San Francisco judge again refuses to sign off on settlement between Uber and driver

Days after rejecting a proposed PAGA settlement for looking like a reverse auction deal, a San Francisco judge rejected another proposal between an Uber driver and the company Friday, citing his "serious concerns" about how the parties reached the $10.8 million figure.

If accepted, the order said, the deal would represent "approximately .13% of the revised theoretical maximum $8,431,847,933" estimated by the parties.

Superior Court Judge Andrew Y.S. Cheng wrote in his order that he found "no evidence that the settlement is a reverse auction," but questioned the heavy discounting the parties used on certain claims, and why they valued other claims at zero dollars. Tabola v. Uber, CGC16550992 (S.F. Super. Ct., filed March 16, 2016).

Cheng issued a second order Friday permitting the Division of Labor Standards Enforcement to intervene in the case, after the agency opposed the settlement last fall on the grounds it was reached via a reverse auction -- a phenomenon that can occur when multiple plaintiffs' attorneys file overlapping representative actions, and the defendant shops around to find the plaintiff willing to settle for the lowest amount. The resulting settlement, if approved, wipes out the remaining claims. Because the counsel who represent the settling plaintiff get to collect the attorney fees, this gives them an incentive to broker settlements that may not actually deter the defendant companies from violations of the law.

Cheng did not allow another Uber driver, whose case features PAGA claims that overlap with Tabola, to intervene in the case. The attorneys who represent this second driver had also alleged the Tabola parties engaged in a reverse auction. Gregg v. Uber, BC719085 (L.A. Super. Ct., filed Aug. 29, 2018).

In his order, Cheng said he did not approve the settlement "because of the (1) inaccurate, incomplete, and unreliable revised damages calculations; (2) unjustified zero valuation of claims (also pursued in other pending actions); (3) released claims added to the second amended complaint ... at the time of the settlement negotiations, with limited investigation and zero valuations; and (4) the unsupported 99.87% discount of the revised theoretical maximum damages."

"The court cannot find that the PAGA settlement is fair and adequate in view of the purpose and policies of the statute," Cheng said, adding he wanted to see the parties continue to negotiate the deal with the state labor commissioner and the Gregg attorneys.

Earlier last week, Cheng had rejected another PAGA settlement brokered between a worker for e-scooter company Lime and one of its workers, suggesting the deal resulted from a reverse auction and "has an odor of mendacity about it." Neutron Holdings Wage and Hour Cases, CJC19005044 (S.F. Super. Ct., filed August 16, 2019).

As in Tabola, the defendant company in Neutron Holdings is represented by attorneys at Littler Mendelson PC.