3 Motions to Dismiss Uber Wage and Hour Class Denied

Only three motions to dismiss out of seven in a wage and hour class action lawsuit against the popular app-based transportation network and taxi company, Uber, were granted.

Plaintiffs Hakan Y. and Abdi M. claim they drove for Uber between 2012 and 2014. They jointly allege that Uber violated wage and hour laws by telling passengers that a tip for the driver was included in the fare charged, then withheld part of those tips from the drivers.

Hakan and Abdi originally filed this wage and hour class action lawsuit in Massachusetts, but Uber had it transferred to California based on a forum selection clause in their contract.

Judge Rules On Seven Wage and Hour Motions to Dismiss

In a victory for the Class plaintiffs, Judge Edward M. Chen found the claims for violation of Massachusetts Tips Law, tortious interference with advantageous relations, and unjust enrichment claims were all sufficiently pleaded by the plaintiffs and denied Uber’s motion to dismiss these three wage and hour claims.

The wage and hour class action lawsuit also alleges that Uber misclassified drivers as independent contractors. However, Uber did not include this particular employee misclassification claim in its seven motions to dismiss.

Uber argued that the plaintiffs’ claim under the Massachusetts Tips Law should be dismissed because Uber does not separate the tip amount from the rest of the customer’s charges. The court disagreed. Judge Chen noted some passing mentions in the statute and case law of separate invoicing for service charges, but he found no express legal authority for saying that the Tips Law did not cover service charges that were not separately billed or invoiced.

Additionally, the court found that the Class plaintiffs had adequately stated a claim for tortious interference with regards to the plaintiffs’ advantageous business relationships with their passengers. The plaintiffs had alleged that by telling riders that a service charge was included in the cost of fare, Uber led passengers to not to add a gratuity that they would have added otherwise with more traditional taxi service.

Judge Chen only granted three of Uber’s motions to dismiss: tortious interference with a contract, breach of contract, and violation of the Massachusetts minimum wage and overtime laws. The judge will also allow the plaintiffs to amend their pleadings for these three dismissed wage and hour claims.

Plaintiffs claimed tortious interference with contractual relations. This type of claim alleges the intrusion of a third party into a contractual relationship between two other parties, causing harm to that relationship. But the court noted that the plaintiffs had not first alleged the existence of a contract between themselves and their riders. Therefore, the court dismissed that claim but left open the opportunity for the plaintiffs to correct the oversight.

Plaintiffs had also claimed that Uber had been unjustly enriched by keeping a portion of fares that had been designated as a service charge. The court noted that the existence of a contract that covered the distribution of service charges between drivers and Uber would nullify that claim. However, since the plaintiffs’ pleadings did not mention any contract, and since the court’s review was limited to those pleadings, the court declined to dismiss the breach of contract claim.

Similarly, the court dismissed but left open the opportunity to amend the plaintiffs’ claim that Uber breached an implied contract between themselves and their passengers, a contract in which the plaintiffs were allegedly entitled to receive a benefit as third parties.

Additional Wage and Hour Rulings

The court bluntly dismissed the plaintiffs’ unpaid overtime claims under Massachusetts law. The plaintiffs had alleged that drivers sometimes receive less than the minimum wage and that Uber does not ensure drivers receive at least the Massachusetts minimum wage or time-and-a-half for overtime work. But as the court noted, the plaintiffs did not allege that they themselves were ever personally underpaid.

The court also dismissed the Tips Law claims against Uber’s president and vice president as individuals, finding that those two officers did not fit the definition of “employer” under the Tips Law.

This Wage and Hour Class Action Lawsuit is Hakan Yucesoy, et al., v. Uber Technologies Inc., Case No. C-15-0262 in the U.S. District Court for the Northern District of California.

UPDATE: On Aug. 18, 2016, a California federal judge rejected Uber’s proposed $100 million wage & hour class action settlement finding that an arbitration provision included in the agreement may unfairly benefit Uber and deserves further consideration before determining if the deal is worthy of approval.

UPDATE 2: May 2019, the Calif., Mass., Uber driver misclassification class action settlement is now open. Click here to file a claim.

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