Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 1 of 44 1 5 SHANNON LISS-RIORDAN, SBN 310719 (sliss@llrlaw.com) ADELAIDE PAGANO, pro hac vice (apagano@llrlaw.com) LICHTEN & LISS-RIORDAN, P.C. 729 Boylston Street, Suite 2000 Boston, MA 02116 Telephone: (617) 994-5800 Facsimile: (617) 994-5801 6 Attorneys for Plaintiffs 2 3 4 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 11 12 DOUGLAS O'CONNOR, THOMAS COLOPY, MATTHEW MANAHAN, and ELIE GURFINKEL, individually and on behalf of all others similarly situated, Plaintiff, 13 14 15 v. UBER TECHNOLOGIES, INC., 18 19 20 21 22 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Defendant. 16 17 CASE NO. CV 13-03826-EMC CASE NO. CV 15- 00262-EMC HAKAN YUCESOY, ABDI MAHAMMED, MOKHTAR TALHA, BRIAN MORRIS, and PEDRO SANCHEZ, individually and on behalf of all others similarly situated, v. Plaintiffs, Hearing: Time: Courtroom: Judge: March 21, 2019 1:30 p.m. 5 Judge Edward Chen UBER TECHNOLOGIES, INC. and TRAVIS KALANICK, Defendants. 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 2 of 44 1 2 3 NOTICE OF MOTION AND MOTION TO DEFENDANTS AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE THAT on March 21, 2019, at 1:30 p.m., in Courtroom 5 of this 4 Court, located at 450 Golden Gate Avenue, 17th Floor, San Francisco, California, Plaintiffs Matthew 5 Manahan, Elie Gurfinkel, Mokhtar Talha, Pedro Sanchez, Aaron Dulles, and Antonio Oliveira, 6 individually and on behalf of all others similarly situated, will, and hereby do, move the Court 7 pursuant to Federal Rule of Civil Procedure 23 and 29 U.S.C. § 216(b) for an order: 8 9 (1) Preliminarily approving the Settlement Agreement between Defendants Uber Technologies, Inc. and Travis Kalanick and Plaintiffs (attached as Exhibit 1 to the 10 Declaration of Shannon Liss-Riordan, filed concurrently herewith), on the grounds that its 11 terms are sufficiently fair, reasonable, and adequate for notice to be issued to the 12 settlement class; 13 14 15 16 17 18 (2) Certifying the proposed settlement class for settlement purposes only, pursuant to Federal Rule of Civil Procedure 23(c); (3) Approving the form and content of the proposed class notice and notice plan (attached as Exhibit 1 to the Declaration of Shannon Liss-Riordan); (4) Appointing Lichten & Liss-Riordan, P.C. to represent the settlement class as class counsel; 19 (5) Appointing Epiq (formerly Garden City Group) as Settlement Administrator; 20 (6) Scheduling a hearing regarding final approval of the proposed settlement, Class Counsel’s 21 request for attorneys’ fees and costs, and enhancement payments to the Named Plaintiffs; 22 and 23 (7) Granting such other and further relief as may be appropriate. 24 This Motion is based on this Notice of Motion and Motion; the Memorandum of Points and 25 Authorities below; the Declaration of Shannon Liss-Riordan filed concurrently herewith; all 26 supporting exhibits filed herewith; all other pleadings and papers filed in this action; and any 27 argument or evidence that may be presented at or prior to the hearing in this matter. 28 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. CV 15-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 3 of 44 TABLE OF CONTENTS 1 Page 2 3 I. INTRODUCTION .....................................................................................................................1 4 II. BACKGROUND .......................................................................................................................5 5 A. 6 7 8 9 10 11 12 13 Litigation History ...........................................................................................................5 1. The O’Connor Case ...........................................................................................5 2. The Yucesoy Case..............................................................................................7 B. Settlement History .........................................................................................................8 C. The Proposed Settlement .............................................................................................10 III. THE LEGAL STANDARD .....................................................................................................13 IV. DISCUSSION ..........................................................................................................................15 A. Certification of the Settlement Class is Appropriate ...................................................15 1. 14 Requirements of Fed. R. Civ. P. 23(a) .............................................................16 15 a. Numerosity...........................................................................................16 16 b. Commonality........................................................................................16 17 c. Typicality .............................................................................................18 18 d. Adequacy .............................................................................................18 19 20 21 22 2. B. The Court Should Preliminarily Approve the Settlement ............................................20 1. The Settlement is the Product of Informed, Non-Collusive Negotiation.........21 2. The Settlement Falls Within the Range of Possible Approval ........................22 23 24 25 26 27 28 Requirements of Fed. R. Civ. P. 23(b).............................................................19 a. Risks of Further Litigation ...................................................................23 b. Benefit to Drivers .................................................................................26 3. The Settlement Has No Obvious Deficiencies.................................................29 4. The Settlement Does Not Unfairly Grant Preferential Treatment to Any .......31 Settlement Class Members...........................................................................................31 i NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 4 of 44 TABLE OF CONTENTS (continued) 1 2 3 Page V. CONCLUSION ........................................................................................................................33 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Gibson, Dunn & Crutcher LLP NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. CV 15-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 5 of 44 1 TABLE OF AUTHORITIES 2 Page(s) 3 Cases 4 Acosta v. Trans Union, LLC, 243 F.R.D. 377 (C.D. Cal. 2007) ...................................................................................................21 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Alberto v. GMRI, Inc., 252 F.R.D. 652 (E.D. Cal. 2008) .............................................................................................15, 19 Alexander v. FedEx Ground Package Sys., Inc., 765 F.3d 981 (9th Cir. 2014) .........................................................................................................25 Anfinson v. FedEx Ground Package System, Inc., 2009 WL 2173106 (Wa. Sup. Ct.) .................................................................................................25 Awuah v. Coverall North America, Inc., C.A. No. 07-cv-10287 (D. Mass. Sept. 27, 2011)..........................................................................18 Barbosa v. Cargill Meat Sols. Corp., 297 F.R.D. 431 (E.D. Cal. 2013) .............................................................................................16, 28 Barcia v. Contain-A-Way, Inc., 2009 WL 587844 (S.D. Cal. Mar. 6, 2009) ...................................................................................22 Barnes v. The Equinox Grp., Inc., 2013 WL 3988804 (N.D. Cal. Aug. 2, 2013) ................................................................................30 Bellinghausen v. Tractor Supply Co., 306 F.R.D. 245 (N.D. Cal. 2015) ...................................................................................................33 California v. eBay, Inc., 2015 WL 5168666 (N.D. Cal. Sept. 3, 2015) ................................................................................28 Chaves v. King Arthur’s Lounge, Inc., C.A. No. 07-2505 (Mass. Super. July 31, 2009)............................................................................18 Chu v. Wells Fargo Investments, LLC, 2011 WL 672645 (N.D. Cal. Feb. 16, 2011) .................................................................................32 Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir. 1992) .......................................................................................................14 Colopy, et al. v. Uber Technologies Inc., CGC-16-549696 (San Francisco Sup. Ct.) ....................................................................................15 Connie Arnold, et al. v. United Artists Theatre Circuit, Inc., et al., No. C–93–0079–THE (N.D. Cal.1996) .........................................................................................17 iii NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 6 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 TABLE OF AUTHORITIES (continued) Page(s) Cotter v. Lyft, 3:13-cv-04065-VC (N.D. Cal.) ................................................................................................12, 29 Cotter v. Lyft, Inc., 176 F. Supp. 3d 930 (N.D. Cal. 2016) .............................................................................................4 Cotter v. Lyft, Inc., 193 F. Supp. 3d 1030 (N.D. Cal. 2016) ...................................................................................27, 28 Cotter v. Lyft, Inc., 2016 WL 1394236 (N.D. Cal. Apr. 7, 2016) .................................................................................25 Covillo v. Specialtys Cafe, 2014 WL 954516 (N.D. Cal. Mar. 6, 2014) ...................................................................................32 Custom LED, LLC v. eBay, Inc, 2013 WL 6114379 (N.D. Cal. Nov. 20, 2013) ..............................................................................29 Dalton v. Lee Publications, Inc., 270 F.R.D. 555 (S.D. Cal. 2010) ...................................................................................................18 De Giovanni v. Jani-King Int'l, Inc., 262 F.R.D. 71 (D. Mass. 2009) ................................................................................................17, 18 Deaver v. Compass Bank, 2015 WL 4999953 (N.D. Cal. Aug. 21, 2015) ............................................................14, 21, 22, 29 Dynamex Operations W. v. Superior Court, 4 Cal. 5th 903, 416 P.3d 1 (2018) .......................................................................................... passim Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) ...................................................................................................................10 Estrella v. Freedom Fin’l Network, 2010 U.S. Dist. LEXIS 61236 (N.D. Cal. 2010) ...........................................................................16 Garcia v. Border Transp. Group, LLC, 28 Cal. App. 5th 558 (2018) ..........................................................................................................24 Hahn v. Massage Envy Franchising LLC, 2015 WL 2164981 (S.D. Cal. Mar. 6, 2015) .................................................................................17 Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir.1998) ........................................................................................9, 14, 16, 18 28 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. CV 15-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 7 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES (continued) Page(s) Harris v. Vector Mktg. Corp., 2012 WL 381202 (N.D. Cal. Feb. 6, 2012) ...................................................................................26 Hefler v. Wells Fargo & Co., 2018 WL 6619983 (N.D. Cal. Dec. 18, 2018) .............................................................20, 21, 22, 31 Hendricks v. StarKist Co., 2015 WL 4498083 (N.D. Cal. July 23, 2015)................................................................................31 In re Activision Sec. Litig., 723 F.Supp. 1373 (N.D.Cal.1989) .................................................................................................30 In re Heritage Bond Litig., 2005 WL 1594403 (C.D. Cal. June 10, 2005) ...............................................................................14 In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078 (N.D. Cal. 2007) ...............................................................................5, 14, 31 In re TRS Recovery Servs., Inc. & Telecheck Servs., Inc., Fair Debt Collection Practices Act (FDCPA) Litig., 2016 WL 543137 (D. Me. Feb. 10, 2016) ....................................................................................17 Johnson v. VCG-IS, LLC, Case No. 30-2015-00802813, Ruling on Motion in Limine (Super. Ct. Cal. July 18, 2018) ........................................................................................................................................23 Karl v. Zimmer Biomet Holdings Inc., 2018 WL 5809428 (N.D. Cal. Nov. 6, 2018) ................................................................................24 Lawson v. Grubhub, Inc., 302 F. Supp. 3d 1071 (N.D. Cal. 2018) ...................................................................................23, 25 Lundell v. Dell, Inc., 2006 WL 3507938 (N.D. Cal. Dec. 5, 2006) .................................................................................22 Lusby v. GameStop Inc., 2015 WL 1501095 (N.D. Cal. Mar. 31, 2015) .........................................................................30, 