A federal judge refused to grant preliminary approval for Uber Technologies Inc’s proposed $3 million class-action settlement with 2,421 New York City drivers who accused the Transportation Network Company (TNC) of keeping excessive fees from their fares.

In a decision in January, U.S. District Judge Nicholas Garaufis (Brooklyn) objected to a provision allowing the revival of breach of contract claims he had dismissed, so long as the settlement won final approval.

According to Garaufis, the “conditional stipulation” could keep the drivers’ claims to the settlement in limbo. Garaufis also objected to a $2,500 payment to drivers whose claims had been deemed subject to arbitration. The judge added that the drivers could submit a revised settlement for approval.

Drivers had accused Uber of accounting improperly for sales taxes and a “Black Car Fund” fee charged on every ride, which pays for their workers’ compensation insurance. They also accused Uber of falsely advertising guaranteed compensation for drivers, without disclosing the conditions. Uber has denied all allegations.

The settlement covered drivers who used the Uber app to arrange rides in New York since Dec. 29, 2009, and whose claims were not subject to arbitration. It was reached after Uber paid more than $80 million to roughly 96,000 drivers in New York, following its admission that it had inadvertently underpaid drivers for two-and-a-half years, court papers show.

Source: Reuters

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