Uber Seeks to End Drivers’ Gratuity Charge Class Action Lawsuit

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Last week, Uber Technologies Inc. asked a California federal judge to dismiss a class action lawsuit accusing the transportation service of misleading passengers into thinking the 20 percent automatic gratuity is paid to drivers, arguing that the drivers failed to provide evidence they relied on any of the company’s alleged misrepresentations.

Uber developed a mobile application that connects prospective passengers with drivers-for-hire, such as taxicab services. An automatic gratuity is included in the cost of the transportation service. The Uber class action lawsuit alleges that drivers receive only a portion of the gratuity, but passengers are misled into believing the entire gratuity charge goes to the driver.

“Thus, drivers do not receive the tips that are customary in the car service industry and that they would otherwise receive were it not for Uber’s communication to customers that they do not need to tip,” the Uber class action lawsuit says. Although Uber attempted to dismiss the driver gratuity class action lawsuit, a California federal judge denied its request in December 2013.

The Uber class action lawsuit asserts five claims of relief: tortious interference with prospective economic advantage, breach of implied-in-fact contract, statutory gratuity violation, independent contractor misclassification, and unlawful and fraudulent business practices.

In its motion to dismiss the driver gratuity class action lawsuit, Uber argues that the plaintiffs have failed to meet their pleading burden and that Uber is entitled to judgment. According to Uber, the tortious interference claim must be dismissed because the plaintiffs failed to allege Uber engaged in an “independently wrongful act” that disrupted the purported relationship between Uber and the drivers.

Uber argues that the breach of implied contract claim must fail because an express contract applies to the subject matter. The transportation company also takes issue with the drivers’ assertion of California law claims on behalf of potential Class Members who do not reside in California.

Uber also argues that the plaintiffs failed to state a claim under the Unfair Competition Law. In making the argument, Uber argues that the California Supreme Court, the 9th U.S. Circuit Court of Appeals, and other federal courts have recognized that “to state a claim under the UCL based upon an alleged misrepresentation, the plaintiff must allege that he or she actually relied on the allegedly misleading communications.”

“Plaintiffs’ UCL claim fails because Plaintiffs do not allege that they relied on any purported misleading advertising by Uber,” Uber argues. “Plaintiffs’ entire theory for this claim has been and remains predicated not on their own reliance on that advertising, but on the allegation that unspecified Uber customers purportedly did not provide tips as a result of the allegedly misleading advertising.”

Uber drivers are not the only ones upset by the automatic gratuity charge. Passengers have also filed a class action lawsuit against Uber, alleging they were misled by the automatic gratuity policy and believed the full amount of the tip would be paid to the driver. Last month, Uber filed a motion to dismiss the passengers’ class action lawsuit.

The plaintiffs are represented by Shannon Liss-Riordan of Lichten & Liss-Riordan PC and Monique Olivier of Duckworth Peters Lebowitz Olivier LLP.

The Uber Driver Gratuity Class Action Lawsuit is O’Connor, et al. v. Uber Technologies Inc., et al., Case No. 3:13-cv-03826, in the U.S. District Court for the Northern District of California.