32 Marciano v. DoorDash Inc., CGC-15-548102 (Cal. Sup. Ct.) ....................................................................................................12 Martins v. 3PD, Inc., 2013 WL 1320454 (D. Mass. Mar. 28, 2013)................................................................................17 McCrary v. Elations Co., LLC., 2016 WL 769703 (C.D. Cal. Feb. 25, 2016)..................................................................................17 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. CV 15-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 8 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 TABLE OF AUTHORITIES (continued) Page(s) Mohamed v. Uber Technologies, Inc., 109 F. Supp. 3d 1185 (N.D. Cal. 2015) ...........................................................................................7 Mohamed v. Uber Technologies. Inc., 848 F.3d 1201 (9th Cir. 2016) .........................................................................................................7 Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016) .....................................................................................................9, 10 Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523 (C.D. Cal. 2004) ...................................................................................................14 Nielson v. The Sports Authority, 2013 WL 3957764 (N.D. Cal. July 29, 2013)................................................................................22 Noll v. eBay, Inc., 309 F.R.D. 593 (N.D. Cal. 2015) ...................................................................................................20 O'Connor v. Uber Technologies, Inc., 201 F. Supp. 3d 1110 (N.D. Cal. 2016) .................................................................................1, 4, 13 O'Connor v. Uber Technologies, Inc., 2015 WL 5138097 (N.D. Cal. Sept. 1, 2015) ................................................................................15 O'Connor v. Uber Technologies, Inc., 904 F.3d 1087 (9th Cir. 2018) ...........................................................................................1, 7, 9, 15 Oppenlander v. Standard Oil Co. (Ind.), 64 F.R.D. 597 (D.Colo.1974) ..................................................................................................23, 28 Price v. Uber Technologies, Inc., Los Angeles Superior Court, Case No. BC554512 (Jan. 18, 2018).................................................9 Razak v. Uber Technologies, Inc., 2018 WL 1744467 (E.D. Pa. Apr. 11, 2018) .................................................................................25 Satchell v. Fed. Express Corp., 2007 WL 1114010 (N.D. Cal. Apr. 13, 2007) ...............................................................................21 Schwann v. FedEx Ground Package Sys., Inc., 2014 WL 496882 (D. Mass. Feb. 7, 2014) ....................................................................................26 Sebago v. Boston Cab Dispatch, 471 Mass. 321 (2015) ....................................................................................................................26 28 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. CV 15-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 9 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 TABLE OF AUTHORITIES (continued) Page(s) Singer v. Postmates, 4:15-cv-01284-JSW (N.D. Cal.) ....................................................................................................12 Slayman v. FedEx Ground Package Sys., Inc., 765 F.3d 1033 (9th Cir. 2014) .......................................................................................................25 Smith v. Cardinal Logistics Mgmt. Corp., 2008 WL 4156364 (N.D. Cal. Sept. 5, 2008) ..........................................................................16, 26 Spann v. J.C. Penney Corp., 2016 WL 297399 (C.D. Cal. Jan. 25, 2016) ............................................................................17, 19 Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294 (N.D. Cal. 1995) ..........................................................................................32, 33 Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482 (E.D. Cal. 2010) .................................................................................19, 21, 23, 30 Velez v. Novartis Pharm. Corp., 2010 WL 4877852 (S.D.N.Y. Nov. 30, 2010) ...............................................................................17 Villalpando v. Exel Direct, Inc., 303 F.R.D. 588 (N.D. Ca. 2014) ....................................................................................................16 Villegas v. J.P. Morgan Chase & Co., 2012 WL 5878390 (N.D. Cal. Nov. 21, 2012) ..............................................................................26 Vinh Nguyen v. Radient Pharm. Corp., 2014 WL 1802293 (C.D. Cal. May 6, 2014) .................................................................................31 20 Zolkos v. Scriptfleet, Inc., 2014 WL 7011819 (N.D. Ill. Dec. 12, 2014) .................................................................................22 21 Statutes 22 Cal. Bus. & Prof. Code § 17200 et seq. .................................................................................................5 23 24 25 26 27 28 Cal. Lab. Code § 2699, et. seq. ..............................................................................................................1 Cal. Labor Code § 2802 ............................................................................................................... passim Cal. Labor Code § 351 ...............................................................................................................5, 15, 19 Mass. Gen. Law c. 149 § 150...............................................................................................................32 Other Authorities NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. CV 15-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 10 of 44 1 2 3 4 5 6 7 8 9 10 11 TABLE OF AUTHORITIES (continued) Page(s) CA. Assem. Bill #71, (2019-2020 Reg. Sess.), available at: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB 71....................................................................................................................................................26 Day One - Dynamex to Dominate Legislative Discussion in California in 2019, EBBINK, BENJAMIN, LEXOLOGY (Dec. 6, 2018) available at: https://www.lexology.com/library/detail.aspx?g=dfde5985-5ffa-425b-84752990b298d1cf ................................................................................................................................26 Manual for Complex Litig., Third, § 30.41 (1995) ..............................................................................15 Rules Fed. R. Civ. P. 23 ......................................................................................................................... passim 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. CV 15-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 11 of 44 1 I. 2 INTRODUCTION Pursuant to Federal Rule of Procedure Rule 23, Plaintiffs Matthew Manahan, Elie Gurfinkel, 3 Mokhtar Talha, Pedro Sanchez, Aaron Dulles, and Antonio Oliveira (“Plaintiffs”) move this court for 4 an order preliminarily approving a proposed class action settlement agreement entered into by 5 Plaintiffs and Defendants Uber Technologies, Inc. and Travis Kalanick (“Defendants” or “Uber”). 6 The Settlement follows five and a half years of extremely active and highly-contested litigation and 7 was achieved with the assistance of Mediators Mark S. Rudy and Francis J. (“Tripper”) Ortman, III, 8 who oversaw a series of mediation sessions and continued ongoing discussions after the mediation 9 sessions. The Settlement Agreement is attached as Exhibit 1 to the Declaration of Shannon Liss- 10 Riordan (filed herewith) (“Liss-Riordan Decl.” or “Liss-Riordan Declaration”). 11 This Court previously considered a proposed settlement in Spring 2016, which it ultimately 12 concluded was fair and adequate other than for the proposed settlement of claims under the Private 13 Attorney General Act (“PAGA”), Cal. Lab. Code § 2699, et. seq. See O’Connor v. Uber 14 Technologies, Inc., 201 F. Supp. 3d 1110, 1132 (N.D. Cal. 2016) (“[T]he Court would be inclined, 15 after weighing the Hanlon factors, to find the consideration afforded by the settlement to be adequate 16 for release of the non-PAGA claims.”). Since that time, this Court’s orders holding Uber’s 17 arbitration agreement to be unenforceable have been reversed on appeal at the Ninth Circuit, resulting 18 in the decertification of the certified class in this case. See O’Connor v. Uber Technologies, Inc., 904 19 F.3d 1087 (9th Cir. 2018). Under the Ninth Circuit’s ruling, most Uber drivers would have to 20 individually arbitrate their claims, other than a relatively small number of drivers who are not 21 covered by an arbitration clause (either because they validly opted out of arbitration or because Uber 22 has no record of the driver’s acceptance of an arbitration clause). The number of drivers not covered 23 by an arbitration clause consists of approximately 11,000 drivers in California and 2,600 drivers in 24 Massachusetts. See Liss-Riordan Decl. at ¶¶ 15-16.1 In the wake of this ruling, and now, after 25 1 26 27 28 Of these 13,600 drivers not bound by an arbitration clause, 9,461 drivers last drove using the Uber app before it included an arbitration clause in the driver agreement (7,556 in California and 1,905 in Massachusetts); 3,156 drivers opted out of the arbitration clause (2,788 in California and 368 in Massachusetts); and Uber has no record of an additional 949 drivers having accepted the arbitration clause (646 in California and 303 in Massachusetts). See Liss-Riordan Decl. at ¶¶ 15-16. (Cont’d on next page) 1 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 12 of 44 1 extensive and hard-fought negotiations, the parties have reached a proposed settlement of the claims 2 of these remaining 13,600 drivers for a payment in the amount of $20,000,000, along with certain 3 non-monetary relief. This amount, which is non-reversionary, will provide those drivers who are not 4 bound by an arbitration clause a much higher amount of money than they would have received in the 5 2016 proposed settlement (which the Court deemed adequate other than for the PAGA portion of that 6 agreement), though of course this settlement will now only benefit a much smaller settlement class, in 7 light of the Ninth Circuit’s ruling, which requires the majority of Uber drivers to pursue their claims, 8 if they choose to do so, in arbitration.2 9 Indeed, under the proposed 2016 agreement (which would have been for up to $100 million 10 and covered approximately 385,000 drivers), the average actual net settlement share per claiming 11 settlement class member (after deduction of attorneys’ fees) would have likely been $3903 (assuming 12 a 50% claims rate)4, but in this settlement, it is $2,206. Liss-Riordan Decl. at ¶ 21. Thus, the average 13 14 15 16 17 18 (Cont’d from previous page) 2 This proposed settlement does not include any PAGA claims. No PAGA claims have been added to this case, and the settlement does not release any PAGA claims. The scope of the release is the same as the scope of the release of the non-PAGA claims that this Court stated it would have likely approved in 2016 but for the settlement of PAGA claims in that agreement. Compare Ex. 1 (Settlement Agreement) to Liss-Riordan Decl. at ¶ 98 with Dkt. 575-6 at ¶ 105. 3 20 The average anticipated share had Uber gone public and met the contingency for a $100 million settlement would have been $390; if it had not met this contingency, the amount would have been $327. 21 4 19 22 23 24 25 26 27 28 These average estimated shares are based upon counsel’s expectation that approximately half of the settlement fund will be claimed by settlement class members; because the settlement is nonreversionary, unclaimed amounts will be distributed to settlement class members who submit claims. In other settlements involving misclassification claims against “gig economy” companies, using a similar notice and claim process, Plaintiffs’ counsel has observed a claim rate of approximately 50%. See infra at p. 12. These settlements have all utilized multiple reminders to settlement class members who have not claimed, which is also included in this settlement. Plaintiffs’ counsel expects that the drivers included in this settlement who opted out of arbitration will likely claim at a much higher rate than the drivers who last drove using the Uber app prior to when Uber included an arbitration agreement in its driver agreement (as the latter group, who have not driven using the Uber app since 2014 or earlier, may be harder to locate, since many drivers will have moved, their addresses changed, etc., although the settlement does provide for efforts to locate current contact information for settlement class members). (Cont’d on next page) 2 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 13 of 44 1 settlement share per driver is approximately 6 times higher in this settlement than in the 2016 2 agreement (but, of course, for far fewer drivers). Id.5 3 However, given the fact that the vast majority of Uber drivers have driven for a very short 4 time (often only trying it out for a handful of trips, or just a few days or weeks), and only a very small 5 percentage of Uber drivers have continued to drive for any extended length of time or a significant 6 number of miles, the average settlement share per settlement class member is not (and was not) a 7 particularly informative statistic. For drivers who drove in the highest category of miles (25,000 or 8 more), the 2016 settlement was expected to pay them on average approximately $3,164. This 9 settlement is expected to pay drivers with the highest category of miles more than double this 10 amount. Liss-Riordan Decl. at ¶¶ 22, 83. 11 In addition to these monetary payments, Uber has also agreed to some non-monetary terms 12 (discussed infra at Part II(C)). The settlement does not include a reclassification of drivers to 13 employees. As noted above (see note 1), the great majority of the settlement class covered by this 14 proposed settlement have not driven using the Uber app for nearly six years (having last driven using 15 the Uber app prior to its implementation of an arbitration clause).6 These settlement class members 16 thus have no further interest in their classification going forward. As for the portion of this 17 settlement class who opted out of arbitration, this portion of the settlement class is a minority, and 18 many of these drivers may no longer drive using the Uber app either. In any event, Plaintiffs’ 19 20 (Cont’d from previous page) 21 5 25 In the 2016 proposed agreement, the average share per settlement class member was lowered significantly because it included class members who faced the risk of arbitration clauses, as well as settlement class members who had been excluded from the class in the Court’s class certification rulings. For the California drivers who had opted out of arbitration and who had not been excluded from the Court’s certification orders, the average share they would have likely received from the 2016 settlement was higher – approximately $961 net (and $1,281 gross, before deduction of attorneys’ fees). See Liss-Riordan Decl. at ¶ 21, n. 3. 26 6 22 23 24 27 28 As explained in note 1, about three times as many members of this settlement class are not bound by an arbitration clause because they stopped driving using the Uber app years ago (9,461 drivers), as compared to the settlement class members who opted out of arbitration (3,156 drivers). 3 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 14 of 44 1 counsel note that they have been in close touch with thousands of Uber drivers throughout the course 2 of this litigation. The vast majority have primarily expressed interest in knowing what monetary 3 payment they may receive from this case and when they may receive it. Although a number of 4 drivers are particularly concerned with the ongoing employment status issue, this settlement (once 5 again) does not resolve that question. But it would provide an immediate benefit for many settlement 6 class members who are anxious to receive some payment from this long-running litigation. It also 7 allows them to avoid further delay, as well as uncertainty from continued litigation. The question of 8 the proper classification of Uber drivers will undoubtedly continue to be litigated in other cases and 9 other fora. This Court and others have recognized that a settlement of such claims need not resolve 10 the misclassification question. See O'Connor, 201 F. Supp. 3d at 1132 (indicating that this Court 11 likely would have approved the 2016 settlement were it not for the PAGA portion of the settlement, 12 notwithstanding the fact that it did not reclassify drivers); see also Cotter v. Lyft, Inc., 176 F. Supp. 13 3d 930, 936-37 (N.D. Cal. 2016) (approving class settlement that did not resolve the classification 14 question and expressly rejecting argument that settlement should not be approved because it did not 15 reclassify drivers as employees). Settlement of this long-running case, for the drivers whose claims 16 may still proceed in court, is in the interests of the settlement class. The agreement submitted here is 17 eminently fair, adequate, and reasonable and should be approved by this Court.7 18 19 20 21 22 23 24 25 26 27 28 The settlement satisfies the standard for preliminary approval—it is undoubtedly within the range of possible approval to justify sending notice to settlement class members and scheduling final 7 As discussed further below, the California Supreme Court last year adopted a new test for employee status at least for certain claims in Dynamex Operations W. v. Superior Court, 4 Cal. 5th 903, 416 P.3d 1 (2018), reh'g denied (June 20, 2018), which Plaintiffs believed would make it much more difficult for Uber to defend against these misclassification claims. However, even after Dynamex, many risks remain for the plaintiffs. These issues are now being hotly litigated in other cases across California (including many cases in which Plaintiffs’ counsel are actively involved – and thus are well aware of how these legal arguments are developing). They include the question of what exactly is necessary to establish Prong B under the Dynamex test; whether the test applies retroactively to the period before the decision was issued; what claims are covered by the Dynamex decision (including the expense reimbursement claim); and whether the California Legislature will keep the decision in place or instead will roll it back (as a widely discussed pending bill proposes to do, which is backed by many supporters, including most “gig economy” companies). See infra at p. 24. 4 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 15 of 44 1 approval proceedings; moreover, Plaintiffs submit that the proposed settlement (which is superior 2 monetarily for settlement class members than the 2016 settlement, which was only not approved by 3 this Court because of the PAGA release) is likely to earn final approval. See Fed. R. Civ. P. 23(e); In 4 re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007). Thus, the Court should: 5 (1) grant preliminary approval of the settlement; (2) certify, for settlement purposes only, a settlement 6 class of Uber drivers in California and Massachusetts who are not bound by an arbitration clause; (3) 7 approve the manner and forms of notice; (4) appoint Lichten & Liss-Riordan, P.C. to represent the 8 settlement class as class counsel; (5) appoint Epiq (formerly Garden City Group) as Settlement 9 Administrator; and (6) schedule a hearing for final approval in June or July 2019. 10 II. 11 BACKGROUND A. 12 Litigation History 1. 13 The O’Connor Case The O’Connor case was filed on August 16, 2013, on behalf of individuals who have used the 14 Uber software application as drivers, alleging that drivers have been misclassified as independent 15 contractors and thereby denied reimbursement of their necessary business expenses under Cal. Labor 16 Code § 2802.8 Plaintiffs also brought a claim under Cal. Labor Code § 351 (enforceable through the 17 California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq. (“UCL”)), alleging that 18 Uber advertised to its customers that a gratuity is included in the fare, but Uber did not remit any 19 such gratuity to the drivers. Dkt. 1.9 (Uber later introduced an in-app tip function in July 2017.10) 20 Since the O’Connor case was filed more than five and a-half years ago, in August 2013, the 21 parties have engaged in exhaustive discovery and extensive motion practice. Plaintiffs propounded 22 multiple sets of written discovery (totaling more than 73 requests), reviewed more than 30,000 pages 23 of documents produced by Uber, and analyzed several sets of confidential data made available by 24 8 25 The case was originally alleged as a nationwide class action, but the Court reduced it to a California-only case (Dkt.136). 26 9 27 28 All citations to the docket refer to the O’Connor case unless otherwise indicated. 10 See O’Brien, Sara Ashley, Uber is (finally) rolling out tipping, CNN BUSINESS (June 20, 2017), available at: https://money.cnn.com/2017/06/20/technology/business/uber-adds-tipping/ 5 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 16 of 44 1 Uber; Uber propounded multiple sets of written discovery (totaling more than 1,000 requests) and 2 reviewed more than 5,000 pages of documents produced by the named plaintiffs; the parties 3 collectively deposed 10 witnesses, including the named plaintiffs and several Uber employees, 4 totaling approximately 55 hours of deposition testimony; the parties reviewed more than 1,000 pages 5 of documents produced by third parties; the parties litigated at least 10 discovery disputes over five 6 formal discovery dispute letters that were adjudicated by the Court. See Liss-Riordan Decl. at ¶ 3. 7 In addition to this in-depth discovery and case investigation, the parties have engaged in 8 aggressive motion practice regarding class certification issues and the substantive merits of Plaintiffs’ 9 claims. The parties briefed a Motion to Dismiss (Dkt. 39), Motion for Judgment on the Pleadings 10 (Dkt. 116), two Motions for Summary Judgment (Dkt. 211 & 499), and Motions to Compel 11 Arbitration (Dkt. 346 & 397), and the parties engaged in extensive supplemental briefing regarding 12 Plaintiffs’ Motion for Class Certification (Dkt. 276). The parties also briefed multiple Motions to 13 Stay, as well as multiple Motions for Protective Order (Dkts. 4, 15, 405, 411, 427, 439, 506). 14 Altogether, the Court has held 24 hearings and conferences in this case (totaling more than 30 hours 15 of court time) (not counting hearings and briefing related to the proposed settlement in 2016). See 16 Liss-Riordan Decl. at ¶ 5. Moreover, because of the number of appeals filed in this case, the parties 17 fully briefed five separate appeals of this Court’s orders before the Ninth Circuit Court of Appeals 18 and argued twice before the Ninth Circuit. See Ninth Circ. Appeal Nos. 14-16078, 15-17420, 15- 19 17532, 16-15000, and 16-15595. Id. at ¶ 7. 20 In fall 2015, the Court granted class certification for a class of 240,000 California Uber 21 drivers (Dkt. 342, 395). A class trial was set for June 2016. Liss-Riordan Decl. at ¶ 6. However, on 22 April 5, 2016, the Ninth Circuit granted review of this Court’s class certification decision (Ninth 23 Circ. Appeal No. 15-80220, Dkt. 9 (granting review); Ninth Circ. Appeal No. 16-15595). Following 24 the Ninth Circuit’s order granting review of this case, and prior to trial, the parties announced a 25 proposed settlement (Dkt. 574). The trial of the case was continued. At the time of the parties’ prior 26 proposed settlement, the Ninth Circuit was also considering the Court’s decision to hold Uber’s 27 arbitration clause unenforceable in Mohamed v. Uber Technologies, Inc., 109 F. Supp. 3d 1185 (N.D. 28 Cal. 2015). After extensive briefing and argument, the Court ultimately declined to approve the 2016 6 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 17 of 44 1 settlement (Dkt. 748). Less than three weeks later, the Ninth Circuit reversed this Court in 2 Mohamed, rejecting its rationale for holding the arbitration clause unenforceable (which the Court 3 had used in both this case and Mohamed). Mohamed v. Uber Technologies. Inc., 848 F.3d 1201 (9th 4 Cir. 2016). 5 Following the Court’s refusal to approve the proposed 2016 settlement, Plaintiffs made 6 repeated attempts to reopen the case or some portion of the case. However, the Court declined to 7 reopen the case while the Ninth Circuit was reviewing the case, and so the stay continued. Then, last 8 September, the Ninth Circuit issued its ruling reversing the Court’s class certification decision and 9 reversing the Court’s decision holding Uber’s arbitration clause unenforceable. See O’Connor v. 10 Uber Technologies, Inc., 904 F.3d 1087 (9th Cir. 2018). 11 2. 12 The Yucesoy Case The Yucesoy case was filed in June 2014 as a class action on behalf of Uber drivers in 13 Massachusetts, alleging misclassification and resulting wage claims. Like the O’Connor case, this 14 case has also been hotly contested, with Uber filing four separate Motions to Dismiss, as well as three 15 Motions to Compel Arbitration of several of the named plaintiffs, all of which Plaintiffs vigorously 16 opposed. See Yucesoy Dkt. 6, 36, 109, 149, 62, 94, 296. Plaintiffs also filed a Motion for Partial 17 Summary Judgment (Yucesoy Dkt. 38) and a Motion for Class Certification (Yucesoy Dkt. 246), but 18 the Court declined to entertain those motions at those stages of the case. See Liss-Riordan Decl. at 19 ¶ 8. 20 The Yucesoy case (which was part of the 2016 proposed settlement) was stayed (like the 21 O’Connor case) for a time as a result of the various appeals pending at the Ninth Circuit Court of 22 Appeals. See Liss-Riordan Decl. at ¶ 14; see also Ninth Cir. Appeal No. 15-17422, 15-17534, 16- 23 15001. However, in March 2018, at Plaintiffs’ urging, the Court partially lifted the stay and ordered 24 that the case could resume on behalf of individuals who were not covered by Uber’s arbitration 25 clause. See Yucesoy Dkt. 287. The Court allowed Plaintiffs to file a Fifth Amended Complaint for 26 the purpose of adding additional named plaintiffs who opted out of the arbitration clause and ordered 27 the parties to confer regarding outstanding discovery needed for a renewed and updated motion for 28 class certification (pertaining only to drivers who were not bound by an arbitration clause). Id. 7 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 18 of 44 1 Plaintiffs filed their Fifth Amended Complaint, adding two additional named plaintiffs (Yucesoy Dkt. 2 292), and they prepared a response to Uber’s latest motion to compel arbitration and strike class 3 allegations (Yucesoy Dkt. 296). However, before Plaintiffs filed their response, the parties reached 4 this proposed settlement. See Liss-Riordan Decl. at ¶ 14. 