Employment Law Daily Uber can’t dodge class tip claims
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Monday, April 4, 2016

Uber can’t dodge class tip claims

By Lisa Milam-Perez, J.D. The federal judge overseeing the closely watched case challenging the “independent contractor” status of Uber drivers has refused the ride-share company’s bid to decertify a class of drivers on their state-law claims they were denied the tips they were entitled to under the California Labor Code. The court also denied Uber’s motion for summary judgment on the tip claim, which is scheduled for June trial (along with an expense reimbursement claim, which is not at issue here) (O’Connor v. Uber Technologies, Inc., March 30, 2016, Chen, E.). According to the drivers, Uber represented to the users of its now-ubiquitous “app” that tips are included in the ride-share fare; however, the company does not turn over the total amount of those tips to the drivers. In its summary judgment motion, Uber contended that this claim was fundamentally flawed because it was based on alleged misrepresentations to users, and the drivers cannot establish first-person reliance on those representations, as California’s unfair competition law (UCL) demands. Because the drivers could not prove they ever had a driver who saw the alleged misrepresentation, they lacked standing, Uber argued. Not your typical fraud case. But the tip claim at issue here was “not a typical case based on fraud or misrepresentation,” the court noted. In fact, the drivers aren’t alleging misrepresentation; rather, they contend that Uber was telling the truth when it represented to users that tips were included in the fare, since Uber did indeed charge every rider for a tip—as evidenced in Uber’s advertisements to that effect on every ride. The problem was that Uber didn’t fork over those tips in full to the drivers. Because the drivers weren’t proceeding under a traditional theory of misrepresentation, Uber’s argument lacked merit. Disclaimer effective? Uber had also urged the court that any rider using the app since November 2014 could not reasonably believe that a gratuity was included in the fare because Uber added a disclaimer to its rider agreement stating that gratuity is not included. But a question remained whether the disclaimer was effective. The clause appears on page five of an eight-page document, the court observed, and does not immediately follow any of Uber’s alleged representations that a tip is included. The ultimate question is whether a jury can find that tips are included in every fare. And the disclaimer is just one piece “in the universe of statements that Uber has made about whether or not tip is included,” all of which will be relevant to the jury’s determination, the court said. Class treatment is proper. Moreover, the drivers didn’t have to prove that every individual rider believed that he or she was leaving a tip as part of the fare because theirs was an “all-or-nothing” claim: either Uber’s fares included tips to drivers as a matter of policy or they didn’t. “[T]he question of whether Uber charges tip is a singular question that is not dependent on a showing of individualized reliance by each rider, but instead turns on an analysis of Uber’s uniform practice and policy,” the court explained. “This is especially the case in view of Uber’s admission that its conduct with respect to the way it charges customers and its goal of not requiring customers to deal with cash is uniform.” As such, class treatment of these claims was appropriate, and Uber’s motion to decertify the tip class was denied.

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