Uber's California drivers granted class-action status — with limits
NEW YORK — In a major blow to Uber Technologies, a handful of drivers were granted class-action status in their lawsuit against the ride-hailing company, raising the stakes for Uber if the drivers win their case.
The drivers — Thomas Colopy, Matthew Manahan and Elie Gurfinkel — are suing Uber on the grounds that they should be labeled employees and not independent contractors — an issue that goes to the heart of how Uber does business.
On Tuesday, U.S. District Judge Edward Chen said the drivers, who face a trial by jury, can proceed as a class with limits. For example, Judge Chen said the drivers can only sue on behalf of UberBlack, UberX, and UberSUV drivers who have driven for Uber in the state of California at any time since Aug. 16, 2009.
To join the class, drivers also must have signed up to drive directly with Uber or an Uber subsidiary, among other restrictions.
It's unclear how many of Uber's 160,000 past and current California will qualify for the class, but a class-action victory could have a greater impact on Uber's business model and $51 billion valuation than a win by a handful of disgruntled drivers.
In an emailed statement, Uber said it will appeal the decision. It also said the limitations on the class will likely eliminate Colopy — one of the named plaintiffs. Uber also said that "only a tiny fraction of the class that the plaintiffs were seeking" will be certified under the ruling — without specifying how many.
"While we are not surprised by this Court's ruling, we are pleased that it has decided to certify only a tiny fraction of the class that the plaintiffs were seeking," Uber said in the statement. "That said, we'll most likely appeal the decision as partners use Uber on their own terms, and there really is no typical driver--the key question at issue.”
The San Francisco start-up keeps expenses down by claiming that it's a technology company matching drivers with riders, rather a taxi or car service company with vehicles to maintain. That means Uber's drivers are saddled with expenses such as maintenance, insurance, gas and the vehicles themselves.
If Uber is forced to treat drivers as employees, it could be forced to bear some of those costs as well as Social Security, workers compensation and other benefits.
Lawyers for Uber fought class-action status by arguing that the drivers who filed the lawsuit don't reflect all of their peers. In papers to the judge, Uber cited statements from 400 drivers who have told the company they prefer the flexibility being an independent contractor provides.
The parties were ordered to meet again on Oct. 22, 2015, at 10:30 a.m. PST.
In a separate case in June, California's Labor Commission awarded Barbara Berwick, a former driver, $4,152 after it determined she was an employee, not an independent contractor. Uber has said it will appeal the ruling even though the ruling does not impact other drivers.