Judge Faults Uber for Confusing Drivers With New Contract

The Hamptons Lure Uber Top Drivers Amid NYC Slow Summer Weekends
Photographer: Victor J. Blue/Bloomberg
  • Company started circulating reworded agreement last week
  • Lawyer for drivers says contract is meant to trick them

Uber Technologies Inc. won’t be able to impose a new contract on drivers who are suing the company to be treated like employees after a federal judge said the reworded agreement was confusing.

U.S. District Judge Edward Chen in San Francisco on Thursday also said he would order Uber to stop communicating with drivers covered by the class action about matters affecting the lawsuit without consulting their lawyers or getting the court’s consent. Uber previously told the judge it wouldn’t enforce the agreement for drivers covered by the case.

Chen was responding to a request from a lawyer for the drivers, who said Uber went behind her back on Dec. 11 to circulate a reworded work agreement that she said was meant to trick her clients into relinquishing their right to participate in the class action.

The new contract is “likely, frankly, to engender confusion,” Chen told lawyers in court. “I’m very concerned about what has happened.”

Uber’s lawyer told the judge the company thought it had his blessing to issue the new agreement to replace earlier versions the judge had criticized.

‘Unlawful, Unconscionable’

“This court had ruled that provisions were unlawful, unconscionable and unenforceable,” Theodore Boutrous, the attorney, said in court. “The agreement that was sent out addresses the things that this court was troubled by, it fixes those things.”

Uber issued the new agreement two days after Chen vastly expanded the case, seeking to classify California drivers as employees rather than independent contractors, to include more than 100,000 people. A provision of the new agreement requires drivers to resolve any conflicts with Uber in private arbitration instead of court.

While the contract gives drivers 30 days to opt out of the provision, it also prohibits those who don’t “from participating in or recovering relief under any current or future” class action.

Shannon Liss-Riordan, the drivers’ lawyer, said in a court filing that the agreement is aimed at undercutting the tens of thousands of drivers eligible to join the suit. Hundreds of drivers have phoned her office expressing “confusion and dismay about the new agreement” because they don’t understand if they have to opt out of the new arbitration provision to join the lawsuit, according to the filing.

Chen said in court that the contract might have been worded more clearly. The judge said he would issue a written order.

‘Planned Roll out’

Uber said it told Chen at a Dec. 10 hearing in a different, related case that it would issue the agreements containing new arbitration agreements. The judge acknowledged “why the planned roll out made sense,” the company said.

The company said on the day it issued the reworded contract that it wouldn’t apply the new arbitration provisions to any drivers covered by the class action. The new agreement is intended to be “more driver-friendly,” the company said in a court filing.

Chen ruled Dec. 9 that drivers in the class action can seek expense reimbursement, including as much as 57 1/2 cents for every mile driven, in addition to their claims for tips that were already part of the case. A trial is scheduled for June. A victory for the drivers threatens to upend the ride share company’s business model and cut into its more than $60 billion valuation.

A trial is scheduled for June 20. The drivers’ lawyers contend the trial can be decided by the judge, while Uber contends it has the right to have a jury decide the case, lawyers for both sides said in a joint filing on the status of the case. Chen will rule later on that issue after further arguments.

Watch Next: Defending Uber's Unicorn Valuation Status

Defending Uber's Unicorn Valuation Status

The case is O’Connor v. Uber Technologies Inc., 13-cv-03826, U.S. District Court, Northern District of California (San Francisco).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE