Dulberg v. Uber Technologies, Inc.

          ORDER RE UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF REVISED SETTLEMENT

          WILLIAM ALSUP UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         In this breach-of-contract class action, plaintiff moves for preliminary approval of a revised settlement agreement. Defendants do not oppose. To the extent stated below, the revised class settlement is PRELIMINARILY APPROVED. Nonetheless, the motion will not be granted until the parties revise the settlement agreement so that the class notice will be mailed, not e-mailed. Further modifications to the class notice are also required.

         STATEMENT

         The background of this action is set forth in prior orders (see, e.g., Dkt. No. 52). In short, plaintiff Martin Dulberg brought this class action on behalf of Uber drivers against defendants Uber Technologies and Rasier, LLC (collectively, “Uber”), asserting Uber breached its contract with Uber drivers. Uber's policy changed in late 2016. Plaintiff alleged the new policy violated his contract with Uber because Uber calculated costs to passengers by estimating time and distance amounts before the ride and then compensated drivers based on actual time and distance amounts - keeping the difference for itself. In January 2018, an order certified the following class (Dkt. No. 80 at 8):

All natural persons nationwide who (1) drove for UberX or UberSELECT; (2) opted out of arbitration; (3) transported a passenger who was charged an upfront Fare before May 22, 2017, when Uber issued its updated fee addendum; and (4) made less money overall on rides where they transported passengers who were charged an upfront Fare because they were paid on a Fare calculated based on actual time and distance values instead of the upfront Fare calculated based on estimated time and distance values.

         Plaintiff moved for preliminary approval of a proposed class settlement in the amount of $345, 622 (Dkt. No. 107 at 9). Defendants did not oppose. After some court-ordered changes to the settlement agreement, including direction to alter the “released claims” section, an order preliminarily approved the settlement agreement (Dkt. No. 121). Thereafter, an order approved, as to form and content, the notice of class action settlement and a schedule governing the remaining proceedings in the action (Dkt. No. 123). In November 2018, the settlement administrator e-mailed the proposed class settlement notice to 4, 584 class members - fifty-seven did not deliver. Eight class members subsequently requested to be excluded from the settlement, and one class member informally objected to the settlement via e-mail to class counsel but never followed the process delineated by the class action notice (Dkt. No. 142 ¶¶ 4-9).

         In February 2019, plaintiff moved for final approval of the proposed class settlement of $345, 622. Plaintiff also requested attorney's fees and reimbursement for expenses (Dkt. No. 139). In April 2019, a hearing was held. Two separate requests for information subsequently issued to the parties (Dkt. Nos. 149, 151). Unsatisfied with the parties' justifications for the low proposed class-settlement, an order rejected it (Dkt. No. 153). More specifically, over 25% of the class subject to the proposed settlement would have recovered less than the estimated administrative costs of mailing the checks ($1.75). Many of the checks to be issued would have been for one cent. The potential benefit of the settlement to the class as a whole could not be justified. The high percentage of very low recovery was not reasonable (id. at 1).

         Now, plaintiff tries again. His motion is unopposed. Specifically, the revised settlement agreement has made three changes. First, each class member will now receive the minimum payment of $20. Those class members who would have received more than $20, will still receive the same amount as before. This change increases the total settlement amount from $345, 622 to approximately $395, 000. Second, plaintiff's counsel agreed to limit its request for attorney's fees to 25% of the net settlement amount. Third, Uber agreed to pay the administrative costs of sending the revised class notice to class members. The expenses would not come out of the settlement fund (Dkt. No. 156 at 3-5). This order follows a second oral argument.

         ANALYSIS

         Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a certified class . . . may be settled . . . only with the court's approval.” Preliminary approval is appropriate if “the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, and falls within the range of possible approval.” In re Tableware Antitrust Litig., 484 F.Supp.2d 1078, 1079 (N.D. Cal. 2007) (Chief Judge Vaughn Walker) (citation omitted). The parties' proposed settlement agreement satisfies these requirements.

         1. Benefit to Class Members.

         The issue raised at the final approval hearing stemmed from the mere pennies that would be sent to approximately 25% of the class. This proposed settlement agreement establishes a maximum settlement amount of approximately $395, 000 paid directly to a maximum number of 4, 594 class members. Under the revised settlement, the settlement amount remains $345, 622. After the expenses and fees have been taken out of the settlement, Uber will add approximately $50, 000 to ensure no class member will receive less than $20. This cash infusion will go only to the class who would have received less than $20 after the fees and expenses have been taken out. Because no class member will now receive less than $20, this solution falls within the range of possible approval (Dkt. No. 156-2 at 8-10).

         This is still a low-end recovery for the class. Evidently, this is because the case itself has turned out to be a low-end theory. It might be better for the average class member to roll the dice and see if they could hit big with a jury rather than accept a mere twenty or so dollars. But even a “hit” would not push the average award into three figures, now that we see how little the case was built on. It is hard to justify the burden on the jury to try this case. For ...