Uber drivers could be forced to arbitration if revised settlement can't be reached, lawyer says

19 August 2016. By Amy Miller.

Uber Technologies and drivers could reach a revised agreement after a federal judge rejected the company’s $84 million settlement with drivers, an attorney for the drivers said.

But if the parties don’t come up with a new deal, the class size could be dramatically reduced and most drivers would have to resolve their claims over their employment status in private arbitration, plaintiffs’ attorney Shannon Liss-Riordan said.

“I am disappointed the judge did not approve the settlement, but I understand and I have heard him,” Liss-Riordan said.

On Thursday, US District Judge Edward Chen denied a motion for preliminary approval of the deal, which covers about 400,000 drivers, saying it isn’t adequate or reasonable.

The proposal for settlement of claims under California’s Private Attorney General Act adds up to a fraction of the potential verdict value, Chen said. PAGA lets private citizens pursue civil penalties on behalf of the state of California. The parties had been seeking to settle the PAGA claim for $1 million despite having told Chen that the claim could result in penalties of more than $1 billion, more than half of the total verdict value of the case, Chen said.

It’s routine in California wage and hour litigation for PAGA claims to be settled for a fraction of their theoretical value, Liss-Riordan said. The parties could reach a revised agreement to address Chen’s concerns, she said.

“In light of this order, we will have to see what happens next,” she said.

But if revising the agreement isn’t possible, Liss-Riordan said she would “take the case to trial and fight my hardest for the Uber drivers.”

An impasse on a revised agreement would also make it “very likely” that the scope of this case would be reduced from about 400,000 drivers to about 8,000 drivers because of Uber’s arbitration clause, Liss-Riordan said. Chen also agreed to terminate his orders making Uber’s most recent version of its arbitration agreement with drivers unenforceable until the company issued a new opt-out notice, which Uber has not done.

Drivers who didn’t opt out of Uber’s arbitration clause would need to bring individual claims in arbitration, which many are already doing, she said.

“We are prepared to start bringing these claims individually, and more than 1,000 drivers in California have already signed up with us to bring individual claims in arbitration,” Liss-Riordan said.