US Judge Gives Uber Drivers Class Action Status
A U.S. judge said on Tuesday Uber drivers are entitled to class action status in litigation over whether they are independent contractors or employees, part of a case that could have wide implications for the sharing economy.
Three drivers sued Uber in a federal court in San Francisco, contending they are employees and entitled to reimbursement for expenses, including gas and vehicle maintenance. The drivers currently pay those costs themselves.
[Update 12-9-2015: Judge Chen ruled that drivers that did not opt out of the arbitration clause will be included into this class action lawsuit. The previous ruling establishing the class excluded drivers who did not opt out of the arbitration clause. The class will be expanded by some estimates to 160,000 drivers to all X, Uberblack and UberSUV drivers who were not driving under a corporation who were signed up after August 2009.
In addition, drivers in the class action lawsuit would be able to sue for expenses, such as the standard mileage rate (57.5 cents per mile for 2015) and cell phone expenses.
Here is the text of the subclass that was certified on Dec 9, 2015:
All UberBlack, UberX, and UberSUV drivers who have driven for Uber in the state of California at any time since August 16, 2009, and meets all of the following requirements: (1) who signed up to drive directly with uber or an Uber subsidiary under their individual name, and (2) are/were paid by Uber or an Uber subsidiary directly and in their individual name, and (3) electronically accept any contract with Uber or one of Uber’s subsidiaries which contain the notice and opt-out provisions previously ordered by this court, and did not timely opt out of that contract’s arbitration agreement.
See this article for more details: http://www.reuters.com/article/us-uber-tech-drivers-ruling-idUSKBN0TS2MA20151209]
(Reporting by Dan Levine) via US Judge Gives Uber Drivers Class Action Status
What do you think about this judgement?
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My Thoughts
We saw in a separate small lawsuit in California a few months ago where a woman was classified as an employee of Uber and received some compensation based on employee status. Because it was not a class action lawsuit, the verdict was only binding to that one driver and neither the classification or damages applied to any other drivers. The lawsuit was important in that it was the first lawsuit in the sharing economy to name a contractor an employee. A previous settlement between Fedex and its drivers was similar in that the drivers were suing for employee status, rather than contractor status which would entitle them to certain benefits like worker’s compensation, health insurance and many other state and federally mandated benefits.
The original lawsuit started from four drivers. If the lawsuit was denied class action status, the lawsuit judgement or outcome would only apply to these three drivers. The cost of this lawsuit would be split between these drivers and the potential payout would be small relative to the legal cost. However, now that it has class actions status, here are a few differences:
- The potential damages for this lawsuit is much greater
- Any driver can be part of the class action lawsuit so you can get damages (depending on the settlement)
So far, as this lawsuit takes place in California, it only applies to Uber drivers in California, which according to MarketWatch is about 160,000 drivers. They also report that it applies to UberBlack, SUV and XL drivers. There is a similar lawsuit in Massachusetts that is also trying to get class action status. There is a separate lawsuit against Lyft that will have a decision on class action status in December.
Here are some advantages and disadvantages of class action lawsuits (from injuryclaimcoach.com)
Advantages of Class Actions
- You don’t have to go out and find an attorney who will take your case.
- No matter how little you were harmed you get to be a member of the same lawsuit.
- You don’t have to pay any legal fees or the costs of preparing the case in advance.
- Unless you are a named plaintiff, you won’t have to take time off from work to participate in pre-trial discovery like depositions, interrogatories, etc.
- You won’t have to testify.
- You get to join forces against a big corporation you couldn’t otherwise go after by yourself.
- You receive a proportionate share of the settlement or jury verdict.
Disadvantages of Class Actions
- You give up your right to sue the defendant individually.
- You have no input into how your case is handled.
- Although you are an equal member of the class, you won’t participate in the trial itself.
- You probably won’t have any access to the attorneys representing the class.
- You are bound by the jury’s decision or the final settlement amount.
- You give up your individual right to appeal the case if the attorney loses.
What about arbitration?
According to Wikipedia, arbitration is “a form of alternative dispute resolution (ADR), is a technique for the resolution of disputes outside the courts. The parties to a dispute refer it to arbitration by one or more persons (the “arbitrators”, “arbiters” or “arbitral tribunal“), and agree to be bound by the arbitration decision (the “award“). A third party reviews the evidence in the case and imposes a decision that is legally binding on both sides and enforceable in the courts.” If drivers were to choose this route, they would file a complaint and then it would be resolved outside of court and with a neutral third party to decide on the case.
