Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Class certification granted in action against Uber by former drivers, (Dec 11, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in San Francisco has granted supplemental class certification to an expanded class of current and former drivers in their false advertising claims against ridesharing service Uber for allegedly misrepresenting that a gratuity was included in the total cost of the car service and there was no need to give a gratuity to the driver, while retaining a substantial portion of the gratuity for itself (O’Connor v. Uber Technologies, Inc., December 9, 2015, Chen, E.).

Uber Technologies allows consumers to arrange for car rides electronically through an application on their mobile phones.

In August 2013, current or former Uber drivers Douglas O' Connor and Thomas Colopy filed a class-action complaint against Uber Technologies, Inc. and two of its executives, alleging violations of statutory employee reimbursement and false advertising claims under California’s Unfair Competition Law (UCL). In December 2013, the court denied Uber’s motion to dismiss. In September 2015, the court certified a class to pursue the gratuity claims of Uber drivers who drove for Uber since August 16, 2009, had signed up directly with Uber, and did not accept contracts containing the notice and opt-out provisions regarding the arbitration agreement, unless the driver timely opted out of the arbitration agreement. Subsequently, the plaintiffs filed a supplemental motion for class certification.

Proposed class. In granting the plaintiff’s motion in part, the court certified a subclass of drivers who drove for Uber since August 16, 2009, signed up directly with Uber, accepted any contract containing the notice and opt-out provisions regarding the arbitration agreement, and did not timely opt out of the arbitration agreement. This subclass can pursue gratuity claims. Further, both the September 2015 class and December 2015 subclass are certified to pursue expense reimbursement claims for vehicle and telephone expenses. However, the court declined to include drivers who drove for Uber through a third party transportation company or who used fictitious or corporate names since inclusion would result in material variations that could preclude predominance.

Adequacy. First, the court determined that the plaintiffs’ proposed subclass sufficiently satisfied the adequacy prerequisite of Federal Rule of Civil Procedure 23(a). Uber’s argument that the plaintiffs failed to show adequate representation by seeking only vehicle and telephone expenses and split a single cause of action across different forms of relief was rejected. The court noted that the plaintiffs made a reasonable decision to pursue those expenses in the litigation and presented evidence that such expenses comprise the majority of any recoverable expenses. Moreover, the plaintiffs’ decision to pursue expenses that were common to all drivers, while not seeking other potentially recoverable expenses, was reasonable in light of the potential difficulties of proving recovery of those other expenses on a class-wide basis.

Predominance. The court also found that certifying the vehicle and telephone expenses would not cause individualized issue to predominate. Uber contended that the use of the IRS reimbursement method to calculate drivers’ expenses would not closely approximate their actual claimed expenses. The court noted, however, that the IRS reimbursement method was not arbitrary and was a “reasonable basis of computation” of vehicle expenses. Uber’s argument that telephone expenses require an individualized inquiry was also rejected. A smart phone and data plan were required to access the Uber application and therefore telephone expenses were plainly required for every Uber driver. As such, liability for telephone could be adjudicated on a class-wide basis, the court concluded.

The case is No. 3:13-cv-03826-EMC.

Attorneys: Adelaide Pagano (Lichten and Liss-Riordan, PC) for Douglas O'Connor. Andrew Michael Spurchise (Littler Mendelson) for Uber Technologies, Inc. and Rasier-CA, LLC. James Parton, III (Parton Sell Rhoades PC) for 7x7 Executive Transportation LLC.

Companies: Uber Technologies, Inc.; 7x7 Executive Transportation LLC; Rasier-CA, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews