$3 million agreement gets a flat because of nonclass payment and conditional terms


For a company whose name is infused with overtones of exultant triumph – think “Deutschland Über Alles,” “Übermensch” – it has seemed more like the underdog for the past year or so, especially in the legal arena.

Settlements with the Federal Trade Commission over massive data breaches and misleading pay claims, the ouster or resignation of its CEO and other management leaders over failed security policies and allegations of sexual harassment coverups, lawsuits over stolen technology and defrauded passengers, an “F” rating from the Better Business Bureau – it’s been a rough year.

But after all this constant drama, there was a small share of good news in January 2018. Or there seemed to be.

All Done, Nothing to See Here …

Uber reached a proposed settlement agreement with a class of drivers, led by Joce Martinez, who accused the company of saddling its drivers with fees that unfairly included taxes and other fees.

The plaintiffs also charged Uber with false advertising: “UBER’s marketing materials and advertisements to drivers [that] induce them to work for UBER,” alleged the class complaint, “are materially misleading in that UBER offers guaranteed compensation without disclosing the actual conditions imposed.” The complaint specifically cited an advertisement that stated, “Drive & Make $5,000 – Guaranteed, during your first month.”

The fee dispute was killed off by the court back in March 2017, and Martinez’s individual claims had been thrown out, but the false advertising claim remained. Uber later publicly admitted that it had, in fact, underpaid the New York drivers, and laid out $80 million to tens of thousands of drivers in an effort to address the mistake. Following this revelation, the plaintiffs spent the summer working to win another day in court for their original wage claims.

The Takeaway

Before that could happen, Uber tried to put sand in the claim’s tank by attempting to settle with the drivers, including Martinez, in early January. The proposed settlement, in which Uber admitted no wrongdoing, would cost the company a cool $3 million. But at least the agreement would put an end to one of the company’s ongoing legal conflicts – a badly needed pit stop in the midst of all its other challenges.

But it was not to be. The proposed settlement ran out of gas shortly after the agreement was announced. (We promise – this is the last ham-handed car metaphor in this story.)

First, a group of Los Angeles drivers who were pursuing a parallel litigation attacked the settlement for improperly shutting down a number of viable claims.

Then the Eastern District of New York, where the original complaint was filed in 2015, nixed the agreement. The court objected to a small individual settlement promised to Martinez, which it deemed improper – Martinez was no longer in the class and couldn’t claim funds that were to be set aside for the remaining members. The complaint also rejected a settlement provision that would revive the breach-of-contract claims that had been dismissed if the settlement was approved in the end.