Today Uber
is trying to kill two legal problems with one stone. After contending with a pair of class action lawsuits over a questionable “safe ride fee,” the company petitioned the U.S. District Court for the Northern District of California to settle both of them in one shot with a $28.5 million payout. That’s the most amount of money Uber has ever had to shell out over a lawsuit, but don’t get your hopes up — payouts will be downright paltry.
That’s because when combined, the scope of the two cases is pretty huge: between Philliben v. Uber Technologies, Inc. and Mena v. Uber Technologies, Inc, the potential payout will be divvied up among about 25 million people, meaning affected customers probably won’t even get a full dollar after all the lawyers get their slice.
But let’s back up for a minute. Uber started charging people a Safe Ride fee (usually between $1 and $2.50 depending on where you used the service) back in 2014 to build out key parts of the platform “including a background check process, development of safety features in the app, incident response, and other operational costs.” As the Philliben and Mena suits pointed out, though, would-be Uber drivers were never fingerprinted or checked against the Department of Justice’s sex offender registry. Since some Uber drivers have been charged and indeed sentenced to jail time over incidents of sexual assault, it’s no wonder why Uber’s veneer of stringent safety has fallen apart. As part of the settlement, Uber will swap “safe ride fee” for “booking fee,” because, well, they over-promised on safety to start with.
Whether you like Uber or hate it, there’s no denying that the company will survive paying these settlement costs. According to leaked documents obtained by The Information last month, Uber had just over $4 billion in cash and cash equivalents, money that should serve nicely as a buffer against game-breaking litigation. Still, you’ve got to remember that Uber, insanely valued as it is, really sucks turning a profit.
If the lawsuits keep coming — and they will — Uber might soon find itself in more dire straits. Today’s move notwithstanding, there are still more class action suits for Uber to deal with; Tadepalli v. Uber Technologies alleges that the on-demand car company charged certain customers in California an Airport Toll fee that went to the service’s drivers instead of the airports in question. And then there are the 13 other potential class action suits just waiting in the wings; it shouldn’t come as a surprise that some of these lawsuits were filed to capitalize on the momentum that similar cases in California built up. Either way, this particular legal odyssey isn’t over just yet — it’ll be a few weeks yet before we find out if the presiding judge accepts the offer.