5 B. 6 The parties initially attempted mediation early in the case (in 2014) with mediator Jeff Ross, Settlement History 7 to no avail. See Liss-Riordan Decl. at ¶ 9. Two years later, the parties launched mediation efforts 8 again ahead of their class trial, scheduled for June 2016, with mediator Mark Rudy. Id. at ¶ 10. The 9 parties met with Mr. Rudy on March 10, 2016, April 1, 2016, and April 8, 2016, and thereafter, 10 Plaintiffs filed their Motion for Preliminary approval on April 21, 2016, which provided for up to 11 $100,000,00011 to settle the misclassification-related wage claims of 385,000 Uber drivers in 12 California and Massachusetts, as well as PAGA claims brought against Uber on behalf of the state of 13 California. Id.; see also Dkt. 518, 519-6. 14 After extensive briefing of the fairness and adequacy of the proposed settlement over the 15 course of several months, the Court eventually denied preliminary approval of the settlement. Liss- 16 Riordan Decl. at ¶ 12. In doing so, the Court noted that it “would be inclined, after weighing the 17 Hanlon factors, to find the consideration afforded by the settlement to be adequate for release of the 18 non-PAGA claims.” O'Connor, 201 F. Supp. 3d at 1132 (emphasis added). However, the Court 19 declined to approve the settlement because of the proposed allocation to settle the PAGA claims for a 20 proposed sum of $1 million. Id. at 1133. Although Plaintiffs offered to raise that sum to $11 million 21 through a reduction in the proposed attorneys’ fees, the Court opined that this sum would still be 22 inadequate to settle PAGA claims which were theoretically worth $1 billion or more. Id. at 1135, n. 23 21.12 24 25 26 27 28 11 The non-reversionary settlement amount was $84,000,000, to be increased to $100,000,000 if Uber went public and met certain contingencies regarding its valuation in its initial public offering. See Dkt. 575-6 at ¶¶ 58, 102(b). 12 Those PAGA claims were later settled for $7.75 million in Price v. Uber Technologies, Inc., Los Angeles Superior Court, Case No. BC554512 (Jan. 18, 2018), over the vehement objection of Plaintiffs in this case. This Court declined to interfere with that settlement. See Dkt. 777. 8 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 19 of 44 1 2 3 4 5 6 7 8 9 10 11 After this Court declined to approve the 2016 proposed settlement, Plaintiffs sought to continue to litigate the case, at least on behalf of drivers who were not bound by Uber’s arbitration clause; the Court, however, chose to stay the litigation until the Ninth Circuit could rule on the pending appeals in this case and would not permit Plaintiffs to continue pressing forward. See LissRiordan Decl. at ¶ 13; see also Dkt. 769, 777, 858, 877. When the Ninth Circuit eventually issued its ruling in September 2018, it reversed this Court’s holding that Uber’s arbitration clause was invalid and unenforceable, and it reversed the Court’s class certification order on this basis, noting that the class could not include drivers who were bound by arbitration clauses. See O’Connor v. Uber Technologies, Inc., 904 F.3d at 1094-95. Under this ruling, Plaintiffs’ certified class of 240,000 drivers would now have to be reduced at most to only those approximately 11,000 California Uber drivers not covered by an arbitration clause. Liss-Riordan Decl. at ¶ 15.13 12 13 14 15 16 17 18 19 20 21 22 23 In response to Uber’s appeal of this Court’s ruling that the arbitration clause was not enforceable, Plaintiffs defended this Court’s rationale and also argued that the arbitration clause was not enforceable because it violated the National Labor Relations Act (“NLRA”) (an argument that Plaintiffs maintain they had preserved below, although the Court had not addressed it). The Ninth Circuit later agreed with this argument, holding in Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016), that class waivers in arbitration clauses violate the NLRA. On the appeal of this case, the Ninth Circuit stayed its decision until the Supreme Court ruled on the correctness of the NLRA argument in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018). While the Supreme Court was considering the Epic case, the parties here resumed settlement negotiations. Those negotiations continued after the Supreme Court ruled in Epic that the NLRA does not trump the FAA in prohibiting class waivers in arbitration agreements, a ruling which reversed the Ninth Circuit’s Morris decision. 24 25 26 The parties met on May 3, 2018, July 26, 2018, and September 7, 2018, and engaged in extensive and hard-fought negotiations, assisted by mediators Mark S. Rudy and Francis J. (“Tripper”) Ortman, III. See Liss-Riordan Decl. at ¶ 18. Following these sessions and extensive 27 28 13 Uber continues to state that it vigorously contests whether this class could be certified. 9 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 20 of 44 1 2 3 further discussions, the parties ultimately agreed to settle the misclassification claims of California and Massachusetts Uber drivers who are not covered by arbitration clauses for a payment of $20 million (plus some non-monetary terms). Id. 4 C. 5 6 7 8 9 10 11 12 The Settlement provides for a non-reversionary Settlement Fund in the amount of $20,000,000. See Ex. 1 (Settlement Agreement) at ¶ 95. This Settlement Fund, less costs of claims administration (totaling an estimated $146,000), requested attorneys’ fees (totaling $5 million), and settlement class representative enhancements (totaling $40,000), will be distributed to class members pursuant to a plan of allocation summarized here and described in more detail in the Declaration of Shannon Liss-Riordan. Id. at ¶¶ 79, 125, 126. This allocation to settlement class members is based on the number of miles drivers have transported passengers who placed ride requests using the Uber App (i.e., “on trip” mileage). Id. at ¶¶ 134-135.14 13 14 In addition to monetary compensation, Uber has also agreed as part of this settlement to modify certain business practices in California and Massachusetts: 15 (1) Low acceptance rates will no longer be grounds for account deactivation. 16 17 18 19 (2) Uber will maintain a comprehensive policy online in an easily accessible and easilyunderstood format and will provide advance warning before a driver’s user account is deactivated for reasons other than safety issues, physical altercations, discrimination, fraud, sexual misconduct, harassment, or illegal conduct (excluded matters). 20 21 22 23 The Proposed Settlement (3) Uber will institute a formal appeal process (that will be voluntary for drivers) for deactivation decisions for drivers, except in certain circumstances (e.g., among others, where deactivation relates to or arises from low star ratings, safety issues, criminal activity, physical altercation, sexual misconduct, fraud, discrimination, harassment and background checks). 24 25 26 27 28 14 As discussed at the parties’ pretrial conference in March 2016, there were serious practical difficulties involved in calculating the number of miles that drivers drove to pick up passengers. See Dkt. 498. Uber does not keep that data, Plaintiffs faced a challenge in how to establish those miles, and Uber intended to argue that they were not recoverable because, among other reasons, Plaintiffs would have difficulty proving such mileage. The Court suggested that Plaintiffs may simply choose not to include those miles in their damages analysis. Id. at 78-79. 10 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 21 of 44 1 (4) Uber will maintain quality courses for drivers whose user accounts are deactivated, except 2 in certain excluded matters set forth above, and will work with third-party providers to help lower the 3 cost of these courses for drivers. Completion of one of these courses will make the driver eligible for 4 consideration for reactivation. Id. at ¶ 127. 5 The parties have selected Epiq (which acquired Garden City Group last year) to administer 6 the settlement.15 Liss-Riordan Decl. at ¶ 24. Plaintiffs had previously engaged Garden City Group to 7 serve as the notice administrator in the O’Connor case. Id. Plaintiffs’ counsel have worked with 8 Garden City Group in many cases over the last dozen years, including several other large settlements 9 in other so-called “gig economy” cases. Id.16 Garden City Group managed the class notice process 10 in this case with diligence and care. Id. 11 The settlement provides that notice will be distributed to settlement class members via email, 12 with follow-up mailed notice for those settlement class members for whom email is returned as 13 undeliverable. See Ex. 1 to Liss-Riordan Decl. (“Settlement Agreement”) at ¶¶ 146-149. Settlement 14 payments will be mailed by check to settlement class members who submit claims to participate in 15 the settlement. Id. at ¶¶ 132, 136. In order to obtain a payment, settlement class members will be 16 able to make a claim electronically or send in a simple form. Id.; Ex. C to the Settlement Agreement 17 (Claim Form). Reminder emails will be sent to settlement class members who have not yet submitted 18 claims, both before the final approval hearing and before the final distribution of settlement funds. 19 Id. at ¶¶ 137, 151. The Settlement Administrator will make particular additional efforts to locate and 20 encourage the filing of later claims by settlement class members who have not yet submitted claims 21 whose settlement shares are likely to be greater than $200 (for instance, by mailing notice in addition 22 to emailing notice). Id. 23 24 15 25 Plaintiffs obtained proposals from two prospective administrators (using the same methods of notice and claims payment). Liss-Riordan Decl. at ¶ 24. 26 16 27 28 Plaintiffs’ counsel have also worked with a number of other administrators over the years but have been most pleased with Garden City Group’s work, including its responsiveness, diligence in carrying out notice and distribution duties, and commitment to conscientiously tracking down class members and responding to their questions and concerns regarding settlement administration. 11 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 22 of 44 1 Plaintiff’s counsel anticipates a claim rate of approximately 50% for this settlement, based on 2 counsel’s experience in other similar settlements. These settlements include other cases which used a 3 similar notice and distribution process to that included here: Cotter v. Lyft, 3:13-cv-04065-VC (N.D. 4 Cal.) (claim rate of 64%); Singer v. Postmates, 4:15-cv-01284-JSW (N.D. Cal.) (claim rate of 48%); 5 and Marciano v. DoorDash, CGC-15-548102 (Cal. Sup. Ct.) (claim rate of 46%). See Liss-Riordan 6 Decl. at ¶ 23. Plaintiffs believe that these cases provide a useful proxy for this case because they also 7 involved misclassification claims against so-called “gig economy” companies that Plaintiffs believe 8 utilize a similar business model to Uber, and the settlement class here is made up of individuals who 9 Plaintiffs believe fit a similar profile. Id. These cases utilized a similar notice and claims process, 10 allowing individuals to submit claims via an online portal or by paper. Id. Those settlements 11 included similar follow-up reminders to those that would be used in this case. One factor that may 12 somewhat decrease the claim rates in this case, as compared to these other settlements, is that those 13 drivers who drove using the Uber app before Uber included an arbitration clause have not done so for 14 as many as six years now. These drivers comprise approximately 75% of the settlement class, and 15 these drivers may be more difficult to locate and less engaged with the litigation. Id. However, 16 Plaintiffs will work closely with the Settlement Administrator to ensure appropriate and repeated 17 reminders are sent to ensure that as many settlement class members as possible may be located and 18 encouraged to submit claims. 19 Following the initial distribution of funds, the Settlement Administrator will make reasonable, 20 good-faith efforts to remind settlement class members whose shares are more than $200 but who have 21 not cashed their checks to do so, and it will work with settlement class members to reissue checks as 22 needed. Ex. 1 (Settlement Agreement) at ¶ 137. After an estimated 180 days, there will be a second 23 distribution of all uncashed checks (and any remaining portion of a dispute fund that has not been 24 used) to those settlement class members who did submit claims and cashed their checks and whose 25 residual shares would be at least $100. Id. at ¶ 142. If, following the second distribution, there are 26 any remaining funds that have not been distributed, such funds will be distributed to the parties’ 27 agreed-upon cy pres beneficiaries, Legal Aid at Work (for any remaining unclaimed funds out of the 28 California settlement pool) and Greater Boston Legal Services (for any remaining unclaimed funds 12 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 23 of 44 1 out of the Massachusetts settlement pool). Id. This settlement is non-reversionary, meaning that no 2 funds from the settlement, including unclaimed funds, will revert to Uber; the full amount of the net 3 settlement fund, other than a small portion that may go to cy pres, will be paid to settlement class 4 members. Id. 5 In exchange for their settlement share, settlement class members will release all wage-and- 6 hour claims that have been brought against Uber in these two states, as described in the Settlement 7 Agreement. Id. at ¶ 98. Except for the named plaintiffs, the release does not provide for release of 8 claims unrelated to the core misclassification allegation, e.g. claims for discrimination, wrongful 9 termination, personal injury, etc. Id. at ¶¶ 98, 76.17 10 III. 11 THE LEGAL STANDARD Federal Rule of Civil Procedure 23(e) provides that any compromise of a class action must 12 receive Court approval. “Approval under 23(e) involves a two-step process in which the Court first 13 determines whether a proposed class action settlement deserves preliminary approval and then, after 14 notice is given to class members, whether final approval is warranted.” Nat’l Rural Telecomms. 15 Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004), citing Manual for Complex Litig., 16 Third, § 30.41 (1995). Pursuant to Rule 23, preliminary approval of proposed class action settlement 17 is appropriate where the parties make a “showing that the court will likely be able to: (i) approve the 18 proposal under Rule 23(e)(2); and (ii) certify the class for purposes of judgment on the proposal.” 19 Fed. R. Civ. P. 23(e)(1). As set forth infra, Part IV(A), the settlement class will likely be certified. 20 Moreover, as set forth further infra, Part IV(B), all of the requirements of Rule 23(e)(2) have been 21 17 22 23 24 25 26 27 28 As set forth in greater detail in the Declaration of Shannon Liss-Riordan, Plaintiffs placed the most value on the expense reimbursement claims in this case. Liss-Riordan Decl. at ¶¶ 38-53. Settlement class members will also release claims for other wage claims, including claims for minimum wage, overtime, meal and rest breaks, unlawful deductions, waiting time, record-keeping violations, sick leave and the like. Id. In the proposed 2016 settlement, the Court previously approved this same scope of the release of these non-PAGA claims and generally agreed with Plaintiffs’ assessment that these other wage-and-hour claims could be significantly discounted. O'Connor, 201 F. Supp. 3d at 1119-20. The Court noted that the meal and rest break claims, minimum wage and overtime claims, and failure to carry workers’ compensation insurance claim, all faced significant hurdles. Id. at 1125-26. Furthermore, claims for pay statements, recordkeeping, willful misclassification, and failure to pay wages when due all require a finding of willfulness, which this Court agreed would make any recovery significantly less likely. Id. at n. 12. 13 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 24 of 44 1 met as well. Specifically, the class representatives and class counsel have adequately represented the 2 class, the proposed settlement was negotiated at arm’s length, the relief is more than adequate given 3 the costs, risks, and delay of further litigation and the contours of the proposed settlement, and the 4 proposal treats all members of the Settlement Class equitably relative to one another. Fed. R. Civ. P. 5 23(e)(2); see also In re Tableware Antitrust Litig., 484 F.Supp.2d 1078, 1079 (N.D. Cal. 2007) (a 6 court should grant preliminary approval if the parties’ settlement “appears to be the product of 7 serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant 8 preferential treatment to class representatives or segments of the class, and falls within the range of 9 possible approval.”); Deaver v. Compass Bank, 2015 WL 4999953, *4 (N.D. Cal. Aug. 21, 2015). 10 “Moreover, “a presumption of fairness arises where: (1) counsel is experienced in similar litigation; 11 (2) settlement was reached through arm’s length negotiations; (3) investigation and discovery are 12 sufficient to allow counsel and the court to act intelligently.” In re Heritage Bond Litig., 2005 WL 13 1594403, *2 (C.D. Cal. June 10, 2005). 14 “In deciding whether to approve a proposed settlement, the Ninth Circuit has a ‘strong judicial 15 policy that favors settlements, particularly where complex class action litigation is concerned.’” Id. 16 at *2 (citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992)). “Generally, the 17 district court’s review of a class action settlement is ‘extremely limited.’” Harris, 2011 WL 1627973, 18 *7 (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir.1998)). “The Court considers the 19 settlement as a whole, rather than its components, and lacks the authority to delete, modify or 20 substitute certain provision.” Id. (internal citation omitted).18 21 22 23 24 25 26 27 28 18 Pursuant to the Class Action Fairness Act (CAFA), 28 U.S.C. § 1715, Defendant Uber will send CAFA notices within 10 (ten) days of the filing of this Motion for Preliminary Approval to the appropriate federal and state officials. 14 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 25 of 44 1 IV. DISCUSSION Certification of the Settlement Class is Appropriate19 2 A. 3 The Court must confirm the propriety of the settlement class by determining “if it meets the 4 four prerequisites identified in Federal Rule of Civil Procedure 23(a) and additionally fits within one 5 of the three subdivisions of Federal Rule of Civil Procedure 23(b).” Alberto v. GMRI, Inc., 252 6 F.R.D. 652, 659 (E.D. Cal. 2008). Here, this Court has already found that the requirements for class 7 certification have been met in the O’Connor case and has already certified Plaintiffs’ claims under 8 California Labor Code §§ 2802 and 351, including the predicate issue of misclassification. See Dkt. 9 342, 395.20 The Ninth Circuit reversed the Court’s class certification decision but did not reach any 10 issues other than that the class included drivers who were covered by Uber’s arbitration clause. 11 O’Connor, 904 F.3d at 1094 (“Certification of the class by the district court, notably the court's 12 determinations that the requirements of Rule 23 were satisfied, was premised upon the district court's 13 conclusion that the arbitration agreements were not enforceable.”). Because the proposed settlement 14 class now includes only those individuals who have no arbitration clause, the Court’s prior 15 conclusion that a class was appropriate supports class certification here for purposes of this 16 17 18 19 20 21 22 23 24 25 26 27 28 19 Defendants reserve all of their objections to class certification for litigation purposes, and do not consent to certification of the proposed class for any purpose other than to effectuate the settlement. 20 In its class certification order, the Court excluded from the class drivers who drove using the Uber app through limousine companies or drove under corporate or fictitious names. See O'Connor v. Uber Technologies, Inc., 2015 WL 5138097, at *22-24 (N.D. Cal. Sept. 1, 2015), rev’d on other grounds, 904 F.3d 1087 (9th Cir. 2018). (Following this ruling, lead plaintiff Thomas Colopy filed a new case in San Francisco Superior Court on behalf of these drivers who had been excluded from the certified class. Colopy, et al. v. Uber Technologies Inc., CGC-16-549696 (San Francisco Sup. Ct.)). The Court’s justification for this exclusion was that it concluded that these drivers may have differing facts with respect to the “distinct occupation” factor of the Borello test for employment classification. See O'Connor, 2015 WL 5138097, at *22-24. After the California Supreme Court’s decision in Dynamex, Plaintiffs no longer believe this factor is relevant, since it is not part of the Dynamex test. (Uber disagrees that this factor is irrelevant and also maintains that the Borello test still applies to Plaintiffs’ claims.) For settlement purposes, the parties have agreed to include these drivers in the settlement class. Indeed, the prior proposed settlement in 2016 included these drivers, see O’Connor, 201 F. Supp. 3d at 1119, and the Court noted it was inclined to approve the settlement, had it not been for the settlement’s inclusion of a PAGA release. Id. at 1132. 15 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 26 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 settlement. Thus, Plaintiffs now ask that the Court certify, for settlement purposes, a class consisting of “all drivers in California and Massachusetts who have used the Uber App at any time since August 16, 2009, up to and including February 28, 2019, and who are not covered by an arbitration agreement (either because they validly opted out of arbitration or because Uber has no record of their acceptance of an arbitration agreement).” Ex. 1 (Settlement Agreement) at ¶ 96. 1. Requirements of Fed. R. Civ. P. 23(a) Rule 23(a) requires that the Plaintiffs demonstrate: “(1) numerosity of plaintiffs; (2) common questions of law or fact predominate; (3) the named plaintiff’s claims and defenses are typical; and (4) the named plaintiff can adequately protect the interests of the class.” Barbosa v. Cargill Meat Sols. Corp., 297 F.R.D. 431, 441 (E.D. Cal. 2013). Here, all criteria are met. a. Numerosity A plaintiff will satisfy the numerosity requirement if “the class is so large that joinder of all members is impracticable.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir.1998). “Although the requirement is not tied to any fixed numerical threshold, courts have routinely found the numerosity requirement satisfied when the class comprises 40 or more members.” Villalpando v. Exel Direct, Inc., 303 F.R.D. 588, 605-06 (N.D. Ca. 2014). Here, the total settlement class consists of approximately 13,600 Uber drivers. See Liss-Riordan Decl. at ¶ 19. Thus, the numerosity requirement is easily satisfied. b. Commonality Courts have found that “[t]he existence of shared legal issues with divergent factual predicates is sufficient, [to satisfy commonality under Rule 23] as is a common core of salient facts coupled with disparate legal remedies within the class.” Smith v. Cardinal Logistics Mgmt. Corp., 2008 WL 4156364, *5 (N.D. Cal. Sept. 5, 2008). The “commonality requirement has been ‘construed permissively,’ and its requirements deemed minimal.” Estrella v. Freedom Fin’l Network, 2010 U.S. Dist. LEXIS 61236 (N.D. Cal. 2010) (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019-1020 (9th Cir. 1998)). Here, all settlement class members share the key question of whether they have been improperly classified as independent contractors and also share common questions of law with respect to their substantive claims. This Court has already recognized as much in certifying a class in 16 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 27 of 44 1 this case. See Dkt. 342, 395. Moreover, courts routinely alter or expand previously-certified classes 2 for purposes of certifying a settlement class. See, e.g., Spann v. J.C. Penney Corp., 2016 WL 3 297399, *7 (C.D. Cal. Jan. 25, 2016) (adding additional time period to the court’s previously certified 4 class definition for purposes of settlement).21 This Court indicated it would have approved such an 5 alteration in the prior 2016 proposed agreement, by indicating that it would have been inclined to 6 approve the settlement were it not for the PAGA portion of the agreement. O’Connor, 201 F. Supp. 7 3d at 1132. Here, the Court should do the same by certifying a class for settlement purposes of only 8 those Uber drivers who are not covered by an arbitration clause. Likewise, just as the Court appears 9 to have been prepared to do with the 2016 proposed settlement (had it not been for the PAGA portion 10 of the settlement), the Court should include Massachusetts Uber drivers who are not covered by an 11 arbitration clause in the settlement class for similar reasons. Plaintiffs believe that now that the 12 California Supreme Court has in Dynamex adopted the “ABC” test for certain classification claims, it 13 is particularly appropriate for the Massachusetts and California drivers to be included together in the 14 settlement class in this case.22 15 21 24 See also In re TRS Recovery Servs., Inc. & Telecheck Servs., Inc., Fair Debt Collection Practices Act (FDCPA) Litig., 2016 WL 543137, *2 (D. Me. Feb. 10, 2016) (certifying a settlement class that has been “merged and expanded by agreement” to cover not only the previously certified class of Maine residents, but also residents nationwide); Velez v. Novartis Pharm. Corp., 2010 WL 4877852, *1 (S.D.N.Y. Nov. 30, 2010) (expanding initial certified class period from five years to eight years for purposes of certifying settlement class); Connie Arnold, et al. v. United Artists Theatre Circuit, Inc., et al., No. C–93–0079 (N.D. Cal.1996), Dkt. 433 (granting the parties’ motion to expand the previously certified class to include a larger settlement class of persons with mobility impairments nationwide); Hahn v. Massage Envy Franchising LLC, 2015 WL 2164981, *1 (S.D. Cal. Mar. 6, 2015) (granting preliminary approval of class action settlement that expanded the certified class to encompass former and current members of Defendant’s clinics or spas nationwide, rather than only former members in California); McCrary v. Elations Co., LLC., 2016 WL 769703, *2 (C.D. Cal. Feb. 25, 2016) (granting final approval of settlement agreement that applied to an expanded class encompassing all persons who purchased Elations from May 28, 2009 through the date of the preliminary approval order at a California retail location, for personal use and not for resale). 