Uber Tip-Skimming Allegations Could Spark National Class Action

curtwoodward writes "Uber has just raised a monster investment round that valued the company at some $3.5 billion. And it looks like some of that cash will have to be earmarked for more legal expenses. The startup, which offers an easy-to-use mobile app for hailing "black car" sedans and other rides, is being sued in federal court over allegations that it's illegally skimming the tips paid to drivers. The lawsuit also claims that Uber is misclassifying its drivers as contractors, rather than employees. The upshot: If the federal judge certifies this as a national class action, Uber could be facing millions of dollars in potential damages. Oh, and the lawyer behind it? She's made a career out of suing companies for exactly these kind of violations."

Comments

How is that an "upshot"?

[hsmith]

So, this woman is very successful at class action suits. So, she has made millions of dollars herself, getting back pennies on the dollar for those who were actually harmed. And Uber is the claimed crook?

Re:How is that an "upshot"?

[Anonymous Coward]

So you would rather bad companies just go completely free than compensate an attorney for his or her work? Class action suits are incredibly difficult to build, organize and execute. They are far more expensive to launch than a single suit and, often, the amount per-plaintiff is too small to justify an individual court case for each. So, instead, a lawyer or law firm foots the expense of a multi-year process in the hopes of returning a verdict that both pays them back plus profits. That seems completely reasonable to me.

For some reason people forget that our civil court is often the ONLY recourse we have against wrongdoing.

Re:How is that an "upshot"?

[hsmith]

It is clearly better for a law firm to make loads of money and toss some scraps to the people actually harmed. Great counter point!

Re:How is that an "upshot"?

[h4rr4r]

The alternative is the company is never forced to pay, so yes that is clearly better.

If you want to see class action lawsuits where the harmed party gets the majority of the settlement then you take your money and fund such cases. You can take the risk of work for no pay, you can wait years for what might be a minimal or no return. Have at it, nothing stopping you.

Until you do that, this is the system we have. The only alternatives would be to allow companies to steal so long as the amounts were small enough or greatly expand the size of our government.

Re:How is that an "upshot"?

[nitehawk214]

It is clearly better for a law firm to make loads of money and toss some scraps to the people actually harmed. Great counter point!

Well what is the alternative? Allow companies to abuse their customers and employees? Because that is exactly what would happen without some kind of balance of power.

is it right that the only winner in this situation are the lawyers? Of course not. But our legal system was created by lawyers so it is no surprise that it benefits lawyers most. The system needs fixed instead of abused. But until then at least there is some incentive for companies to not use abusive behavior.

Re:How is that an "upshot"?

[Idarubicin]

How is that an "upshot"?

<PrincessBride>I do not think it means what you think it means.</PrincessBride>

The "upshot" is simply a result, key outcome, or central point. The term, by itself, does not convey a value judgement by the person using it. Describing something as the upshot does not imply endorsement or an assessment of benefit to any party or to society as a whole; it merely indicates that what follows is the most important part of the story.

So, she has made millions of dollars herself, getting back pennies on the dollar for those who were actually harmed. And Uber is the claimed crook?

Even if we grant your implied premise - that class action suits are intrinsically unethical, or that there might have been a hypothetically-plausible way for the injured parties to recover more money - that doesn't get Uber off the hook. Both lawyer and company can, simultaneously, be (different flavours of) crooks.

Re:How is that an "upshot"?

[rickb928]

Our Government has decreed that health insurance companies must pay out at least 85% of the premiums they collect towards their subscribers' benefits. perhaps we could reform tort law to require class-action attorneys to pay at least 85% of the settlements they negotiate to the class members?

Naw. That's just crazy talk. These lawyers are SERVING us. Their profit motive is above reproach.

Cronyism. The New Left, same as The Old left, just without the encumberances of restraint, and in league with the Old Guard Incumbent Right, who are desperate to save their current jobs.

Re:How is that an "upshot"?

[devman]

...and the drivers who will be reclassified properly as employees and not have there tips stolen anymore. But hey, I guess we should do away with class actions so companies can continue to rip people off just so long as the amounts are small enough not to justify a regular lawsuit by individuals.

Re:How is that an "upshot"?

[h4rr4r]

Then there would be no class action lawsuits. You do understand that right?

Health insurance companies are notionally in the business of providing health insurance for profit. Class action lawsuits are not designed to provide restitution to members of the class, just to punish the party being sued and to prevent similar action in the future. This is very basic.

Forget Right or Left, you are in the camp of ignorance.

Re:How is that an "upshot"?

[CastrTroy]

Except that's usually not how it works in practice. If they win, the lawyers get actual real cash money, and the people harmed by the company's actions usually end up getting coupons for use at the business, or something equally stupid. Why would they want to use the business services if they are suing the business. The people the lawyer is defending should have to get paid in the same currency as the lawyer. If the lawyer gets money, so should the plaintiffs, if the plaintiffs get coupons for store services, so should the lawyers.

Re:How is that an "upshot"?

[Dishevel]

So you would rather bad companies just go completely free than compensate an attorney for his or her work?

These lawsuits are not about the people "harmed". They are a deal between two crooks. the crook getting sued gets protection from their bad acts and the crook doing the suit gets cash. Those that were "harmed" get a coupon for future purchases.

Re:How is that an "upshot"?

[Hatta]

perhaps we could reform tort law to require class-action attorneys to pay at least 85% of the settlements they negotiate to the class members?

Would that lead to fewer class action suits? It seems likely, if you reduce the incentive for lawyers to make those suits. If it does lead to fewer class action suits, would that reduce their deterrence of bad behavior by companies? If it does reduce the deterrence effect, could that cost consumers overall more than they lose to class action lawyers today?

I'm not disagreeing with you, it's a good idea. But good ideas sometimes have unintended consequences. It's definitely worth an experiment, but the result could go either way.

Re:How is that an "upshot"?

[MindStalker]

But how is Uber a "bad company". It sounds like they are completely sticking to their clearly laid out payment system. Shes simply arguing that their payment system is bad for 1) Taking a 10% cut of everything including tips. 2) Charging a $1 booking fee, 3) Not reimbursing for gas/maintenance.
All the drivers understand the payment system and agree to it, if it wasn't a fair deal, people wouldn't be doing it. These people certainly aren't "employees" by any stretch of the imagination.

Tip in cash

[unixcorn]

I have used Uber and find it to be a convenient service. I recognize the additional fees that go on my card and also tip the driver in cash. From what I read in the article, it sure looks like some sour grapes from the drivers. They agreed to the program and are now complaining that they aren't making enough. Seems like they should find another pimp.

Re:Tip in cash

[Anonymous Coward]

The contract thing is likely not going to fly, if the drivers own their own equipment and set their own hours, I'm pretty sure they are contractors.

Skimming tips though? If that's true then Uber should be pounded into the ground, balls first. If there's a line on the receipt that says tip and it's not a tip, then it's straight up fraud, 100%. None of this "just tip cash" bullshit, why should riders be inconvenienced because of a company lying to take their money?

Complexity of laws

[intermodal]

The complexity of laws pretty much assured that Uber would get in trouble at some point over something. The way they have to operate to avoid being considered taxicabs for legal purposes pretty much ensured that any way they profited would be an invitation to one suit or another.

Doesn't Uber discourage tips anyway?

[langelgjm]

I've used it twice. I thought they discouraged tips, suggesting the fee you paid was inclusive of everything? That's part of the appeal. A significant number of cabs in DC don't accept credit cards, and not long ago, it used to be a free-for-all catching cabs at Union Station after midnight, with cab drivers forcing riders to share cabs, refusing riders based on destination, etc. (all of which is illegal). Uber was great for that - call a black car, they pick you up, no waiting, no cash... home in 15 minutes. Yes, it was more expensive than a cab, but the service made it worthwhile.

Scam lawsuit

[TWiTfan]

Uber has a *lot* of enemies in the established cab and limo industry. Don't take any lawsuit against them on face value. You can bet that the REAL impetus behind this lawsuit has nothing to do with tips or contracting.

Re:Scam lawsuit

[dkleinsc]

Ok, so let's say this is some plot by traditional cab and limo companies. So what? If Uber is able to offer cheaper prices than the established cab and limo industry because it is stealing from its employees, that's about as fair competition as a legitimate used car business competing with a car theft ring. If the complaint is true, that means a traditional limo company pays drivers $8 per hour plus tips plus half the FICA tax, and Uber is out there paying people at what amounts to $4 per hour as an "independent contractor" plus no tips and none of the taxes. And those "independent contractors" are in fact the victims of that policy and should be the plaintiffs in the suit.

That's why we have court systems with class-action lawsuits and discovery and public records and a judge and possibly a jury to sort this thing out.

I Still Don't Understand...

[Anonymous Coward]

I still don't understand how/why the taxi business is so thoroughly convoluted and corrupt, at all levels.

Kneel and get my permission

[Impy the Impiuos Imp]

Licensing, if it is to exist at all in a free societ, should be about competence and not restricting entry to a profession. Otherwise it becomes the age old tool of corruption where you know people and give kickbacks to get a license.

i.e. kleptocracy business-as-usual.