A federal judge has prevented Uber from imposing a new contract on its drivers. According to United States District Judge of San Francisco Edward Chen, the new contract was written in a way that made the agreement confusing. The news comes as drivers are suing the company for not being properly compensated for the mileage they put on their vehicles.
Additionally, Judge Chen also told Uber to cease communications with drivers involved in the class action lawsuit without first consulting their lawyers or obtaining consent from the court. Uber originally required its drivers to agree to the new contract on December 11. The drivers had to accept the terms before they would be able to accept any new fares. The contract was designed to prevent additional drivers from getting involved in the class action lawsuit.
While Judge Chen called the new contract confusion, lawyers for Uber believed that the company had the right to issue the new agreement. Needless to say, they were less than satisfied with the decision.
Uber attorney Theodore Boutrous said, “This court had ruled that provisions were unlawful, unconscionable and unenforceable. The agreement that was sent out addresses the things that this court was troubled by, it fixes those things.”
The contract was issued by the company just two days after Judge Chen expanded the case, which is seeking to reclassify California Uber drivers as employees instead of independent contractors. The case now includes more than 100,000 individuals. The contract would have required drivers to resolve all conflicts with the company in private arbitration rather than in court.
According to lawyer for the Uber drivers, Shannon Liss-Riordan, many of her clients were confused about the agreement. She says that hundreds of her clients expressed “confusion and dismay about the new agreement”. Any driver that accepted the terms of the contract was given just 30 days to opt out before they would be able to participate in court proceedings.
On December 10, Uber informed Judge Chen of its plan to rollout the new agreement. The judge seemingly acknowledged that the introduction of the new contract made sense. Uber also said that it wouldn’t apply the new provisions to any drivers currently involved in the class action lawsuit. That being said, any driver who wanted to get involved in any sort of lawsuit against Uber wouldn’t be able to agree to the terms.
Judge Chen made the ruling on December 9 that Uber drivers in the class action will be able to seek expense reimbursement of up to 57.5 cents for every mile that was driven. A trial on the matter is expected to take place in June of 2016. If Uber loses this case, it will pose a serious threat to the company’s business model, and it will greatly reduce its valuation of more than $60 billion.