Nearly 9000 taxi drivers just scored $152 million from Uber as compensation for its illegal launch in Australia

The $271.8 million settlement by US ride-sharing giant Uber against a class action by the Australian taxi industry is now official, eight months after it was struck, with the Victorian Supreme Court ratifying the deal today.

Justice Patricia Matthews approved the settlement of the group proceedings brought by Nicos Andrianakis and Jamal Salem on behalf of participants in the taxi and hire car industries against seven companies in the Uber group of companies.

Law firm Maurice Blackburn, who’ll take a $38.7 million slice of the pie for legal costs, including its uplift fee (for winning), launched the case against Uber in 2019.

It dragged on for five years before Uber struck the settlement deal on the evening before the case was about to begin in court on March 18, without an admission of liability. It’s the fifth-largest class action payout in Australian history.

“The entry of Uber ride-sharing services into the Australian point to point passenger transport market caused significant disruption to the taxi and hire car industries. It precipitated major changes to those industries, including to the regulatory framework,” her Honour wrote in the settlement approval.

“Thousands of drivers, operators, licence holders and network service providers lost significant income and/or capital value, and many experienced substantial declines in their livelihoods, which they attribute to the entry of Uber ride-sharing services into the market.

The plaintiffs had claimed that they’d suffered loss and damage by an alleged conspiracy by Uber to operate the ride-sharing business illegally between 2014 and 2017, with the intention of injuring the taxi and hire car industry.

Uber denied the allegations.

Fair and reasonable

The settlement saved the US tech giant from potentially embarrassing court revelations and negative findings about its actions during its initially illegal roll-out in Australia.

Justice Matthews found that the settlement is fair and reasonable and in the interests of group members. The settlement was also a windfall for litigation funder, Harbour Fund III, which will receive around 30% of the settlement, $81.54 million, as its funding commission.

That leaves around $152 million in the kitty for the taxi and hire car industry owners and drivers.

Maurice Blackburn will administer the settlement distribution scheme, which will see the claims of registered group members assessed and processed. The costs of administering the settlement distribution scheme will also come out of the settlement amount.

All up 8,701 group members were registered with Maurice Blackburn in the class action by 2023, and the Court allowed unregistered group members to apply for leave to participate in the settlement after it was reached in March. Of the 6,476 who applied, 140 were granted leave to join after demonstrating they met the threshold.

That works out at an average a little over $17,000 per registered member of the class action, but how much they receive will be determined on a case-by-case basis

The deal also led to 634 objections, largely from the industry, with 549 from unregistered class action members.

More compensation

The settlement figure is a fraction of the billions in compensation state governments and consumers have paid to the taxi industry since Uber first began operating illegally in Sydney in 2013.

The former NSW Coalition government, which legalised Uber in the state in late 2015, upped its total compensation package to taxi licence holders in late 2022 by $260 million to $905 million in total.

But to pay for it, NSW rideshare and taxi users were slugged with a 20% increase in the $1 passenger service levy (PSL) to $1.20 (ex GST), with the surcharge extended for another two years to the end of 2030. The PSL was originally first introduced in 2018 for a maximum of five years.

The cost of becoming the verb for getting a ride or grocery delivery in Australia, has been considerable for Uber, which has spent considerable sums on lawyers and fines in recent years, including $21 million fine for misleading users over cancellation fees and taxi prices in December 2022, $5m less than the $26m the company originally agree to, before appealing the decision, as well as $412,500 fine for sending 2 million spam emails.

The class action settlement is not the end of Uber’s legal fights.

The company now awaits the verdict of Victorian Supreme Court Justice Lisa Nichols following its defence in another five year legal battle, this time against the failed Australian startup Taxi Apps, which developed taxi-hailing app GoCatch. It was backed by VC Square Peg, James Packer and Alex Turnbull.

The matter came to a head earlier this year in a two-month trial, during which Uber conceded it operated illegally, while emails revealed that the US tech giant’s former Australian general manager told colleagues he’d obtained the phone numbers of all GoCatch drivers and “I want to destroy them before they get too legit.”