Uber facing sexual assault litigation, pushes plan that may curb suits

It has been a decades-long dream of corporate America: making it harder for aggrieved customers, workers and others to file lawsuits against companies seeking compensation for alleged injuries, mistreatment and other harms.

Now, Uber, a giant ride-hailing company that has been a magnet for such litigation, is pitching a plan that could fulfill that fantasy, at least in one state.

The company is seeking to place a measure on Nevada's ballot that would drastically limit the amount of money that lawyers could collect when they brought successful lawsuits. If the measure passes, it will make it less attractive -- and in some cases financially impractical -- for plaintiffs' lawyers to file such suits.

The initiative is being spearheaded by Nevadans for Fair Recovery, a political action committee created this year by Uber and its lobbyists. The company has put $5 million into the PAC and is its only financial backer, campaign finance records show.

The PAC has presented the measure as a way to protect people from trial lawyers who are "getting rich at the expense of plaintiffs and everyone else," as the group says on its website alongside a picture of someone sliding a $100 bill into a suit pocket.

But Uber is pushing the proposal at the same time that the company faces a torrent of lawsuits in Nevada and elsewhere from customers who have accused it of failing to protect them from being sexually assaulted or harassed by drivers.

The suits have been consolidated in federal court, a move that is likely to make it easier for additional victims to come forward with similar claims.

The initiative has the potential to help shield Uber from that onslaught.

The ballot measure would prohibit lawyers in Nevada from collecting more than 20 per cent of their clients' jury awards or settlements in the form of so-called contingency fees. Today, those fees can be as high as 40 per cent.

Contingency fees allow lawyers to take on cases without requiring clients to pay anything out of pocket. Lawyers shoulder the costs of bringing the lawsuit in exchange for a cut of any settlement or judgment.

Large payments in successful cases help cover the costs of lawsuits that do not yield any money. But businesses have long complained that high contingency fees drive up costs for the public and exist primarily to enrich lawyers.

The proposed 20 per cent cap in Nevada would be the most stringent in the country. Only one other state, Oklahoma, has a broad cap on contingency fees, and that ceiling is 50 per cent.

Many legal experts said a ceiling of 20 per cent would make it financially difficult for many lawyers to take on complex cases against deep-pocketed companies -- and could help shield Uber from additional lawsuits from people who blamed the company for misconduct by its drivers.

"This would basically be slamming the door of the courthouse on individuals who were harmed," said Herbert M Kritzer, a law professor emeritus at the University of Minnesota, who has studied contingency fees.

Three people familiar with Uber's legal strategy said the company hoped the initiative would insulate Uber from what could be a flood of litigation related to its drivers' misconduct.

One of those people said the company was also trying to make it harder for lawyers to file frivolous lawsuits against drivers for traffic accidents.

Harry Hartfield, senior manager of public affairs at Uber in Nevada, denied that was the intent. "This measure does not limit Uber's exposure to lawsuits, period, and it's simply false to suggest otherwise," he said. The goal, Hartfield said, is to ensure that plaintiffs receive at least 80 per cent of the proceeds of their lawsuits.

Until 2018, Uber forced many passengers with complaints into arbitration, a legal process that typically favors companies and allows them to keep allegations of wrongdoing out of public view. Uber and other tech companies abandoned that practice for sexual assault claims after intense public pressure.

The shift was part of Uber's broader effort to remake its image. The company's chief legal officer, Tony West, said at the time that the change would "give sexual assault and harassment survivors control of how they pursue their claims."

(West is preparing to go on leave from Uber to help his sister-in-law, Vice President Kamala Harris, run for president.)

This is not the first time that Uber has used a ballot measure to try to change the law in its favor.

In 2020, Uber and other companies in the so-called gig economy spent about $200 million on a proposal in California that classified their drivers as independent contractors who were not automatically eligible for some benefits. The initiative, which succeeded, was the most expensive in the state's history.

To get the latest measure on the ballot in Nevada, organizers will have to gather 100,000 signatures from state residents and survive a legal challenge that claims the initiative's wording is misleading.

Hartfield said the company expected to have those signatures in hand this month. The proposal could be put to voters as soon as next year.

Hartfield accused plaintiffs' lawyers in Nevada of lining their pockets at the expense of clients and sent The New York Times a photo of a personal-injury lawyer lounging on a private plane.

He said Uber turned to the initiative process rather than trying to push a bill through the Legislature because the state government was controlled by trial lawyers.

Uber is joining a long-running effort by tobacco, drug and other giant companies to vilify plaintiffs' lawyers as unscrupulous, greedy "ambulance chasers," said Michael McCann, a professor emeritus of political science at the University of Washington and an author of Distorting the Law: Politics, Media, and the Litigation Crisis.

The campaign started in the 1970s, McCann said, as class-action lawsuits against pharmaceutical companies and asbestos makers were gaining steam.

Groups backed by corporations circulated advertisements in major newspapers, highlighting nightmarish -- and often fabricated -- cases such as the woman who supposedly microwaved her cat to dry it off and then sued the microwave maker for not putting a warning on the device.

Some courts, as well as researchers from across the political spectrum, have found that contingency fees help align the interests of lawyers and their clients.

Still, Uber's messaging is resonating with the public, according to polls conducted by the PAC. Roughly 86 per cent of respondents in Nevada said they thought the current system overcompensated lawyers and left victims with too little money.

Opponents of the measure, including a group called Uber Sexual Assault Survivors for Legal Accountability, filed a lawsuit in April asking a judge to block the measure from making it to the ballot, arguing that it misleads voters in violation of state law. A state judge dismissed the suit, although it is currently being appealed.

Astrid Perez, a lawyer who handles worker-compensation cases in Reno, Nevada, said she had recently been approached at an outdoor dance party by a man who asked her to sign a petition to help get the initiative on the ballot. Perez said the canvasser had told her -- incorrectly -- those lawyers in the state charged up to 80 per cent in contingency fees.

The two started talking, and Perez informed him that Uber was behind the measure. "He didn't know and was surprised," she said, "but he told me that he'd already gotten all the signatures he needed for the day."

So far, Uber has received support from only a few other business groups. The Nevada Trucking Association's CEO, Paul Enos, said in a statement that members were "constantly hit with frivolous lawsuits." The American Tort Reform Association, whose backers have included major drug and oil companies, also endorsed it.

Hundreds of passengers have filed lawsuits accusing Uber of failing to adequately screen and perform background checks on drivers who went on to sexually assault them.

Among the lawsuits is one brought by a woman, identified in court records by the initials K.K., who said an Uber driver picked her up in November from the Cosmopolitan, a hotel in Las Vegas. About an hour after dropping her at home, K K alleged in her lawsuit, the driver entered her house while she was sleeping and raped her.

In court, Uber has denied wrongdoing. Hartfield said the company was committed to the safety of its riders. He said that Uber had stepped up its background checks of drivers -- including screening for local or federal criminal records -- and that the company had removed more than 80,000 drivers from its app as a result of that process.