"State Agency is the Latest Skeptic of Uber Settlement"

The Daily Journal, August 4, 2016

By Matthew Blake

The state is the latest critic of the proposed settlement between Uber Technologies Inc. and a class of California and Massachusetts drivers.

The California Labor and Workforce Development Agency filed a brief last Friday at U.S. District Judge Edward M. Chen's invitation, voicing skepticism about the $1 million set aside to drivers' Private Attorneys General Act claims as part of the nearly $100 million deal Uber reached with plaintiffs in April. 

"The agency can discern no rationale for allocating $1 million of the proposed settlement fund to the PAGA claim (out of a total settlement fund of $84 million to $100 million), other than that this is a 'round' number and a large figure in comparison to other PAGA settlements," wrote agency counsel John Cumming in the brief.

Cumming's conclusion is similar to Chen's, who wrote in a June court order he needs more information about why plaintiffs agreed to a "99.9 percent potential discount PAGA recovery" from plaintiffs' estimate of more than $1 billion in civil penalties.

It is not clear if plaintiffs provided the requested information. Subsequent filings from plaintiffs' attorney Shannon Liss-Riordan, a partner at Boston-based Lichten Liss-Riordan PC, focused on driver mileage and complaints that Uber no longer seeks to stay its appeal with the 9th U.S. Circuit Court of Appeals. 

Messages left on Wednesday with Liss-Riordan, who is out of the U.S., and her co-counsel were not returned.

The labor agency brief may be another chink in the armor for a deal awaiting initial approval from Chen, who held a preliminary approval hearing two months ago. Also, the brief revealed lamentations from the state, which feels short-changed by PAGA settlements.

Under PAGA, workers sue on behalf of the state for labor code violations that result in civil penalties, and, if they succeed, collect 25 percent of all damages, with 75 percent going to state coffers.

The labor agency brief ruefully notes it is not aware of case law establishing a specific benchmark for how much goes to PAGA in a settlement when a judgment was not rendered on civil penalties. Instead, in class action settlement negotiations, "the easiest claim to compromise in such a negotiation may well be the PAGA claim."

Bryan J. Schwartz of Bryan Schwartz Law said any grumblings from the state are misguided. "I think that the LWDA should be delighted to have a $1 million PAGA allocation in a case where the state did no work whatsoever and where the precise additional value of the PAGA claim is almost entirely speculative," he said.

Where Schwartz, a plaintiff-side employment lawyer, and LWDA do agree is the rarity of a judge asking for the state's input. Schwartz said he has never seen the state step in before, and LWDA spokesman Garin Casaleggio stated, "It is rare for the court to invite agency's comments on proposed settlements, and [LWDA] has not received any invitations similar to this case."

A message seeking comment Wednesday from Uber and lead counsel Theodore J. Boutrous of Gibson, Dunn & Crutcher LLP was not returned.

matthew_blake@dailyjournal.com