ELA Founder and CEO and Hirschfeld Kraemer LLP Co-managing Partner Stephen J. Hirschfeld was quoted on Law360 and in the San Francisco Chronicle regarding the August 18 rejection by U.S. District for the Northern District of California Judge Edward M. Chen of a proposed $100 million class-action settlement in a multi-state lawsuit brought by drivers against the ride sharing service Uber.
Law360, "Uber Primed For Hard Fight After $100M Labor Deal Rejected," Aug. 19. 2016
From reporter Linda Chiem's story:
On Uber's Motivation to Settle and an Unresolved Arbitration Agreement Agreement Enforcement Issue
There is obviously incentive to hammer things out, but if I’m Uber, I’m starting to think maybe I shouldn’t. I think I might wait until the arbitration enforcement issue is resolved. If we’re talking hundreds of millions of dollars, I think I roll the dice and litigate the case because if it is resolved [in my favor], I have a lot more leverage to win outright the issue of drivers being independent contractors.
On Judges Scrutinizing Proposed Settlements More Closely
There are smart lawyers on both sides of this, and the plaintiffs' lawyer who did a risk analysis saw that her chance of success was limited, so why not get as much money as she can for the drivers rather than take a chance at losing everything? Uber is the big kahuna and built on the premise of 'I don’t give this issue up, and I don’t settle the issue.' So a bird in the hand, cash in the can [for plaintiffs] versus the decent chance of losing, that’s hard to criticize.
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San Francisco Chronicle , "What’s next for Uber drivers’ lawsuit?," Aug. 19. 2016
From reporter Carolyn Said's story:
Uber seemed perfectly happy to pay $100 million (the amount of the proposed settlement) “as a cost of business to move on and maintain its current business strategy that’s the foundation of its business,” said Steve Hirschfeld, a San Francisco employment attorney. “Would it pay $1 billion? That seems kind of crazy.”
From the drivers’ side, the $100 million offer seemed like a “significant bird in the hand,” Hirschfeld said, forestalling the risks of losing at trial where the case would face an all-or-nothing outcome: If the drivers are found to be independent contractors, they could end up with no money at all.
If thousands of cases go to arbitration, they would be charting a new course, according to Hirschfeld. “This is unprecedented,” he said. “In theory, Uber could insist on a little trial for every single one of them with hundreds of arbitrators.” But more likely, one arbitrator would address all the legal issues, and then mini-arbitrations could determine damages for each individual.
Ultimately, Hirschfeld said, the freelance or employee issue is so pivotal, not just to Uber but to a whole sector of on-demand companies, that it eventually may have to be resolved by a higher authority.
“This is an issue for either the U.S. Supreme Court, or the Legislature, or both,” he said. “Right now we’re applying standards (for determining employment status) that have been around for years and never anticipated these new kinds of business enterprises.”
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