Law360, San Francisco (July 16, 2015, 9:22 PM ET) — Uber Technologies Inc. reached a deal Thursday in a discovery feud over documents on how it calculates fares and tips, which its California drivers wanted for their proposed class action claiming Uber misclassified them as independent contractors and cheated them out of a 20 percent gratuity.
Uber agreed to stipulate that it had never factored tips into how it sets its fares in California, plaintiffs’ attorney Shannon Liss-Riordan of Lichten and Liss-Riordan PC told Law360 on Thursday. The agreement came after U.S. District Court Magistrate Judge Donna Ryu said she would order Uber to provide at least a sampling of documents related to how it calculates its fares and tips, which the drivers sought as they prepare to move for class certification in the suit.
Riordan said in a hearing Thursday that Uber has refused to provide details on how it calculates its fares, claiming the information is proprietary. She asked whether Uber would stipulate that tips have never been part of its fare calculations for UberX and Uber Black services in California. Uber’s attorney, Theane Evangelis of Gibson Dunn, argued during the hearing that Uber would stipulate that it’s not part of the calculation now, but not that it never was.
U.S. District Court Judge Edward Chen, who is presiding over the case, previously ruled that Uber has claimed a mandatory 20 percent tip is included in the fares customers pay, and that “if drivers are employees, then the gratuity is to be remitted to them,” Judge Ryu said. “I think I have to allow that discovery. It could be relevant to their remaining claims.”
The plaintiffs asked Uber to produce documents related to its fare and tip calculations, including any studies, analysis or research that went into those decisions. Evangelis said Thursday that the request was too broad and suggested a sampling of documents that could satisfy the plaintiffs’ needs.
Liss-Riordan said she’d only agree to accept a sampling if Uber agreed that it couldn’t use that fact to later argue that the plaintiffs couldn’t show they had common claims. Judge Ryu ordered Liss-Riordan and Evengelis to spend some time Thursday hashing out the language of that agreement. By the end of the day, Uber had agreed to the stipulation instead, Liss-Riordan told Law360.
Attorneys for Uber didn’t respond to requests for comment on the stipulation late Thursday.
Uber drivers Douglas O’Connor and Thomas Colopy sued the company in August 2013, making claims for tortious interference with contractual or advantageous relations, unjust enrichment, breach of contract, gratuity violations and violations of the California Unfair Competition Law and accusing Uber of misclassifying them as independent contractors.
In March, Judge Chen denied Uber’s motion for summary judgment, taking issue with the company’s repeated claims that it was merely a software platform providing an app that allows independent drivers to find potential fares. Although Uber argued that it exerts little or no control over drivers, the drivers have said they were threatened with termination if they didn’t pick up a certain number of rides during a shift, keep their cars clean or follow other Uber rules.
In their motion for class certification, the plaintiffs have argued that class certification is warranted because, in its contracts with drivers, Uber has uniformly reserved the right to terminate drivers at will.
Uber opposed that motion last week, arguing there are too many individualized issues to certify a class of 160,000 drivers. The company added that more than 400 drivers had filed declarations supporting its business model.
O’Connor and other plaintiffs are represented by Shannon Liss-Riordan and Adelaide Pagano of Lichten & Liss-Riordan PC, and Matthew Carlson of Carlson Legal Services.
Uber is represented by Theodore J. Boutrous Jr., Debra Wong Wang, Marcellus A. McRae, Theane D. Evangelis, Dhananjay S. Manthripragada, Brandon J. Stoker, Joshua S. Lipshutz and Kevin J. Ring-Dowell of Gibson Dunn.
The cases are O’Connor et al v. Uber Technologies Inc. et al., case number 3:13-cv-03826, in the U.S. District Court in the Northern District of California.
–Additional reporting by Kurt Orzeck. Editing by Chris Yates.