Uber Reaches “Gratuity” Charge Class Action Settlement with Riders

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Uber riders who paid a 20-percent premium on their fare and were told it was a tip for the driver will be refunded some of that money under a class action settlement announced last week.

The proposed settlement deal, which still needs court approval, would end a class action lawsuit brought against Uber Technologies Inc., claiming the ride-hail giant misrepresented the premium as a “tip” but then kept roughly half of that money, in violation of California law.

The deal was filed Wednesday afternoon in federal court in San Francisco, about seven months after the Class was certified by U.S. District Judge Edward Chen of the Northern District of California.

“After years of hard-fought litigation, the parties have reached a settlement that provides plaintiff and the class with essentially a full refund of the amount at issue in this suit,” the July 20 filing says.

The Uber class action settlement fund is approximately $344,000, and that will be divided up among the nearly 47,000 Class Members eligible to receive a payment. The Class includes customers who received emails from Uber characterizing the premium as a tip that would go to the driver and subsequently booked rides between April 2012 and March 2013.

“Class counsel achieved an excellent settlement while ultimately avoiding the uncertainties and risks of a trial,” the riders said.

Class counsel are requesting about $431,000 in attorneys’ fees, according to court documents. Lead plaintiff Caren Ehret, would get $10,000. A hearing on the proposed Uber class action settlement has been set for September.

The Uber gratuity charge class action lawsuit was initially filed in 2014 by Ehret who alleges Uber charges a 20-percent fee above the metered fare for some rides, calling it a “gratuity,” which is “for the driver.” However, Ehret alleges that a large percentage of the “gratuity” goes to the company rather than to the drivers.

Ehret stated in the lawsuit that if she knew Uber was pocketing a portion of the “gratuity” fee, she would not have agreed to pay it.

Uber provides a software solution that connects riders with transportation providers via a smartphone app that allows riders to “summon, arrange, and pay for” their rides all in one place.

Although in most cities Uber uses private drivers with normal automobiles, from April 2012 to March 2013, Uber had an option in five cities that allowed riders to select a traditional taxi.

Through a promotional email campaign, their website, and a blog, Uber represented that the fee would be the metered charge plus a 20-percent “gratuity.” In reality, about 12 percent of this surcharge went to Uber, and the remainder to the driver.

In September 2014, Uber sought to dismiss all of Ehret’s claims. Judge Chen denied all but one of the company’s motions. One of the counts that Chen allowed to proceed was an allegation that Uber violated California’s unfair competition laws.

Then, after an October 2015 hearing, Judge Chen certified Ehret’s proposed class in part in December 2015. Specifically, the Class was defined as “all individuals who received Uber’s email with the representation that the 20 percent charge would be gratuity only, who then arranged and paid for taxi rides through Uber’s service from April 20, 2012 to March 25, 2013.”

The Class of Uber riders is represented by Myron M. Cherry and Jacie C. Zolna of Myron M. Cherry and Associates, Hall Adams III of the Law Offices of Hall Adams LLC and Michael Ram of Ram Olson Cereghino & Kopczynski LLP.

The Uber Gratuity Charge Class Action Lawsuit is Caren Ehret et al. v. Uber Technologies Inc., Case No. 3:14-cv-00113, in the U.S. District Court for the Northern District of California, San Francisco Division.

UPDATE: The Uber gratuity charge class action settlement is now open. Click here to file a claim!