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O'Connor v. Uber Technologies, Inc.

United States District Court, N.D. California

September 13, 2019

DOUGLAS O'CONNOR, et al., Plaintiffs,
UBER TECHNOLOGIES, INC., et al., Defendants.



         Plaintiffs brought two lawsuits against Defendant Uber Technologies, Inc., alleging that Uber misclassifies its drivers as independent contractors rather than as employees. See O'Connor v. Uber Techs., Inc., No. 13-cv-3826-EMC, Docket No. 330 ¶ 3; Yucesoy v. Uber Techs., Inc., No. 15-cv-262-EMC, Docket No. 292 ¶ 2. Five years of contentious litigation ensued. The parties eventually entered into an agreement to settle both suits, and on March 29, 2019, the Court granted preliminary approval to the parties' class action settlement. O'Connor, Docket No. 930 (“Prelim. Approval Order”); Yucesoy, Docket No. 332.

         For the reasons stated on the record and as explained below, the Court now GRANTS Plaintiffs' Motion for Final Approval of Class Action Settlement Agreement and Release and GRANTS Plaintiffs' Motion for Attorneys' Fees. O'Connor, Docket No. 954 (“Mot.”) & Docket No. 935 (“MAF”); Yucesoy, Docket No. 347 & Docket No. 335.[1] Due and adequate notice of the Settlement Agreement having been given to the Settlement Class; the Court having carefully considered all papers filed and proceedings held herein, including the objections to the proposed Settlement Agreement and/or request for attorneys' fees, the Memoranda of Points and Authorities in Support of the Motions and all associated Declarations, the Settlement Agreement, the arguments of counsel, and the record in this case; the Court otherwise being fully informed; and good cause appearing therefore, the Court hereby enters the following order.


         A. Settlement Agreement

         The Settlement Agreement covers “all Drivers in California and Massachusetts who have used the Uber App at any time since August 16, 2009, up to and including February 28, 2019, and who have validly opted out of arbitration or for whom Uber has no record of acceptance of an arbitration agreement. Excluded from the Settlement Class are (i) all Persons who are directors, officers, and agents of Uber or its subsidiaries and affiliated companies or are designated by Uber as employees of Uber or its subsidiaries and affiliated companies; (ii) Persons who timely and properly excluded themselves from the Settlement Class as provided in this Settlement Agreement (see Exhibit C to the Supplemental Hathaway Declaration in support of Final Approval); and (iii) the Court, the Court's immediate family, and Court staff.” Docket No. 926 (“Sett. Agmt.”) ¶ 96.

         Although the O'Connor and Yucesoy cases were limited to claims based on expense reimbursement and tips, the Settlement Agreement contains an expansive release provision, requiring Class Members to release “any and all” claims “based on or reasonably related to the claims asserted in” O'Connor and Yucesoy, Sett. Agmt. ¶ 98, while also requiring the Plaintiffs to file amended complaints expanding the causes of action to include all claims related to the alleged misclassification of drivers as independent contractors. See id., Exhs. A, B. However, unlike the First Proposed Settlement, this Settlement Agreement does not include any PAGA claims and would not release any PAGA claims. Motion for Preliminary Approval (“MPA”) at 2 n.2; Docket No. 915. Nor does the Settlement Agreement purport to resolve the key underlying dispute whether Uber drivers are employees or independent contractors.

         In exchange for Class Members' release of their claims, the Settlement provides monetary and non-monetary consideration. The monetary component of the Settlement is a $20 million non-reversionary fund. Sett. Agmt. ¶ 95. From the fund, $5 million will be deducted for attorneys' fees, approximately $311, 092 will be awarded for attorneys' out-of-pocket expenses related to the litigation, $300, 000 will be awarded for costs of claims administration, and $40, 000 will be ordered as incentive awards[2] for the Settlement Class representatives. Id. ¶¶ 79, 125, 126. The remainder-an estimated $14, 348, 900-will be distributed to Class Members who timely submit claims. Id. ¶ 130. Each claimant's share will be calculated in proportion with the number of miles he or she drove for Uber, based on “relevant records that Uber is able to identify following a good-faith inquiry.” Id. ¶ 135. Plaintiffs' counsel estimates that Class Members who drove 0-1, 000 miles will receive approximately $360, those who drove 10, 000 miles will receive $4, 000, and those who drove 100, 000 miles will receive $36, 000. Docket No. 916 (“Liss-Riordan Decl.”) ¶¶ 21 n.2, 22 n.4. The average settlement share for each claiming Class Member, after attorneys' fees are deducted, will be approximately $2, 206. Id. ¶ 20. The Court, in granting preliminary approval of the proposed settlement, found this Plan of Allocation-outlining the monetary recovery, on a pro rata basis, to all members of the Settlement Class who file a timely claim-to be fair and reasonable. Prelim. Approval Order at 23-24.

         After an initial distribution is made to drivers whose claims are approved by the Settlement Administrator, a second distribution of uncashed checks will be made to claimants who cashed their initial checks, in proportion to their on-trip mileage. Sett. Agmt. ¶ 142; Docket No. 927. Any funds remaining after the second distribution will be distributed to two cy pres beneficiaries: Legal Aid at Work, for unclaimed funds in the California settlement pool, and Greater Boston Legal Services, for unclaimed funds in the Massachusetts settlement pool. Id.

         Uber has also agreed to provide non-monetary relief in the form of three modifications to its business practices. First, Uber will maintain a comprehensive, written policy governing the deactivation of drivers' accounts that will be easily accessible online. Sett. Agmt. ¶ 127(a)(ii). Second, the deactivation policy will provide several new safeguards to drivers. Id. ¶¶ 127(a)(i)- (iv), 127(b). Third, except in the case of deactivations stemming from a number of “excluded matters” (safety issues, physical altercations, discrimination, fraud, sexual misconduct, harassment, or illegal conduct), drivers whose accounts are deactivated will have the opportunity to take a “quality course” and be “eligible for consideration for reactivation” upon completion of the course. Id. ¶ 127(c). These policy modifications shall expire upon either two years after Final Approval, or “changes to any applicable statute, regulation, or other law that Uber reasonably believes would require a modification to any of the provisions, ” whichever is earlier. Id. ¶ 128. Thus, the modifications will remain in effect for at most two years.

         B. Updates Since Preliminary Approval

         On April 19, 2019, Plaintiffs filed a Fifth Amended Complaint, as required by the Settlement Agreement. Docket No. 932 (“FiAC”); Sett. Agmt., Exhs. A, B. The Fifth Amended Complaint adds (1) claims pertaining to unjust enrichment, conversion, and fraud, based upon Uber's failure to remit to drivers the entire gratuity paid by customers or tips they might have otherwise received; (2) claims pertaining to various violations of the California Labor Code “stemming from [drivers'] misclassification as independent contractors”; and (3) claims pertaining to violations of the federal Fair Labor Standards Act. FiAC ¶ 3-6. Seventeen claims were added in total. Id. at 9-19.

         On April 19, 2019, the Settlement Administrator “emailed the Court-approved Long Form Notice . . . to the . . . email addresses provided by Uber for the 14, 085 Settlement Class Members.” Docket No. 954-1 (“Hathaway Decl.”) ¶ 5. Each email contained a unique ID number, password, and personalized link that would take Class Members to a “claim portal where they could file a Claim Form.” Id. The Settlement Administrator also set up a website “where a person could view the Short Form Notice, ” as well as a toll-free number to “answer frequently asked questions.” Id. ¶ 5, 13-14.

         In total, 2, 034 of the emailed class notices were returned as undeliverable. Id. ¶ 6. On May 10, 2019, the System Administrator “mailed paper copies of the Class Notice to the 1, 898 Settlement Class Members whose emails had been returned as undeliverable and for whom mailing addresses could be identified. Id. Of those paper notices, 324 were returned by the Post Office as undeliverable. Id. That same month, Uber informed the Settlement Administrator that there were 1, 622 “additional drivers who were not part of the Initial Class Information who the Parties agreed met the definition of a Settlement Class Member and needed to be issued Class Notice.” Id. ¶ 6 n.3. Over the course of May and June, the Settlement Administrator emailed the same Class Notice to the newly identified drivers as had been sent to the drivers identified in the Initial Class Information (and “successfully mailed paper Reminder Notices to all 158” of the newly identified drivers whose emails were returned as undeliverable). Id. The Settlement Administrator notes that “[a]s of July 22, 2019, Class Notices were ultimately returned undeliverable for 618 of the 15, 710 recipient Settlement Class Members. Therefore, total deliverability of Class Notices to Settlement Class Members was over 96%.” Id. ¶ 7.

