Lyft Court Case Detours After Judge Defers Decision Over Drivers

June 2, 2016, 7:49 PM UTC
A Post-Taxi Population Opts For Ride-sharing
BOSTON - JULY 16: Hunter Perry, a regular Lyft user, gets picked up on July 16, 2013 near his office on Harrison Avenue. The vehicles participating in the Lyft program wear a pink mustache on their front grille. (Photo by Essdras M Suarez/The Boston Globe via Getty Images)
Essdras M Suarez - Boston Globe via Getty Images

A proposed $27 million settlement in a class action lawsuit by drivers against ride-hailing service Lyft took an unexpected detour on Thursday as a federal judge deferred a decision to consider whether drivers in another Lyft lawsuit should get some of the money.

The deal would settle a lawsuit between the company and 150,602 drivers who claimed they should be treated as employees, and it came before U.S. District Judge Vince Chhabria in San Francisco for preliminary approval.

The agreement met conditions that Chhabria had previously spelled out and, in a victory for Lyft, would keep the drivers classified as independent contractors.

But plaintiffs in a separate Lyft class action, known as the Zamora case for plaintiff Alex Zamora, made a motion requesting a portion of the $27 million be reallocated to them or that money be added to the settlement and earmarked for them.

Chhabria said he would consider the motion and rule at a later date.

Meanwhile, Lyft rival Uber hoped to persuade another federal judge to approve a proposed deal in its own class-action lawsuit with drivers. Uber agreed to settle its lawsuit for up to $100 million, plus other benefits including help forming a drivers’ association.

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Uber will appear before U.S. District Judge Edward Chen in San Francisco on Thursday afternoon.

As in the Lyft settlement, Uber’s agreement would keep drivers classified as independent contractors.

Drivers who brought the lawsuits contended they should be deemed employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance. Drivers currently pay those costs themselves.

A ruling that these workers are employees would affect the profits and valuations at ride-hailing companies and set a precedent for other so-called on-demand technology companies that rely on independent contractors, including cleaning service Handy and delivery company Postmates.

In the Lyft hearing, attorneys for both the company and drivers appealed to Chhabria to approve the settlement agreement.

The motion by the Zamora plaintiffs to intervene threatens to stymie months of negotiation, said Shannon Liss-Riordan, an attorney at Lichten & Liss-Riordan representing the plaintiffs.

“All parties would be punished if Zamora motion is granted,” Liss-Riordan said.

Plaintiffs in the Zamora case have argued they are entitled to the commission Lyft took from its Prime Time payout to drivers. Prime Time is a program in which drivers can earn more money during peak demand, and Lyft takes a cut of that.

The Zamora plaintiffs say they are owed reimbursement up to $75 million.

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