A US district judge has rejected a proposed $100 million settlement in a pair of class action lawsuits filed in California and Massachusetts, saying the proposed settlement was neither fair nor adequate.
"The settlement, mutually agreed by both sides, was fair and reasonable," said Uber in a statement. "We’re disappointed in this decision and are taking a look at our options."
The plaintiffs had argued that as Uber drivers, they should be classified as employees, and thus entitled to the benefits stipulated under the states' labor laws, as well as being compensated for things like gasoline and vehicle maintenance. But by classifying drivers as independent contractors, Uber doesn't have to stump up the cost of these perks, driving down its operating costs significantly.
In the settlement, Uber had promised to give drivers more information about their quality rating and share additional information about the conditions under which it deactivates drivers. It also agreed to work with drivers to create and fund a drivers' association, but only in the states in which the lawsuits were raised.
The total potential damages in the case amount to $852 million, and the settlement would have amounted to just $100 million and would keep drivers classified as independent contractors.
The settlement had been considered a huge win for Uber and the judge’s rejection of the agreement throws the whole process into disarray. It’s not clear if the judge will send the two sides back to settlement negotiations or some other path forward.