U.S. District Judge Edward Chen, Northern District of CaliforniaU.S. District Judge Edward Chen, Northern District of CaliforniaHillary Jones-Mixon / The Recorder SAN FRANCISCO — A federal judge had tough questions Thursday about the fairness of allowing plaintiffs attorney Shannon Liss-Riordan to negotiate away a host of other lawsuits pending against Uber Technologies Inc. in reaching an $84 million settlement.
U.S. District Judge Edward Chen of the Northern District of California kicked off a contentious, nearly four-hour hearing on preliminary approval of the Uber peace pact echoing criticisms from other attorneys that Liss-Riordan had cut off their claims and discounted them as worthless in the settlement.
"One could say there is something wrong when claims from another case are ... some might say hijacked ... and on top of that, given almost zero value," Chen said. "Isn't that troubling? Shouldn't I be troubled by that?
In front of a packed courtroom, Liss-Riordan proceeded to joust with a gaggle of fellow plaintiffs attorneys over that point, contending that she had pursued the claims that had the most likelihood of success rather than take a "kitchen sink" approach. She also reiterated that establishing a "global peace" is common in similar settlements and was essential to getting Uber to agree to the deal.
The settlement, which would bring Liss-Riordan at least $21 million in fees and possibly more, was reached on the basis of cases that alleged Uber owed drivers compensation for tips it collected and expenses like gas. It did not resolve the question that poses the biggest threat to Uber's business model: whether drivers ought to be treated as employees or as independent contractors. Liss-Riordan at one point grew audibly upset in fighting back against suggestions that she had simply abandoned driver overtime claims that could be worth millions. To the contrary, she said, she had pursued those claims in front of Chen—only to have them rejected.
"For me to be accused of saying there are not overtime claims so I'm just going to walk away from them is just patently a misrepresentation," she said, her voice growing louder.
Mark Geragos of Geragos & Geragos, who is now among the lawyers now representing one of the litigation's original named plaintiffs, countered that if Liss-Riordan didn't want to pursue a kitchen-sink case, she "certainly shouldn't take the kitchen sink settlement approach." Throughout the hearing, Chen dug into the details, picking apart the deal's elements and asking for clarification on certain parts of it.
In addition to the release issue, he seemed especially worried about a component of the deal that would vacate an order he issued December 23. That order nullified Uber's latest arbitration agreement until the company issued a new notice that drivers could opt-out. It never did that and both sides appealed that order for different reasons.
Chen said that vacating the order could disadvantage drivers who want to opt-out of the settlement and sue Uber in court. "Even if there's one of those [drivers], there's a due process problem," Chen said, rebuking Liss-Riordan after she suggested that was a speculative problem. He indicated that—if nothing else—he's likely to reject that part of the settlement even if it risks tanking the entire deal.
He also pressed Theodore Boutrous Jr., the Gibson, Dunn & Crutcher partner representing Uber, on whether a mechanism of the settlement that would increase its value to $100 million was simply "window-dressing." The $84 million settlement would jump to $100 million if Uber goes public or is acquired and its valuation climbs by one-and-a-half times its current amount. Boutrous said it was "very likely" that drivers could get that whole amount, citing Uber's strong business prospects.
Liss-Riordan would get $21 million in fees under the lower amount, or $25 million if the settlement grows to its full value. Her fee request, however, was not discussed during the hearing.
Many of the lawyers who lined up next to Liss-Riordan at the lectern have called for her to be thrown off the case. Chen gave no indication that he was prepared to do that, though he asked whether there should have been a "democratic" process like that typically used in multi-district litigation. Liss-Riordan successfully fought off an attempt to rope her cases into an MDL earlier this year.
That effort, led by Napoli Shkolnik partner Hunter Shkolnik—who was also in the courtroom—could have landed the case in federal court in Texas. That, Liss-Riordan contended, would not have been in the best interest of the class.
"It would have been in my best interest," Chen joked, in one of a few light moments in the hearing.
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