Uber Technologies Inc., accused of cheating thousands of drivers on their pay, would have paid some of them just a penny to drop a class-action lawsuit — until a judge read the fine print in the settlement.
U.S. District Judge William Alsup in San Francisco told lawyers who negotiated the deal in May that it was “dangerously inadequate,” saying it’s “not reasonable” to present more than a quarter of the class members with a check amounting to less than the cost of mailing the check. He said one option was to tell those drivers with “minuscule claims” that they’re being excluded from the settlement.
But Uber ultimately did something more gracious: It agreed to pay those 1,300 drivers a minimum of $20 — increasing the value of the accord by $50,000 to $395,000 — even though the final payout now exceeds the worst-case scenario the company had envisioned if it had taken the case to trial and lost.
In a 2017 complaint, driver Martin Dulberg accused the ride-hailing giant of breach of contract. He alleged that, while Uber estimated costs to passengers by calculating time and distance amounts before the ride, the company was compensating drivers based on the actual distance they drove — and pocketing any difference for itself. As Alsup noted, Uber showed that most drivers actually made more money from this arrangement.
Alsup gave the new deal a tepid blessing on Monday, saying it’s “still a low-end recovery for the class.”
“It might be better for the average class member to roll the dice and see if they could hit big with a jury rather than accept a mere twenty or so dollars,” he wrote in an order granting preliminary approval to the settlement.
The judge demanded one more change: The class members must be notified of the settlement by first-class mail, not by email.
Uber didn’t immediately respond to a request for comment.