Judge Rules Uber Drivers Can Seek Expense Reimbursement; Uber to Appeal

By | December 10, 2015

Uber Technologies Inc. drivers seeking to be treated as employees won a ruling that could add tens of thousands of them to the case and put hundreds of millions dollars more at stake.

The drivers can now seek expense reimbursement, in addition to their claims for tips that are already part of the case headed for trial next year. U.S. District Judge Edward Chen in San Francisco also permitted potentially tens of thousands of drivers who had previously been excluded from the class action to join.

“A lot rides on this case,” Catherine Fisk, a law professor at the University of California at Irvine, said before Wednesday’s ruling. “Uber’s business model rests on outsourcing to its employees the fixed costs of running a huge fleet of cars for hire.” While reimbursing any individual driver for her expenses is small, “in the aggregate it appears to be a substantial amount of money,” she said.

Uber said it will appeal the ruling immediately.

“Nearly 90 percent of drivers say the main reason they use Uber is because they love being their own boss,” the company said in a statement. “Drivers use Uber on their own terms; they control their use of the app along with where and when they drive. As employees, drivers would lose the personal flexibility they value most — they would have set shifts, earn a fixed hourly wage, and be unable to use other ridesharing apps.”

Independent Contractors

Chen allowed the drivers in September to press their claims as a group, seeking tips allegedly denied them as independent contractors. At the same time, the judge limited the size of the group to what Uber said is less than 10 percent of its 160,000 drivers in California.

Thursday’s ruling may add tens of thousands of drivers hired since 2014 who were excluded because their contracts required them to resolve disputes through arbitration. The company has said most of its drivers were hired in the last two years.

“This order will probably increase the size of the plaintiff class many times over, to include the large majority of Uber drivers in California,” Charlotte Garden, an associate professor at Seattle University School of Law, said in an e- mail.

Uber was leaning on a court ruling from August in the fast- changing area of arbitration law to urge Chen to keep the class capped at fewer than 15,000 drivers. It has appealed a previous ruling which Wednesday’s decision rests on.

Legal experts have said if drivers who have been denied mileage reimbursement by the company can seek as much as 57 1/2 cents a mile going back to 2009, Uber’s potential exposure would increase sharply, possibly by hundreds of millions of dollars. They’ve also said that a ruling that adds many more drivers is an even bigger liability for Uber because a victory for the drivers at trial threatens to upend the ride share company’s business model and cut into its more than $50 billion valuation.

The case is O’Connor v. Uber Technologies Inc., 13- cv-03826, U.S. District Court, Northern District of California (San Francisco).

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