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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 1 of 30

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SHANNON LISS-RIORDAN, pro hac vice


(sliss@llrlaw.com)
ADELAIDE PAGANO, pro hac vice
(apagano@llrlaw.com)
LICHTEN & LISS-RIORDAN, P.C.
729 Boylston Street, Suite 2000
Boston, MA 02116
Telephone:
(617) 994-5800
Facsimile:
(617) 994-5801
MATTHEW CARLSON (SBN 273242)
(mcarlson@llrlaw.com)
LICHTEN & LISS-RIORDAN, P.C.
466 Geary St., Suite 201
San Francisco, CA 94102
Telephone:
(617) 994-5800
Facsimile:
(617) 994-5801
UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DOUGLAS OCONNOR, THOMAS


Case No. CV 13-3826-EMC
COLOPY, MATTHEW MANAHAN, and ELIE
GURFINKEL, individually and
DECLARATION OF SHANNON
on behalf of all others similarly situated,
LISS-RIORDAN IN SUPPORT OF
PLAINTIFFS MOTION FOR
Plaintiffs,
PRELIMINARY APPROVAL OF
v.
CLASS ACTION SETTLEMENT

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UBER TECHNOLOGIES, INC,

Hon. Edward M. Chen

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Defendant.

Hearing:
June 2, 2016
Time:
1:30 p.m.
Courtroom: 5

HAKAN YUCESOY, ABDI MAHAMMED,


MOKHTAR TALHA, BRIAN MORRIS, and
PEDRO SANCHEZ, individually and on behalf
of all others similarly situated,

Case No. 3:15-cv-00262-EMC

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Plaintiffs,
v.

Hon. Edward M. Chen


Hearing:
June 2, 2016
Time:
1:30 p.m.
Courtroom: 5

UBER TECHNOLOGIES, INC. and TRAVIS


KALANICK,
Defendants.

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 2 of 30

DECLARATION OF SHANNON LISS-RIORDAN

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I, Shannon Liss-Riordan, declare as follows:


1.

I am a partner at the law firm of Lichten & Liss-Riordan, P.C., and am lead attorney
and class counsel for the Plaintiff class in the above-captioned matter. I submit this

declaration in support of Plaintiffs Motion for Preliminary Approval of Class Action

Settlement. I have personal knowledge of the information set forth herein.

Litigation History

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2.

In the nearly three years this case has been pending, the parties have engaged in

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extensive discovery. Plaintiffs have propounded and Uber has responded to thirty-six

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Requests For Production and thirty-six Interrogatories, while the named Plaintiffs have

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collectively responded to 290 Requests For Production, 180 Interrogatories, and 71

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Requests for Admission since the start of the case. To date, the parties have

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collectively produced more than 36,000 pages of documents in discovery.

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3.

Plaintiffs have taken five depositions, including depositions of two Uber managers, two

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separate Rule 30(b)(6) witnesses, and Ubers Senior Vice President of Operations Ryan

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Graves.

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4.

Defendants have deposed five named plaintiffs (in full-day depositions), including one

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named plaintiff who this Court dismissed from the case following the Courts Order

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limiting the class to California drivers. See Dkt. 136 at 16 (limiting class to California).

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5.

The parties have presented five joint discovery letters to Magistrate Judge Ryu and
participated in four discovery hearings, and Judge Ryu has issued three separate
substantive decisions on discovery-related issues. My firm has also been in nearconstant contact with class members in this case. More than 2,000 class members have
contacted my firm about the case and I have personally been in email contact with
drivers on a daily (and often hourly) basis. I have been assisted in these
communications by associate attorneys and a team of paralegal staff (currently

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 3 of 30

comprised of four paralegals, two of whom have been engaged primarily with

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communicating with class members in this case).


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almost daily basis) and were in the midst of preparing additional letter briefs regarding

trial-related discovery disputes just prior to reaching agreement on this settlement.

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Counsel have met and conferred countless times regarding discovery (lately on an

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In addition to in depth discovery, the parties have engaged in aggressive motion


practice regarding class certification issues and the substantive merits of Plaintiffs

claims. There have been 23 substantive motions filed in this case (not to mention more

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than sixty administrative motions), and the Court has issued 25 substantive rulings

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(totaling more than 287 pages of legal opinions). The Court has held 18 hearings

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(totaling more than 23 hours of court time).

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8.

A trial on both liability and damages is currently scheduled to begin in this case

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approximately two months from now on June 20, 2016, and the parties have also

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already expended tremendous effort in trial preparation.

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When this settlement was reached, the parties were prepared to begin depositions of

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trial witnesses, and the Court had allowed each side to take up to 80 hours of

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depositions.

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10.

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but made no significant progress.


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The parties attempted mediation early in the case in April 2014 with mediator Jeff Ross,

Following the certification of an enlarged class and several months before trial, the
parties decided to attempt mediation again.

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The parties agreed to mediate again with mediator Mark Rudy. They met with Mr.
Rudy on March 10, 2016, and again on April 1, 2016. On April 5, 2016, the Ninth
Circuit granted Ubers Petition for Review Pursuant to Fed. R. Civ. P. 23(f). The
parties then met for an additional mediation session on April 8, 2016, and thereafter
finalized a written Memorandum of Understanding.

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 4 of 30

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experience, in light of the known monetary and non-monetary benefits of the resolution,

and weighed against the risks of continued litigation, including the following:

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Assessment of the Risks of Further Litigation


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The Ninth Circuit granted Ubers Petition for review of this Courts Supplemental
Class Certification Order on April 5, 2016. See Ninth Cir. Appeal No. 16-15595,

Dkt. 1.

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Plaintiffs decision to accept the terms of this agreement was based upon Counsels

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Based on the data and information I have received from Uber in this litigation, it is my

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understanding that if the Supplemental Class Certification Order were to be overturned,

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the class size would have diminished from more than 240,000 drivers to approximately

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8,000 drivers (or fewer depending on the Ninth Circuits reasoning).

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Moreover, by granting the Rule 23(f) petition, the Ninth Circuit agreed to review the

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Courts decision to certify Plaintiffs claim under Cal. Labor Code 2802, the driving

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force behind this case, and by far the most significant source of damages.

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Ubers Rule 23(f) appeal is currently scheduled to begin briefing in July 2016.

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Moreover, Uber has informed me that, in the absence of a Settlement, Uber would seek

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an emergency stay of the district court proceedings in OConnor so that the Ninth

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Circuit could resolve Ubers pending Rule 23(f) appeal before the start of the June 2016

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trial in this case. While not required to do so, a number of Circuit Courts have stayed

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district court proceedings following the grant of a Rule 23(f) petition. See, e.g., Arreola

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v. Godinez, 546 F.3d 788, 794 (7th Cir. 2008); Wachtel ex rel. Jesse v. Guardian Life
Ins. Co. of Am., 453 F.3d 179, 183 (3d Cir. 2006); Andrews v. Chevy Chase Bank, 545
F.3d 570, 573 (7th Cir. 2008); Gregory v. Finova Capital Corp., 442 F.3d 188, 190 (4th
Cir. 2006). Thus, if the Ninth Circuit were to follow this precedent, the Ninth Circuit
would have heard and resolve Ubers Rule 23(f) petition before trial begins here.

