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Drivers’ $12M Deal With Lyft too Low, Judge Says

SAN FRANCISCO (CN) - A federal judge on Thursday questioned the fairness of a $12.25 million settlement of California Lyft drivers' claims that they should be classified as employees and not independent contractors, suggesting the figure might be too low.

The 2013 class action claims that the misclassification allows the ride-share service to avoid paying employment benefits and reimbursement for gas and vehicle maintenance.

Lyft agreed to settle the lawsuit in January, and settlement negotiations were based on Lyft-supplied data - based on the company's driver population through June 2015 - that supported an estimate of $64 million as the most that drivers could claim for expense reimbursement.

But Lyft later provided updated driver population numbers through February 2016, which increased the potential expense reimbursement claim to $126 million.

At Thursday's hearing, U.S. District Judge Vince Chhabria said he did not understand why the case's maximum recovery value should not be that figure.

Shannon Liss-Riordan, who represents the plaintiffs, said that her clients and Lyft were obligated to bring to court the agreement they reached before receiving the second set of data.

"I don't think for a moment that counsel for the plaintiffs have represented the plaintiffs anything less than tenaciously," Chhabria said, adding that he did not think the agreement stemmed from "improper collusion."

Liss-Riordan pointed out that non-monetary components of the proposed settlement benefit her clients, such as a prohibition against Lyft firing drivers without giving them a chance to arbitrate.

Chhabria also heard arguments from attorneys representing a group of drivers affiliated with the Teamsters union, who object that the agreement does not provide for the drivers' complete reclassification as employees.

But the judge said those arguments seem "best made to a legislature."

"The issue here is whether the law classifies these people as independent contractors or employees, not which would be better as a matter of policy," he said.

Chhabria did not rule from the bench on the proposed settlement.

Liss-Riordan is with Lichten & Liss-Riordan in Boston.

Lyft is represented by Robert Slaughter, with Keker & Van Nest in San Francisco.

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