Uber Technologies failed to persuade a judge to approve a settlement offering 1.6 million California drivers an average of $1.08 apiece to dispense with alleged labor-code violations that their lawyer claimed might have been worth billions of dollars.
Los Angeles Superior Court Judge Maren Nelson issued a tentative ruling rejecting a deal aimed at resolving one of more than a dozen US lawsuits challenging the company’s contractor-based business model.
The judge said there’s merit to objections that the $7.75 million accord — most of which would go to state coffers, administrative costs, and lawyer fees — shortchanges drivers who sued seeking the protections and benefits of employees. Nelson also said the settlement provides too broad a release of liability for Uber from labor-code claims.
‘‘I need some analysis why it is fair and adequate,’’ she said during a hearing Friday.
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While the judge allowed the company and lawyers for the drivers to revise the terms of the deal and resubmit it for approval, her ruling marks another setback for Uber in its effort to dispose of the most potent legal threat to its business model. Uber still faces a class-action case by California drivers in San Francisco after a federal judge in August rejected a $100 million settlement as inadequate. A critical appeals court hearing over the size and scope of that case is scheduled for June.
It’s already been a tough year for the San Francisco-based startup, valued at $69 billion. Uber is facing calls from customers to #DeleteUber, reports of a toxic corporate culture, sexual harassment allegations, criticism from investors over the company’s response, and the abrupt departure of a new senior executive over an undisclosed harassment claim from his previous job at Google.
The company is also contending with Alphabet Inc.’s high-profile lawsuit accusing it of copying technology for self-driving cars, and Uber’s chief executive officer said this month he’s seeking ‘‘leadership help’’ in the form of a chief operating officer after his verbal altercation with a driver was caught on video.
Uber said it’s confident the Los Angeles settlement will be approved. Christopher Morosoff and Douglas Caiafa, lawyers for the drivers, didn’t immediately respond to phone calls and e-mail messages seeking comment.