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 5 of 30

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briefed and scheduled for oral argument on June 16, 2016, just days before the trial in

this case has been scheduled to begin. See Ninth Circuit Appeal Nos. 14-16078, 15-

16178. An adverse decision reversing this Courts rulings regarding the enforceability

of Ubers 2013 and 2014 arbitration clauses could destroy the certified class in this case,

making recovery unfeasible for the vast majority of class members.

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Two other appeals of this Courts rulings regarding Ubers arbitration clauses are fully

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Moreover, Uber has made clear that, should this case not resolve, and should the Ninth
Circuit panel affirm the Courts rulings regarding class certification and enforceability

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of the arbitration clauses, the company would continue to aggressively appeal these

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rulings by seeking en banc review and even certiorari from the U.S. Supreme Court.

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The uncertainty created by these appeals was a major factor I took into account in

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deciding to accept this settlement on behalf of the class.

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employment status question to a jury.

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A second major risk that I took into account was the risk of trying the all-important

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This Court has stated that numerous [Borello] factors point in opposing directions on

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the issue of employment classification, such that the employment misclassification test

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does not yield an unambiguous result. Dkt. 251 at 2627; see also Cotter v. Lyft, Inc.,

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60 F. Supp. 3d 1067, 108182 ( [s]ome [Borello]factors point in one direction, some

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point in the other, and some are ambiguous . . . .). Thus, there is serious risk that a

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unanimous jury would not find that all drivers in the certified class are Ubers

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employees, a prerequisite to both of Plaintiffs claims in OConnor.


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In addition, I have adamantly maintained that the employment status question is a legal
question for the Court to decide. The multi-factor Borello test is complicated, and a
decision by a jury risks that the jurors would rely on their own lay understanding of
what constitutes an employee or an independent contractor. I am concerned that a jury
would give undue weight to the fact that drivers value their flexibility (something that

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
5

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 6 of 30

Uber has made clear it intended to impress upon the jury even though I contend it is not

relevant) and would likewise give undue weight to the fact that the parties contract

states that drivers are independent contractors. Even with proper jury instructions,

there can be no avoiding the risk of jurors imposing their own beliefs and

understanding regarding this question.

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a major risk, as it would make it very difficult for Plaintiffs to have appealed an adverse

verdict with a general verdict form.

Information Used to Assess the Fairness of This Settlement

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I believe this settlement falls within the range of possible approval, and the Court
should grant the settlement preliminary approval.

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I also view the Courts decision to deny Plaintiffs request for a special verdict form as

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The parties have exchanged extensive information necessary to make an informed

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evaluation of the case, including detailed damages discovery during pre-trial

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preparation and in advance of the parties three mediation sessions.

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Likewise, the parties have aggressively litigated the issue of Ubers independent

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contractor defense in summary judgment and have studied this issue in depth in

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preparation for trial. The parties have also litigated the issue of class certification

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(including the enforceability of Ubers arbitration clause) through multiple rounds of

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supplemental briefing and hearings. See Dkt. 276, 298, 312, 359, 365, 370-1, 380, 381,

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387, 388.

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27.

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This information was discussed in depth over the course of three mediation sessions
with Mediator Mark Rudy as well as in additional negotiations between the parties.

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Paragraphs 29 to 85 below set forth Plaintiffs analysis, based upon my review of


extensive confidential data provided by Uber of the potential value of each claim
asserted in this case, as well as some of Plaintiffs considerations regarding the

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 7 of 30

likelihood of establishing liability on these claims, were Plaintiffs to prevail on the

threshold issue of whether Uber misclassified its Drivers as independent contractors.

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Failure to Reimburse for Necessary Work-Related Expenses (Cal. Lab. Code 2802)
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necessary expenditures or losses incurred by the employee in direct consequence of the

discharge of his or her duties.

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30.

If Plaintiffs were to prevail on the misclassification issue at trial, I believe a jury would
likely find that drivers expenditures for mileage and cellular phone data plans were

necessary business expenditures.

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Cal. Lab. Code 2802 requires an employer to indemnify its employees for all

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However, Uber has informed me that it intended to defend the Cal. Labor Code 2802

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claim on the merits at trial by asserting, among other arguments, that Uber has, in fact,

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satisfied Section 2802 by structuring the fare to be an all-inclusive fare that takes into

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account things like expenses, see Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th

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554, 55859 (2007) ([A]n employer may satisfy its statutory reimbursement obligation

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by paying employees enhanced compensation in the form of increases in base salary or

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increases in commission rates . . . .). Although I disagree with this argument, because

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Uber did not expressly indicate that it was reimbursing for expenses, it is conceivable

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that this argument may gain traction with a jury,, thus precluding recovery under

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2802.

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32.

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drove in California while transporting riders during the class period, and applying the

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IRS fixed reimbursement rates that have been in effect each year during this period, I

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calculated Plaintiffs claim for unreimbursed vehicle expenses in California to be worth

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Based on data that Uber produced showing the number of miles that class members

approximately $
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However, Uber has vigorously contested this calculation and made clear that it intended
to argue at trial that Plaintiffs use of the fixed IRS reimbursement rate did not provide

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
7

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 8 of 30

a proper or accurate estimate of drivers expenses and that instead the IRS variable

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rate should be used instead.1


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cents per mile during the applicable timeframe, whereas the fixed and variable rate for

mileage reimbursement (favored by Plaintiffs) varied from 50 to 56.6 cents per mile

during the applicable timeframe. Thus, using Plaintiffs figures, we calculated the

mileage reimbursement claim for the OConnor certified class to be worth

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The variable rate for mileage reimbursement (favored by Uber) varied from 16.5 to 24

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approximately $

, while using Ubers figures, it would be worth

approximately $

Although these damage calculations account for the certified class period, this

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settlement would release claims through the date of preliminary settlement approval.

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Based upon data that Uber provided that is current through April 8, 2016, less than two

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weeks ago, Plaintiffs estimate of mileage reimbursement for certified OConnor class

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The costs of owning and operating a vehicle fall into two categories: fixed and variable.
Fixed expenses are those that do not vary over time from month to month, including
depreciation and insurance, whereas variable expenses are costs that fluctuate month to month,
such as the costs of gas, maintenance, and tires. Plaintiffs use of the IRS fixed rates (which
are actually called the IRS Fixed and Variable Rates, but I refer to them here as the fixed
rates for convenience) would compensate drivers for both types of costs, but Uber intended to
argue at trial (had Plaintiffs succeeded on liability) that only variable costs attributable to
driving for Uber should be used because Uber drivers would have incurred the fixed expenses
even if they did not use their cars for Uber. In other words, a driver using his own car would
have had to pay for insurance and depreciation whether or not he drove for Uber, whereas
variable costs like gas and wear and tear are more directly attributable to driving for Uber.
Plaintiffs would have disputed Ubers reasoning because Uber drivers cannot perform
their job without a car, and Uber requires them to have cars of a certain make and model and to
have insurance, meaning that they cannot do the job without having to pay these fixed
expenses. Furthermore, many drivers do upgrade their cars or even buy a brand new car in
order to meet Ubers standards, so Plaintiffs do not agree that all drivers were paying these
fixed costs regardless. However, although Plaintiffs would have vigorously disputed Ubers
argument, they recognize that there was a serious risk that Ubers argument could gain traction
with the jury, and that if the variable rate were applied, the expense reimbursement claim
would be worth far less than Plaintiffs had estimated.

