U.S. District Judge Edward Chen has given final approval to a $7.5 million settlement between Uber and a class of former drivers who said they were denied further employment based on illegal background checks that the company procured in violation of the Fair Credit Reporting Act and certain state laws.
While $7.5 million is nothing to turn your nose up at, Chen said that the settlement was only a fraction of what Uber might have paid if the case went to trial, according to Courthouse News. However, the judge cited potential legal hurdles that the plaintiffs would have faced which would make it difficult to secure a more substantial amount.
“Given the overall weakness of their case, the court concluded that the proposed settlement falls within the range of possible approval,” said Chen.
In his decision, Chen voiced his displeasure at the comparably low payout of the suit but said that the class was on shaky legal grounds due to several factors.
First, the judge cited a recent Ninth Circuit ruling that would have excluded around 40% of the members in the class and forced them to seek individual arbitration, which would have reduced the amount that Uber would have paid.
“Given the small amount of potential recovery per individual, there is a strong likelihood that few would pursue individual arbitration,” Chen said. “This fact alone accounts for a significant discount on the potential recovery.”
Second, Chen said that class attorneys had recently admitted that their case was weaker than they first thought. The legal team’s argument had relied on Uber not complying with a requirement for background checks under the Fair Credit Reporting Act, but the company proved that it generally followed the policy.
Lastly, Chen said that the class would have had to prove that current and former drivers were Uber employees and not private contractors, a topic that has been fiercely debated. Chen said that this stumbling block was “obviously a difficult factual question” that would have tied up litigation and relied on other court rulings to succeed.
"In light of the substantial risks to Plaintiffs, the Court finds that the proposed settlement, though sharply discounted, is sufficiently within the range of reasonableness," Chen stated.
The class was represented by Tina Wolfson, Robert Ahdoot, and Theodore W. Maya, of Ahdoot & Wolfson, PC, and Laura Ho, Andrew Lee, and William Jhaveri-Weeks of Goldstein, Borgen, Dardarian & Ho
Editor's note: This story is about a class-action lawsuit. If you are among the class of consumers described in the suit, you may eventually be eligible to participate in whatever compensation the court awards, if any. Unlike what many people think, you do not "join" a class action -- you are either in the class covered by the action or you are not.
Often, consumers included in an award do not need to take any action, as the defendant is required to contact them directly. In other cases, the court and the attorneys who brought the case will issue instructions when the case is settled.
Please see our Class Action Guide for more information.