By: Joel Rosenblatt
Uber Technologies Inc. was dealt another rejection of a legal settlement, this time in a case over claims the company misled riders when it charged them a $1 “safe rides fee.”
U.S. District Judge Jon Tigar in San Francisco said the proposed $28.5 million payout wasn’t fair and reasonable for customers, considering the total revenue Uber earned from the fees.
Consumers alleged in the class action that background checks on drivers weren’t as rigorous as the company advertised. In April, the company paid $10 million to settle similar claims filed by California prosecutors.
It’s the second rejection this month by a federal judge overseeing Uber’s attempt to dispose of lawsuits. On Aug. 18, another judge in the same courthouse rejected Uber’s $100 million settlement with drivers over claims they deserve to be treated as employees and are owed reimbursement for expenses and tips.
Uber spokesman Matt Kallman declined to comment on Tigar’s ruling.
Uber introduced the safe rides fee in April 2014 to cover costs such as insurance, background checks and vehicle checks. The fee started at $1 per trip, but the company had raised it to as much as $2.50 in some cities.
Uber announced its $28.5 million settlement in February, saying it would be split evenly among about 25 million riders after attorneys’ fees. Uber said the "safe rides fee" would be called a "booking fee."
The case is Philliben v. Uber Technologies Inc., 3:14-cv-05615, U.S. District Court, Northern District of California (San Francisco).
Copyright Bloomberg 2016