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 9 of 30

members (using the IRS fixed rate) would be approximately $

calculation using the IRS variable rate (as Uber had preferred) would place this number

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at approximately $
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In addition, the settlement includes drivers who were excluded from the OConnor class
and drivers who used other platforms not at issue in OConnor (e.g., UberTAXI).

Based on updated data that Uber has provided about these drivers, the mileage expense

reimbursement figures for these drivers (through April 8, 2016) would be

approximately

(using Plaintiffs preferred IRS fixed rate), or

(using Ubers preferred IRS variable rate).

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, while a

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Of course, these drivers faced much greater challenges in being able to prevail on their

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claims, given that the Court had excluded many of these drivers from the class and

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determined that their misclassification claim could not proceed on a class basis. In

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addition, many of the excluded class members likely did not have as strong a claim for

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expense reimbursement in the first place because some of the limo companies they

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drove for provide partial reimbursement (such as for gas) and most provide a vehicle

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for the drivers.2 Given these additional hurdles these drivers would have faced, the

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settlement allocation formula gives these drivers one-half the credit for their miles as

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compared to drivers who were class members in OConnor.

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The settlement also includes drivers in Massachusetts who were putative class members
in the Yucesoy case and other Massachusetts drivers. Based on updated data that Uber

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has provided, the mileage expense reimbursement figures for these Massachusetts

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See, e.g., OConnor Dep. at 124:22-125:1.

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 10 of 30

drivers (through April 8, 2016) would be approximately

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preferred IRS fixed rate), or


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(using Plaintiffs

(using Ubers preferred IRS variable rate). 3

However, the Massachusetts drivers face much more significant risks in this litigation
than the drivers in California, given that there is not yet a certified class in the Yucesoy

case, and the case has not advanced nearly as far as OConnor. Further, because there

is not an express expense reimbursement statute in Massachusetts analogous to Cal.

Labor Code 2802, Plaintiffs recovery for expenses in Massachusetts is much less

certain. See Schwann v. FedEx Ground Package Sys., Inc., 2014 WL 496882, *3 (D.

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Mass. Feb. 7, 2014) (in Massachusetts, the question of whether business expenses and

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deductions borne by employees are recoverable under the Wage Act is unsettled under

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state law.) (certifying this question to the Massachusetts Supreme Judicial Court).4

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With respect to expense reimbursement for telephones, I received data from Uber

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showing that California drivers who leased their phones from Uber were charged a total

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of $13.8 million for the phones. Extrapolating half of this rate to all California

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settlement class members (based on the assumption that drivers who used their own

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phones to drive for Uber would not have to pay the full amount that drivers who leased

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their phones would pay, and would also be able to use the phones for their own

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purposes) brings the total estimate for phone expenses in California to approximately

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This figure includes all Massachusetts drivers, including drivers that drove through
third-party companies and under corporate or fictitious names, because Plaintiffs do not believe
that the distinction that the Court drew in the California case would have been relevant under
Massachusetts law. It also includes drivers who used Uber platforms not specifically at issue
in Yucesoy (e.g., UberTAXI). In total, the settlement covers approximately 385,000 California
and Massachusetts drivers.

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Thus, in allocating the settlement funds between California drivers and Massachusetts
drivers, I calculated the relative value of the claims of the two groups, ascribing one-half credit
for the expense reimbursement claim.

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 11 of 30

$24.7 million. Extrapolating these figures for phone expenses to Massachusetts

settlement class drivers comes to approximately $4.6 million.

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Unlawful Taking of Gratuities (Cal. Lab. Code 351; Cal. Bus. & Prof. Code 17200)
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employees. Section 351 does not provide for a private cause of action; however, a

violation thereof can be brought as a claim under Cal. Bus. & Prof. Code 17200, et

seq.

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Cal. Lab. Code 351 prohibits employers from taking any part of a gratuity given to its

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Plaintiffs have argued that, if they were to prevail on the misclassification issue, and

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prevailed on the claim that Uber has charged passengers a gratuity but without passing

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it on in full to the drivers, then the jury would be asked to determine what amount of

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the fare constituted a gratuity. I made calculations based on a conclusion that the jury

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may have found that Uber included a 20% tip in the fare (a figure which Uber stated on

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some occasions in communications with customers, see Dkt. 485-3 at 9, 20, 52). In

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other words, under this theory, if a driver had a $10 fare, Uber should have set aside

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20% of the fare ($2) to be remitted exclusively to the driver as a tip. Uber should then

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have taken its commission (of, for example, 20%) out of the remaining $8. Uber would

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then receive a commission of $1.60. Instead, Uber took its commission out of the

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entire $10 fare and thus received $2. Thus, Uber would owe the driver the 40 cent

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difference (which equals 20% of Ubers commission).

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California for certified class members), I calculated the total potential value of this

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claim to be approximately

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. Based upon this same data, I calculated the

potential value of the claim for drivers who are not currently in the OConnor certified

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Based on this theory and data produced by Uber (showing the total amount of fares in

class to be approximately
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Using the same logic, based on data produced by Uber providing the total amount of
fares in Massachusetts, the total value of the analogous claim in for Massachusetts

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 12 of 30

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drivers under Mass. Gen. L. c. 149 152A is approximately


45.

Plaintiffs recognize the risks in proving this claim, including the risk that the jury could
find that Ubers communications that tip is included in Ubers fare were too variable

or not widespread enough to warrant a finding that a tip was actually included. In

addition, in order to succeed on this claim, Plaintiffs would have to prove employee

status for the drivers. And, even if Plaintiffs succeeded on the claim, the jury could

conclude that a lesser amount of tip than 20% was included (such as 15% or 18%). For

example, Uber was prepared to argue that, even if Plaintiffs succeeded on this claim, its

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research demonstrates that 16% is a more usual tip left for taxicab drivers and, if

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liability were established, damages could not exceed that amount.

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46.

The claims described above are the statutory claims that Plaintiffs pursued in this

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lawsuit. For settlement purposes, Plaintiffs have agreed to a release of additional

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employment-misclassification and wage-and-hour claims that have been brought

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against Uber in California and Massachusetts, in order to effectuate the final resolution

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of all employment-misclassification and wage-and-hour disputes in these states up to

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the date of preliminary approval. However, for the reasons discussed below, Plaintiffs

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did not value these claims as posing significant risk to Uber and thus contributing any

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appreciable increase in likely damages that drivers may have been able to obtain.

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47.

In particular, a number of these claims require a finding of willfulness. Given the


heated dispute regarding whether Uber drivers are employees or independent
contractors, and the lack of any definitive court rulings on this question, I believe the
drivers would have been unlikely to prevail on claims requiring a finding of
willfulness. See, e.g., Dalton, 2011 WL 1045107, *5 (granting summary judgment to
defendant on Cal. Lab. Code 203 claim, which requires a finding of willfulness, on
grounds that there was a good faith dispute that plaintiff was an independent
contractor).

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
12

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 13 of 30

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Failure to Pay Wages When Due (Cal. Lab. Code 201-203, 204, 210)
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within a certain time frame if an employee quits (within 72 hours) or is discharged

(immediately). Cal. Lab. Code 203 provides for waiting time penalties assessed

only when such failure to pay wages when due is willful, and a finding of willfulness

is precluded when there is a good faith dispute as to whether a plaintiff is subject to

the Labor Code provisions at all, i.e. when there is a good faith dispute as to whether a

plaintiff is in independent contractor rather than an employee.

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Cal. Lab. Code 201 and 202 require employers to page wages earned and unpaid

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As discussed above, even if Plaintiffs prevail on the misclassification issue, I expect

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that it would be difficult for Plaintiffs to overcome Ubers good faith defense to

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liability with respect to this claim.

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50.

Accordingly, I believe there would be a substantial risk of no recovery on this claim.

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Unlawful Deductions (Cal. Labor Code 221-224, 227)

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51.

Cal. Labor Code 221 and 224 provide that an employer may only lawfully withhold

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amounts from an employees wages when (1) required or empowered to do so by state

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or federal law; (2) when a deduction is expressly authorized in writing by the employee

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to cover insurance premiums, benefit plan contributions, or other deductions not

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amounting to a rebate on the employees wages; or (3) when a deduction to cover

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health, welfare or pension contributions is expressly authorized by a wage or collective

21

bargaining agreement. Here, Defendants conduct as alleged herein has violated Cal.

22
23
24
25
26
27

Labor Code 221-224 insofar as Defendant has deducted the costs of equipment (i.e.
telephones). However, because the telephone expenses are part of Plaintiffs Cal.
Labor Code 2802 claim, Plaintiffs do not think that this claim adds any value. Thus,
although Plaintiffs added this claim for settlement purposes in an effort to give Uber
global peace, Plaintiffs do not believe that this claim has any additional value.

28
DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
13

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 14 of 30

1
2
3
4

Failure to Pay Minimum Wages (Cal. Lab. Code 1182.12, 1194, 1194.2, 1197, 1197.1)
and FLSA (29 U.S.C. 201, et seq.)
52.

Cal. Lab. Code 1194 permits an employee receiving less than the legal minimum
wages (currently $10.00 per hour under California law) to recover the unpaid balance

of minimum wage in a civil action. Section 1194.2 further provides for an award of

liquidated damages in a minimum wage action unless an employer can show that the

violation was in good faith and that it had reasonable grounds for believing it was not

subject to minimum wage requirements. Likewise, the federal Fair Labor Standards

9
10

Act requires that employers pay at least the federal minimum wage of $7.25 per hour

11

for all hours worked. See 29 U.S.C. 201, et seq.

12

53.

Significantly, this Court dismissed Plaintiffs minimum wage claim under

13

Massachusetts law in the Yucesoy case, see Yucesoy, Civ. A. No. 3:15-00262-EMC,

14

Dkt. 194 at 9-10 (after several attempts to amend), and dismissed similar minimum

15

wage claims under the FLSA in the Del Rio case, see Del Rio, Civ. A. No. 3:15-cv-

16

03667-EMC Dkt. 84 at 4. Furthermore, I believe that Plaintiffs faced a significant

17

hurdle in resolving this claim on a class-wide basis, as discovery has not revealed that

18

Uber has had a uniform policy or practice that would support a finding of liability (or

19

no liability) on this claim for all drivers and may well have required individualized

20

analysis.

21
22
23
24
25
26
27
28

54.

Accordingly, I believe there would be a substantial risk of no recovery on this claim.

Failure to Pay Overtime Wages (Cal. Lab. Code 510, 1198, 1194) and Fair Labor
Standards Act (29 U.S.C. 207(a)(1))
55.

Cal. Lab. Code 1198 and Wage Order 9 require employers to pay their employees at
their overtime rate of pay for hours worked in excess of eight per day and/or 40 per
week. Cal. Lab. Code 1194 permits an employee receiving less than his or her
overtime wages to recover the unpaid balance of such wages in a civil action.

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
14

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 15 of 30

Likewise, the Fair Labor Standards Act requires that an employer pay time-and-a-half

an employees regular rate of pay for all hours worked beyond forty in a workweek.

3
4
5

See 29 U.S.C. 207(a)(1).


56.

claim under Massachusetts law in the Yucesoy case, see Yucesoy, Civ. A. No. 3:15-

00262-EMC, Dkt. 194 at 9-10 (again, after several attempts at amendment), and

dismissed similar overtime claims under the FLSA in the DelRio case, see DelRio, Civ.

A. No. 3:15-cv-03667-EMC Dkt. 84 at 4. Moreover, it is not certain whether the Court

would certify a claim for those drivers who worked these hours.

10
11

As with the minimum wage claim, the Court already dismissed Plaintiffs overtime

57.

However, if the Court did certify this claim, and if Plaintiffs were to prevail on the

12

misclassification issue, I believe a jury would determine that certain drivers worked in

13

excess of eight hours per day or 40 hours per week without being compensated at their

14

applicable overtime rates of pay. Based on data provided by Uber, I estimate that if this

15

claim were to succeed, its value would be approximately $2 million for California

16

drivers and $400,000 for Massachusetts drivers.

17

58.

However, given the Courts skepticism of this claim in the Yucesoy case, and the

18

hurdles to its certification, I believe it would have been very difficult to achieve

19

recovery on this claim for the plaintiff class.

20
21
22

Failure to Provide Meal Periods and Failure to Authorize and Permit Rest Periods (Cal.
Lab. Code 226.7, 512, Wage Order 9
59.

23

all employees with one 30-minute duty-free meal period if such employee works more

24

than five hours in a day. Additionally, 226.7 and Wage Order 9 generally require

25

employers to provide all employees with one 10-minute duty-free rest period for every

26
27
28

Cal. Lab. Code 226.7, 512 and Wage Order 9 generally require employers to provide

four hours worked each day, or major fraction thereof.


60.

If Plaintiffs were to prevail on the misclassification issue, I believe a jury would likely

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
15

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 16 of 30

determine that Uber has met its obligation to provide meal and rest periods. While

drivers might feel pressure to accept ride requests and therefore skip meal and rest

periods, given the way that I understand Ubers application works, I believe that Uber

will be able to argue that drivers can take breaks whenever they wish, including by not

accepting a ride request or by logging out of the Uber App and going off-line

whenever the driver wishes to take break. For example, when drivers are not logged in

to Driver Mode, they do not receive ride requests, and, therefore, cannot be punished by

Uber for declining ride requests or be pressured into missing or cutting short their

9
10

breaks. I believe that such facts would likely preclude liability for meal and rest period

11

violations.

12

Failure to Keep Accurate Records (Cal. Lab. Code 1174.5, 353)

13

61.

Cal. Lab. Code 1174 requires employers to maintain payroll records pertaining to its

14

employees, and Cal. Lab. Code 1174.5 provides for penalties for willful failures to

15

maintain such records. A finding that an employers failure to comply with 1174 was

16

in good faith precludes liability for the violation. Dalton, 2011 WL 1045107, *6

17

(granting summary judgment on 1174 claim because of a good faith dispute that

18

employees were independent contractors).

19

62.

Even if Plaintiffs were to prevail on the misclassification issue, I believe it would be

20

difficult for Plaintiffs to show that Uber does not maintain all information required by

21

1174, and, even if it does not, it would be difficult for Plaintiffs to overcome Ubers

22
23
24
25
26
27
28

good faith defense to liability with respect to this claim.


63.

Accordingly, I believe there would be a substantial risk of no recovery on this claim.

Failure to Furnish Accurate Wage Statements (Cal. Lab. Code 226)


64.

I believe that Uber would likely argue that their weekly driver summary emails
constitute pay statements that show all information required by 226(a), except for the
information required by 226(a)(7) (drivers last four digits of their social security

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
16

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 17 of 30

numbers). Thus, I believe Plaintiffs may be able to show a technical violation of

2
3
4

226(a)(7).
65.

However, to recover under 226, an employee must also show injury. Injury exists
under 226 when an employee is not provided with a pay statement at all, 226(e)(2),

or when there is a deficient wage statement and an employee cannot promptly and

easily determine from the statement alone the information required by 226(a)(2) (total

hours worked), (a)(3) (piece rate units earned, if applicable), (a)(4) (all deductions),

(a)(6) (inclusive dates of the pay period), and (a)(9) (all applicable hourly rates in effect

9
10

during the pay period and the corresponding number of hours worked at each hourly

11

rate by the employee). Courts have determined that this injury requirement generally

12

requires that the employee be unable to quickly verify earnings when looking at the

13

wage statements. Holak v. K Mart Corp., 2014 WL 4930762, *7 (E.D. Cal. Sept. 30,

14

2014); see also Price v. Starbucks Corp., 192 Cal.App.4th 1136, 1143, 122 Cal.Rptr.3d

15

174 (2011) (recognizing that an injury exits where inaccurate or incomplete wage

16

statements ... require [ ] ... plaintiffs to engage in discovery and mathematical

17

computations to reconstruct time records and determine if they were correctly paid).

18

66.

I believe it would have been difficult for Plaintiffs to show injury here, including

19

because Uber would likely argue that its pay statements set forth the information

20

required by 226(a)(2) (statements show hours online), (a)(3) (inapplicable because

21

drivers are not paid on a piecework basis), (a)(4) (Uber did not make any deductions),

22

(a)(6) (statements show dates of the pay period), and (a)(9) (inapplicable because there

23

have not been hourly rates in effect for drivers). Additionally, Uber would likely

24

argue that the weekly statements clearly set forth earnings during each pay period,

25

hours worked and substantial additional information, which allow drivers to quickly

26
27
28

verify earnings when looking at the wage statements.


67.

Moreover, even assuming that Plaintiffs can show injury arising from a violation of

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
17

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 18 of 30

226, such a violation of 226 is actionable only if it is knowing and intentional, and

therefore courts have permitted employers to assert a good faith defense to the claim at

or after trial. Dalton, 2011 WL 1045107, *5 (finding that good faith dispute as to

whether plaintiffs were independent contractors exempt from Section 226 precludes a

finding that defendant acted with the requisite scienter of knowing and intentional);

Hurst v. Buczek Enterprises, LLC, 870 F.Supp.2d 810, 829 (N.D.Cal.2012) (when a

party makes a good faith claim that a worker [has been properly classified as exempt],

its failure to provide accurate wage statements is not knowing and intentional.)

9
10

Accordingly, Plaintiffs recognize they would face a challenge in overcoming Ubers

11

defenses to this claim, including that it had a good faith belief that drivers were

12

properly classified and therefore not subject to the requirements of 226.

13

68.

Accordingly, I believe there would be a substantial risk of no recovery on this claim.

14

One in Seven Days Rest (Cal. Labor Code 551, 552, and 558)

15

69.

Cal. Lab. Code 551 provides that every person in every occupation is entitled to one

16

days rest in seven, and Cal. Lab. Code 552 prohibits employers from requiring an

17

employee to work more than six days out of seven. Here, some Uber drivers worked

18

seven days per week (although based on data from Uber it appears that this was true

19

only for a minority of drivers). In any case, Plaintiffs believe they would face difficult

20

hurdles in proving this claim on a class-wide basis given that many drivers drove only

21

occasionally, and given that it is undisputed that drivers are able to sign on and off the

22
23
24
25
26
27
28

Application whenever they wish and can drive as much or as little as they wish.
70.

Accordingly, I believe there would be a substantial risk of no recovery on this claim.

Requiring Drivers To Agree to Unlawful Terms (Cal. Labor Code 432.5)


71.

Cal. Lab. Code 432.5 makes it unlawful for an employer to require an employee or
applicant to agree, in writing, to a term or condition that the employer knows to be
prohibited by law. Here, there is an argument Uber required drivers to accept its

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
18

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 19 of 30

agreements, which contained numerous illegal provisions. However, Plaintiffs believe

that they would face a challenge in overcoming Ubers defenses to this claim, including

3
4
5
6
7

that it had a good faith belief that the provisions of its agreements were lawful.
72.

Accordingly, I believe there would be a substantial risk of no recovery on this claim.

Failure to Provide Paid Sick Leave (Cal. Labor Code 245-249)


73.

Cal. Labor Code 246 provides that an employer must provide any employee who, on
or after July 1, 2015, works in California for the same employer for 30 days or more

within a year from the start of employment, with paid sick days. If Plaintiffs succeed in

9
10

proving employee status, then drivers who drove more than 30 days in a calendar year

11

arguably accrued a certain number of paid sick days and were entitled to use these

12

accrued paid sick days for purposes enumerated in Labor Code section 246.5(a)(l)-(2).

13

74.

However, Plaintiffs likely would face serious challenges in proving liability under

14

section 246 because they must first prove the employees hourly rate of pay, a figure

15

that the Court might find to be incalculable in the case of drivers who use Uber. See

16

Cal. Labor Code 246(k). Even if calculable, a Court may conclude that individual

17

issues predominate for purposes of class certification. Moreover, because employees

18

must be employed for at least 90 days before being able to use paid sick leave, a Court

19

may conclude that many of the drivers who use Uber infrequently may not be entitled

20

to paid sick leave at all. See Cal. Labor Code 246(c).

21
22
23
24
25
26
27

Failure to Pay Wages Due Upon Termination (Cal. Labor Code 201-04, 206.5, 208,
210)
75.

Cal. Labor Code 204 requires that an employer pay all wages due upon the
termination of any employee. Plaintiffs ascribe little value to this claim because they
have not seen evidence that Uber delays final payment to drivers who have been
deactivated.

28
DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
19

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 20 of 30

1
2
3
4

Failure to Pay Workers Compensation Insurance (Cal. Labor Code 3700.5, 3712,
3715 Brought Pursuant to Cal. Bus. & Prof. Code 17200)
76.

These sections of the Labor Code require employers to provide workers compensation
insurance to employees injured on the job. Cal. Lab. Code 3700.5 provides that the

failure to secure the payment of compensation as required by this article by one who

knew, or because of his or her knowledge or experience should be reasonably expected

to have known, of the obligation to secure the payment of compensation is punishable

by fines and imprisonment. I believe that recovering on these claims pose

9
10

challenges. First, I believe that it is highly questionable whether drivers could bring

11

such a claim in a private lawsuit as I believe that Uber would argue the claim is

12

preempted by the exclusivity of the Workers Compensation Act, Cal. Labor Code

13

3600, 3602, and that a UCL claim cannot be utilized as a backdoor way to avoid this

14

exclusivity. See Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund, 24 Cal. 4th

15

800, 828 (2001); Hughes v. Argonaut Ins. Co., 88 Cal. App. 4th 517, 522 (2001)

16

(dismissing claim on behalf of the general public, asserting violations of California's

17

unfair competition law (UCL) where the underlying challenged conduct was a

18

violation of the Workers Compensation Act because the WCAB had exclusive

19

jurisdiction); Koszdin v. State Comp. Ins. Fund, 186 Cal. App. 4th 480, 495 (2010).

20

Accordingly, I believe there would be a substantial risk of no recovery on this claim.

21
22
23
24
25
26
27
28

Failure to Pay Reporting Time (Wage Order 9)


77.

Wage Order 9, 5, requires that for each workday that a California employee is
required to report for work and does report, but is either not put to work or is furnished
less than half of that employees usual or scheduled days work, each such employee
must be paid an amount equal to half of his or her usual or scheduled days pay, or in
any event must be paid an amount equal to 2 hours at the employees regular rate of
pay. Here, the claim would presumably apply where drivers signed onto the App but

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
20

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 21 of 30

received no ride requests and gave no rides. I believe there is a substantial risk of no

recovery on this claim because drivers can indisputably work as often as they like and

are not required to report or sign onto the App at any particular time. Thus, because

Uber drivers are arguably never required to report for work, I do not ascribe any

value to this claim.

6
7
8
9

Willful misclassification of drivers as independent contractors (Cal. Labor Code 226.8,


2753)
78.

Cal. Lab. Code 226.8 defines willful misclassification as avoiding employee status

10

for an individual by voluntarily and knowingly misclassifying that individual as an

11

independent contractor. Here, even if Plaintiffs were to prevail on the

12

misclassification issue, I believe that there be a significant challenge in overcoming

13

Ubers defenses to this claim, including that it had a good faith belief that its drivers

14

should be classified as independent contractors rather than employees, and that it did

15

not knowingly misclassify drivers as a way of avoiding the law. Accordingly, I believe

16

there would be a substantial risk of no recovery on this claim because of the willfulness

17

requirement.

18

Penalties Pursuant to PAGA (Cal. Lab. Code 2698, et seq.)

19

79.

PAGA, Cal. Lab. Code 2698, et seq., generally provides for penalties arising from

20

violations of the California Labor Code. Penalties are assessed per employee and per

21

pay period. Id.

22

80.

23

has yet to rule, so there remained a risk that these claims would not go forward in this

24

case. However, assuming that Plaintiffs were successful in having these claims added

25
26
27
28

Here, Plaintiffs have moved to have PAGA claims added to their case, but the Court

to this case, Plaintiffs have made the following assessment of this claim.
81.

Given that much of the work that Uber drivers have performed has been spread out over
time, there have been a considerable number of weeks in which Labor Code violations

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
21

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 22 of 30

may be at issue.5 In light of this fact, if Plaintiffs were successful in establishing Labor

Code violations for all of these drivers during all of these workweeks, potential PAGA

penalties would be astronomical and far beyond the potential damages at issue in this

4
5
6

case.
82.

For example, assuming that the Court or jury were to find that Uber is subject to PAGA
penalties for their failure to reimburse Drivers for work related expenses (e.g., mileage),

Uber would be subject to a PAGA penalty of $100 per driver for the first pay period in

which there was a violation, and $200 per driver for each subsequent pay period in

9
10

which there was a violation. Cal. Lab. Code 2699(f). Thus, for only the penalties

11

associated with the California Labor Code violations in this case, 2802 and 351, the

12

penalties could exceed one billion dollars.6 This is to say nothing of other potential

13

PAGA penalties arising from the numerous other Labor Code violations set forth herein.

14

See supra, n. 4.

15
16
17
18
19
20
21
22
23
24
25
26
27

The Labor Code provisions that have been alleged in various litigation against Uber are
sections 201, 202, 203, 204, 206.5, 207, 208, 210-14, 221-224, 226, 226.7, 226.8, 227, 245-49,
351, 353, 432.5, 450, 510, 512, 550, 551, 552, 558, 1174.5, 1182.12, 1194, 1197, 1197.1, 1198,
2753, 2802, 3700, 3700.5, 3712, and 3715, although Plaintiffs recognize that it would be
difficult to prove underlying liability on a number of these statutory provisions for the reasons
discussed above. Additionally, it is not entirely clear under California law whether it is
permissible to stack PAGA penalties on top of underlying violations, as the California
Supreme Court has yet to weigh in on the issue. Thus, it is possible that Plaintiffs would not
have been able to obtain more than a single PAGA penalty per pay period, even if there had
been multiple violations in that pay period.
6

Plaintiffs estimated the total number of pay periods for the California class by assuming
that every class member drove every month between their first month and their last month with
Uber for a total of approximately 1,253,954 months. Because Uber pays drivers weekly, that
would equate to 5,392,002 pay periods. When each pay period is multiplied by $100 for every
violation of Cal. Labor Code 2802, the total is $530 million. Likewise, when each pay period
is multiplied by $100 for every violation of Cal. Labor Code 351, that yields an additional
$530 million. Thus, for violations of just Cal. Labor Code 2802 and 351 alone, the PAGA
penalties could top $1 billion. However, this estimate is likely a large overestimate because all
drivers certainly did not drive every week starting with their first week and ending with their
last week.

28
DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
22

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 23 of 30

1
2

83.

