Big shakeups at Uber still ongoing


(Preet) #1

Uber continues to make headlines and this week is no different, we present here four cases and will continue to update as and when new instance crop up, which will keep us busy for a long time.
Big shakeups at Uber still ongoing

Uber driver fares

One of the class action suits facing Uber is about the pre-ride upfront passenger fee being charged. This class action suit claims that Uber is overcharging passengers and underpaying drivers. The basic premises the plaintiff is that once Uber received an upgraded payment from a passenger, they were required to pay the driver an additional amount based on the incremental change in the passenger's fee.

Uber's defense was put as; drivers do not understand their agreement with Uber, and that drivers were not compensated but paid as independent contractors. This means drivers agree to be paid according to set rates based on mileage and minutes of a ride as well as additional bonuses based on certain field upgrades such as surges and Quests. If a passenger pays more as part of a separate agreement (every time a passenger confirms a preset price is considered an agreement) between the passenger and Uber, Uber does not have to include any part of the delta (difference in price to ride fee) with drivers. Drivers receive exactly what they agree to receive as per their contract with Uber. Uber also stated that the difference in price and the actual driving fee were never a secret, drivers and passengers could see the price and discuss it together.

Uber also stated that they took a lot of risk in taking a pre-ride fee based on a quote generated by their pricing algorithm. There are instances where the price could be less than the ride. While this is an issue between Uber and the passenger, drivers continued to receive what they signed up for. Uber also stated that drivers signed their agreements with the company knowing that Uber can change fares at any time based on any number of mentioned instances. With this, drivers agree to accept the fare based on the driver's rate and not anything above that. The only additional driver can receive, is not from Uber, but from the passenger in the form of a tip.

We consider that Uber is facing a major challenge in this case since it involves all 2 million plus drivers in contract with them. Since employment laws differ in every country, we concentrate on the US market. Drivers need to find a balance between being employees of Uber and being an independent contractor. There is no middle road and must accept the good with the bad in both instances. We expect that this issue will not be resolved until it reaches a federal court ruling.

A new CEO and a resigning CLO

With the new CEO Dara Khosrowshahi coming online its was obvious to many that certain C level executives would leave. The old system of management as shaky and not straight. Immediately after his appointment, Ubers 5 year CFO Salle Woo resigned. While she was instrumental in both developing the corporate legal framework, which means she is responsible for all the legal shit that's happening now, she was also instrumental in navigating the hard legal waters of Uber's global growth.Together with Joseph Spiegler the global head of compliance, once asks where were they when "greyballing and VTOS" were introduced? Another issue arising is the 250 plus legal suits and class actions being filed against Uber all across the US and the many hundreds of suits in other countries. This is a real legal nightmare, and maybe after 5 years Salle had enough, or maybe she just set the scene up for her predecessor. Whoever takes over this position should get an honorary doctorship after completing it.

Ubers Asia Bribery Allegations

In continuation from the above short expo on Ubers CLO Salle Woo leaving, Uber is facing a government probe into their alleged overseas bribing escapades. Uber is working with full transparency on this issue with State and has employed the O'Melveny & Myers LLP a reputable law firm to review all records and documents of foreign payments and employee statements. China, India, Indonesia, South Korea and Malaysia offices are being targeted at first with a focus on the possible bribery of Malaysian government officials.

One instance under review was the case of the Jakarta office in Indonesia, where employees placed the Uber offices outside the city business zone and paid police officials in cash to overlook the issue. All these transactions were recorded as local authority payments. The employee and office manager were given a leave of absence while the issue under investigation. Another interesting coincidence is the investment made by the Malaysian government pension fund, placing $30 million investment in Uber after Uber allegedly donated a lot of money to a Malaysian Global Innovation and Creativity Center. After a few months of receiving this investment, the Malaysian government made ride0-sharing legal in the country. Which raises the question of transparency and ethics.

Uber sues contractors

On the flip side of Uber being sued, Uber filed a claim against Fetch, a mobile agency owned by Dentsu. They claim that Fetch billed Uber for ads that were never placed and acted with fraudulence.The claim is for $40 million in damages for fraudulent mobile advertising. James Connely, French's CEO stated that they were shocked by Ubers allegations and is most probably a continuation of Uber's unscrupulous activity of not paying suppliers. He also stated that Fetch stopped working with Uber months ago since Uber failed to pay invoices for services that had been supplied. He claims that Uber is merely trying to misdirect everyone as a tactic to cancel the debt.


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