         Following these initial efforts, the Settlement Administrator sent a reminder notice by email on June 11, 2019 and again on June 24, 2019, to all those members of the Settlement Class who had not yet submitted claims. Id. ¶¶ 8-9. The Administrator then sent additional weekly email reminders on July 2, July 10, July 19, July 26, August 2, and August 9, 2019. Id. ¶ 10; Docket No. 957-1 (“Supp. Hathaway Decl.”) ¶ 4. On July 8, 2019, the Settlement Administrator sent a mailed reminder notice to all those members of the Settlement Class who had not yet submitted claims and whose shares were estimated to be at least $100. Hathaway Decl. ¶ 11. The Administrator also sent mailed reminders to the members of the Settlement Class who requested their reminder notice be re-sent or whose initial reminder notice was returned by the Post Office with a forwarding address on July 26, 2019, August 2, 2019, August 9, 2019, and August 16, 2019. Supp. Hathaway Decl. ¶ 4. Proof that email and postal mail notice complied with the Preliminary Approval Order has been filed with the Court. Hathaway Dec., Exhs. A, B.

         Class Members were directed to file claims by August 17, 2019, and as of August 23, 2019, the Settlement Administrator had “received 5, 627 timely Claim Forms . . . accounting for 67.3% of the settlement fund (assuming 100% participation).” Supp. Hathaway Decl. ¶ 3. Class Members who “wished to exclude themselves from the Settlement were required to submit a request for exclusion” by June 18, 2019, and as of August 23, 2019, the Settlement Administrator had received three such requests, although one of the parties requesting exclusion subsequently asked to withdraw his request for exclusion.[3] Id. ¶ 8. The Settlement Administrator also received four untimely requests for exclusion from three parties. Id. ¶ 9. The Court has reviewed Exhibit C to the Supplemental Declaration of Katherine Hathaway, filed on August 27, 2019, and approves Exhibit C thereto as the complete list of all Persons who have submitted timely requests for exclusion from the Settlement Class. Class Members who “wished to object to the Settlement were required to send a written objection, including the specific reason for the objection” by June 18, 2019. Hathaway Decl. ¶ 17. A total of four objections from three parties-discussed in greater detail below-have been filed.[4] Supp. Hathaway Decl. ¶ 11. The Court notes that despite an extensive and robust class notice program, only three members of the Settlement Class have objected; thus, it finds that the response to the proposed Settlement has been considerably positive.

         The Court finds that the notice plan as performed by the Parties-including the form, content, and method of dissemination of notice to members of the Settlement Class, as well as the procedures followed for locating (when necessary) current postal addresses for members of the Settlement Class for notice purposes and sending multiple reminder notices-(i) constituted the best practicable notice; (ii) was reasonably calculated, under the circumstances, to apprise members of the Settlement Class of the pendency of the Action and of their right to exclude themselves or object to the Settlement and to appear at the Fairness Hearing; (iii) was reasonable and constituted due, adequate, and sufficient notice to all persons entitled to receive notice; and (iv) met all applicable requirements of Federal Rule of Civil Procedure 23 and due process, and any other applicable rules or law. Specifically, the notice complies with Fed.R.Civ.P. 23(c)(2)(B), which requires that class notice “must clearly and concisely state in plain, easily understood language: (i) the nature of the action; (ii) the definition of the class certified; (iii) the class claims, issues, or defenses; (iv) that a class member may enter an appearance through an attorney if the member so desires; (v) that the court will exclude from the class any member who requests exclusion; (vi) the time and manner for requesting exclusion; and (vii) the binding effect of a class judgment on members under Rule 23(c)(3).”


         A. Class Certification

         When presented with a motion for final approval of a class action settlement, a court first evaluates whether certification of the Settlement Class is appropriate under Federal Rule of Civil Procedure 23(a) and (b). Rule 23(a) provides that a class action can be maintained if four requirements are met: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation. See Fed. R. Civ. 23(a)(1)-(4). As relevant here, settlement certification of a Rule 23(b)(3) class requires that (1) “the questions of law or fact common to class members predominate over any questions affecting only individual members” and that (2) “a class action [be] superior to any other available methods for fairly and efficiently adjudicating the controversy.” See Fed. R. Civ. P. 23(b)(3).

         The Court analyzed these factors in its Preliminary Approval Order and there is no reason to disturb its earlier conclusions. The requirements of Rule 23(a) and (b)(3) were satisfied then and they remain so now. See Prelim. Approval Order at 8-11. The only question pertaining to class certification that arose after the issuance of the Preliminary Approval Order was the identification and addition of 1, 625 drivers by Uber; the Court asked the parties about these drivers at the August 29, 2019 hearing, and was assured by both parties that they had simply been identified as qualifying drivers through subsequent rounds of record checks by Uber; there is nothing that suggests the addition of these ...

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