JON S. TIGAR, District Judge.
Before the Court is Plaintiffs' unopposed Motion for Preliminary Approval of Amended Class Action Settlement. ECF No. 127. The Court previously denied a motion for preliminary approval of a proposed settlement with different terms. ECF No. 98. Plaintiffs now move for approval of a revised settlement. The Court will grant the motion.
This motion arises from a putative class action against Defendants Uber Technologies, Inc., and Rasier, LLC (collectively, "Uber" or "Defendants") revolving around Uber's alleged misrepresentations and omissions regarding its "Safe Rides Fee" and the safety measures, background checks, and other efforts it takes to provide safety for its customers.
On July 14, 2016, Plaintiffs filed a Motion for Preliminary Approval of Class Action Settlement. ECF No. 95. The Court denied the motion, identifying two deficiencies: (1) the settlement provided preferential treatment to certain class members; and (2) the settlement amount did not fall within the range of possible approval. ECF No. 98 at 7-9. The Court also denied class certification on the grounds that the class did not satisfy Rule 23's typicality, commonality, and predominance requirements.
After the Court denied the proposed settlement, the Parties returned to negotiations and engaged in three additional mediation sessions and a settlement conference before Chief Magistrate Judge Joseph C. Spero. ECF No. 127 at 13. The Parties reached a new agreement and on June 1, 2017, Plaintiffs filed a Motion for Preliminary Approval of Amended Class Action Settlement. ECF No. 127. Defendants submitted a statement of support on June 15, 2017. ECF No. 134.
Plaintiffs seek to represent a class consisting of "all persons who, from January 1, 2013 to January 31, 2016, used the Uber App or website to obtain service from one of the Uber Ride Services With a Safe Rides Fee in the United States or its territories." ECF No. 127 at 14. Uber's Rideshare Services refers to "all transportation services that are arranged through Defendants' website or the Uber App, regardless of type of ride or service that is requested."
The settlement provides for a $32.5 million non-reversionary settlement fund. ECF No. 127 at 10. After accounting for administrative costs, attorneys' fees, and service awards, "each [c]lass [m]ember will receive $0.25 for their first Safe Rides Fee Service and $0.05 for each subsequent Safe Rides Fee Service."
Class members will receive notice of the settlement at the email address associated with their Uber Rider Accounts.
A class member may opt-out of the class by sending a written request to the Settlement Administrator postmarked on or before a date no later than 90 days after the Court orders preliminary approval.
The Court has jurisdiction over this action under 28 U.S.C. § 1332(d).
The Ninth Circuit maintains a "strong judicial policy" that favors the settlement of class actions.
Where the "parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement."
At a preliminary approval stage, the Court looks to see if the settlement agreement
The Court considers the settlement as a whole, rather than its components, and lacks the authority to "delete, modify or substitute certain provisions."
In its prior order denying preliminary approval ("Denial Order"), the Court stated there was no reason to suspect the prior settlement ("2016 Settlement") was the product of any collusive negotiations, nor were there any obvious deficiencies beyond those captured by the separate criteria of the preliminary approval standard.
Under this factor, the Court evaluates whether the settlement agreement provides preferential treatment to certain class members. The Court found the 2016 Settlement did so in two ways. ECF No. 98 at 6-8. The Amended Settlement corrects these deficiencies.
First, the 2016 Settlement included all Uber riders in the proposed class, instead of only riders who had paid a Safe Rides Fee. ECF No. 98 at 7. As a result, it "compensate[d] persons who [had not] been injured . . . at the expense of persons who [had] been."
Second, the 2016 Settlement provided preferential treatment by dividing the available funds between all class members equally, regardless of the number of Safe Rides Fees each class member paid. ECF No. 98 at 7. In declining to allocate funds according to degree of injury, the settlement prioritized riders who had paid only one Safe Rides Fee over those who had paid the fee multiple times.
Accordingly, the Court finds that the Amended Settlement does not impermissibly provide preferential treatment to certain class members.
In evaluating the fairness and adequacy of a settlement, the Court balances the following factors: "(1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement."
In its Denial Order, the Court found that, with respect to the first three factors, there were significant obstacles in Plaintiffs' litigation path. ECF No. 98 at 10. The same is true now. In particular, Defendants' pending motion to compel arbitration based on an arbitration clause contained in Uber's Terms and Conditions means Plaintiffs may never make it to trial.