However, whatever the ultimate figure, if Plaintiffs were to prevail on the


misclassification issue and PAGA claims, it appears likely that the Court would

dramatically reduce the award pursuant to Cal. Lab. Code 2699(e)(2), which permits

the court to reduce awarded PAGA penalties if, based on the facts and circumstances of

the particular case, to do otherwise would result in an award that is unjust, arbitrary and

oppressive, or confiscatory, and to comport with due process. See York v. Starbucks

Corp., 2012 WL 10890355, *10 (C.D. Cal. Nov. 1, 2012) (PAGA's section 2699(e) (2)

provides the Court with the ability to fashion an appropriate penalty in this case that

9
10

will not offend notions of due process.); see also Amaral v. Cintas Corp. No. 2, 163

11

Cal. App. 4th 1157, 1214 (2008) (holding that a PAGA penalty in the amount of one-

12

third of damages award was proportional to [defendants] misconduct.).

13

84.

Uber would no doubt argue that these penalties should be dramatically reduced

14

pursuant to 2699(e)(2) and to comport with due process. Given that PAGA penalties

15

would arise purely from Ubers alleged misclassification of drivers, and given that Uber

16

may well establish that it had a good faith belief that its drivers were properly classified,

17

I believe there is a good chance that the Court would reduce PAGA penalties (as

18

occurred in Amaral) to an amount no greater than approximately one-third of the

19

damages, if that much. See Harris v. Radioshack Corp., 2010 3155645, at *3-4 (N.D.

20

Cal. Aug. 9, 2010) (Chen, J.) (granting motion for final settlement approval and finding

21

that although Plaintiffs could arguably get more . . . because they [were] entitled to

22

penalties under the PAGA, it [was] not clear that they could get a significant amount

23
24
25
26
27
28

more because of Section 2699(e)).


85.

Moreover, most settlements provide only modest allocations for PAGA claims and
have not analyzed actual potential recoveries. Indeed, there is no requirement that a
PAGA allocation be proportional to the value of a PAGA claim, as many courts have
approved settlement agreements that provide for less than the one percent allocation to

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
23

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 24 of 30

PAGA penalties made here (75 percent of which goes to the LWDA), notwithstanding

the potential value of the PAGA claim. Hopson v. Hanesbrands Inc., 2009 WL 928133,

*9 (N.D. Cal. Apr. 3, 2009) (approving total PAGA allocation that was .49% of

$408,420.32 gross settlement; Moore v. PetSmart, Inc., 2015 WL 5439000, *8 (N.D.

Cal. Aug. 4, 2015) (approving total PAGA allocation that was .5% of $10,000,000

gross settlement); Lusby v. Gamestop Inc., 297 F.R.D. 400, 407 (N.D. Cal. 2013)

(approving total PAGA allocation that was .67% of $750,000 gross settlement), final

approval granted, Lusby v. GameStop Inc., 2015 WL 1501095, *2 (N.D. Cal. Mar. 31,

9
10

2015). In fact, this Court conditionally granted final settlement approval under such

11

circumstances just last week. See Alexander v. Fedex Ground Package Sys., 2016 WL

12

1427358, *2 n.5 (N.D. Cal. Apr. 12, 2016) (conditionally approving PAGA allocation

13

that was 0.7% of $173 million net settlement amount).7

14

86.

These exposure numbers assume that Uber would not be successful in proving that

15

drivers are properly classified as independent contractors at trial and would not be

16

successful in any of its numerous appeals before the Ninth Circuit on the arbitration

17

issue, thereby preserving the integrity of the class.

18
19
20
21
22
23
24
25
26
27

Indeed, a significant number of courts have approved PAGA allocations that are
simply $10,000 or less, regardless of the settlement value of the case and regardless of the
valuation (if any) of the PAGA claim. Chu v. Wells Fargo Investments, LLC, 2011 WL
672645, *1 (N.D. Cal. Feb. 16, 2011) (approving PAGA settlement payment of $7,500 to the
LWDA out of $6.9 million common-fund settlement); Franco v. Ruiz Food Products, Inc.,
2012 WL 5941801, *13 (E.D. Cal. Nov. 27, 2012) (approving PAGA settlement payment of
$7,500 to the LWDA out of $2.5 million common-fund settlement); Schiller v. David's Bridal,
Inc., 2012 WL 2117001, *14 (E.D. Cal. June 11, 2012) (approving PAGA settlement payment
of $7,500 to the LWDA out of $518,245 common-fund settlement). If Plaintiffs were to
consider the actual penalties that could be awarded under PAGA, this case would not be
capable of being settled at all. It could not have been the intention of the California legislature
for PAGA to be a weapon that makes settlements of highly contested litigation impossible.

28
DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
24

Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 25 of 30

1
2
3

Benefits of the Settlement


87.

The allocation formula distributes the settlement funds among drivers on a proportional
basis based on number of miles while On Trip, transporting a passenger in the car.

Drivers who are members of the certified class in OConnor will receive double weight

for their mileage (relative to those drivers who were excluded from the class and

Massachusetts drivers), in recognition of the stronger claims of these drivers on the

reimbursement claim, as well as the much greater likelihood of these claims being

pursued, given that they had been included in a certified class. The formula also

9
10

awards double weight for the mileage of drivers who timely opted out of Ubers 2013

11

and 2014 arbitration clause (in either California or Massachusetts) relative to those

12

drivers who did not opt out, reflecting their greater chance of remaining in the class in

13

this case, should the Courts rulings holding Ubers arbitration clauses invalid be

14

overturned on appeal.

15

88.

Attached hereto as Exhibit 1 is a breakdown of my calculations of the approximate

16

expected net settlement distributions (after the subtraction of fees and expenses) for the

17

various categories of drivers discussed above in 87.

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89.

As shown in this exhibit, drivers who drove a substantial amount of miles will receive

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significant payments. For example, class members in California who drove in the

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highest category of miles (more than 25,000) may recover on average close to $2,000,

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which would double to $4,000 if they opted out of the arbitration clause, and could

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double again to $8,000 (assuming a 50% claim rate for the settlement). In contrast, the

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settlement class members who drove a minimal number of miles will receive more

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nominal payments.
90.

Further, I believe the non-monetary relief in the settlement provides significant and
meaningful benefit to drivers. First, Ubers agreement that it will make deactivation
decisions only for sufficient cause is both legally and practically significant. Under the

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 26 of 30

settlement, this provision will preclude Uber from deactivating drivers for any reason at

all and will specifically eliminate deactivation for failing to accept a sufficient number

of ride requests while using the app. Additionally, Uber will now provide drivers with

notice and the right to cure many deactivations prior to permanent deactivation, will

provide greater transparency regarding the reasons for deactivations, and will create an

appeals process for many deactivations (not related to safety, fraud, customer ratings or

other limited reasons).

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91.

