A US federal judge has thrown out a $US100 million ($131 million) class-action settlement offered by Uber to its drivers, calling the proposal “not fair, adequate and reasonable”.
US District Judge Edward Chen rejected the ride sharing company’s offer on Thursday. The original lawsuit contended, among other things, that drivers should be classed as employees rather than contractors, and that they should be paid back for the cost of petrol and vehicle upkeep.
The settlement proposed by Uber would have awarded $US100 million ($131 million) to about 385,000 current and former drivers operating in California and Massachusetts. According to MarketWatch, the sum would have would have amounted to a paltry $US24 ($31) for most drivers — roughly how much it costs to fill up a small car in Boston. (It also would have required the drivers remain as contractors.)
According to Reuters, some drivers filed legal objections, arguing that the $US100 million ($131 million) sum was significantly less than the $US850 million ($1.1 billion) in damages the drivers could have been awarded had they won the case.
Chen also wasn’t pleased with the breakdown of the settlement — $US16 million ($20.9 million) of the total would only have gone to the drivers if Uber’s valuation ballooned to 1.5 times its current value after an IPO. Uber apparently couldn’t promise that would happen, and Chen said $US84 million ($110 million) was a “substantial discount” on what the drivers could have walked away with.
In a shocking twist, Uber was not pleased with the decision. “The settlement, mutually agreed by both sides, was fair and reasonable. We’re disappointed in this decision and are taking a look at our options,” spokesman Matt Kallman told NPR. The two sides could still come to an agreement; if not, the case could go to trial.
Uber’s unwillingness to shell out dough isn’t surprising — it is a business, and one born in Silicon Valley — but the apparent ease with which it would shaft its drivers isn’t that shocking, either. After all, news broke yesterday that the company was looking toward a future in which drivers weren’t even necessary. (Remember when the company effectively told customers not to tip their drivers?)