Putting the Brakes on Uber

When John Crabtree filed a class action lawsuit against Uber over how it pays its drivers, his corporate opponent accused him and his colleagues of having “hallucinated” the facts and scoffed that the plaintiffs’ legal theory was a “logical impossibility.”

The company won a ruling from U.S. District Judge Yvonne Gonzalez Rogers in San Francisco that excluded nearly 98 percent of the potential plaintiffs because those drivers hadn’t opted out of a contract arbitration clause. Uber also asked to stay the case for those who had opted out, pending the appeals of related cases in the 9th U.S. Circuit Court of Appeals. The stay was denied.

Crabtree, leading the plaintiff’s team, persevered for about 9,600 drivers who had opted out of arbitration and won a summary judgment against Uber in March 2018. It’s believed to be the first-ever class action Uber has lost on the merits in lawsuits over its pay practices.

The judge granted Crabtree’s motion for class certification, while ruling that Uber breached its contract with the opt-out drivers, deducting a $1 “safe-rides” fee from them on short, minimum-fare rides that should not have been coming from the drivers.

The parties have agreed on damages with pre-judgment interest totaling about $2 million, while the judge considers how much to award for plaintiff’s attorney fees. Crabtree and his colleagues intend to appeal the judge’s exclusion of about 390,000 other drivers across the country who had not checked the box on their contract to opt out of arbitration.

“We achieved what nobody else achieved: a contested judgment against Uber,” says Crabtree, a veteran class action and appellate attorney at five-lawyer Crabtree & Auslander in Key Biscayne.

Brought into a driver pay case in 2016 by Boulder, Colorado, attorney Mark Morrison, Crabtree decided the drivers’ complaint in that suit didn’t hold up. But he noticed Uber seemed to be taking the $1 safe-rides fee—which it had established to cover the cost of driver background checks and other safety initiatives—out of drivers’ paychecks in 2014 and 2015 on short rides. On average, drivers allegedly lost about $200 apiece; some losing as much as $2,000. (Crabtree says Uber amended its contract in November 2015.)

So Crabtree filed a class action, and over the next two years, he and Morrison, along with local San Francisco counsel Andrew August, of Browne George & Ross, ran a gantlet of legal obstacles thrown up by Uber’s lawyers.

Crabtree asked the court to find the arbitration provision unenforceable because it would cost each driver a $2,000 filing fee to arbitrate a case that would bring them an average $200 recovery.

The plaintiff’s team beat back two Uber attempts to dismiss the case before the judge allowed discovery. Uber then discussed mediating the claims of the drivers who opted out of arbitration—even as it was seeking to dismiss the entire case, Crabtree says. His team rejected that effort, believing the opt-out drivers were likely to recover full damages.

Instead, Crabtree’s team offered to mediate both groups’ claims. If Uber settled the claims of the drivers who did not opt out of arbitration on reasonable terms, his thinking went, the company would be more likely to settle the claims of the opt-out drivers at full value. Uber, however, refused that offer.

So Crabtree waited for a ruling that would give the parties a realistic sense of the value of the claims.  “We didn’t see the purpose of mediation when they were saying our case was worthless,” he says.

Judge Rogers rejected Uber’s argument that the $1 safe-rides fee wasn’t part of the fare to which drivers were entitled. The plaintiffs then sought punitive damages, which the judge denied.

For August, what makes the case special is that the team stuck with it despite the judge’s ruling to exclude the vast majority of the potential class. “It would have been so easy to say we took this on because it’s a $40 million case, and now that it’s reduced to $2 million, let’s cut and run,” he says.

Crabtree says the case illustrates injustice in arbitration: “The 390,000 drivers were subject to the exact same practice as the 9,600 people who just won. Uber took their money as well. It’s outlandish that companies can hide behind the skirt of an arbitration clause when their liability is so clear.”