UBER 2016-04-21 [519] SLR Declaration (1)

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

CASE NO.: 13-3826-EMC 1

SHANNON LISS-RIORDAN, pro hac vice ([email protected]) ADELAIDE PAGANO, pro hac vice ([email protected]) LICHTEN & LISS-RIORDAN, P.C. 729 Boylston Street, Suite 2000 Boston, MA 02116 Telephone: (617) 994-5800 Facsimile: (617) 994-5801 MATTHEW CARLSON (SBN 273242) ([email protected]) LICHTEN & LISS-RIORDAN, P.C. 466 Geary St., Suite 201 San Francisco, CA 94102 Telephone: (617) 994-5800 Facsimile: (617) 994-5801

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DOUGLAS O’CONNOR, THOMAS COLOPY, MATTHEW MANAHAN, and ELIE GURFINKEL, individually and on behalf of all others similarly situated, Plaintiffs, v. UBER TECHNOLOGIES, INC, Defendant.

Case No. CV 13-3826-EMC DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Hon. Edward M. Chen Hearing: June 2, 2016 Time: 1:30 p.m. Courtroom: 5

HAKAN YUCESOY, ABDI MAHAMMED, MOKHTAR TALHA, BRIAN MORRIS, and PEDRO SANCHEZ, individually and on behalf of all others similarly situated, Plaintiffs, v. UBER TECHNOLOGIES, INC. and TRAVIS KALANICK, Defendants.

Case No. 3:15-cv-00262-EMC

Hon. Edward M. Chen Hearing: June 2, 2016 Time: 1:30 p.m. Courtroom: 5

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 1 of 30

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CASE NO.: 13-3826-EMC 2

DECLARATION OF SHANNON LISS-RIORDAN

I, Shannon Liss-Riordan, declare as follows:

1. I am a partner at the law firm of Lichten & Liss-Riordan, P.C., and am lead attorney

and class counsel for the Plaintiff class in the above-captioned matter. I submit this

declaration in support of Plaintiffs’ Motion for Preliminary Approval of Class Action

Settlement. I have personal knowledge of the information set forth herein.

Litigation History

2. In the nearly three years this case has been pending, the parties have engaged in

extensive discovery. Plaintiffs have propounded and Uber has responded to thirty-six

Requests For Production and thirty-six Interrogatories, while the named Plaintiffs have

collectively responded to 290 Requests For Production, 180 Interrogatories, and 71

Requests for Admission since the start of the case. To date, the parties have

collectively produced more than 36,000 pages of documents in discovery.

3. Plaintiffs have taken five depositions, including depositions of two Uber managers, two

separate Rule 30(b)(6) witnesses, and Uber’s Senior Vice President of Operations Ryan

Graves.

4. Defendants have deposed five named plaintiffs (in full-day depositions), including one

named plaintiff who this Court dismissed from the case following the Court’s Order

limiting the class to California drivers. See Dkt. 136 at 16 (limiting class to California).

5. The parties have presented five joint discovery letters to Magistrate Judge Ryu and

participated in four discovery hearings, and Judge Ryu has issued three separate

substantive decisions on discovery-related issues. My firm has also been in near-

constant contact with class members in this case. More than 2,000 class members have

contacted my firm about the case and I have personally been in email contact with

drivers on a daily (and often hourly) basis. I have been assisted in these

communications by associate attorneys and a team of paralegal staff (currently


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CASE NO.: 13-3826-EMC 3

comprised of four paralegals, two of whom have been engaged primarily with

communicating with class members in this case).

6. Counsel have met and conferred countless times regarding discovery (lately on an

almost daily basis) and were in the midst of preparing additional letter briefs regarding

trial-related discovery disputes just prior to reaching agreement on this settlement.

7. In addition to in depth discovery, the parties have engaged in aggressive motion

practice regarding class certification issues and the substantive merits of Plaintiffs’

claims. There have been 23 substantive motions filed in this case (not to mention more

than sixty administrative motions), and the Court has issued 25 substantive rulings

(totaling more than 287 pages of legal opinions). The Court has held 18 hearings

(totaling more than 23 hours of court time).

8. A trial on both liability and damages is currently scheduled to begin in this case

approximately two months from now on June 20, 2016, and the parties have also

already expended tremendous effort in trial preparation.

9. When this settlement was reached, the parties were prepared to begin depositions of

trial witnesses, and the Court had allowed each side to take up to 80 hours of

depositions.

10. The parties attempted mediation early in the case in April 2014 with mediator Jeff Ross,

but made no significant progress.

11. Following the certification of an enlarged class and several months before trial, the

parties decided to attempt mediation again.

12. The parties agreed to mediate again with mediator Mark Rudy. They met with Mr.

Rudy on March 10, 2016, and again on April 1, 2016. On April 5, 2016, the Ninth

Circuit granted Uber’s Petition for Review Pursuant to Fed. R. Civ. P. 23(f). The

parties then met for an additional mediation session on April 8, 2016, and thereafter

finalized a written Memorandum of Understanding.


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CASE NO.: 13-3826-EMC 4

13. Plaintiffs’ decision to accept the terms of this agreement was based upon Counsel’s

experience, in light of the known monetary and non-monetary benefits of the resolution,

and weighed against the risks of continued litigation, including the following:

Assessment of the Risks of Further Litigation

14. The Ninth Circuit granted Uber’s Petition for review of this Court’s Supplemental

Class Certification Order on April 5, 2016. See Ninth Cir. Appeal No. 16-15595,

Dkt. 1.

15. Based on the data and information I have received from Uber in this litigation, it is my

understanding that if the Supplemental Class Certification Order were to be overturned,

the class size would have diminished from more than 240,000 drivers to approximately

8,000 drivers (or fewer depending on the Ninth Circuit’s reasoning).

16. Moreover, by granting the Rule 23(f) petition, the Ninth Circuit agreed to review the

Court’s decision to certify Plaintiffs’ claim under Cal. Labor Code § 2802, the driving

force behind this case, and by far the most significant source of damages.

17. Uber’s Rule 23(f) appeal is currently scheduled to begin briefing in July 2016.

Moreover, Uber has informed me that, in the absence of a Settlement, Uber would seek

an emergency stay of the district court proceedings in O’Connor so that the Ninth

Circuit could resolve Uber’s pending Rule 23(f) appeal before the start of the June 2016

trial in this case. While not required to do so, a number of Circuit Courts have stayed

district court proceedings following the grant of a Rule 23(f) petition. See, e.g., Arreola

v. Godinez, 546 F.3d 788, 794 (7th Cir. 2008); Wachtel ex rel. Jesse v. Guardian Life

Ins. Co. of Am., 453 F.3d 179, 183 (3d Cir. 2006); Andrews v. Chevy Chase Bank, 545

F.3d 570, 573 (7th Cir. 2008); Gregory v. Finova Capital Corp., 442 F.3d 188, 190 (4th

Cir. 2006). Thus, if the Ninth Circuit were to follow this precedent, the Ninth Circuit

would have heard and resolve Uber’s Rule 23(f) petition before trial begins here.


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CASE NO.: 13-3826-EMC 5

18. Two other appeals of this Court’s rulings regarding Uber’s arbitration clauses are fully

briefed and scheduled for oral argument on June 16, 2016, just days before the trial in

this case has been scheduled to begin. See Ninth Circuit Appeal Nos. 14-16078, 15-

16178. An adverse decision reversing this Court’s rulings regarding the enforceability

of Uber’s 2013 and 2014 arbitration clauses could destroy the certified class in this case,

making recovery unfeasible for the vast majority of class members.

19. Moreover, Uber has made clear that, should this case not resolve, and should the Ninth

Circuit panel affirm the Court’s rulings regarding class certification and enforceability

of the arbitration clauses, the company would continue to aggressively appeal these

rulings by seeking en banc review and even certiorari from the U.S. Supreme Court.

The uncertainty created by these appeals was a major factor I took into account in

deciding to accept this settlement on behalf of the class.

20. A second major risk that I took into account was the risk of trying the all-important

employment status question to a jury.

21. This Court has stated that “numerous [Borello] factors point in opposing directions” on

the issue of employment classification, such that the employment misclassification test

“does not yield an unambiguous result.” Dkt. 251 at 26–27; see also Cotter v. Lyft, Inc.,

60 F. Supp. 3d 1067, 1081–82 ( “[s]ome [Borello]factors point in one direction, some

point in the other, and some are ambiguous . . . .”). Thus, there is serious risk that a

unanimous jury would not find that all drivers in the certified class are Uber’s

employees, a prerequisite to both of Plaintiffs’ claims in O’Connor.

22. In addition, I have adamantly maintained that the employment status question is a legal

question for the Court to decide. The multi-factor Borello test is complicated, and a

decision by a jury risks that the jurors would rely on their own lay understanding of

what constitutes an employee or an independent contractor. I am concerned that a jury

would give undue weight to the fact that drivers value their flexibility (something that


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CASE NO.: 13-3826-EMC 6

Uber has made clear it intended to impress upon the jury even though I contend it is not

relevant) and would likewise give undue weight to the fact that the parties’ contract

states that drivers are independent contractors. Even with proper jury instructions,

there can be no avoiding the risk of jurors imposing their own beliefs and

understanding regarding this question.

23. I also view the Court’s decision to deny Plaintiffs’ request for a special verdict form as

a major risk, as it would make it very difficult for Plaintiffs to have appealed an adverse

verdict with a general verdict form.

Information Used to Assess the Fairness of This Settlement

24. I believe this settlement falls within the range of possible approval, and the Court

should grant the settlement preliminary approval.

25. The parties have exchanged extensive information necessary to make an informed

evaluation of the case, including detailed damages discovery during pre-trial

preparation and in advance of the parties’ three mediation sessions.

26. Likewise, the parties have aggressively litigated the issue of Uber’s independent

contractor defense in summary judgment and have studied this issue in depth in

preparation for trial. The parties have also litigated the issue of class certification

(including the enforceability of Uber’s arbitration clause) through multiple rounds of

supplemental briefing and hearings. See Dkt. 276, 298, 312, 359, 365, 370-1, 380, 381,

387, 388.

27. This information was discussed in depth over the course of three mediation sessions

with Mediator Mark Rudy as well as in additional negotiations between the parties.

28. Paragraphs 29 to 85 below set forth Plaintiffs’ analysis, based upon my review of

extensive confidential data provided by Uber of the potential value of each claim

asserted in this case, as well as some of Plaintiffs’ considerations regarding the


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CASE NO.: 13-3826-EMC 7

likelihood of establishing liability on these claims, were Plaintiffs to prevail on the

threshold issue of whether Uber misclassified its Drivers as independent contractors.

Failure to Reimburse for Necessary Work-Related Expenses (Cal. Lab. Code § 2802)

29. Cal. Lab. Code § 2802 requires an employer to indemnify its employees for all

necessary expenditures or losses incurred by the employee in direct consequence of the

discharge of his or her duties.

30. If Plaintiffs were to prevail on the misclassification issue at trial, I believe a jury would

likely find that drivers’ expenditures for mileage and cellular phone data plans were

necessary business expenditures.

31. However, Uber has informed me that it intended to defend the Cal. Labor Code § 2802

claim on the merits at trial by asserting, among other arguments, that Uber has, in fact,

satisfied Section 2802 by structuring the fare to be an all-inclusive fare that takes into

account things like expenses, see Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th

554, 558–59 (2007) (“[A]n employer may satisfy its statutory reimbursement obligation

by paying employees enhanced compensation in the form of increases in base salary or

increases in commission rates . . . .”). Although I disagree with this argument, because

Uber did not expressly indicate that it was reimbursing for expenses, it is conceivable

that this argument may gain traction with a jury,, thus precluding recovery under

§ 2802.

32. Based on data that Uber produced showing the number of miles that class members

drove in California while transporting riders during the class period, and applying the

IRS fixed reimbursement rates that have been in effect each year during this period, I

calculated Plaintiffs’ claim for unreimbursed vehicle expenses in California to be worth

approximately $ .

33. However, Uber has vigorously contested this calculation and made clear that it intended

to argue at trial that Plaintiffs’ use of the fixed IRS reimbursement rate did not provide


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CASE NO.: 13-3826-EMC 8

a proper or accurate estimate of drivers’ expenses and that instead the IRS “variable

rate” should be used instead.1

34. The variable rate for mileage reimbursement (favored by Uber) varied from 16.5 to 24

cents per mile during the applicable timeframe, whereas the fixed and variable rate for

mileage reimbursement (favored by Plaintiffs) varied from 50 to 56.6 cents per mile

during the applicable timeframe. Thus, using Plaintiffs’ figures, we calculated the

mileage reimbursement claim for the O’Connor certified class to be worth

approximately $ , while using Uber’s figures, it would be worth

approximately $ .

35. Although these damage calculations account for the certified class period, this

settlement would release claims through the date of preliminary settlement approval.

Based upon data that Uber provided that is current through April 8, 2016, less than two

weeks ago, Plaintiffs’ estimate of mileage reimbursement for certified O’Connor class 1 The costs of owning and operating a vehicle fall into two categories: fixed and variable. Fixed expenses are those that do not vary over time from month to month, including depreciation and insurance, whereas variable expenses are costs that fluctuate month to month, such as the costs of gas, maintenance, and tires. Plaintiffs’ use of the IRS fixed rates (which are actually called the IRS “Fixed and Variable Rates”, but I refer to them here as the “fixed rates” for convenience) would compensate drivers for both types of costs, but Uber intended to argue at trial (had Plaintiffs succeeded on liability) that only variable costs attributable to driving for Uber should be used because Uber drivers would have incurred the fixed expenses even if they did not use their cars for Uber. In other words, a driver using his own car would have had to pay for insurance and depreciation whether or not he drove for Uber, whereas variable costs like gas and wear and tear are more directly attributable to driving for Uber. Plaintiffs would have disputed Uber’s reasoning because Uber drivers cannot perform their job without a car, and Uber requires them to have cars of a certain make and model and to have insurance, meaning that they cannot do the job without having to pay these fixed expenses. Furthermore, many drivers do upgrade their cars or even buy a brand new car in order to meet Uber’s standards, so Plaintiffs do not agree that all drivers were paying these fixed costs regardless. However, although Plaintiffs would have vigorously disputed Uber’s argument, they recognize that there was a serious risk that Uber’s argument could gain traction with the jury, and that if the variable rate were applied, the expense reimbursement claim would be worth far less than Plaintiffs had estimated.


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CASE NO.: 13-3826-EMC 9

members (using the IRS fixed rate) would be approximately $ , while a

calculation using the IRS variable rate (as Uber had preferred) would place this number

at approximately $ .

36. In addition, the settlement includes drivers who were excluded from the O’Connor class

and drivers who used other platforms not at issue in O’Connor (e.g., UberTAXI).

Based on updated data that Uber has provided about these drivers, the mileage expense

reimbursement figures for these drivers (through April 8, 2016) would be

approximately (using Plaintiffs’ preferred IRS fixed rate), or

(using Uber’s preferred IRS variable rate).

37. Of course, these drivers faced much greater challenges in being able to prevail on their

claims, given that the Court had excluded many of these drivers from the class and

determined that their misclassification claim could not proceed on a class basis. In

addition, many of the excluded class members likely did not have as strong a claim for

expense reimbursement in the first place because some of the limo companies they

drove for provide partial reimbursement (such as for gas) and most provide a vehicle

for the drivers.2 Given these additional hurdles these drivers would have faced, the

settlement allocation formula gives these drivers one-half the credit for their miles as

compared to drivers who were class members in O’Connor.

38. The settlement also includes drivers in Massachusetts who were putative class members

in the Yucesoy case and other Massachusetts drivers. Based on updated data that Uber

has provided, the mileage expense reimbursement figures for these Massachusetts

2 See, e.g., O’Connor Dep. at 124:22-125:1.


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CASE NO.: 13-3826-EMC 10

drivers (through April 8, 2016) would be approximately (using Plaintiffs’

preferred IRS fixed rate), or (using Uber’s preferred IRS variable rate).3

39. However, the Massachusetts drivers face much more significant risks in this litigation

than the drivers in California, given that there is not yet a certified class in the Yucesoy

case, and the case has not advanced nearly as far as O’Connor. Further, because there

is not an express expense reimbursement statute in Massachusetts analogous to Cal.

Labor Code § 2802, Plaintiffs’ recovery for expenses in Massachusetts is much less

certain. See Schwann v. FedEx Ground Package Sys., Inc., 2014 WL 496882, *3 (D.

Mass. Feb. 7, 2014) (in Massachusetts, “the question of whether business expenses and

deductions borne by employees are recoverable under the Wage Act is unsettled under

state law.”) (certifying this question to the Massachusetts Supreme Judicial Court).4

40. With respect to expense reimbursement for telephones, I received data from Uber

showing that California drivers who leased their phones from Uber were charged a total

of $13.8 million for the phones. Extrapolating half of this rate to all California

settlement class members (based on the assumption that drivers who used their own

phones to drive for Uber would not have to pay the full amount that drivers who leased

their phones would pay, and would also be able to use the phones for their own

purposes) brings the total estimate for phone expenses in California to approximately

3 This figure includes all Massachusetts drivers, including drivers that drove through third-party companies and under corporate or fictitious names, because Plaintiffs do not believe that the distinction that the Court drew in the California case would have been relevant under Massachusetts law. It also includes drivers who used Uber platforms not specifically at issue in Yucesoy (e.g., UberTAXI). In total, the settlement covers approximately 385,000 California and Massachusetts drivers. 4 Thus, in allocating the settlement funds between California drivers and Massachusetts drivers, I calculated the relative value of the claims of the two groups, ascribing one-half credit for the expense reimbursement claim.


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CASE NO.: 13-3826-EMC 11

$24.7 million. Extrapolating these figures for phone expenses to Massachusetts

settlement class drivers comes to approximately $4.6 million.

Unlawful Taking of Gratuities (Cal. Lab. Code § 351; Cal. Bus. & Prof. Code § 17200)

41. Cal. Lab. Code § 351 prohibits employers from taking any part of a gratuity given to its

employees. Section 351 does not provide for a private cause of action; however, a

violation thereof can be brought as a claim under Cal. Bus. & Prof. Code § 17200, et

seq.

42. Plaintiffs have argued that, if they were to prevail on the misclassification issue, and

prevailed on the claim that Uber has charged passengers a gratuity but without passing

it on in full to the drivers, then the jury would be asked to determine what amount of

the fare constituted a gratuity. I made calculations based on a conclusion that the jury

may have found that Uber included a 20% tip in the fare (a figure which Uber stated on

some occasions in communications with customers, see Dkt. 485-3 at 9, 20, 52). In

other words, under this theory, if a driver had a $10 fare, Uber should have set aside

20% of the fare ($2) to be remitted exclusively to the driver as a tip. Uber should then

have taken its commission (of, for example, 20%) out of the remaining $8. Uber would

then receive a commission of $1.60. Instead, Uber took its commission out of the

entire $10 fare and thus received $2. Thus, Uber would owe the driver the 40 cent

difference (which equals 20% of Uber’s commission).

43. Based on this theory and data produced by Uber (showing the total amount of fares in

California for certified class members), I calculated the total potential value of this

claim to be approximately . Based upon this same data, I calculated the

potential value of the claim for drivers who are not currently in the O’Connor certified

class to be approximately .

44. Using the same logic, based on data produced by Uber providing the total amount of

fares in Massachusetts, the total value of the analogous claim in for Massachusetts


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CASE NO.: 13-3826-EMC 12

drivers under Mass. Gen. L. c. 149 § 152A is approximately .

45. Plaintiffs recognize the risks in proving this claim, including the risk that the jury could

find that Uber’s communications that “tip is included” in Uber’s fare were too variable

or not widespread enough to warrant a finding that a tip was actually included. In

addition, in order to succeed on this claim, Plaintiffs would have to prove employee

status for the drivers. And, even if Plaintiffs succeeded on the claim, the jury could

conclude that a lesser amount of tip than 20% was included (such as 15% or 18%). For

example, Uber was prepared to argue that, even if Plaintiffs succeeded on this claim, its

research demonstrates that 16% is a more usual tip left for taxicab drivers and, if

liability were established, damages could not exceed that amount.

46. The claims described above are the statutory claims that Plaintiffs pursued in this

lawsuit. For settlement purposes, Plaintiffs have agreed to a release of additional

employment-misclassification and wage-and-hour claims that have been brought

against Uber in California and Massachusetts, in order to effectuate the final resolution

of all employment-misclassification and wage-and-hour disputes in these states up to

the date of preliminary approval. However, for the reasons discussed below, Plaintiffs

did not value these claims as posing significant risk to Uber and thus contributing any

appreciable increase in likely damages that drivers may have been able to obtain.

47. In particular, a number of these claims require a finding of “willfulness”. Given the

heated dispute regarding whether Uber drivers are employees or independent

contractors, and the lack of any definitive court rulings on this question, I believe the

drivers would have been unlikely to prevail on claims requiring a finding of

“willfulness.” See, e.g., Dalton, 2011 WL 1045107, *5 (granting summary judgment to

defendant on Cal. Lab. Code § 203 claim, which requires a finding of willfulness, on

grounds that there was a good faith dispute that plaintiff was an independent

contractor).


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CASE NO.: 13-3826-EMC 13

Failure to Pay Wages When Due (Cal. Lab. Code §§ 201-203, 204, 210)

48. Cal. Lab. Code §§ 201 and 202 require employers to page wages earned and unpaid

within a certain time frame if an employee quits (within 72 hours) or is discharged

(immediately). Cal. Lab. Code § 203 provides for “waiting time” penalties assessed

only when such failure to pay wages when due is “willful,” and a finding of willfulness

is precluded when there is a “good faith dispute” as to whether a plaintiff is subject to

the Labor Code provisions at all, i.e. when there is a good faith dispute as to whether a

plaintiff is in independent contractor rather than an employee.

49. As discussed above, even if Plaintiffs prevail on the misclassification issue, I expect

that it would be difficult for Plaintiffs to overcome Uber’s good faith defense to

liability with respect to this claim.

50. Accordingly, I believe there would be a substantial risk of no recovery on this claim.

Unlawful Deductions (Cal. Labor Code § 221-224, 227)

51. Cal. Labor Code §§221 and 224 provide that an employer may only lawfully withhold

amounts from an employee’s wages when (1) required or empowered to do so by state

or federal law; (2) when a deduction is expressly authorized in writing by the employee

to cover insurance premiums, benefit plan contributions, or other deductions not

amounting to a rebate on the employee’s wages; or (3) when a deduction to cover

health, welfare or pension contributions is expressly authorized by a wage or collective

bargaining agreement. Here, Defendant’s conduct as alleged herein has violated Cal.

Labor Code §221-224 insofar as Defendant has deducted the costs of equipment (i.e.

telephones). However, because the telephone expenses are part of Plaintiffs’ Cal.

Labor Code § 2802 claim, Plaintiffs do not think that this claim adds any value. Thus,

although Plaintiffs added this claim for settlement purposes in an effort to give Uber

global peace, Plaintiffs do not believe that this claim has any additional value.


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CASE NO.: 13-3826-EMC 14

Failure to Pay Minimum Wages (Cal. Lab. Code §§ 1182.12, 1194, 1194.2, 1197, 1197.1)

and FLSA (29 U.S.C. § 201, et seq.)

52. Cal. Lab. Code § 1194 permits an employee receiving less than the legal minimum

wages (currently $10.00 per hour under California law) to recover the unpaid balance

of minimum wage in a civil action. Section 1194.2 further provides for an award of

liquidated damages in a minimum wage action unless an employer can show that the

violation was in good faith and that it had reasonable grounds for believing it was not

subject to minimum wage requirements. Likewise, the federal Fair Labor Standards

Act requires that employers pay at least the federal minimum wage of $7.25 per hour

for all hours worked. See 29 U.S.C. § 201, et seq.

53. Significantly, this Court dismissed Plaintiffs’ minimum wage claim under

Massachusetts law in the Yucesoy case, see Yucesoy, Civ. A. No. 3:15-00262-EMC,

Dkt. 194 at 9-10 (after several attempts to amend), and dismissed similar minimum

wage claims under the FLSA in the Del Rio case, see Del Rio, Civ. A. No. 3:15-cv-

03667-EMC Dkt. 84 at 4. Furthermore, I believe that Plaintiffs faced a significant

hurdle in resolving this claim on a class-wide basis, as discovery has not revealed that

Uber has had a uniform policy or practice that would support a finding of liability (or

no liability) on this claim for all drivers and may well have required individualized

analysis.


Failure to Pay Overtime Wages (Cal. Lab. Code §§ 510, 1198, 1194) and Fair Labor

Standards Act (29 U.S.C. §207(a)(1))

55. Cal. Lab. Code § 1198 and Wage Order 9 require employers to pay their employees at

their overtime rate of pay for hours worked in excess of eight per day and/or 40 per

week. Cal. Lab. Code § 1194 permits an employee receiving less than his or her

overtime wages to recover the unpaid balance of such wages in a civil action.


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Likewise, the Fair Labor Standards Act requires that an employer pay time-and-a-half

an employee’s regular rate of pay for all hours worked beyond forty in a workweek.

See 29 U.S.C. §207(a)(1).

56. As with the minimum wage claim, the Court already dismissed Plaintiffs’ overtime

claim under Massachusetts law in the Yucesoy case, see Yucesoy, Civ. A. No. 3:15-

00262-EMC, Dkt. 194 at 9-10 (again, after several attempts at amendment), and

dismissed similar overtime claims under the FLSA in the DelRio case, see DelRio, Civ.

A. No. 3:15-cv-03667-EMC Dkt. 84 at 4. Moreover, it is not certain whether the Court

would certify a claim for those drivers who worked these hours.

57. However, if the Court did certify this claim, and if Plaintiffs were to prevail on the

misclassification issue, I believe a jury would determine that certain drivers worked in

excess of eight hours per day or 40 hours per week without being compensated at their

applicable overtime rates of pay. Based on data provided by Uber, I estimate that if this

claim were to succeed, its value would be approximately $2 million for California

drivers and $400,000 for Massachusetts drivers.

58. However, given the Court’s skepticism of this claim in the Yucesoy case, and the

hurdles to its certification, I believe it would have been very difficult to achieve

recovery on this claim for the plaintiff class.

Failure to Provide Meal Periods and Failure to Authorize and Permit Rest Periods (Cal.

Lab. Code §§ 226.7, 512, Wage Order 9

59. Cal. Lab. Code §§ 226.7, 512 and Wage Order 9 generally require employers to provide

all employees with one 30-minute duty-free meal period if such employee works more

than five hours in a day. Additionally, § 226.7 and Wage Order 9 generally require

employers to provide all employees with one 10-minute duty-free rest period for every

four hours worked each day, or major fraction thereof.

60. If Plaintiffs were to prevail on the misclassification issue, I believe a jury would likely


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CASE NO.: 13-3826-EMC 16

determine that Uber has met its obligation to provide meal and rest periods. While

drivers might feel pressure to accept ride requests and therefore skip meal and rest

periods, given the way that I understand Uber’s application works, I believe that Uber

will be able to argue that drivers can take breaks whenever they wish, including by not

accepting a ride request or by logging out of the Uber App and going “off-line”

whenever the driver wishes to take break. For example, when drivers are not logged in

to Driver Mode, they do not receive ride requests, and, therefore, cannot be punished by

Uber for declining ride requests or be pressured into missing or cutting short their

breaks. I believe that such facts would likely preclude liability for meal and rest period

violations.

Failure to Keep Accurate Records (Cal. Lab. Code §§ 1174.5, 353)

61. Cal. Lab. Code § 1174 requires employers to maintain payroll records pertaining to its

employees, and Cal. Lab. Code § 1174.5 provides for penalties for willful failures to

maintain such records. A finding that an employer’s failure to comply with § 1174 was

in good faith precludes liability for the violation. Dalton, 2011 WL 1045107, *6

(granting summary judgment on § 1174 claim because of a good faith dispute that

employees were independent contractors).

62. Even if Plaintiffs were to prevail on the misclassification issue, I believe it would be

difficult for Plaintiffs to show that Uber does not maintain all information required by

§1174, and, even if it does not, it would be difficult for Plaintiffs to overcome Uber’s

good faith defense to liability with respect to this claim.


Failure to Furnish Accurate Wage Statements (Cal. Lab. Code § 226)

64. I believe that Uber would likely argue that their weekly driver summary emails

constitute pay statements that show all information required by § 226(a), except for the

information required by § 226(a)(7) (drivers’ last four digits of their social security


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CASE NO.: 13-3826-EMC 17

numbers). Thus, I believe Plaintiffs may be able to show a technical violation of §

226(a)(7).

65. However, to recover under § 226, an employee must also show injury. Injury exists

under § 226 when an employee is not provided with a pay statement at all, § 226(e)(2),

or when there is a deficient wage statement and an employee cannot promptly and

easily determine from the statement alone the information required by § 226(a)(2) (total

hours worked), (a)(3) (piece rate units earned, if applicable), (a)(4) (all deductions),

(a)(6) (inclusive dates of the pay period), and (a)(9) (all applicable hourly rates in effect

during the pay period and the corresponding number of hours worked at each hourly

rate by the employee). Courts have determined that this injury requirement generally

requires that the employee be unable to “quickly verify earnings when looking at the

wage statements.” Holak v. K Mart Corp., 2014 WL 4930762, *7 (E.D. Cal. Sept. 30,

2014); see also Price v. Starbucks Corp., 192 Cal.App.4th 1136, 1143, 122 Cal.Rptr.3d

174 (2011) (recognizing that an injury exits where “inaccurate or incomplete wage

statements ... require [ ] ... plaintiffs to engage in discovery and mathematical

computations to reconstruct time records and determine if they were correctly paid”).

66. I believe it would have been difficult for Plaintiffs to show injury here, including

because Uber would likely argue that its pay statements set forth the information

required by §226(a)(2) (statements show hours online), (a)(3) (inapplicable because

drivers are not paid on a piecework basis), (a)(4) (Uber did not make any deductions),

(a)(6) (statements show dates of the pay period), and (a)(9) (inapplicable because there

have not been hourly rates “in effect” for drivers). Additionally, Uber would likely

argue that the weekly statements clearly set forth earnings during each pay period,

hours worked and substantial additional information, which allow drivers to “quickly

verify earnings when looking at the wage statements.”

67. Moreover, even assuming that Plaintiffs can show injury arising from a violation of


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CASE NO.: 13-3826-EMC 18

§226, such a violation of § 226 is actionable only if it is “knowing and intentional,” and

therefore courts have permitted employers to assert a good faith defense to the claim at

or after trial. Dalton, 2011 WL 1045107, *5 (finding that good faith dispute as to

whether plaintiffs were independent contractors exempt from Section 226 precludes a

finding that defendant acted “with the requisite scienter” of knowing and intentional);

Hurst v. Buczek Enterprises, LLC, 870 F.Supp.2d 810, 829 (N.D.Cal.2012) (“when a

party makes a good faith claim that a worker [has been properly classified as exempt],

its failure to provide accurate wage statements is not knowing and intentional.”)

Accordingly, Plaintiffs recognize they would face a challenge in overcoming Uber’s

defenses to this claim, including that it had a good faith belief that drivers were

properly classified and therefore not subject to the requirements of § 226.


One in Seven Day’s Rest (Cal. Labor Code §§ 551, 552, and 558)

69. Cal. Lab. Code § 551 provides that every person in every occupation is entitled to one

day’s rest in seven, and Cal. Lab. Code § 552 prohibits employers from requiring an

employee to work more than six days out of seven. Here, some Uber drivers worked

seven days per week (although based on data from Uber it appears that this was true

only for a minority of drivers). In any case, Plaintiffs believe they would face difficult

hurdles in proving this claim on a class-wide basis given that many drivers drove only

occasionally, and given that it is undisputed that drivers are able to sign on and off the

Application whenever they wish and can drive as much or as little as they wish.


Requiring Drivers To Agree to Unlawful Terms (Cal. Labor Code § 432.5)

71. Cal. Lab. Code § 432.5 makes it unlawful for an employer to require an employee or

applicant to agree, in writing, to a term or condition that the employer knows to be

prohibited by law. Here, there is an argument Uber required drivers to accept its


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CASE NO.: 13-3826-EMC 19

agreements, which contained numerous illegal provisions. However, Plaintiffs believe

that they would face a challenge in overcoming Uber’s defenses to this claim, including

that it had a good faith belief that the provisions of its agreements were lawful.


Failure to Provide Paid Sick Leave (Cal. Labor Code §§ 245-249)

73. Cal. Labor Code § 246 provides that an employer must provide any employee who, on

or after July 1, 2015, works in California for the same employer for 30 days or more

within a year from the start of employment, with paid sick days. If Plaintiffs succeed in

proving employee status, then drivers who drove more than 30 days in a calendar year

arguably accrued a certain number of paid sick days and were entitled to use these

accrued paid sick days for purposes enumerated in Labor Code section 246.5(a)(l)-(2).

