Uber, Lyft settlements receive legal scrutiny

Two proposed settlements that would give Uber and Lyft drivers up to $127 million went before two different federal judges in San Francisco Thursday and were subjected to intense scrutiny by the judges as well as opponents of the agreements.

Both U.S. District Judge Edward Chen, presiding over a proposed $100 million Uber settlement, and U.S. District Judge Vince Chhabria, supervising a possible $27 million Lyft pact, took the cases under consideration after hearing arguments and will rule later on whether to grant preliminary approval.

If either settlement wins preliminary approval, drivers would then be given a chance to opt out of the agreement or submit objections and the judge would hold a fairness hearing before giving final approval.

The two settlements were negotiated by the same lawyer, Shannon Liis-Riordan of Boston.

Both would give drivers of the ride-booking companies certain benefits, such as the right to receive tips and a way to challenge being fired, in addition to the financial award.

But both would leave drivers classified as independent contractors rather than employees, a point that the two San Francisco-based transportation companies have insisted on.

An employee classification would give protections such as rights to a minimum wage, overtime pay and reimbursement of expenses. The classification was originally a main goal of the lawsuits filed by Liis-Riordan on behalf of the drivers in 2013.

The attorney has said she believes the proposed settlements were the best deal that could be obtained because of the risk of losing the employee claim before a jury or an appeals court.

Liis-Riordan told Chen today:

“I did the best we could under the circumstances.”

Uber attorney Theodore Boutrous said:

“It’s a good deal, it’s a fair deal, it’s reasonable.”

The Uber settlement would cover 385,000 current and former drivers in California and Massachusetts. It would include payments of at least $84 million plus an additional $16 million if Uber later goes public or increases in value. The Lyft settlement would cover about 150,000 California drivers.

During a nearly four-hour afternoon hearing in the Uber case, Chen asked questions about how the financial award was calculated, how “sufficient cause” for firing a driver would be determined, whether drivers would be forced to settle future claims in individual arbitration, and the effect of a clause that would release Uber from liability for California labor law violations.

At an earlier hearing on the Lyft pact, Chhabria asked whether a clause releasing Lyft from liability would preclude proceedings on a separate lawsuit filed last month in which some drivers are seeking compensation for fees deducted by Lyft from the higher pay given to drivers during rush hours.

Chhabria asked:

“Shouldn’t we have an understanding of what the release covers and what it doesn’t?”