Despite these obstacles, the Court nevertheless concluded in its Denial Order that, weighed against Plaintiffs' maximum potential recovery at trial, "Plaintiffs [had] not adequately explain[ed] why a gross settlement of $28.5 million [was] fair, adequate, and reasonable." ECF No. 98 at 14. The Court emphasized that the total amount recoverable at trial, measured by Uber's gross revenue from the Safe Rides Fees, totaled almost times the proposed settlement amount.
The Amended Settlement attempts to correct this discrepancy. First, it increases the total settlement amount by $4 million. ECF No. 127 at 10. But because Uber also increased its estimate of its Safe Rides Fee revenue from $ ________, this change only negligibly improves the ratio between the settlement amount and the total amount recoverable at trial. ECF No. 96 ¶ 41; ECF No. 128 ¶¶ 46-47.
Second, Plaintiffs provide a more tailored estimate of Uber's safety expenses. This is a meaningful change. In its Denial Order, the Court refused to deduct Plaintiffs' estimate of Uber's safety expenses because Plaintiffs had included ________ of Uber's insurance costs. ECF No. 98 at 12-13; ECF No. 75-6 at 10. The Court explained that those insurance costs largely consisted of "garden variety liability insurance" that protects Uber, not its customers. ECF No. 98 at 12. In the Amended Settlement, Plaintiffs revise this estimate to include insurance costs related only to rider safety, which they estimate at $ ________ ECF No. 127 at 30. Plaintiffs also include more detailed explanations of Uber's costs related to other safety-enhancing mechanisms, such as background checks and vehicle inspections.
The Court did not address the procedures for notice, opt-out, or distribution of settlement funds in its Denial Order, but finds here that the proposed mechanisms adequately protect the class members' interests.
The notice program adequately informs class members of the settlement because it includes direct notice to the class and is expected to reach at least 80%, and likely over 90%, of class members. ECF No. 127 at 17;
The distribution method, which gives riders the option to receive their settlement share through payment to their PayPal account, payment to their bank account via eCheck, or a credit towards their next Uber ride, also adequately protects class members' interests. ECF No. 127 at 15.
The Court will evaluate requests for service awards and attorneys' fees at the final approval hearing.
In its last order, the Court noted that the parties' settlement agreement provided for any residual funds to be distributed to the National Consumer Law Center, but did not comment further on the cy pres provision of the settlement. The Court therefore addresses that issue now.
"Cy pres is shorthand for the old equitable doctrine `cy près comme possible' — French for `as near as possible.' Although the doctrine originated in the area of wills as a way to effectuate the testator's intent in making charitable gifts, federal courts now frequently apply it in the settlement of class actions where the proof of individual claims would be burdensome or distribution of damages costly."
In determining whether a cy pres award meets these criteria, courts should evaluate the award holistically, recognizing that a cy pres award "serves the goals of civil damages by ensuring [the defendant] fairly pays for the class's alleged losses."
The present settlement contemplates than any residual funds will be distributed to the National Consumer Law Center. NCLC is a non-profit organization committed to protecting consumers and promoting fairness in the marketplace, with a particular focus on false advertising and other misleading statements and omissions by businesses. ECF No. 129 at 2. In addition to its advocacy work, NCLC also publishes material for the legal profession and the public concerning false advertising and deceptive practices.
For the foregoing reasons, the Court finds that the cy pres distribution to NCLC in this settlement satisfies the Ninth Circuit's requirements. Its work is directly relevant to the alleged omissions and misrepresentations in this case, and will provide a nationwide benefit to the consumers most likely to use Uber's services.
In sum, the proposed settlement adequately addresses the concerns raised in the Denial Order and fairly and reasonably protects the class. Accordingly, the Court grants preliminary approval of the settlement.
Class certification under Rule 23 is a two-step process. First, a plaintiff must demonstrate that the four requirements of Rule 23(a) are met: numerosity, commonality, typicality, and adequacy. "Class certification is proper only if the trial court has concluded, after a `rigorous analysis,' that Rule 23(a) has been satisfied."
When determining whether to certify a class for settlement purposes, a court must pay "heightened" attention to the requirements of Rule 23.
The Court denied class certification of the 2016 Settlement because Plaintiffs failed to satisfy Rule 23(a)'s typicality and commonality requirements, or Rule 23(b)'s predominance requirement. ECF No. 98 at 18. The Amended Settlement satisfies these requirements.
In its Denial Order, the Court found that Plaintiffs' claims were not typical of the entire class because the class included riders who had never paid the Safe Rides Fee, paid it once, and paid it multiple times.