25 22 16 17 18 19 20 21 22 23 26 27 28 Plaintiffs’ position is that, under Massachusetts law, courts have routinely certified cases challenging workers’ misclassification as independent contractors under this “ABC” test. See, e.g., Martins v. 3PD, Inc., 2013 WL 1320454, *9 (D. Mass. Mar. 28, 2013); Awuah v. Coverall North America, Inc., C.A. No. 07-cv-10287 (D. Mass. Sept. 27, 2011); Chaves v. King Arthur’s Lounge, Inc., C.A. No. 07-2505 (Mass. Super. July 31, 2009); De Giovanni v. Jani-King Int’l, Inc., 262 F.R.D. 71, 87-88 (D. Mass. 2009). Also, the claims brought in the Yucesoy case on behalf of (Cont’d on next page) 17 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 28 of 44 1 2 c. Typicality “Typicality is a permissive standard, and only requires that the named plaintiffs’ claims are 3 ‘reasonably coextensive’ with those of the class.” Dalton v. Lee Publications, Inc., 270 F.R.D. 555, 4 560 (S.D. Cal. 2010). Thus, “[i]n examining this condition, courts consider whether the injury 5 allegedly suffered by the named plaintiffs and the rest of the class resulted from the same alleged 6 common practice.” Id. (internal quotation omitted). Here, as the Court recognized in its prior class 7 certification orders, there are no factual differences between Plaintiffs’ claims and those of the 8 settlement class members; all drivers allegedly have suffered the same misclassification and resulting 9 wage and hour violations. Indeed, the claims of the settlement class members are identical with 10 respect to Uber’s uniform policy of classifying all drivers as independent contractors. See Norris- 11 Wilson v. Delta-T Grp., Inc., 270 F.R.D. 596, 605 (S.D. Cal. 2010) (noting that “[t]he injuries 12 alleged—a denial of various benefits—and the alleged source of those injuries—a sinister 13 classification by an employer attempting to evade its obligations under labor laws—are the same for 14 all members of the putative class” such that “[t]he typicality requirement is therefore satisfied”). 15 16 d. Adequacy “Resolution of two questions determines legal adequacy: (1) do the named plaintiffs and 17 their counsel have any conflicts of interest with other class members, and (2) will the named plaintiffs 18 and their counsel prosecute the action vigorously on behalf of the class?” Hanlon, 150 F.3d at 1020. 19 Here, the Court has already determined that class counsel will adequately represent the certified class 20 and that named plaintiffs Matthew Manahan and Elie Gurfinkel would adequately represent the 21 interests of the class in certifying them as lead plaintiffs for the certified class. See Dkt. 342 at 17-25. 22 Likewise, several named plaintiffs in the Massachusetts case (Mokhtar Talha, Pedro Sanchez, Aaron 23 24 (Cont’d from previous page) 25 Massachusetts drivers are similar to the claims brought on behalf of California drivers in O’Connor (seeking expense reimbursement and recovery for unpaid tips). As in the proposed 2016 settlement, the settlement agreement here releases these claims, as well as other wage claims predicated on misclassification. Uber’s position is that it is agreeing to the certification of a settlement class for settlement purposes only, and that it would vigorously contest any efforts to certify a class outside of the settlement context. 26 27 28 18 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 29 of 44 1 Dulles, and Antonio Oliveira) who are not covered by arbitration clauses are adequate representatives 2 of the Massachusetts portion of the settlement class.23 3 2. Requirements of Fed. R. Civ. P. 23(b) 4 Rule 23(b)(3) requires the Court to find that: (1) “the questions of law or fact common to class 5 members predominate over any questions affecting only individual members,” and (2) “a class action 6 is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. 7 Civ. P. 23(b)(3). Some of the factors that are part of the Rule 23(b)(3) analysis are rendered 8 irrelevant in the settlement context, such as “the likely difficulties in managing a class action.” 9 Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 488 (E.D. Cal. 2010) (noting that this factor 10 is “essentially irrelevant” in “the context of settlement”); see also Alberto v. GMRI, Inc., 252 F.R.D. 11 652, 664 (E.D. Cal. 2008); Spann v. J.C. Penney Corp., 2016 WL 297399, *3 (C.D. Cal. Jan. 25, 12 2016) (“[C]ourts need not consider the Rule 23(b)(3) considerations regarding manageability of the 13 class action, as settlement obviates the need for a manageable trial.”). 14 Here, this Court has already determined that Uber’s independent contractor defense could be 15 resolved on a classwide basis under the common law Borello test because each of the Borello factors 16 could be assessed with common proof with respect to most of the drivers who are part of the 17 settlement class. See Dkt. 342. The Ninth Circuit did not reach that issue, reversing the class only 18 based on the fact that it included drivers who were covered by arbitration clauses, which the Ninth 19 Circuit disagreed was not enforceable. O’Connor, 904 F.3d at 1094-95. Likewise, the Court has 20 already determined that Plaintiffs’ claims under Cal. Labor Code §§ 2802 and 351 are capable of 21 class-wide determination and that common issues predominate with respect to these claims. 22 Moreover, now that the California Supreme Court has announced an “ABC” test for resolving (at 23 least some) classification claims in Dynamex, Plaintiffs contend that it is even more clear that these 24 claims are appropriate for classwide resolution. See note 21 supra. 25 26 27 28 23 Named plaintiff Mokhtar Talha drove using the Uber app prior to Uber including an arbitration clause, see Yucesoy Dkt. 198 at ¶ 7; Dkt. 247-16 (Talha Decl.) at ¶¶ 3-4. Named plaintiffs Pedro Sanchez, Aaron Dulles, and Antonio Oliveira opted out of the arbitration clause. See Yucesoy Dkt. 198 at ¶ 9; Dkt. 247-18 at ¶¶ 3-4; Dkt. 292 at ¶¶ 10-11. 19 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 30 of 44 1 As this Court already recognized in its class certification order, these misclassification claims 2 predominate, and a class action to resolve them is superior than individual actions. Further, it has 3 been well-recognized that “[w]here recovery on an individual basis would be dwarfed by the cost of 4 litigating on an individual basis, this factor weighs in favor of class certification.” Noll v. eBay, Inc., 5 309 F.R.D. 593, 604 (N.D. Cal. 2015). 6 B. 7 8 “Recent amendments to Rule 23 require the district court to consider a [] list of factors, namely, whether: 9 (A) the class representatives and class counsel have adequately represented the class; 10 11 12 The Court Should Preliminarily Approve the Settlement (B) the proposal was negotiated at arm’s length; (C) the relief provided for the class is adequate, taking into account: (i) the costs, risks, and delay of trial and appeal; 13 14 15 (ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims; 16 (iii) the terms of any proposed award of attorney's fees, including timing of payment; and 17 (iv) any agreement required to be identified under Rule 23(e)(3); and 18 (D) the proposal treats class members equitably relative to each other.” 19 20 21 22 23 24 25 26 27 28 Hefler v. Wells Fargo & Co., 2018 WL 6619983, at *3–4 (N.D. Cal. Dec. 18, 2018) (quoting Fed. R. Civ. P. 23(e)(2)). “In the notes accompanying these amendments, the Advisory Committee acknowledged that ‘[c]ourts have generated lists of factors’ to determine the fairness, reasonableness, and adequacy of a settlement” such that “adding these specific factors to Rule 23(e)(2) was not designed ‘to displace any factor, but rather to focus the court and the lawyers on the core concerns of procedure and substance that should guide the decision whether to approve the proposal.’” Id. at *4. Courts in the Ninth Circuit have typically found preliminary approval of a settlement and notice to the class is appropriate if it: (1) falls within the range of possible approval; (2) is the product of serious, informed, non-collusive negotiations, (3) has no obvious deficiencies; and (4) does not 20 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 31 of 44 1 improperly grant preferential treatment to class representatives or segments of the class. Deaver v. 2 Compass Bank, 2015 WL 4999953, *4 (N.D. Cal. Aug. 21, 2015). Here, both under the factors 3 enumerated in Rule 23(e)(2) and the factors traditionally considered by the Ninth Circuit, the 4 proposed settlement clearly warrants preliminary approval. 5 1. The Settlement is the Product of Informed, Non-Collusive Negotiation 6 Under Fed. R. Civ. P. 23(e)(2)(A)-(B), “[t]he Court must consider whether ‘the class 7 representatives and class counsel have adequately represented the class’ and whether ‘the proposal 8 was negotiated at arm’s length’, [which] [] the Advisory Committee notes suggest, [] are ‘matters that 9 might be described as procedural concerns, looking to the conduct of the litigation and of the 10 negotiations leading up to the proposed settlement.’” Hefler, 2018 WL 6619983, at *6. Courts in 11 this Circuit have likewise found that for the parties “to have brokered a fair settlement, they must 12 have been armed with sufficient information about the case to have been able to reasonably assess its 13 strengths and value.” Acosta v. Trans Union, LLC, 243 F.R.D. 377, 396 (C.D. Cal. 2007). Thus, 14 adequate discovery and the use of an experienced mediator support a finding that settlement 15 negotiations were both informed and non-collusive. See Villegas v. J.P. Morgan Chase & Co., 2012 16 WL 5878390, *6 (N.D. Cal. Nov. 21, 2012); Deaver, 2015 WL 4999953, *7; Satchell v. Fed. Express 17 Corp., 2007 WL 1114010, *4 (N.D. Cal. Apr. 13, 2007) (“The assistance of an experienced mediator 18 in the settlement process confirms that the settlement is non-collusive”). 19 Here, “[b]y the time the settlement was reached, the litigation had proceeded to a point in 20 which both plaintiffs and defendants had a clear view of the strengths and weaknesses of their cases.” 21 Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 489 (E.D. Cal. 2010) (internal citations 22 omitted). The parties exchanged extensive discovery prior to conducting a mediation, including 23 detailed damages discovery. See Liss-Riordan Decl. at ¶ 3. Likewise, the parties have litigated the 24 merits of their claims very extensively, through motions to dismiss and for judgment on the pleadings 25 and two motions for summary judgment, and both sides have undertaken detailed analyses of their 26 respective cases. Id. at ¶ 5. The parties also litigated no fewer than five appeals at the Ninth Circuit 27 Court of Appeals (including two oral arguments), delving deeply into the legal issues in the case. Id. 28 at ¶ 7. The parties met on three separate occasions in this last round of settlement negotiations with a 21 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 32 of 44 1 highly experienced and renowned mediator, Mark Rudy, alongside mediator Francis J. “Tripper” 2 Ortman, who helped bring a fresh perspective to their protracted negotiations. Id. at ¶ 18. The 3 settlement the parties have reached was the result of thorough and passionate negotiations by 4 experienced counsel familiar with the applicable law, class action litigation, and the facts of this case. 5 See Nielson v. The Sports Authority, 2013 WL 3957764, *4–5 (N.D. Cal. July 29, 2013) (“[T]he 6 settlement resulted from non-collusive negotiations, i.e., a mediation before Mark Rudy, a respected 7 employment attorney and mediator.”); Barcia v. Contain-A-Way, Inc., 2009 WL 587844, *1 (S.D. 8 Cal. Mar. 6, 2009) (granting final settlement approval and finding that Mark Rudy is a “nationally 9 recognized labor mediator”); Zolkos v. Scriptfleet, Inc., 2014 WL 7011819, *2 (N.D. Ill. Dec. 12, 10 2014) (“Two experienced class action employment mediators, [including] Mark Rudy . . . assisted the 11 Parties with the settlement negotiations and presided over two full-day mediations. This reinforces 12 the non-collusive nature of the settlement.”). Thus, the parties had ample information, expert 13 guidance from not one, but two experienced mediators, and intimate familiarity with the strengths 14 and weaknesses of the case. 15 2. The Relief Provided for the Settlement Class Is Fair and Adequate 16 “Rule 23(e)(2)(C) and (D) set forth factors for conducting a ‘substantive’ review of the terms 17 of the proposed settlement.” Hefler, 2018 WL 6619983, at *7 (citing Fed. R. Civ. P. 23(e)(2)(C)-(D) 18 advisory committee's note to 2018 amendment). “In determining whether ‘the relief provided for the 19 class is adequate,’ the Court must consider ‘(i) the costs, risks, and delay of trial and appeal; (ii) the 20 effectiveness of any proposed method of distributing relief to the class, including the method of 21 processing class-member claims; (iii) the terms of any proposed award of attorney’s fees, including 22 timing of payment; and (iv) any agreement required to be identified under Rule 23(e)(3).’” Id. (citing 23 Rule 23(e)(2)). Similarly, courts in the Ninth Circuit have evaluated “the range of possible approval 24 criterion, which focuses on substantive fairness and adequacy, [] primarily [by] consider[ing] 25 plaintiff’s expected recovery balanced against the value of the settlement offer.” Deaver v. Compass 26 Bank, 2015 WL 4999953, *9 (N.D. Cal. Aug. 21, 2015). A careful risk/benefit analysis must inform 27 Counsel’s valuation of a class’s claims. Lundell v. Dell, Inc., 2006 WL 3507938, *3 (N.D. Cal. Dec. 28 5, 2006). 22 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 33 of 44 1 2 a. Risks of Further Litigation A “relevant factor” that courts must consider in contemplating a potential settlement is “the 3 risk of continued litigation balanced against the certainty and immediacy of recovery from the 4 Settlement.” Vasquez, 266 F.R.D. at 489. Thus, courts “consider the vagaries of litigation and 5 compare the significance of immediate recovery by way of the compromise to the mere possibility of 6 relief in the future, after protracted and expensive litigation.” Id. (citing Oppenlander v. Standard Oil 7 Co. (Ind.), 64 F.R.D. 597, 624 (D.Colo.1974)). Here, there are a number of risks that Plaintiffs had to 8 consider: 9 First, Plaintiffs recognized the delay that was sure to transpire in needing to re-argue class 10 certification on behalf of the reduced number of drivers not covered by arbitration clauses, as well as 11 the delay in arguing the various issues set forth below. The cost of these delays to drivers in a case 12 that has already been pending for almost six years is substantial. In particular, arguing the impact of 13 the California Supreme Court’s recent decision in Dynamex, including what exactly is required for 14 Plaintiffs to prevail under that standard (including Prong B), whether the decision applies 15 retroactively, and whether it applies to all of Plaintiffs’ claims, would be a time-consuming and 16 uncertain endeavor. 17 Even putting aside the further delay, each of these questions is now a hotly disputed issue in 18 other cases throughout California. Indeed, all of these issues are now pending before the Ninth 19 Circuit in Lawson v. Grubhub, Inc., 302 F. Supp. 3d 1071 (N.D. Cal. 2018), appeal pending, Ninth 20 Cir. Appeal No. 18-15386. The parties in the Lawson case are represented by the same counsel on 21 both sides as the parties in this case, and thus counsel are very familiar with all of the arguments as 22 they are unfolding. These arguments include the question of whether Dynamex applies retroactively 23 to the time period before the decision was issued (a question that Grubhub is hotly disputing in the 24 Lawson case). These arguments also include the question of whether the Dynamex “ABC” test 25 applies to expense reimbursement claims (Plaintiffs’ primary claim for damages). Courts have issued 26 differing statements on this question. Compare Johnson v. VCG-IS, LLC, Case No. 30-2015- 27 00802813, Ruling on Motion in Limine (Super. Ct. Cal. July 18, 2018) at *4-5 (holding that 28 Dynamex applies to a variety of Labor Code claims, including expense reimbursement claims under 23 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 34 of 44 1 Cal. Lab. Code §2802); with Garcia v. Border Transp. Group, LLC, 28 Cal. App. 5th 558 (2018) 2 (stating that Dynamex would not apply to “non-wage order” claims under the Labor Code, which the 3 Court stated would include expense reimbursement claims)24; Karl v. Zimmer Biomet Holdings Inc., 4 2018 WL 5809428 *3 (N.D. Cal. Nov. 6, 2018) (summarily concluding that expense reimbursement 5 claim does not arise under the Wage Orders and thus Dynamex would not apply). 6 Second, Plaintiffs recognize that there is now an ongoing and well-funded battle being fought 7 at the California legislature, in which a number of companies, including “gig economy” companies 8 are lobbying for a legislative repeal or rollback of Dynamex.25 The uncertainty of what the outcome 9 will be of this legislative battle was an important factor in Plaintiffs’ decision to reach this settlement. 10 Drivers who have been waiting almost six years would not need to await the outcome of this battle 11 before receiving a payment from this settlement. 12 Were Dynamex not to apply to this case (either for one of the legal reasons discussed above, 13 or because of a legislative change), Plaintiffs recognized that, under the multi-factor Borello test 14 (which the California Supreme Court recognized in Dynamex has led to uncertainty regarding the 15 employee status question), there is a serious risk that a unanimous jury would not find that Uber 16 drivers to be employees. As this Court has explained, “numerous [Borello] factors point in opposing 17 directions” on the issue of employment classification, such that the employment misclassification test 18 “does not yield an unambiguous result.” Dkt. 251 at 26–27. Plaintiffs have maintained that the 19 employee status question is a legal question for the Court to decide. Liss-Riordan Decl. at ¶ 33. 20 However, the Court rejected these arguments and held that the ultimate issue of employment status 21 22 23 24 25 26 27 28 24 Plaintiffs contend that statement was dicta in Garcia, but they recognize the challenge in the fact that the statement was made by the Court of Appeal. 25 See CA. Assem. Bill #71, (2019-2020 Reg. Sess.), available at: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB71; see also Ebbink, Benjamin, Day One - Dynamex to Dominate Legislative Discussion in California in 2019, LEXOLOGY (Dec. 6, 2018) available at: https://www.lexology.com/library/detail.aspx?g=dfde59855ffa-425b-8475-2990b298d1cf (“December 3 was also the first day that members could introduce bills for the 2019-2020 legislative session. If the first day is any indication, there is one issue that will dominate employment policy discussion in 2019: Dynamex, Dynamex and Dynamex.”). 24 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 35 of 44 1 under Borello would be given to a jury to decide.26 Plaintiffs recognized additional risks they faced 2 in proceeding on this issue before a jury, particularly given Uber’s popularity in the San Francisco 3 Bay area and the general popularity of the so-called “gig economy.”27 4 Plaintiffs also recognized that Uber planned to contend that, even if Plaintiffs prevailed on 5 liability, the IRS mileage reimbursement rate was not the proper measure of reimbursement damages. 6 Uber would have advocated for the use of the IRS variable rate, rather than the fixed rate, which 7 could have reduced the reimbursement damages by at least 60%. See Liss-Riordan Decl. at ¶¶ 42-43, 8 infra p. 27. With respect to their tips claim, Plaintiffs also recognized the risk that, given what 9 Plaintiffs believe could be viewed as conflicting messages that Uber has disseminated regarding 10 whether a tip is included in the fare (as well as the current message that allows passengers to leave 11 voluntary tips), a jury might not find that, under the prior system, a tip was included in the fare. Id. at 12 ¶ 52. And even if the jury found that a tip was included in the fare, it is uncertain what amount of tip 13 the jury may have found was included. Id. 14 For all of these reasons, Plaintiffs determined that the settlement they were able to negotiate 15 was in the best interests of the settlement class. Although this settlement does not result in a 16 reclassification of Uber drivers as employees, courts—including this one—have routinely approved 17 settlements of misclassification cases that do not result in reclassification. See, e.g., Alexander v. 18 Fedex Ground Package Sys., Inc., 2016 WL 1427358, *1 (N.D. Cal. Apr. 12, 2016); Cotter v. Lyft, 19 Inc., 2016 WL 1394236, *5-6 (N.D. Cal. Apr. 7, 2016) (rejecting objection to settlement on the 20 21 26 24 In similar litigation against FedEx, in one of the only independent contractor misclassification cases ever to go to trial, a jury held FedEx drivers to be independent contractors, see Anfinson v. FedEx Ground Package System, Inc., 2009 WL 2173106 (Wa. Sup. Ct.), rev’d, 159 Wash. App. 35 (2010), aff’d, 174 Wash.2d 851 (2012), despite the Ninth Circuit holding them as a legal matter to be employees, see Alexander v. FedEx Ground Package Sys., Inc., 765 F.3d 981 (9th Cir. 2014); Slayman v. FedEx Ground Package Sys., Inc., 765 F.3d 1033 (9th Cir. 2014). 25 27 22 23 26 27 28 In applying a similar multi-factor test for considering employee status under the FLSA, a court in Pennsylvania held Uber drivers to be independent contractors. See Razak v. Uber Technologies, Inc., 2018 WL 1744467, at *1 (E.D. Pa. Apr. 11, 2018), appeal pending Third Cir. Appeal No. 18-1944. In addition, a federal judge in this district found that a Grubhub driver was an independent contractor under the Borello test. Lawson v. Grubhub, Inc., 302 F. Supp. 3d 1071, 1073 (N.D. Cal. 2018), appeal pending, Ninth Cir. Appeal No. 18-15386. 25 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 36 of 44 1 ground that drivers would not be reclassified); Harris v. Vector Mktg. Corp., 2012 WL 381202 (N.D. 2 Cal. Feb. 6, 2012); Smith v. Cardinal Logistics Mgmt. Corp., 2011 WL 3667462, *1 (N.D. Cal. Aug. 3 22, 2011). 4 In sum, after carefully considering these risks and the potential benefits of proceeding further 5 with this case, Plaintiffs concluded that the significant monetary relief obtained here for the drivers 6 not covered by arbitration clauses is in the best interests of the settlement class.28 7 b. 8 Benefit to Drivers “[I]t is well-settled law that a cash settlement amounting to only a fraction of the potential 9 recovery does not per se render the settlement inadequate or unfair.” Villegas, 2012 WL 5878390, *6 10 (approving gross settlement of “approximately fifteen percent (15%) of the potential recovery against 11 Defendants”). Here, Plaintiffs have analyzed the potential monetary value of their claims if they 12 were to succeed in proving their misclassification, reimbursement, and gratuities law claims. Based 13 on extensive data provided by Uber, as described in more detail in the Liss-Riordan Declaration at ¶¶ 14 35-50, Plaintiffs have calculated the following potential damages they might have obtained in a 15 judgment against Uber: 16 Car Reimb. (IRS fixed) Phones $3 M 17 California class $39.8 M 18 Massachusetts $4.1 M 19 TOTAL: Tips $5.6 M $556,710 $902,729 Total $48.4 M $5.6 M $54 M 20 21 22 23 24 25 26 27 28 28 Plaintiffs note that additional risks exist for Massachusetts drivers. First, there has not yet been a certified class in the Yucesoy case. And although Plaintiffs expected to be able to prove that drivers are Uber’s employees under Massachusetts law, litigation is always uncertain. See, e.g., Sebago v. Boston Cab Dispatch, 471 Mass. 321 (2015) (holding that taxi drivers were not misclassified by taxi companies as independent contractors under Massachusetts law, despite Superior Court and Appeals Court’s rulings that plaintiffs were likely to succeed on the merits of that claim). More significantly, because there is not an express expense reimbursement statute in Massachusetts analogous to Cal. Labor Code § 2802, Plaintiffs’ recovery for expenses in Massachusetts is less certain. See Schwann v. FedEx Ground Package Sys., Inc., 2014 WL 496882, *3 (D. Mass. Feb. 7, 2014) (in Massachusetts, “the question of whether business expenses and deductions borne by employees are recoverable under the Wage Act is unsettled under state law.”) (certifying this question to the Massachusetts Supreme Judicial Court, though certification was withdrawn before it could be decided). 26 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 37 of 44 1 2 3 4 5 6 7 8 9 10 Thus, considering the total potential damages, had Plaintiffs prevailed in both cases on a classwide basis (and prevailed in convincing the jury that 20% was the amount of gratuity included), and giving equal weighting to all claims, the total potential monetary settlement payment in this case ($20 million) constitutes approximately 37% of the potential damages for all the claims that have been litigated in this case, using the IRS fixed rate of reimbursement (which is $54 million).29 Notably, in Cotter v. Lyft, Inc., 193 F. Supp. 3d 1030, 1039 (N.D. Cal. 2016), the court approved a similar settlement that was worth 17% of the drivers’ reimbursement claim (based upon the IRS fixed rate); by comparison, this settlement is worth approximately 46% of the drivers’ reimbursement claim (based upon the IRS fixed rate) – in other words, nearly three times as much as the Cotter settlement proportionately, based on the expense reimbursement claim. 11 12 13 14 15 In view of the many legal issues and uncertainties that faced Plaintiffs, discussed above, Plaintiffs submit that this is an excellent monetary result.30 Further, as shown in the Liss-Riordan Declaration, Plaintiffs estimate that the net payment to settlement class members who submit claims and who drove a significant amount (25,000 miles) would be more than double the amount they would have received from the 2016 settlement. See Liss-Riordan Decl. at ¶ 22. 16 17 18 19 20 Courts have also recognized the value of obtaining relatively prompt settlements and the benefits to class members of receiving payments sooner rather than later, where litigation could extend for years on end, thus significantly delaying any payments to class members. “A court may consider the vagaries of litigation and compare the significance of immediate recovery by way of the compromise to the mere possibility of relief in the future, after protracted and expensive litigation.” 21 22 23 24 25 26 27 28 29 The percentage recovery is even greater, approximately 75% of the potential damages, if the IRS variable rate (rather than the IRS fixed rate) were used. 30 Indeed, in Alexander v. FedEx Ground Package Sys., 2016 WL 1427358, *2 n.5 (N.D. Cal. Apr. 12, 2016), where this Court granted final approval to a settlement achieved after more than 10 years of litigation, and in a case where the plaintiffs won liability on appeal with a ruling that drivers were employees as a matter of law (yet no reclassification occurred as a result of the settlement) (and the case did not raise any issues regarding arbitration clauses), the ultimate settlement reached accounted for approximately 40% of the class members’ actual damages. By comparison, Plaintiffs submit that the potential settlement percentage here, ranging from 37% and 75% depending on how actual potential damages are calculated, is an excellent result. 27 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 38 of 44 1 Vasquez, 266 F.R.D. at 489 (internal citation omitted); see also Barbosa v. Cargill Meat Sols. Corp., 2 297 F.R.D. 431, 446 (E.D. Cal. 2013) (noting that “there were significant risks in continued litigation 3 and no guarantee of recovery” whereas “[t]he settlement [] provides Class Members with another 4 significant benefit that they would not receive if the case proceeded—certain and prompt relief”); 5 California v. eBay, Inc., 2015 WL 5168666, *4 (N.D. Cal. Sept. 3, 2015) (“Since a negotiated 6 resolution provides for a certain recovery in the face of uncertainty in litigation, this factor weighs in 7 favor of settlement”); Oppenlander v. Standard Oil Co., 64 F.R.D. 597, 624 (D.Colo.1974) (“It has 8 been held proper to take the bird in hand instead of a prospective flock in the bush.”). 