McKnight v. Uber “Safe Rides” Settlement for Consumers

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After the district court rejected their first deal in McKnight, et al. v. Uber Technologies, Inc., et al., No. 3:14-cv-05615-JST (N.D. Cal.), the plaintiffs and Uber have submitted an amended settlement for approval. See Plaintiffs’ Notice of Motion and Motion for Preliminary Approval of Class Action Settlement, available here. The $32.5 million settlement would resolve the plaintiffs’ claims that Uber misled consumers about the quality of the background checks on the drivers and whether all of the “safe rides” fees charged by Uber go toward safety measures. The revised deal adds $4 million to the fund. More importantly, the amended settlement now excludes consumers who did not pay the “safe rides” fee, reducing the class size by over 2 million, according to the plaintiffs in their motion for preliminary approval.

The restructured deal is aimed at fixing problems identified by District Judge Jon S. Tigar in denying preliminary approval of the parties’ initial settlement. See Order Denying Motion for Preliminary Approval, Philliben, et al. v. Uber Technologies, Inc., et al., No. 3:14-cv-05615-JST (N.D. Cal. Aug. 30, 2016) (slip op. available here). According to Judge Tigar, the initial settlement fell short of the standard for preliminary approval because it failed to distinguish between consumers who paid the “safe rides” fee from those who had not—all were paid under the same payment formula. For Judge Tigar, the settlement structure unfairly diluted the payments to consumers who were more deserving of payment. By excluding consumers who did not pay the “safe rides” fee from the class definition, the amended settlement eliminates the dilution problem. Those excluded consumers also would not be releasing any claims, so they retain the right to pursue claims on their own. Judge Tigar also asked for more extensive analysis of the value of the claims had the class prevailed at trial, which the plaintiffs provide in the renewed motion for preliminary approval.

Consumer and plaintiffs’ advocates should continue to monitor this settlement to get a further read on how courts are evaluating settlements involving the controversial ride-sharing company. To be sure, the prior version of the settlement illustrates the danger of a settlement that sweeps too broadly and fails to tailor the settlement structure to the allegations in the complaint. While the amended settlement appears to represent a strong victory for consumers, the court will surely scrutinize the settlement closely. The closely-watched preliminary approval hearing scheduled for July 6 was vacated on June 27, 2017; the court is expected to issue its order shortly.

Authored By:
Ryan Wu, Senior Counsel