SAN FRANCISCO — As the popular ride-sharing giant Uber is at the forefront of controversy, the firm also finds itself upping its settlement in a class-action lawsuit that claims that its customers were misled about so-called safe rides fees and the screening process for drivers, among other alleged improprieties documented in a suit filed with a California federal court.
Initially, Uber had offered to settle the case for $28.5 million in McKnight et al. v. Uber Technologies Inc. et al. However, Judge Jon Tigar of the U.S. District Court for the Northern District of California, denied the settlement during proceedings in 2016. The deal to settle was then brought back to the table after it was agreed that Uber will put up $32.5 million as injunctive relief.
Counsels for the plaintiffs and defendants did not respond to requests to comment by press time.
Ian Adams, a senior fellow at the Washington, D.C.-based R Street Institute, told the Northern California Record that the judge drove the cost of the settlement higher.
“This is another instance in which a court has seen fit to drive the cost of settlement upward to satisfy its sense of justice against the wishes of the plaintiffs,” Adams said. “While the court has an obligation to ensure that members of a class are adequately represented and is likely correct in its analysis of the previous settlement's problematic distribution, the adequacy of the sum of the settlement, when not clearly deficient, is better left to the parties in interest. A mere 14 percent increase simply does not amount to a significant enough deviation from reasonability to warrant intervention. Hopefully, this time around, Judge Tigar will approve the settlement.”
The initial denial of the original settlement amount came because Uber overlooked the fact that a large portion of the initial class in the class-action suit didn’t pay the safe rides fee. Originally, the suit was filed by two customers and then consolidated with several other complainants, arguing that the company misrepresented the safe rides fee. The consolidation took place in 2016.
The safe rides fee was set at $1 in 2015 to help fund drivers’ background checks that the company presented as “industry leading.” However, the fees then were set based on the location of the driver. For the consumers of the class-action suit, the plaintiffs asserted that Uber violated various state consumer protection laws.
Particularly, the California Consumers Legal Remedies Act, the Illinois Consumer Fraud Act and was in violation of an implied contract upon service under the statutes of California, Illinois and Massachusetts. There are also allegations of false advertising and unfair and unlawful business processes and practices.
Now, the class action has been expanded to cover all other users of Uber’s mobile app and drive services. If the settlement amount is approved, all Uber customers who used the service from Jan. 1st, 2013 to Jan. 31, 2016 will be entitled to $0.25 for the first ride that includes the payment of a safe rides fee and $0.05 for every other ride that includes similar fees.
Pam Villarreal, a senior fellow at the National Center for Policy Analysis and a palpable voice on ride sharing and the public policy of the sharing economy, told the Northern California Record that the entire class-action suit is nothing but a frivolous lawsuit.
“I think not only that the lawsuit is not only frivolous, but the [settlement] seems like an excessive amount for an award,” she said. “And, probably, two-thirds of it is going to go to the attorneys.”
Villarreal said the lawsuit needs be an example to fix the courts with reforms. She argued that potential damage caps could be put in place and rules governing the legal counsel in the class actions should also be created.
“There needs to be some kind of court and lawsuit reforms,” she said. But, she did argue that such reforms are unlikely in California jurisdictions.
Aside from the nature of this lawsuit, Uber has been the recipient of several controversial matters in the past several months. Specifically, the latest “embarrassment” for the firm was when a member of the corporate board allegedly made a sexist remark at an event on sexual harassment put on by the company.
Uber’s CEO, Travis Kalanick, also stepped aside from his position for an indefinite amount of time, which came months after a row with a former staff engineer named Susan Fowler who alleged that the company didn’t have proper procedures in place to address claims of sexual harassment that she and her other female colleagues allegedly experienced.
The row resulted in the hiring of Eric Holder, former U.S. attorney general, to conduct an audit of Uber’s corporate culture.
Uber has also been on the receiving end of several other class-action suits and lawsuits in a stream of legal trouble coming from alleged labor violations, safety concerns and other allegations.