of recovery for all but the most
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motivated Drivers. Uber’s agreeing to pay for drivers’ arbitration costs in cases based
on alleged misclassification is an important concession that will benefit drivers.
97. Finally, I believe the portion of the settlement regarding Uber’s tipping policy will have
a substantial and real effect on drivers’ livelihoods. Under the agreement, Uber has
agreed to make good faith efforts to clarify its messaging regarding tipping, clarifying
on its website and in communications with drivers and riders that tips are not included
on Uber's platforms (with the exception of UberTAXI) and that tipping is neither
expected nor required. Moreover, Uber has confirmed that its policies do not prohibit a
driver from putting up signs or requesting a tip. And under this agreement, Uber will
not have the ability to deactivate drivers at will in California and Massachusetts. Thus,
there would be no prohibition on drivers posting in their cars a small sign stating that
“tips are not included, they are not expected, but they would be appreciated.”8 I
believe that, with this information, many riders will begin tipping their drivers, which
will increase drivers’ pay substantially.
98. In light of the risks posed by this case, as well as the anticipated delay in payment even
if Plaintiffs were to prevail (because of Uber’s stated intention to aggressively appeal
any adverse rulings), and considering as well the significant non-monetary components
of this settlement, I believe this settlement is a fair, reasonable, and adequate resolution
of the claims brought in this case.
99. Attached hereto as Exhibit 6 is a true and correct copy of the parties’ Settlement
Agreement.
8 If some passengers are unhappy with the signs (or their interactions with drivers regarding tips) and that leads to poor ratings, then given that low ratings are still a basis for deactivation, drivers may still suffer potential repercussions for having such signs in their cars. But, under this agreement, there would be nothing directly prohibiting drivers from having such signs.
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100. Attached hereto as Exhibit 7 is a true and correct copy of the parties’ Short Form
Notice to be sent to the Settlement Class.
101. Attached hereto as Exhibit 8 is a true and correct copy of the parties’ Long Form
Notice to be sent to the Settlement Class.
102. Attached hereto as Exhibit 9 is a true and correct copy of the draft Claim form (both
online and in paper form).
I declare under penalty of perjury under the laws of the United States of America that
the foregoing is true and correct.
Executed on April 21 2016, in Boston, Massachusetts.
By: __/s/ Shannon Liss-Riordan_____ Shannon Liss-Riordan
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