Legally, these modifications address one of Plaintiffs core arguments in this case that

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it is a companys right to terminate at will, and not the actual exercise of that control,

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which is perhaps the strongest evidence of an employer-employee relationship,

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because [t]he power of the principal to terminate the services of the agent gives him

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the means of controlling the agent's activities. Ayala v. Antelope Valley Newspapers,

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Inc., 59 Cal. 4th 522, 531 (2014); see also O'Connor v. Uber Techs., Inc., 2015 WL

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5138097, at *19-21 (N.D. Cal. Sept. 1, 2015) (noting that the majority of Ubers

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contracts contain express language that provides Uber with a right to terminate any

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and all drivers without cause and that a putative employer's right to discharge a hiree

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at will, without cause, is perhaps the strongest evidence of the right to control)

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(emphasis in original).

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92.

Moreover, on a practical level, I believe these changes in the deactivation policy will be
meaningful for drivers who must confront these issues on a regular basis. Indeed,
scores of drivers have contacted my firm on a regular basis stating they are concerned
about being deactivated for numerous and wide-ranging reasons or without any
explanation at all. These changes will help alleviate this widespread problem in several
ways by providing drivers with: (1) at least two warnings and an opportunity to cure
many types of deficiencies prior to deactivation; (2) a written explanation of the reasons
for their deactivation; and (3) an appeals process for many types of deactivations,

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 27 of 30

overseen by fellow drivers for those who believe they have been unjustly deactivated.

Creating more transparency while also restricting the reasons that Uber can deactivate

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drivers will go a long way towards addressing this problem.


93.

In addition, the creation of the Drivers Association will allow drivers to continue to
work towards additional non-monetary programmatic relief for drivers in California

and Massachusetts by polling their fellow drivers to create an agenda for further change

and meeting regularly with Uber management to engage in good faith discussions to

address issues of concern to drivers. Drivers have regularly expressed to Plaintiffs

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counsel their desire to have more of a voice in the way Uber operates and have

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expressed frustration at feeling the company is unaware of their needs. I believe the

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Drivers Association could go a long way towards addressing these issues as well.

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94.

The drivers will also have the benefit of challenging some of these issues in arbitration

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at the companys expense. As this Court has already held, Ubers current agreements

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require an even split of arbitration-related costs (except where required by law). See

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Mohamed v. Uber Techs., Inc., 109 F. Supp. 3d 1185, 1209 (N.D. Cal. 2015). Thus,

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even in a misclassification case where drivers allege they are employees and should be

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subject to the Employment Rules, Uber can (and has) readily argue that the

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Commercial Rules would apply.

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95.

The Commercial Rules require claimants to pay substantial initial and final fees (a
minimum of $1,550 depending on the value of the case) and requires the parties to split
all other costs of arbitration, including arbitrator fees. In other cases I have litigated in
which workers have challenged their misclassification as independent contractors, but
in which the workers have been compelled to pursue individual arbitration under the
AAA Commercial Rules, the arbitration service has made an initial determination that
the claimants would be required to split the arbitration fees. For example, in McKean
v. Caviar, Inc., JAMS No. 1100082951, the claimant brought a misclassification claim

DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR


PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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in arbitration, since a plaintiff in a related case against this company was compelled to

individual arbitration under the AAA Commercial Rules. In this case, the office of the

arbitrator indicated that the Employment Rules (under which the respondent would pay

the bulk of the fees) did not apply because of the independent contractor relationship.

See Exhibit 2, attached hereto. While I protested this determination, and the respondent

agreed in that case to pay the arbitration fees, it is not certain that the claimant would

not have been required to pay the fees if the respondent had not agreed to pay them.

Similarly, in Ribeiro v. System4, LLC, AAA No. 01 15 0003 8637 (another case in

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which a plaintiff in a related case against the same company had been compelled to

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individual arbitration under the AAA Commercial Rules), the AAA made an

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administrative determination that, because the AAA Commercial Rules applied, the

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arbitration fees would need to be split between the parties. See Exhibits 3 and 4,

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attached hereto. I protested this determination and persuaded the arbitrator to make a

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threshold ruling on who would pay the fees (or whether they would be split). Id.

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However, because the agreement stated that the AAA Commercial Rules would apply,

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my client was still billed for his share of the $7,500 cost of even obtaining this

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preliminary determination. See Exhibit 5, attached hereto. It required significant

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briefing on this issue for me to obtain a ruling from the arbitrator that my client would

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not have to split arbitration fees. However, this result was not assured and could well

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have gone the other way.

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96.

In short, it has been my experience that, even when a claimant is challenging what he or
she alleges to be misclassification as an independent contractor, when an arbitration
provision provides that the AAA Commercial Rules will apply, there is a real risk that
the claimant may be required to split arbitration fees. As a practical matter, this
deterrent would essentially eliminate the possibility of recovery for all but the most

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 29 of 30

motivated Drivers. Ubers agreeing to pay for drivers arbitration costs in cases based

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on alleged misclassification is an important concession that will benefit drivers.


97.

Finally, I believe the portion of the settlement regarding Ubers tipping policy will have
a substantial and real effect on drivers livelihoods. Under the agreement, Uber has

agreed to make good faith efforts to clarify its messaging regarding tipping, clarifying

on its website and in communications with drivers and riders that tips are not included

on Uber's platforms (with the exception of UberTAXI) and that tipping is neither

expected nor required. Moreover, Uber has confirmed that its policies do not prohibit a

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driver from putting up signs or requesting a tip. And under this agreement, Uber will

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not have the ability to deactivate drivers at will in California and Massachusetts. Thus,

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there would be no prohibition on drivers posting in their cars a small sign stating that

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tips are not included, they are not expected, but they would be appreciated.8

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believe that, with this information, many riders will begin tipping their drivers, which

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will increase drivers pay substantially.

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98.

In light of the risks posed by this case, as well as the anticipated delay in payment even

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if Plaintiffs were to prevail (because of Ubers stated intention to aggressively appeal

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any adverse rulings), and considering as well the significant non-monetary components

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of this settlement, I believe this settlement is a fair, reasonable, and adequate resolution

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of the claims brought in this case.

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99.

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Attached hereto as Exhibit 6 is a true and correct copy of the parties Settlement
Agreement.

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If some passengers are unhappy with the signs (or their interactions with drivers
regarding tips) and that leads to poor ratings, then given that low ratings are still a basis for
deactivation, drivers may still suffer potential repercussions for having such signs in their cars.
But, under this agreement, there would be nothing directly prohibiting drivers from having
such signs.

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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Case 3:13-cv-03826-EMC Document 519 Filed 04/21/16 Page 30 of 30

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100.

Attached hereto as Exhibit 7 is a true and correct copy of the parties Short Form
Notice to be sent to the Settlement Class.

101.

Attached hereto as Exhibit 8 is a true and correct copy of the parties Long Form
Notice to be sent to the Settlement Class.

102.

Attached hereto as Exhibit 9 is a true and correct copy of the draft Claim form (both
online and in paper form).
I declare under penalty of perjury under the laws of the United States of America that

the foregoing is true and correct.


Executed on April 21 2016, in Boston, Massachusetts.
By: __/s/ Shannon Liss-Riordan_____
Shannon Liss-Riordan

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DECLARATION OF SHANNON LISS-RIORDAN IN SUPPORT OF PLAINTIFFS MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO.: 13-3826-EMC
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