74. However, Plaintiffs likely would face serious challenges in proving liability under

section 246 because they must first prove the employees’ hourly rate of pay, a figure

that the Court might find to be incalculable in the case of drivers who use Uber. See

Cal. Labor Code § 246(k). Even if calculable, a Court may conclude that individual

issues predominate for purposes of class certification. Moreover, because employees

must be employed for at least 90 days before being able to use paid sick leave, a Court

may conclude that many of the drivers who use Uber infrequently may not be entitled

to paid sick leave at all. See Cal. Labor Code § 246(c).

Failure to Pay Wages Due Upon Termination (Cal. Labor Code §§ 201-04, 206.5, 208,

210)

75. Cal. Labor Code § 204 requires that an employer pay all wages due upon the

termination of any employee. Plaintiffs ascribe little value to this claim because they

have not seen evidence that Uber delays final payment to drivers who have been

deactivated.


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Failure to Pay Worker’s Compensation Insurance (Cal. Labor Code §§ 3700.5, 3712,

3715 Brought Pursuant to Cal. Bus. & Prof. Code § 17200)

76. These sections of the Labor Code require employers to provide worker’s compensation

insurance to employees injured on the job. Cal. Lab. Code § 3700.5 provides that “the

failure to secure the payment of compensation as required by this article by one who

knew, or because of his or her knowledge or experience should be reasonably expected

to have known, of the obligation to secure the payment of compensation” is punishable

by fines and imprisonment. I believe that recovering on these claims pose

challenges. First, I believe that it is highly questionable whether drivers could bring

such a claim in a private lawsuit as I believe that Uber would argue the claim is

preempted by the exclusivity of the Worker’s Compensation Act, Cal. Labor Code

§§ 3600, 3602, and that a UCL claim cannot be utilized as a backdoor way to avoid this

exclusivity. See Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund, 24 Cal. 4th

800, 828 (2001); Hughes v. Argonaut Ins. Co., 88 Cal. App. 4th 517, 522 (2001)

(dismissing claim “on behalf of the general public, asserting violations of California's

unfair competition law (UCL)” where the underlying challenged conduct was a

violation of the Worker’s Compensation Act because the WCAB had “exclusive

jurisdiction”); Koszdin v. State Comp. Ins. Fund, 186 Cal. App. 4th 480, 495 (2010).

Accordingly, I believe there would be a substantial risk of no recovery on this claim.

Failure to Pay Reporting Time (Wage Order 9)

77. Wage Order 9, § 5, requires that for each workday that a California employee is

required to report for work and does report, but is either not put to work or is furnished

less than half of that employee’s usual or scheduled day’s work, each such employee

must be paid an amount equal to half of his or her usual or scheduled day’s pay, or in

any event must be paid an amount equal to 2 hours at the employee’s regular rate of

pay. Here, the claim would presumably apply where drivers signed onto the App but


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CASE NO.: 13-3826-EMC 21

received no ride requests and gave no rides. I believe there is a substantial risk of no

recovery on this claim because drivers can indisputably work as often as they like and

are not required to “report” or sign onto the App at any particular time. Thus, because

Uber drivers are arguably never “required” to report for work, I do not ascribe any

value to this claim.

Willful misclassification of drivers as independent contractors (Cal. Labor Code §§ 226.8,

2753)

78. Cal. Lab. Code § 226.8 defines “willful misclassification” as “avoiding employee status

for an individual by voluntarily and knowingly misclassifying that individual as an

independent contractor.” Here, even if Plaintiffs were to prevail on the

misclassification issue, I believe that there be a significant challenge in overcoming

Uber’s defenses to this claim, including that it had a good faith belief that its drivers

should be classified as independent contractors rather than employees, and that it did

not knowingly misclassify drivers as a way of avoiding the law. Accordingly, I believe

there would be a substantial risk of no recovery on this claim because of the willfulness

requirement.

Penalties Pursuant to PAGA (Cal. Lab. Code § 2698, et seq.)

79. PAGA, Cal. Lab. Code § 2698, et seq., generally provides for penalties arising from

violations of the California Labor Code. Penalties are assessed per employee and per

pay period. Id.

80. Here, Plaintiffs have moved to have PAGA claims added to their case, but the Court

has yet to rule, so there remained a risk that these claims would not go forward in this

case. However, assuming that Plaintiffs were successful in having these claims added

to this case, Plaintiffs have made the following assessment of this claim.

81. Given that much of the work that Uber drivers have performed has been spread out over

time, there have been a considerable number of weeks in which Labor Code violations


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CASE NO.: 13-3826-EMC 22

may be at issue.5 In light of this fact, if Plaintiffs were successful in establishing Labor

Code violations for all of these drivers during all of these workweeks, potential PAGA

penalties would be astronomical and far beyond the potential damages at issue in this

case.

82. For example, assuming that the Court or jury were to find that Uber is subject to PAGA

penalties for their failure to reimburse Drivers for work related expenses (e.g., mileage),

Uber would be subject to a PAGA penalty of $100 per driver for the first pay period in

which there was a violation, and $200 per driver for each subsequent pay period in

which there was a violation. Cal. Lab. Code § 2699(f). Thus, for only the penalties

associated with the California Labor Code violations in this case, §§ 2802 and 351, the

penalties could exceed one billion dollars.6 This is to say nothing of other potential

PAGA penalties arising from the numerous other Labor Code violations set forth herein.

See supra, n. 4. 5 The Labor Code provisions that have been alleged in various litigation against Uber are sections 201, 202, 203, 204, 206.5, 207, 208, 210-14, 221-224, 226, 226.7, 226.8, 227, 245-49, 351, 353, 432.5, 450, 510, 512, 550, 551, 552, 558, 1174.5, 1182.12, 1194, 1197, 1197.1, 1198, 2753, 2802, 3700, 3700.5, 3712, and 3715, although Plaintiffs recognize that it would be difficult to prove underlying liability on a number of these statutory provisions for the reasons discussed above. Additionally, it is not entirely clear under California law whether it is permissible to “stack” PAGA penalties on top of underlying violations, as the California Supreme Court has yet to weigh in on the issue. Thus, it is possible that Plaintiffs would not have been able to obtain more than a single PAGA penalty per pay period, even if there had been multiple violations in that pay period. 6 Plaintiffs estimated the total number of pay periods for the California class by assuming that every class member drove every month between their first month and their last month with Uber for a total of approximately 1,253,954 months. Because Uber pays drivers weekly, that would equate to 5,392,002 pay periods. When each pay period is multiplied by $100 for every violation of Cal. Labor Code § 2802, the total is $530 million. Likewise, when each pay period is multiplied by $100 for every violation of Cal. Labor Code § 351, that yields an additional $530 million. Thus, for violations of just Cal. Labor Code §§ 2802 and 351 alone, the PAGA penalties could top $1 billion. However, this estimate is likely a large overestimate because all drivers certainly did not drive every week starting with their first week and ending with their last week.