Surprising thing was that there was an arbitration clause that many drivers were forced to agree to. You probably didn’t even know about an arbitration agreement. There was one and the funny thing is that Uber’s lawyer really screwed up in drafting up the arbitration agreement with drivers. They screwed up not only once but twice, once in 2013 and again in 2014. I sent the agreement to a friend who was a lawyer and he quipped that Uber really messed this up. I didn’t even notice that there was a way to opt out of forced arbitration in the original Uber contract when I signed up in 2013. However, another judge in California ruled that Uber couldn’t enforce its own arbitration agreement, mainly because it was so hard for drivers to actually opt out.
http://www.latimes.com/business/technology/la-fi-tn-uber-arbitration-20150610-story.html
They did send out a notice in 2014 as a “Raiser Software Sublicense Agreement June 20 2014” but what it was trying to do was getting drivers to accept it, thus forcing every active driver to be forced into arbitration and to automatically exclude them from class action status. Here is a copy of it:
Rasier Software Sublicense Agreement June 21 2014
Luckily a judge ruled that it was “both procedurally and substantively unconscionable” and therefore “unenforceable.” Uber is appealing the ruling but their chances don’t look that good on that front. The 2013 required drivers to either hand deliver a letter to their SF HQ or to send it via traceable mail, which would be prohibitively difficult. The 2014 version was a bit easier for drivers to opt out as they added an email option. It is surprisingly that the judge found even the 2014 version difficult procedurally, but I believe that the 2014 version was more about how they went about getting drivers to accept it rather than the procedure of opting out. The 2013 version had the opt-out “instruction” (I use this term loosely as it wasn’t clear in the 2013 version that you could opt out) on the last page of the 14 page agreement, whereas in the 2014 agreement, it was on page 11 and it spans multiple pages.
If you read through the agreement from 2014, you see that Uber wrote in many areas saying that if they agreed to this agreement, it would exclude them from any class action lawsuits. This was deliberate and what it really was doing was forcing every driver to opt out of the class action lawsuit. Hopefully the judge ruling holds in that Uber can’t enforce the arbitration agreement. There were many people asking on various forums about this new agreement and I told everyone to opt out and made sure people knew about it. Many people didn’t really understand the agreement and just accepted it.
I’ll continue to update this post once there is more information about the type of class that was part of the decision and any other information surrounding this case as it has wide and very expensive implications across not just Uber but any other sharing economy companies. We saw HomeJoy bite the dust last month with the employee-contractor status bubbling up a hurdle in financing for that company. Instacart also converted all of their in-store shoppers to employees. We will continue to see the shift in the next 6-12 months with many of these other sharing economy companies.
Uber’s Formal Response:
Here is what they published yesterday about the ruling. After reading through the court documents, this is an accurate synopsis of the class action status:
Today, the Court declined to certify this very broad class of people, instead opting for a much smaller group — so small in fact that it even excludes one of the original plaintiffs. While this is just one step in legal proceedings that may well play out over several years, we wanted to share some details about today’s ruling:
- Only a few hundred drivers who are actively driving with Uber today can now be part of this case. This is because the ruling found that only drivers who either stopped driving before June 2014 or drove after June 2014 but chose to opt out of the arbitration option in their agreements, are eligible. Most of the growth in driver numbers has happened since then — not just in California but across the United States and the rest of the world.
- Before June 2014, our business in California was mostly UberBLACK, primarily drivers who work for limo companies: they cannot be part of the case. This is because the Court has ruled that those drivers never had a contract directly with Uber. In fact, one of the three plaintiffs — Thomas Colopy — has only worked for limo companies and so can no longer be included in the case.
- Individuals who registered with Uber as a corporation also cannot participate in the class. That means people like Barbara Berwick, who sought reimbursements from the California Labor Commissioner, would not qualify.
So the class moving forward will be significantly less than 160,000. Indeed our early estimates show that the potential class is fewer than 15,000 drivers — that’s less than 10 percent of the total. And there is a chance that this number will fall further depending on the outcome of the appeal in another case — Gillette v. Uber Technologies, Inc.
You can read more about it from their post:
http://newsroom.uber.com/2015/09/oconnorfacts/
Full transcript of court ruling:
Here is a full copy of the judgement from Judge Chen (from MercuryNews.com)
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