Law360: Class-Action Settlement

NY Uber Drivers’ $3M Deal In Fare Cut Spat Gets Early OK

Law360 (May 4, 2018, 4:24 PM EDT) — A New York federal judge on Friday greenlighted a $3 million settlement in a putative class action alleging Uber miscalculated taxes and deductions from drivers’ fares or falsely promised that they would earn a guaranteed income, saying the deal is substantive enough and procedurally fair.

Despite objections from other drivers who’ve separately sued Uber Technologies Inc. over fare deductions, U.S. District Judge Nicholas G. Garaufis granted preliminary approval to the $3 million deal settling breach of contract and false advertising claims in driver Jose Ortega’s putative class action against the ride-hailing giant.

“The court is satisfied that both the substantive terms and procedural fairness of the agreement merit preliminary approval,” the judge said in the order.

Terms of the deal that Judge Garaufis approved Friday remained largely unchanged from the first proposed settlement in January, aside from a few adjustments.

Judge Garaufis initially rejected the January deal as unacceptable because it included certain conditions, including a “conditional” stipulation to file a second amended complaint reinstating breach of contract claims so long as the court gave final approval on the settlement and making payments to nonclass member Joce Martinez, a driver who was once a named plaintiff in the suit but whose claims were forced into arbitration.

The deal now gets the go-ahead because the parties have stipulated to grant Ortega “unconditional” leave to file the second amended complaint. The judge also provisionally certified the proposed class for settlement purposes. It will cover “all individuals who have provided transportation services arranged using the Uber app within the state of New York at any time between Dec. 29, 2009, and the date of the court’s preliminary approval order, and purported to opt-out of arbitration, or whose most recent agreement with defendants and/or the released parties otherwise does not contain an arbitration provision, as determined by defendants’ records.”

The settlement class does not include individuals who exclusively provided transportation services arranged using Uber’s “uberTAXI” product, according to the order.

Judge Garaufis also batted away objections raised by a separate group of drivers led by Bigu Haider, who filed a separate action against Uber and claimed that the amended deal in this case undervalued the strength of their claimsand proposed an inadequate form of notice for class members.

“The Haider plaintiffs have objected to the proposed settlement on the grounds that the particular exclusion of their claims suggests that plaintiff and defendants may have colluded to undercut the claims in Haider,” Judge Garaufis said. “The Haider plaintiffs fail to provide any evidence of this theory, however, speculating solely based on the timing and their own exclusion from negotiations. These ungrounded suspicions of impropriety are insufficient to undercut certification at this stage.”

The judge also approved the plan to notify class members of the deal mostly through email, with a follow-up notice by U.S. mail for all class members whose emails are returned as undeliverable. But the judge directed the parties to establish a website as well.

“In order to allay lingering concerns about whether the email addresses used by the special master are current, or any general concerns about notice by email, plaintiff and Uber shall create a website containing searchable text of the class notice, copies of relevant documents in this lawsuit, and prominently displayed contact information, including a phone number or an email address for class counsel,” the judge said.

Approval of the deal comes a year after Uber in May 2017 admitted to underpaying New York City drivers by deducting inflated service fees from their fares in a manner inconsistent with the drivers’ terms of service. City drivers were being charged a service fee on gross fares, including taxes and other fees, while the driver contract required the fee to be calculated on net fares, the company said.

Drivers in the litigation claimed that Uber’s fees charged drivers “a proportion of the taxes and ancillary fees that should be paid by the riders.”

An attorney for the objecting Haider plaintiffs, Jeanne E. Mirer of Mirer Mazzocchi Schalet & Julien PLLC, said Friday they’ll keep opposing the deal.

“The Haider plaintiffs have never wavered in their position that this is an inadequate settlement for these claims,” she said. “We plan to continue our objection to the settlement.”

Representatives and attorneys for Uber and attorneys for the putative class did not respond to requests for comment Friday.

The class is represented by Jonathan Wolfe Greenbaum of Coburn & Greenbaum PLLC and Philip M. Hines and Scott Richman of Held & Hines LLP.

Uber is represented by Andrew M. Spurchise, Maayan Deker, Kevin Robert Vozzo and David M. Wirtz of Littler Mendelson PC.

The objecting Haider plaintiffs are represented by Ria Julien and Jeanne Ellen Mirer of Mirer Mazzocchi Schalet & Julien PLLC and Zubin Daniel Soleimany of the New York Taxi Workers Alliance.

The case is Ortega et al. v. Uber Technologies Inc. et al., case number 1:15-cv-07387, in U.S. District Court for the Eastern District of New York.

–Additional reporting by Hayley Fowler, Amy Lee Rosen and Braden Campbell. Editing by Alyssa Miller.