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83. However, whatever the ultimate figure, if Plaintiffs were to prevail on the

misclassification issue and PAGA claims, it appears likely that the Court would

dramatically reduce the award pursuant to Cal. Lab. Code § 2699(e)(2), which permits

the court to reduce awarded PAGA penalties if, based on the facts and circumstances of

the particular case, to do otherwise would result in an award that is unjust, arbitrary and

oppressive, or confiscatory, and to comport with due process. See York v. Starbucks

Corp., 2012 WL 10890355, *10 (C.D. Cal. Nov. 1, 2012) (“PAGA's section 2699(e) (2)

provides the Court with the ability to fashion an appropriate penalty in this case that

will not offend notions of due process.”); see also Amaral v. Cintas Corp. No. 2, 163

Cal. App. 4th 1157, 1214 (2008) (holding that a PAGA penalty in the amount of one-

third of damages award was “proportional to [defendant’s] misconduct.”).

84. Uber would no doubt argue that these penalties should be dramatically reduced

pursuant to § 2699(e)(2) and to comport with due process. Given that PAGA penalties

would arise purely from Uber’s alleged misclassification of drivers, and given that Uber

may well establish that it had a good faith belief that its drivers were properly classified,

I believe there is a good chance that the Court would reduce PAGA penalties (as

occurred in Amaral) to an amount no greater than approximately one-third of the

damages, if that much. See Harris v. Radioshack Corp., 2010 3155645, at *3-4 (N.D.

Cal. Aug. 9, 2010) (Chen, J.) (granting motion for final settlement approval and finding

that although Plaintiffs “could arguably get more . . . because they [were] entitled to

penalties under the PAGA, it [was] not clear that they could get a significant amount”

more because of Section 2699(e)).

85. Moreover, most settlements provide only modest allocations for PAGA claims and

have not analyzed actual potential recoveries. Indeed, there is no requirement that a

PAGA allocation be proportional to the value of a PAGA claim, as many courts have

approved settlement agreements that provide for less than the one percent allocation to


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PAGA penalties made here (75 percent of which goes to the LWDA), notwithstanding

the potential value of the PAGA claim. Hopson v. Hanesbrands Inc., 2009 WL 928133,

*9 (N.D. Cal. Apr. 3, 2009) (approving total PAGA allocation that was .49% of

$408,420.32 gross settlement; Moore v. PetSmart, Inc., 2015 WL 5439000, *8 (N.D.

Cal. Aug. 4, 2015) (approving total PAGA allocation that was .5% of $10,000,000

gross settlement); Lusby v. Gamestop Inc., 297 F.R.D. 400, 407 (N.D. Cal. 2013)

(approving total PAGA allocation that was .67% of $750,000 gross settlement), final

approval granted, Lusby v. GameStop Inc., 2015 WL 1501095, *2 (N.D. Cal. Mar. 31,

2015). In fact, this Court conditionally granted final settlement approval under such

circumstances just last week. See Alexander v. Fedex Ground Package Sys., 2016 WL

1427358, *2 n.5 (N.D. Cal. Apr. 12, 2016) (conditionally approving PAGA allocation

that was 0.7% of $173 million net settlement amount).7

86. These exposure numbers assume that Uber would not be successful in proving that

drivers are properly classified as independent contractors at trial and would not be

successful in any of its numerous appeals before the Ninth Circuit on the arbitration

issue, thereby preserving the integrity of the class.

7 Indeed, a significant number of courts have approved PAGA allocations that are simply $10,000 or less, regardless of the settlement value of the case and regardless of the valuation (if any) of the PAGA claim. Chu v. Wells Fargo Investments, LLC, 2011 WL 672645, *1 (N.D. Cal. Feb. 16, 2011) (approving PAGA settlement payment of $7,500 to the LWDA out of $6.9 million common-fund settlement); Franco v. Ruiz Food Products, Inc., 2012 WL 5941801, *13 (E.D. Cal. Nov. 27, 2012) (approving PAGA settlement payment of $7,500 to the LWDA out of $2.5 million common-fund settlement); Schiller v. David's Bridal, Inc., 2012 WL 2117001, *14 (E.D. Cal. June 11, 2012) (approving PAGA settlement payment of $7,500 to the LWDA out of $518,245 common-fund settlement). If Plaintiffs were to consider the actual penalties that could be awarded under PAGA, this case would not be capable of being settled at all. It could not have been the intention of the California legislature for PAGA to be a weapon that makes settlements of highly contested litigation impossible.


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Benefits of the Settlement

87. The allocation formula distributes the settlement funds among drivers on a proportional

basis based on number of miles while On Trip, transporting a passenger in the car.

Drivers who are members of the certified class in O’Connor will receive double weight

for their mileage (relative to those drivers who were excluded from the class and

Massachusetts drivers), in recognition of the stronger claims of these drivers on the

reimbursement claim, as well as the much greater likelihood of these claims being

pursued, given that they had been included in a certified class. The formula also

awards double weight for the mileage of drivers who timely opted out of Uber’s 2013

and 2014 arbitration clause (in either California or Massachusetts) relative to those

drivers who did not opt out, reflecting their greater chance of remaining in the class in

this case, should the Court’s rulings holding Uber’s arbitration clauses invalid be

overturned on appeal.

88. Attached hereto as Exhibit 1 is a breakdown of my calculations of the approximate

expected net settlement distributions (after the subtraction of fees and expenses) for the

various categories of drivers discussed above in ¶ 87.

89. As shown in this exhibit, drivers who drove a substantial amount of miles will receive

significant payments. For example, class members in California who drove in the

highest category of miles (more than 25,000) may recover on average close to $2,000,

which would double to $4,000 if they opted out of the arbitration clause, and could

double again to $8,000 (assuming a 50% claim rate for the settlement). In contrast, the

settlement class members who drove a minimal number of miles will receive more

nominal payments.

90. Further, I believe the non-monetary relief in the settlement provides significant and

meaningful benefit to drivers. First, Uber’s agreement that it will make deactivation

decisions only for sufficient cause is both legally and practically significant. Under the


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CASE NO.: 13-3826-EMC 26

settlement, this provision will preclude Uber from deactivating drivers for any reason at

all and will specifically eliminate deactivation for failing to accept a sufficient number

of ride requests while using the app. Additionally, Uber will now provide drivers with

notice and the right to cure many deactivations prior to permanent deactivation, will

provide greater transparency regarding the reasons for deactivations, and will create an

appeals process for many deactivations (not related to safety, fraud, customer ratings or

other limited reasons).