The Amended Settlement corrects these deficiencies by excluding from the class riders who did not pay Safe Rides Fees and by allocating funds according to the number of fees each rider paid. ECF No. 127 at 10. Accordingly, Plaintiffs' injuries are now typical of the entire class; all class members suffered the same type of injury and the allocation method accounts for the different degree of those injuries. Moreover, because individual questions related to the existence or extent of injury are handled mechanically during the allocation process, common questions of law and fact now predominate.
Because the Amended Settlement adequately remedies the deficiencies identified in the Denial Order, and the other requirements of Rule 23 remain satisfied, the Court will provisionally certify the class for settlement purposes.
For the reasons discussed herein, the Court hereby orders as follows:
1. Preliminary approval of the proposed Amended Settlement;
2. Provisional certification of the following class for settlement purposes only:
3. Pending the Fairness Hearing, all proceedings in the Action, other than those proceedings necessary to carry out or enforce the terms and conditions of the Amended Stipulation Settlement and the Order, are hereby stayed;
4. Approval of the Parties' proposed Notice Program and forms of notice, attached as Exhibits E, G, H, I to the Amended Stipulation of Settlement, ECF No. 125-5, 125-7-125-9;
5. Authorization for Class Counsel to administer the proposed settlement and implement the notice and payment election process, in accordance with the terms of the Amended Stipulation of Settlement, and with approval of Defendants;
6. Approval of the procedures for Class Members to exclude themselves from the Amended Settlement or object to the Settlement;
7. Appointment of Julian Mena, Todd Schreiber, Nate Coolidge, Ernesto Mejia, and Byron McKnight as Class Representatives for the Class;
8. Appointment of Tina Wolfson and Robert Ahdoot of Ahdoot & Wolfson, PC; Mike Arias and Alfredo Torrijos of Arias, Sanguinetti, Stahle & Torrijos, LLP; and Nicholas Coulson of Liddle & Dubin, PC as Class Counsel;
9. Appointment of Epiq Systems, Inc. as the Settlement Administrator specified in the Amended Settlement;
10. Class Counsel and Defense Counsel are authorized to use all reasonable procedures in connection with approval and administration of the Settlement that are not materially inconsistent with this Order or the Amended Stipulation of Settlement, including making, without further approval of the Court, minor changes to the form or content of the Long Form Notice, Summary Notice, and other exhibits that they jointly agree are reasonable or necessary;
11. In the event the Court does not grant final approval of the settlement, or for any reason the parties fail to obtain a Final Order and Final Judgment as contemplated in the Amended Stipulation of Settlement, or the Amended Stipulation of Settlement is terminated pursuant to its terms for any reason or the Effective Date does not occur for any reason, then the following shall apply:
a) All orders and findings entered in connection with the Amended Stipulation of Settlement shall become null and void and have no force and effect whatsoever, and shall not be admissible or discoverable in this or any other proceeding;
b) The provisional certification of the Class pursuant to this Order shall be vacated automatically, and the Action shall proceed as though the Class had never been certified pursuant to the Amended Stipulation of Settlement and such findings had never been made;
c) Nothing contained in this Order is, or may be construed as, a presumption, concession or admission by or against Defendants or Plaintiffs of any default, liability or wrongdoing as to any facts or claims alleged or asserted in the Action, or in any actions or proceedings, whether civil, criminal or administrative, including, but not limited to, factual or legal matters relating to any effort to certify the Action as a class action;
d) Nothing in this Order or pertaining to the Amended Stipulation of Settlement, including any of the documents or statements generated or received pursuant to the settlement administration process, shall be used as evidence in any further proceeding in this case, including, but not limited to, motions or proceedings seeking treatment of the Action as a class action;
e) All of the Court's prior Orders having nothing whatsoever to do with the Settlement shall, subject to this Order, remain in force and effect.
12. This Order shall be of no force or effect if the Settlement does not become final and shall not be construed or used as an admission, concession, or declaration by or against Defendants of any fault, wrongdoing, breach, or liability. Nor shall this Order be construed or used as an admission, concession, or declaration by or against Plaintiffs or the other class members that their claims lack merit or that the relief requested is inappropriate, improper, or unavailable, or as a waiver by any party of any defenses or claims he, she, or it may have in this Action or in any other lawsuit;
13. The Court shall maintain continuing jurisdiction over the administration, consummation, validity, enforcement, and interpretation of the Amended Stipulation of Settlement, the Final Order, Final Judgment any final order approving Attorneys' Fees and Expenses and Service Awards, and for any other necessary purpose;
14. Upon application of the Parties and good cause shown, the deadlines set forth in this Order may be extended by the Court, without further notice to the class;
The Court sets the following schedule: