Uber Upfront Pricing Class Action Lawsuit Moves Forward

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A California federal judge has rejected a motion by Uber Technologies Inc. to dismiss a driver compensation class action lawsuit accusing it of using a pricing model that shortchanges drivers.

On Monday, U.S. District Judge William Alsup issued an order denying Uber’s motion to dismiss the driver compensation class action lawsuit, finding that the plaintiff adequately described Uber’s allegedly deceptive pricing practices.

Uber filed its motion to dismiss the deceptive pricing class action lawsuit in June, arguing the plaintiff’s claims were based on a misreading of the driver agreement.

Plaintiff Martin Dulberg filed the Uber driver compensation class action lawsuit in February, claiming Uber breaches its contract with drivers by calculating their compensation using two different pricing models to calculate the amount a rider will pay and the amount the driver will actually be paid, allegedly resulting in thousands of Uber drivers being underpaid.

Uber filed a motion to dismiss Dulberg’s original complaint, and Dulberg subsequently filed an amended Uber class action lawsuit that asserted only one claim for breach of contract.

According to the Uber driver pay class action lawsuit, riders are charged based on an “aggressive” estimate of how much time and distance the ride will entail. Dulberg alleges this pricing model tends to overestimate the time and distance, resulting in riders being charged higher fares.

However, Uber uses a different system to calculate how much a driver will be paid, the Uber class action lawsuit alleges. Dulberg says Uber pays drivers based on the actual miles and duration of the ride, but he asserts the drivers are entitled to a percentage of the fare as indicated in the Uber driver agreements. Instead, Uber allegedly shortchanges the drivers and keeps the increased profits for itself.

Uber claims this upfront pricing model is a promotional statement and not a contract term as Dulberg argues. Judge Alsup was not persuaded by Uber’s argument, however.

“Dulberg describes this process as essentially calculating the ‘Fare’ twice – once upfront, using higher estimated time and distance amounts, to determine Uber’s own Service Fee, and again after each ride, using lower actual time and distance amounts, to determine the amount remitted to drivers – even though the driver agreement tied both Uber’s Service Fee and the driver’s remittance to the same calculated Fare for each ride,” Judge Alsup states in Monday’s order denying Uber’s motion to dismiss the driver pricing class action lawsuit.

“These allegations, taken as true, suffice to state a claim for breach of contract,” the judge determined.

“At this statge, these allegations are sufficient to survive dismissal,” Judge Alsup concluded and denied Uber’s motion to dismiss the driver compensation class action lawsuit.

Dulberg is represented by Paul B. Maslo and Andrew Dressel of Napoli Shkolnik PLLC.

The Uber Upfront Pricing Class Action Lawsuit is Martin Dulberg v. Uber Technologies Inc., et al., Case No. 3:17-cv-00850, in the U.S. District Court for the Northern District of California.

UPDATE: On Feb. 14, 2018, claims that Uber drivers were shorted compensation after a change in Uber fare calculations will proceed as a class action lawsuit, following a federal court’s grant of class certification.

UPDATE 2: On Aug. 24, 2018, an Uber driver is seeking approval of a settlement deal that would end a class action lawsuit over the company’s upfront pricing model.