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Uber Wars: Was the Settlement Too Little or Just Right?

By Jonathan R. Tung, Esq. on June 01, 2016 | Last updated on March 21, 2019

A few weeks have passed since plaintiffs' attorney Shannon Liss-Riordan negotiated a controversial $100 million on behalf of Uber drivers who sought backpay, benefits, and other damages over their supposed "misclassification" by the company.

The settlement has yet to be approved, but many plaintiffs are angered by the settlement, including the suit's lead plaintiff.

Drivers v. Uber: A New Hope

There seemed to be an unstoppable momentum in favor of drivers for both Lyft and Uber as well as many persons who alleged "misclassification" by many Bay Area Silicon Valley companies last year. The savior for many seemingly disaffected employees "misclassified" as independent contractors was Shannon Liss-Riordan, a plaintiffs' employment attorney who'd built her reputation representing skycaps, waiters, and strippers. The tsunami that was Ms. Liss-Riordan seemed to be crashing down on the "sharing economy."

But somehow, it started to crack at the seems. When Lyft settled, the legal momentum began to shift. Motion practice was starting to wear people out in the Uber case and issues no longer seemed quite so clear cut in favor of the plaintiffs. A settlement was negotiated and a trial was diverted. Almost everyone thinks that Uber got lucky.

The Lawyer Strikes Back

Many plaintiffs were not happy with the fact that Uber settled and have even accused Liss-Riordan of throwing Uber drivers under the bus, if the expression can be forgiven. Ms. Riordan has not taken the criticism lying down and has argued that the settlement was the correct move taking into consideration all the circumstances of the case, the short timeline and the chances that plaintiffs could end up with nothing at all.

We sympathize with her to the extent that it is often difficult to communicate to plaintiffs the sheer magnitude of risk of not winning in court. Many plaintiffs see a settlement offer as a guaranteed floor that will remain even after a loss in court.

Return of the Lawsuit?

Now this is a doozy. Some opinions hold that since the case never saw the inside of a courtroom, the case is still alive for purposes of potential future suit since nothing was adjudicated "on the merits" for purposes of the much maligned preclusion doctrines.

But "on the merits" is still an issue that's hotly contested in and out of the courtroom. A commonly accepted opinion also regards settlements as contracts which can be both very broad or very narrow as to the stipulated issues. If some future Uber driver wishes to sue and bring a class, all he'll need to do is find an issue that was not certified at this level and avoid challenging the settlement entirely. But of course, we're sure a challenge to the terms is in the works as these words are typed.

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