US court rejects $12.25-mln Lyft lawsuit settlement

April 10
8:25 PM 2016

A San Francisco District Court has rejected the $12.25-million legal case between Lyft and its drivers. The US court ruled that the $12.25 million settlement amount shortchanges drivers as against the total reimbursement value that drivers demanded which stands at $126 million. After the latest judgment, Lyft and attorney of drivers will have to sit back on further discussions.

Drivers are demanding Lyft to treat them as its employees, while the US-based transportation network platform has classified them as independent contractors. Drivers are also demanding for reimbursement for work-related expenses including gasoline and mileage. 

Los Angeles Times reports that Judge Vince Chhabria rules that the settlement agreement didn't fall within the range of reasonableness because the value of reimbursement claim itself is over $126 million. The $12.25-million settlement includes payout to drivers and Lyft's terms of service as well. Lyft says it complies with California law governing independent contractors.

Shannon Liss Riordan, attorney for drivers, and Lyft need to resume talks on arriving an amicable solution for both of them. In an email statement, Liss-Riordan said, "We are hopeful this settlement can be improved to meet the judge's concerns. If not, we look forward to taking this case to trial as well."

In case judge Vince Chhabria accepts the terms, contractors who have over 30 hours of driving on Lyft platform will be eligible to get an average amount of $1,000 each. However, they continue to be considered as independent contractors. Chhabria, in February, raised a question whether this is substantial amount to be awarded to the plaintiffs, as reported by Re/code.

Chelsea Wilson, spokeswoman at Lyft, says the company is evaluating next steps. Meanwhile, Labor attorney John Skousen of law firm Fisher & Phillips stated "This case is unique in that there was no admission or finding of liability on Lyft's part and plaintiffs still had the considerable burden to certify and prove their class claims at trial."

ARS Technica further adds that the San Francisco District court opines that drivers were shortchanged by half on their reimbursement claim alone. Drivers had a claim for penalties under Private Attorneys General Act (PAGA). The PAGA law allows for private enforcement of state labor laws with state receiving 75 percent of the proceeds. 

Some analysts consider that it's not unusual for judges to reject settlement cases unless changes are made. If no settlement is made after further discussions, they may go to trial, opine John Skousen. He doesn't want to be in the plaintiffs' attorney's position, because with class actions, it's all or nothing. 

The $12.25 million settlement will give an average payout of $53.02 to part time drivers and $676.19 to full time drivers. This is 50 percent premium to full time drivers' claims. 

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