9 Comparing this settlement to a similar recent settlement involving Lyft drivers, Cotter v. Lyft, 10 Inc., 193 F. Supp. 3d 1030, further underscores why this settlement provides an excellent benefit to 11 the settlement class in view of the risks: 12 13 14 15 16 17 Total Settlement Fund Total Settlement Class Members Total Settlement Class Members Who Received Notice Cotter v. Lyft31 This Case $27 million 202,282 $20 million 201,678 (99.6%) TBD email (or mail if email was not deliverable) 64% email (or mail if email is not deliverable) 50% (estimated) 13,600 18 Method of Notice 19 Percentage Claim Rate 20 Average Recovery Per Class Member $229 $2,206 (estimated) $100,000 (estimated) TBD 23 Amount Distributed to Cy Pres Administration Costs $508,274 $146,000 24 Attorneys’ Fees $3,675,000 $5,000,000 21 22 25 26 27 28 31 See Cotter v. Lyft, 193 F. Supp. 3d at 1040; see also Declaration of Shannon Liss-Riordan at ¶ 23. 28 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 39 of 44 1 In Cotter v. Lyft, a similar notice and claims process led to almost half of the drivers 2 submitting claims (accounting for approximately 64% of the net settlement fund). The settlement 3 fund was 35% larger than in this case, but the total size of the class was many times larger, and thus, 4 the average estimated recovery in this case is much more robust ($2,206 as compared to $229), which 5 reflects the fact that the drivers here do not face the prospect of an arbitration clause being enforced 6 against them.32 7 8 Thus, based on the risks outlined above, Part IV(B)(2)(a), Plaintiffs believe this settlement includes a fair and adequate sum to compensate settlement class members. 9 3. The Settlement Has No Obvious Deficiencies 10 A court should also consider possible deficiencies in a settlement including an overly broad 11 release of claims, an insufficient timeframe for notice, an inadequate form of payment, an unrelated 12 cy pres designee, or an unreasonable request for attorneys’ fees, among other things. See Custom 13 LED, LLC v. eBay, Inc, 2013 WL 6114379, *7-8 (N.D. Cal. Nov. 20, 2013); Deaver, 2015 WL 14 4999953, *7. Here, settlement class members will release only wage-and-hour claims, such as those 15 that could arise from their alleged misclassification as independent contractors, and will not release 16 claims for wrongful termination, personal injury, or pay issues not related to misclassification. See 17 Ex. 1 (Settlement Agreement) at ¶ 98. The timeframe for notice is adequate, and settlement class 18 members will be given ample opportunity to submit claims. Id. at ¶ 54. Likewise, the distribution 19 will compensate drivers fairly, as discussed above. No unclaimed funds will revert to Uber; rather 20 they will be redistributed amongst settlement class members, and, if necessary, given to the cy pres 21 designees. 22 23 24 25 26 27 28 32 The Cotter settlement also included some forward-looking non-monetary components to the settlement, including several changes to Lyft’s business practices. These changes included requiring Lyft to change its Terms of Service to: (1) remove Lyft’s at-will termination provision and replace it with a provision that allows Lyft to deactivate drivers only for specific delineated reasons or after notice and an opportunity to cure period is provided; (2) pay for the arbitration fees and costs unique to arbitration for claims brought by a driver against Lyft related to a driver’s deactivation, pay-related issues, or alleged employment relationship with Lyft and provide an optional, pre-arbitration negotiation process; and (3) provide more information to drivers prior to accepting a ride request and more freedom to refuse requests. See Cotter v. Lyft, 3:13-cv-04065-VC (N.D. Cal.), Dkt. 169 at 1112. 29 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 40 of 44 1 Further, the attorneys’ fee provision is fair and does not give rise to any deficiency. 2 Plaintiffs’ counsel intends to apply for fees not to exceed 25% of the gross settlement fund (totaling 3 $5 million). Id. at ¶ 126. The settlement is not contingent upon the Court approving counsel’s 4 application. “The typical range of acceptable attorneys’ fees in the Ninth Circuit is 20 percent to 33.3 5 percent of the total settlement value, with 25 percent considered a benchmark percentage.” Barbosa 6 v. Cargill Meat Sols. Corp., 297 F.R.D. 431, 448 (E.D. Cal. 2013). However, “in most common fund 7 cases, the award exceeds that benchmark percentage.” Id.; In re Activision Sec. Litig., 723 F. Supp. 8 1373, 1377 (N.D.Cal.1989) (“nearly all common fund awards range around 30%”). Thus, here, a 9 25% fee is eminently reasonable, particularly given the novelty and complexity of litigating the first 10 “gig economy” independent contractor misclassification case in the nation, one that has gained 11 international attention and has set an example for other litigation, and has been closely watched by 12 companies across the country and the world, who have been faced with the choice of whether to 13 classify their workers as employees or independent contractors. 14 Moreover, this percentage fee recovery is a lower percentage than many recent fee awards in 15 California district courts. See, e.g., Vasquez, 266 F.R.D. at 492 (E.D. Cal. 2010) (collecting recent 16 wage and hour cases in which counsel received fee awards in the range of 30% to 33.3% of the 17 common fund); Lusby v. GameStop Inc., 2015 WL 1501095, *9 (N.D. Cal. Mar. 31, 2015) (finding a 18 one-third fee award appropriate because to the results achieved, the risk of litigation, the skill 19 required and the quality of work, and the contingent nature of the fee and the financial burden carried 20 by the plaintiffs); Barnes v. The Equinox Grp., Inc., 2013 WL 3988804, *4 (N.D. Cal. Aug. 2, 2013) 21 (awarding one-third of gross settlement in fees and costs because counsel assumed substantial risk 22 and litigated on a contingency fee-basis). 23 Plaintiffs will submit information regarding the time spent by counsel on this case with their 24 motion for attorneys’ fees to be filed prior to the final approval hearing. However, the chart below 25 demonstrates a summary of hours worked and shows that, based on a lodestar analysis to date, the 26 fees incurred on the case actually exceed the requested fee award in the proposed settlement. Thus, 27 Plaintiffs are not requesting a multiplier, and the lodestar analysis further underscores the 28 reasonableness of the requested fee award. 30 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 41 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Attorney Shannon Liss-Riordan Adelaide Pagano Anne Kramer Ben Weber Sara Smolik Olena Savytska Matthew Carlson Michael Freedman Monique Olivier Hours 4,500 1,640 380 223 36 55 215 57 29 Rate $850 $350 $300 $450 $450 $300 $450 $450 $700 Fees $3,825,000 $ 574,000 $ 114,000 $ 100,350 $ 16,200 $ 16,500 $ 96,750 $ 25,650 $ 20,300 Paralegal Staff 5,000 $225 $1,125,000 TOTAL: $ 5,913,750 For all of these reasons, the settlement has no obvious deficiencies and should be preliminarily approved. 4. The Settlement Does Not Unfairly Grant Preferential Treatment to Any Settlement Class Members “Consistent with Rule 23’s instruction to consider whether ‘the proposal treats class members equitably relative to each other,’ Fed. R. Civ. P. 23(e)(2)(C)(i), the Court considers whether the Settlement ‘improperly grant[s] preferential treatment to class representatives or segments of the class.’” Hefler, 2018 WL 6619983, at *8 (citing In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007)). “[T]o the extent feasible, the plan should provide class members who suffered greater harm and who have stronger claims a larger share of the distributable settlement amount.” Hendricks v. StarKist Co., 2015 WL 4498083, *7 (N.D. Cal. July 23, 2015) (citing cases). However, “courts recognize that an allocation formula need only have a reasonable, rational basis, particularly if recommended by experienced and competent counsel.” Id. citing Vinh Nguyen v. Radient Pharm. Corp., 2014 WL 1802293, *5 (C.D. Cal. May 6, 2014). Here, the settlement will result in payment of a fair and reasonable award to settlement class members, particularly in light of the litigation risks. Here, settlement class members will receive settlement shares based on the 26 27 28 31 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 42 of 44 1 2 number of miles they transported passengers using the Uber application (as calculated by Uber’s mileage data).33 3 4 5 6 7 8 9 10 11 12 13 14 15 Likewise, the proposed enhancements for the named plaintiffs in this settlement are eminently reasonable. Plaintiffs will request enhancements of $7,500 for the named plaintiffs who have been part of this case since nearly the beginning and have participated most actively (Gurfinkel and Manahan in the O’Connor case and Talha and Sanchez in the Yucesoy case), as well as smaller enhancements of $5,000 for two Massachusetts named plaintiffs who were recently added to the case (Dulles and Oliveira).34 See Liss-Riordan Decl. at ¶ 28. These amounts are in line with many awards in other cases in the federal district courts in California. See, e.g., Lusby, 2015 WL 1501095, *5 (awarding $7,500 to each of the four class representatives from $750,000 fund); Covillo v. Specialtys Cafe, 2014 WL 954516, *8 (N.D. Cal. Mar. 6, 2014) (awarding $8,000 to class representatives from $2,000,000 fund); Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 300 (N.D. Cal. 1995) (awarding $50,000 to named plaintiff out of $76 million settlement fund); Chu v. Wells Fargo Investments, LLC, 2011 WL 672645, *2 (N.D. Cal. Feb. 16, 2011) (awarding $10,000 incentive awards to two named plaintiffs). 16 17 18 Particularly given that the named plaintiffs have placed their names in the public eye as part of this high-profile litigation and have placed their livelihoods at risk by suing Uber (some even while continuing to drive using the Uber app), these modest incentive payments are more than 19 20 33 24 The settlement does not distinguish between drivers who have worked in California and those who have worked in Massachusetts. As discussed above, California has an express expense reimbursement statute, Cal. Lab. Code § 2802, whereas Massachusetts does not have such an express statute, and the law in Massachusetts is currently not certain as to whether employees may recover for unreimbursed expenses. However, Massachusetts law provides for mandatory trebling of any wage damages, see Mass. Gen. Law c. 149 § 150. Considering both these factors, Plaintiffs determined that the value of the California and Massachusetts drivers’ claims were comparable. 25 34 21 22 23 26 27 28 The prior settlement in 2016 which the Court did not approve because of the PAGA release included the same incentive payments that Plaintiffs request here ($7,500 for named plaintiffs who have been in the case since near the beginning and $5,000 for those who were added more recently). Plaintiffs submit that the $7,500 requested for the early named plaintiffs have waited a long time for this case to be resolved and have continued to represent the putative class through thick and thin. Their continued efforts have allowed this settlement class to now see significant recovery. 32 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 43 of 44 1 reasonable. See Van Vranken, 901 F. Supp. at 299 (noting that in evaluating incentive awards, courts 2 may consider “the notoriety and personal difficulties encountered by the class representative” and 3 “the amount of time and effort spent by the class representative” among other factors); see also 4 Bellinghausen v. Tractor Supply Co., 306 F.R.D. 245, 267 (N.D. Cal. 2015) (“Incentive awards are 5 particularly appropriate in wage-and-hour actions where plaintiffs undertake a significant 6 “reputational risk” by bringing suit against their former employers”). Moreover, these plaintiffs have 7 remained steadfast in their commitment to this case over the span of many years, and their patience 8 and persistence on behalf of their fellow drivers is worthy of recognition. 9 V. 10 CONCLUSION For the foregoing reasons, Plaintiffs’ Motion for Preliminary Approval should be granted. 11 The Court should allow the Settlement Administrator to proceed with the issuance of notice and 12 should schedule the case for a final settlement approval hearing in July 2019. 13 14 15 16 17 18 Date: March 11, 2019 Respectfully submitted, MATTHEW MANAHAN, ELIE GURFINKEL, MOKHTAR TALHA, PEDRO SANCHEZ, AARON DULLES, and ANTONIO OLIVEIRA, individually and on behalf of all others similarly situated, By their attorneys, 19 20 21 22 23 24 _/s/ Shannon Liss-Riordan_______________ Shannon Liss-Riordan, SBN 310719 Adelaide Pagano, pro hac vice LICHTEN & LISS-RIORDAN, P.C. 729 Boylston Street, Suite 2000 Boston, MA 02116 (617) 994-5800 Email: sliss@llrlaw.com; apagano@llrlaw.com 25 26 27 28 33 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC, CASE NO. 15-CV-0262-EMC Case 3:13-cv-03826-EMC Document 915 Filed 03/11/19 Page 44 of 44 1 2 3 4 5 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing document was served by electronic filing on March 11, 2019, on all counsel of record. _/s/ Shannon Liss-Riordan_______________ Shannon Liss-Riordan, Esq. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF – CASE NO. CV 13-03826-EMC