Uber-Frustrating: Tips to Facilitate Approval of Settlements of Class Actions
On April 21, 2016, Uber tried to buy its peace from two class actions in a $100 million settlement with 385,000 putative class members. See O’Connor v. Uber Technologies Inc., 3:13-cv-03826 (N.D. Cal.); Yucesoy v. Uber Technologies Inc., 3:15-cv-00262 (N.D. Cal.). However, as of July 14, 2016, the class actions still remain open pending court approval of the settlement.
In the long meantime, dozens of class members have filed objections and motions to intervene. Plaintiffs’ counsel cut her fee request by $10 million, and she is opposing a motion to disqualify her as class counsel.
Also in the meantime, the Ninth Circuit Court of Appeals intimated that it may reverse the district court’s prior decision to invalidate the plaintiffs’ arbitration agreements – which could undermine the class certification by ejecting some Uber drivers from district court to arbitration.
It is clearly critical to get a hard-won settlement agreement approved quickly. Here are some takeaways from Uber’s experience:
Many of the Uber drivers’ objections are based on complaints that the ultimate legal issue in the case – whether Uber drivers are employees or independent contractors – remains unresolved in the settlement. However, that is an insufficient basis to object because there is no requirement that a settlement resolve the ultimate legal issue (in fact, most settlements do not), only that the settlement be “fair, reasonable, and adequate.” See Fed. R. Civ. P. 23(e)(2). In one Uber case in state court in California, the judge requested that any objections be filtered through the claims administrator before being forwarded to the court, because some concerns do not, “rise to the level of an objection.” See Kramer v. Uber Technologies Inc., No. BC589891 (Cal. Super. Ct., L.A., July 6, 2016). Parties to class settlements may want to consider requesting a similar pre-objection gatekeeper to avoid the bandwagon, pile-on effect that appears to have occurred in this closely watched, high profile class action settlement.
In this case, one objection came from named plaintiff Douglas O’Connor, who claims that he was not adequately informed about the deal before it was made public. Whether or not his claims have merit, parties should ensure that a named plaintiff is actively involved in negotiations and on board with the settlement to avoid an appearance of unfairness, because an objection from a named plaintiff may carry more weight.
Finally, parties should assign at least some value to all of the claims that are being resolved in a settlement, even if the value is low, and explain why. Judge Chen’s June 30, 2016 Order delaying approval to obtain additional information about the proposed settlement criticizes some claims’ zero value for settlement distribution, especially absent any justification. See O’Connor v. Uber Technologies Inc., 3:13-cv-03826 (N.D. Cal.); Yucesoy v. Uber Technologies Inc., 3:15-cv-00262 (N.D. Cal.).
Much can be learned from the experiences of skilled class action attorneys’ navigating the twists and turns of a complicated and massive class settlement.