Did Uber Driver Settlement Lawyer Win at Expense of Drivers?

By Rebecca Spalding | May 16, 2016

The lawyer who struck a $100 million deal with Uber Technologies Inc. is being accused of greed by some of the drivers covered by the accord who want her bumped.

“She has single-handedly stuck a knife in the back of every Uber driver in the country,” Hunter Shkolnik, a New York lawyer who’s pursuing his own cases against the ride-share service, said Friday in a phone interview. “The entire class was thrown under the bus and backed over.”

Shkolnik asked the San Francisco federal judge who’s weighing approval of the class-action settlement to remove Shannon Liss-Riordan as lead attorney, saying she sold out her clients by accepting a payout for California and Massachusetts drivers that’s less than 10 percent of the value of their claims “while she walks away with $25 million.”

Liss-Riordan said she did the best she could in a hard-fought and risky case to get a fair settlement for the drivers, which she said by some measurements amounts to almost a third of the damages they could have won if the case had gone to trial.

‘Second Guess’

“It is easy for others to come in and second guess, but cases are settled all the time, and it is the lawyer’s duty to assess and balance the risks and make recommendations,” she said in an e-mailed statement.

She said criticisms from other lawyers about the settlement are “uninformed and their actions in circulating untrue and malicious allegations about me is crossing the line.”

One legal scholar who’s followed the case said it’s a close call whether the settlement will win court approval.

“The plaintiffs would have faced a lot of risks in going forward, and so the decision to settle at all strikes me as a reasonable one,” Charlotte Garden, an associate professor at Seattle University School of Law, said in an e-mail. “But whether the plaintiffs should have held out for a higher number, I can’t really say.”

She also said the effort to remove Liss-Riordan as lead attorney will probably fail. The judge spoke positively of the attorney’s work on the case and it would be “hugely disruptive” to take her off it at this point, Garden said.

June 2 Hearing

U.S. District Judge Edward Chen, who has set a June 2 hearing on preliminary approval for the deal, on Friday ordered lawyers to provide more details of the settlement, including a breakdown of the hours worked by Liss-Riordan and her firm. The judge questioned provisions of the deal, including whether signs saying drivers accept tips could lead to lower customer ratings and, as a result, deactivation by Uber.

More than 20 settlement objections have been submitted to Chen.

“I’m just a guy, who gives many passengers a ride, and sure feels like we’re being taken for one,” Craig Preston, a driver for Uber, wrote in his objection, saying more of the settlement should go to drivers instead of lawyers.

Prominent California trial lawyers Mark Geragos and Brian Kabateck called for Liss-Riordan’s ouster as class counsel in a court filing this week. They said the Boston-based attorney also negotiated a “sweetheart deal” for Lyft Inc. on behalf of its California drivers that was rejected by a federal judge as too small. Liss-Riordan and Lyft came back with a new proposal Wednesday that more than doubles the initial offer to drivers to $27 million.

Liss-Riordan said that it was other lawyers’ greed, not her own, which prompted the attacks.

‘Food Fight’

“If this settlement is approved, the next stage of the case will be the food fight of all the lawyers coming in trying to take a piece of this fee for this case that I litigated,” she said in an e-mail. “I expect the lawyers making these objections are going to be first in line trying to get a piece of it.”

While Shkolnik said he knew of at least 500 drivers who plan to opt out of the settlement, Liss-Riordan said more than 2,000 drivers had contacted her firm, many to thank her. She said less than 100 of the drivers she heard from were angry.

Matt Kallman, a spokesman for Uber, declined to comment on the criticisms of the settlement. Uber Chief Executive Officer Travis Kalanick said when the accord was announced that allowing the drivers to remain as independent contractors is important because they “value their independence — the freedom to push a button rather than punch a clock.”

With a valuation of $62.5 billion, Uber is the biggest firm in the sharing economy, where a fight has been brewing over how companies classify workers. The settlement could guide other companies in the sharing economy trying to address labor unrest.

Victory for Uber

Some drivers and analysts have said the settlement amounts to a victory for Uber because it leaves the drivers as contractors, a status that typically qualifies for far fewer workplace benefits and protections.

Liss-Riordan has hailed accord as “extremely significant,” saying it will deter companies from misclassifying workers. She’s also said there was a serious risk that she would lose if the case went to trial, and that Uber would appeal even if she won.

The most the drivers could expect to recover in a trial victory is $852 million, which includes claims for tips, mileage and other expenses, while a more realistic verdict would be hundreds of millions of dollars less, Liss-Riordan said in a filing this week.

$84 Million

Under the proposed agreement, which covers about 385,000 drivers, Uber will initially pay $84 million, with another $16 million contingent on the ride-share service going public and its valuation continuing to grow. A quarter of the payout is designated for attorney fees.

Payments to drivers will be made on a sliding scale proportionate to the miles they’ve driven. Those who have logged at least 25,000 miles for Uber may receive individual payments of more than $8,000, significantly more than those who have driven fewer miles.

The settlement also allows drivers to post signs in their cars saying that tips are not included in the passenger fare and would be appreciated, though they aren’t required. Drivers alleged in the suit that Uber led customers to believe that gratuities were part of the fare.

The accord prohibits Uber from firing drivers without a reason, sets up a two-step process for terminated drivers to appeal their dismissals through peer review and arbitration and recognizes a drivers’ association.

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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