91. Legally, these modifications address one of Plaintiffs’ core arguments in this case – that

it is a company’s right to terminate at will, and not the actual exercise of that control,

which is “perhaps the strongest evidence” of an employer-employee relationship,

because “[t]he power of the principal to terminate the services of the agent gives him

the means of controlling the agent's activities.” Ayala v. Antelope Valley Newspapers,

Inc., 59 Cal. 4th 522, 531 (2014); see also O'Connor v. Uber Techs., Inc., 2015 WL

5138097, at *19-21 (N.D. Cal. Sept. 1, 2015) (noting that the majority of Uber’s

contracts “contain express language that provides Uber with a right to terminate any

and all drivers without cause” and that “a putative employer's right to discharge a hiree

at will, without cause, is perhaps the strongest evidence of the right to control”)

(emphasis in original).

92. Moreover, on a practical level, I believe these changes in the deactivation policy will be

meaningful for drivers who must confront these issues on a regular basis. Indeed,

scores of drivers have contacted my firm on a regular basis stating they are concerned

about being deactivated for numerous and wide-ranging reasons or without any

explanation at all. These changes will help alleviate this widespread problem in several

ways by providing drivers with: (1) at least two warnings and an opportunity to cure

many types of deficiencies prior to deactivation; (2) a written explanation of the reasons

for their deactivation; and (3) an appeals process for many types of deactivations,


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overseen by fellow drivers for those who believe they have been unjustly deactivated.

Creating more transparency while also restricting the reasons that Uber can deactivate

drivers will go a long way towards addressing this problem.

93. In addition, the creation of the Driver’s Association will allow drivers to continue to

work towards additional non-monetary programmatic relief for drivers in California

and Massachusetts by polling their fellow drivers to create an agenda for further change

and meeting regularly with Uber management to engage in good faith discussions to

address issues of concern to drivers. Drivers have regularly expressed to Plaintiffs’

counsel their desire to have more of a voice in the way Uber operates and have

expressed frustration at feeling the company is unaware of their needs. I believe the

Driver’s Association could go a long way towards addressing these issues as well.

94. The drivers will also have the benefit of challenging some of these issues in arbitration

at the company’s expense. As this Court has already held, Uber’s current agreements

require an even split of arbitration-related costs (except where required by law). See

Mohamed v. Uber Techs., Inc., 109 F. Supp. 3d 1185, 1209 (N.D. Cal. 2015). Thus,

even in a misclassification case where drivers allege they are employees and should be

subject to the Employment Rules, Uber can (and has) readily argue that the

Commercial Rules would apply.

95. The Commercial Rules require claimants to pay substantial initial and final fees (a

minimum of $1,550 depending on the value of the case) and requires the parties to split

all other costs of arbitration, including arbitrator fees. In other cases I have litigated in

which workers have challenged their misclassification as independent contractors, but

in which the workers have been compelled to pursue individual arbitration under the

AAA Commercial Rules, the arbitration service has made an initial determination that

the claimants would be required to split the arbitration fees. For example, in McKean

v. Caviar, Inc., JAMS No. 1100082951, the claimant brought a misclassification claim


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in arbitration, since a plaintiff in a related case against this company was compelled to

individual arbitration under the AAA Commercial Rules. In this case, the office of the

arbitrator indicated that the Employment Rules (under which the respondent would pay

the bulk of the fees) did “not apply because of the independent contractor relationship.”

See Exhibit 2, attached hereto. While I protested this determination, and the respondent

agreed in that case to pay the arbitration fees, it is not certain that the claimant would

not have been required to pay the fees if the respondent had not agreed to pay them.

Similarly, in Ribeiro v. System4, LLC, AAA No. 01 15 0003 8637 (another case in

which a plaintiff in a related case against the same company had been compelled to

individual arbitration under the AAA Commercial Rules), the AAA made an

administrative determination that, because the AAA Commercial Rules applied, the

arbitration fees would need to be split between the parties. See Exhibits 3 and 4,

attached hereto. I protested this determination and persuaded the arbitrator to make a

threshold ruling on who would pay the fees (or whether they would be split). Id.

However, because the agreement stated that the AAA Commercial Rules would apply,

my client was still billed for his share of the $7,500 cost of even obtaining this

preliminary determination. See Exhibit 5, attached hereto. It required significant

briefing on this issue for me to obtain a ruling from the arbitrator that my client would

not have to split arbitration fees. However, this result was not assured and could well

have gone the other way.

96. In short, it has been my experience that, even when a claimant is challenging what he or

she alleges to be misclassification as an independent contractor, when an arbitration

provision provides that the AAA Commercial Rules will apply, there is a real risk that

the claimant may be required to split arbitration fees. As a practical matter, this

deterrent would essentially eliminate the possibility of recovery for all but the most


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CASE NO.: 13-3826-EMC 29

motivated Drivers. Uber’s agreeing to pay for drivers’ arbitration costs in cases based

on alleged misclassification is an important concession that will benefit drivers.

97. Finally, I believe the portion of the settlement regarding Uber’s tipping policy will have

a substantial and real effect on drivers’ livelihoods. Under the agreement, Uber has

agreed to make good faith efforts to clarify its messaging regarding tipping, clarifying

on its website and in communications with drivers and riders that tips are not included

on Uber's platforms (with the exception of UberTAXI) and that tipping is neither

expected nor required. Moreover, Uber has confirmed that its policies do not prohibit a

driver from putting up signs or requesting a tip. And under this agreement, Uber will

not have the ability to deactivate drivers at will in California and Massachusetts. Thus,

there would be no prohibition on drivers posting in their cars a small sign stating that

“tips are not included, they are not expected, but they would be appreciated.”8 I

believe that, with this information, many riders will begin tipping their drivers, which

will increase drivers’ pay substantially.

98. In light of the risks posed by this case, as well as the anticipated delay in payment even

if Plaintiffs were to prevail (because of Uber’s stated intention to aggressively appeal

any adverse rulings), and considering as well the significant non-monetary components

of this settlement, I believe this settlement is a fair, reasonable, and adequate resolution

of the claims brought in this case.

99. Attached hereto as Exhibit 6 is a true and correct copy of the parties’ Settlement

Agreement.

8 If some passengers are unhappy with the signs (or their interactions with drivers regarding tips) and that leads to poor ratings, then given that low ratings are still a basis for deactivation, drivers may still suffer potential repercussions for having such signs in their cars. But, under this agreement, there would be nothing directly prohibiting drivers from having such signs.


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100. Attached hereto as Exhibit 7 is a true and correct copy of the parties’ Short Form

Notice to be sent to the Settlement Class.

101. Attached hereto as Exhibit 8 is a true and correct copy of the parties’ Long Form

Notice to be sent to the Settlement Class.

102. Attached hereto as Exhibit 9 is a true and correct copy of the draft Claim form (both

online and in paper form).

I declare under penalty of perjury under the laws of the United States of America that

the foregoing is true and correct.

Executed on April 21 2016, in Boston, Massachusetts.

By: __/s/ Shannon Liss-Riordan_____ Shannon Liss-Riordan


Documents

UBER 2016-04-21 [519] SLR Declaration (1)