Friday, September 16, 2016

Uber Drivers Learn that Sometimes the Perfect is the Enemy of the Good

Courts have an important responsibility to approve class action settlements and ensure that the plaintiffs and their attorneys are not selling out the class by colluding with the defendants. Sometimes, though, in their zealous protection of the absent class members, courts wind up forgetting the old aphorism attributed to Confucius: "Better a diamond with a flaw than a pebble without." Uber drivers may wind up with pebbles rather than somewhat flawed diamonds. Crushed pebbles may make concrete, but even flawed diamonds could help pay a lot more bills.

When veteran wage-and-hour litigator Shannon Liss-Riordan sought court approval for a $100 million settlement on behalf of a class of 385,000 Uber drivers in California and Massachusetts, she was denounced by some objectors for the compromise she reached, even after she volunteered to cut her fee in half. Then Judge Edward Chen of the U.S. District Court for the Northern District of California last month denied approval of the proposed settlement of the drivers’ independent-contractor-misclassification claims, finding that the settlement was not “fair, adequate, and reasonable,” as required to grant preliminary approval.

Judge Chen is one of the most careful protectors of absent class members and one of the most thoughtful jurists when it comes to adjudicating wage protections. In denying preliminary approval for the proposed independent-contractor-misclassification settlement, Judge Chen expressly endorsed the view that district court review of class action settlements should not be too lax – and particularly that the court’s review at the preliminary (as opposed to the final) approval stage should be more searching.  But, in this case, his decision disapproving the settlement may have unintended consequences.

In disapproving the settlement, Judge Chen acknowledged the risk posed by Uber’s previously-rejected arbitration provisions, stating: “The most obvious risk to Plaintiffs is, of course, that the Ninth Circuit [which sits as the Northern District of California’s reviewing court] will uphold the validity of the arbitration provision contained in the 2013 and/or 2014 agreements, which this Court found was invalid as a matter of public policy.” This is exactly what happened.

Last week’s decision from the Ninth Circuit upholding Uber’s arbitration agreements (which contained class waivers) in another case may mean that the vast majority of those 385,000 drivers will get nothing. The Ninth Circuit ruled that Judge Chen had erred in previously declaring Uber’s arbitration agreements unenforceable, and that in doing so, he had “ignore[d]” circuit precedent.

Now, to get anything at all, each driver may need to bring an individual arbitration against Uber and win, showing that he or she was more like an Uber employee than an independent contractor. This will be a tough showing and, as Uber well knows, the vast majority of drivers will never step forward to assert the risky claims at all.

Denying approval for the $100 million settlement, Judge Chen found that the settlement reflected a 90% discount on the full value of the drivers claims, with the exception of the claim under the Private Attorneys General Act (PAGA), for which the Court indicated that the settlement was a mere 0.1% of their full value. In particular, Judge Chen expressed concern that the PAGA claim had recently been added to the lawsuit to induce Uber to settle. Furthermore, Judge Chen questioned the value of the nonmonetary relief in the settlement, such as the provision that would allow drivers to accept cash tips (as opposed to in-app tipping as with Lyft), suggesting that riders accustomed to a cashless experience are unlikely to reach for their wallets. 

It is possible that each of these terms was a compromise that was less than ideal for the Uber driver class members. Of course, any settlement of a wage-and-hour class action (or more broadly, any settlement of any lawsuit) is going to consist of a mix of terms, both good and bad for both sides of the dispute. But surely getting some money in a settlement – even an imperfect settlement – would be much better for hundreds of thousands of Uber drivers than getting nothing at all.

These Uber disputes raise central questions about the level of scrutiny a district court should apply to a class settlement – particularly given Judge Chen’s criticism of “lax review” – and whether the Court or class counsel is in a better position to evaluate the risks of non-recovery. While the court is charged with preventing collusive settlements to protect absent class members, ultimately, seasoned and responsible class counsel and class members both tend to care most about the bottom line, in light of the risks. With the benefit of hindsight, Liss-Riordan appears to have been right about the risks of proceeding with the litigation, and the settlement’s objectors were misguided.

The case is not over. Liss-Riordan has been signing up Uber drivers to pursue individual arbitrations in California. The PAGA claims on behalf of California drivers may not be compelled to arbitration. Nonetheless, the likelihood of a recovery nearing $100 million, or getting money for all 385,000 Uber drivers, looks bleak.

When reviewing class action settlements that were negotiated at arm’s length by experienced class counsel, where class counsel is able to articulate the rationale for their position, courts should be hesitant to second-guess counsel’s risk assessment. The perfect is often the enemy of the good in these cases, where a court – with a single decision – can erase years of work to obtain a successful result, absent some kind of an agreement between the parties. Particularly in the employment context, where workers should be recovering more than nominal amounts in any class resolution, those who do not wish to participate can always opt-out of a deal and pursue their own claims if they are so inclined. For the rest, though, receiving flawed diamonds might be a whole lot better than the alternative – getting dirt.

Wednesday, September 7, 2016

You are Not Helpless! Do Something to Defeat Trump

This is a personal appeal from Bryan Schwartz, the principal of Bryan Schwartz Law:

I'm writing this to you as a friend.

We all know Trump is a hotheaded, bigoted liar who has throughout his life exhibited a willingness to say or do anything that might get him some attention - even run for President without having ever spent a day of his life in public service. He has pledged to build a wall along our border, to round up and deport 11 million, and to end religious freedom for Muslims. We know that even his candidacy is a disgrace to the United States and that, if there is any justice or decency in this country, he will be trounced on November 8th.

First things first - Trump is not being trounced. In current polls nationally, he is within 3-4 percentage points of the former Secretary of State, Senator, and First Lady, Hillary Clinton, in the presidential race, and all the polls lead to the conclusion that the race is tightening. Our preeminent statistics journalist, Nate Silver, reports that "many voters — close to 20 percent — either say they’re undecided or that they plan to vote for third-party candidates. At a comparable point four years ago, only 5 to 10 percent of voters fell into those categories." ( This gives the race far more unpredictability - it means Clinton could still win in a landslide, but it also means that Trump has a real shot at winning, inviting chaos and ruin upon our great country.

But, what can we do about it? Most of us don't live in swing states, the election will be decided by hundreds of millions of dollars - not our measly thousands - and besides, we're very busy people. We've got our stressful jobs, and our family stuff - taking the kids to practice, getting them to school, helping with homework -and then there's the volunteering we're already doing with other good organizations, and just living life - catching a ballgame, having a glass of wine. We plan to vote, but otherwise, aren't sure what we can really do.

Elie Wiesel just died. The timing is spooky. Thirty years ago in his Nobel Prize acceptance speech (, he described us as “guilty…accomplices” if we stand by and let other human beings endure humiliation, as Trump seeks. Elie Wiesel said, “…We must take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented. Sometimes we must interfere….Wherever men and women are persecuted because of their race, religion, or political views, that place must - at that moment - become the center of the universe.”

Trump is not urging genocide yet, but that does not permit us to stand by and be Trump's accomplices. It is simply not enough to believe he is a wrong-headed demagogue and to exercise a single vote against him. We, the empowered, must act more forcefully. If we don't, and he wins, and begins the terrible downward spiral of our democracy that he has promised, it is not because of them. It is because of our own inaction. I always wondered what Americans did while the Holocaust was beginning in Europe, while stories emerged of Hitler's atrocities. Most did not agree with Hitler - but they were busy with their lives, and did not mount a groundswell to stop him while they could, until it was too late for many millions.

Here are five things we can do, even as busy people, to defeat Trump, that I am doing with my family between now and November 8th. Join us - I will buy you dinner if you are my friend and let me know you are working with us!

1.  Visit a swing state. I am taking my family to Reno, Nevada, twice between now and Election Day - the weekend of October 8-10 (Columbus Day weekend) and November 7-8 (the day before Election Day and Election Day). Face-to-face canvassing is the most effective campaign work. There is work to be done walking blocks, entering data, organizing volunteers, driving people to the polls, and otherwise ensuring that Nevada's six electoral votes do not go for Trump. Busses of volunteers go from the Bay Area every Saturday to Nevada to help. Roundtrip tickets on Southwest from Oakland, non-stop, are less than $80. Clinton only leads in current polls by about 2 points in Nevada. Washoe County - where Reno is - is the bellwether county of the bellwether state of Nevada, a state which has predicted the presidency in all but one election over the last 100+ years. Email me and I will plug you into the Nevada grassroots campaign. For anyone who joins us November 8th all day, if you are a friend and let me know you are working with us, I will buy you dinner in Reno, after the polls close.

2. Protect the polls. Attorneys and legal professionals, in particular, can volunteer to do voter protection. I am hosting an event in my office at 6 p.m. on October 6th (1330 Broadway, Suite 1630) if you want to be trained as a poll watcher in Nevada. Again, if you are a friend and let me know you are working with us, I will buy you dinner on November 8th if you come to do voter protection.

3. Get one new person to vote against Trump (or for Clinton). Have the tough conversation with a conservative relative or friend. Whatever will resonate - Trump has filed bankruptcy four times, leaving hardworking building contractors and others holding the bag, and won't release his taxes. He insulted the Pope and had five children with three women. He started a fake university that stole students' money and gave out bogus degrees. He ships jobs overseas and makes Trump products in China. He scoffs at veterans and the parents of fallen soldiers. Do you know one single person, in your entire universe, especially one in a swing state, who you fear might be voting for Trump? Have a tough heart-to-heart.

4. Send a call to action to your friends. I am doing this. You can do this, too. If 100 of my friends contact 100 of their friends (and 50 of them don't overlap), and they each do the same - we can activate thousands of people of conscience, looking for a way to make an impact, but feeling helpless.

5.  Max. out. I have given $2,700 to defeat Trump:
Match this. Maybe it is a lot for an ordinary middle-class or upper middle-class person. But Trump has billions and just had the best fundraising month of his campaign. If you can't give this much, or you can give more (divided among the campaign, the DNC, and other organizations), then max. out the way you can. If you want to see who usually wins elections, follow the money. (

Talking to friends (live or on Facebook) and bemoaning Trump's antics is not enough. Don't feel helpless. Do something. Defeat Trump. If everyone who feels like we do, does what we do, then he will lose.

As Elie Wiesel said, concluding his Nobel acceptance speech: "Our lives no longer belong to us alone; they belong to all those who need us desperately."  America is a great country where we have thrived, and she and her future generations need us desperately now.

I hope you will join me.

Bryan Schwartz