Employment Law Daily Uber’s ‘Safe Rides Fee’ deduction breached driver agreement; N.D. California certifies damages class
Tuesday, March 13, 2018

Uber’s ‘Safe Rides Fee’ deduction breached driver agreement; N.D. California certifies damages class

By Nicole D. Prysby, J.D.

The manner Uber used to collect a “Safe Rides Fee” violated its agreement with drivers, held a federal district court in California, granting summary judgment in the drivers’ favor on their breach of contract claim. The plain language of the contract permitted Uber to only deduct a service fee of 20 percent of the total fee paid to drivers for minimum fare rides. Therefore, when Uber subtracted a $1 Safe Rides Fee off the top of the total fee before deducting the 20 percent, it breached the agreement. The court also certified a damages class over Uber’s objections, finding that Uber’s argument opposing class certification went to the merits of the case and not the question of whether all plaintiffs had suffered the same type of injury (Congdon v. Uber Technologies, Inc., March 8, 2018, Rogers, Y.).

Background. The default amount of an Uber rider’s fare is calculated in accordance with an agreement between Uber and the drivers. As riders paid Uber directly, the agreement also sets forth how the drivers would receive remittance. Uber agreed to pay the drivers at least weekly, the fares minus the service fee. The service fee was paid by drivers on a per-ride basis, and for non-minimum fare rides, was 20 percent of the “total fare” minus the $1 Safe Rides Fee. The total fare was made up of the items on the Service Fee Schedule: Base Fare, Per Mile, Per Minute, Safe Rides Fee, Minimum Fare, and Cancellation Fee.

The Safe Rides Fee was at issue here. Uber implemented the fee in 2014 and told drivers that it would be collected from riders and that the increase in fare would not reduce drivers’ earnings. Several Uber drivers brought a putative class action for breach of contract and conversion arising out of Uber’s Safe Rides Fee. The dispute centered on Uber’s deduction of the $1 fee on minimum fare rides. Both parties motioned for summary judgment and the drivers motioned to certify a class.

Breach of contract, conversion claims. The drivers alleged that Uber violated the agreement by taking an amount equal to the Safe Rides Fee out of drivers’ fares on minimum fare rides. Uber argued that the drivers’ earnings remained unchanged after it introduced the Safe Rides Fee. The drivers were entitled 80 percent of the contractually defined fare, and the Safe Rides Fee was not part of that fare, but was a special fee in addition to the fare, Uber argued. The court was not persuaded, and granted summary judgment for the drivers on the breach of contract claim. It noted that under the agreement, a “total fare” was the product of the six components in the Service Fee Schedule. For the calculation of a regular (not minimum) fare, two of the components were irrelevant (the cancellation fee and the minimum fare, because a cancelled ride fee only applied when a ride was canceled and a fare ride was not a minimum fare ride, by definition). The remaining four components thus made up the “total fare” and those four were: Base Fare, Per Mile, Per Minute, and Safe Rides Fee.

But in the context of a minimum fare ride, different components would be excluded: the Cancellation Fee, Base Fare, Per Mile, and Per Minute. The remaining components would be the Minimum Fare and Safe Rides Fee. Therefore, the Service Fee Schedule identified Minimum Fare and Safe Rides Fee as separate components that, together, make up the “total fare” for a minimum fare ride. By extracting $1 from the Minimum Fare before making its remittance to drivers. Uber breached the agreement. Although Uber argued that it raised the Minimum Fare by $1 and drivers earned the same as before, nothing in the agreement permitted Uber to deduct $1 from the Minimum Fare and then deduct another 20 percent from the balance. Uber was contractually entitled only to deduct 20 percent of the total amount charged on minimum fare rides, and the drivers were entitled to 80 percent.

The court also found that summary judgment should be granted on the drivers’ conversion claim, given the similarities to the breach of contract claim.

Class certification. Uber conceded that the drivers satisfied the numerosity, commonality, predominance, and superiority requirements for class certification, but argued that the plaintiffs were not typical or adequate and that the class definition was overbroad. Uber asserted that the plaintiffs had no Article III standing (and thus, were not typical) because drivers’ fares were not reduced by the amount of the Safe Rides Fee on minimum fare rides. Uber also argued that in their depositions, the drivers had stated that, based on hypothetical scenarios posed to them, they were only entitled to 80 percent of the Minimum Fare, not including the Safe Rides Fee.

But the proper question, the court explained, was whether the plaintiffs suffered the same type of injury. The central issue was not whether the contract did or did not allow Uber to collect the Safe Rides Fee in the manner that it did, but whether the theory of injury was the same across the class. Uber’s arguments went to the merits of the claims and were irrelevant for class certification purposes. Because all claims were based on the collection of the Safe Rides Fee for minimum fare rides, typicality and adequacy were met.

Motion to seal. In a separate order, the court granted the parties’ motion to seal documents containing highly sensitive and confidential, trade secret, and proprietary information (including information relating to Uber’s prices, business strategy, stocks, and marketing strategies), but concluded the parties did not show there were compelling reasons to protect more general information about the company’s operations or payments to drivers and Safe Rides Fees directly related to the matters at issue in the case.

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