Defending Ride-Hailing and Car-Sharing Claims

The sharing economy has grown exponentially in a short period of time. Ride-hailing platforms like Uber and Lyft, and car-sharing platforms like Turo, control a significant part of the sharing economy space.

Along with this rapid growth came insurance programs for ride-hailing and car-sharing platforms, as well as a surge of claims and lawsuits against them, their users, and their insurers.

When accidents occur, ride-hailing and car-sharing claims are complicated and require a detailed understanding of the platform and applicable insurance policy, as well as a nuanced defense strategy. For example, ride-hailing policies have their own vocabulary—such as numbered periods—that generally control the available insurance coverage. In most ride-hailing cases, the accident occurs when a driver is:

•    Using a vehicle with the rideshare app off (Period 0).

•    Waiting for a ride or food delivery request with their ride-sharing app (Period 1).

•    Driving to pick up the rider or food after the request is accepted (Period 2).

•    Transporting the rider, or food, to a destination (Period 3).

The availability of insurance coverage and the applicable limits may change depending on the period. Most states have enacted regulations addressing ride-hailing operations.

Because ride-hailing and car-sharing technologies are relatively new, there are fewer controlling legal precedents. Ride-hailing and car-sharing cases are inherently more complex than most personal and commercial auto claims. They often involve multiple parties, multiple claimants or plaintiffs, and various causes of action. Here’s a sampling of the parties that may be involved:

•    Ride-hailing platforms.

•    Car-sharing platforms.

•    Independent drivers using ride-hailing apps.

•    Owners of vehicles used for ride-hailing or car-sharing.

•    Insurers that insure the platform.

•    Car-sharing drivers.

•    Ride-hailing or car-sharing riders.

•    Insurers that insure the independent drivers.

•    Insurers that insure the ride-hailing or car-sharing riders.

Though the particulars vary from state to state, causes of action may include:

•    Vicarious liability.

•    Negligent hiring or selection.

•    Negligent retention and supervision.

•    Negligent design of the ride-hailing application.

•     Negligent maintenance of a shared car.

•    Bad faith.

•    Uninsured and underinsured motorists.

In the course of litigation, a company’s intellectual property, such as app data, may become the subject of discovery. This creates the need for confidentiality agreements and protective orders. They shield the proprietary and trade-secret information of the ride-hailing or car-sharing platform defendants.

Another element that can come into play is when ride-hailing or car-sharing cases attract widespread media attention. Uber and Lyft are publicly traded companies that are followed by analysts and financial reporters. As a result, brand protection via confidentiality agreements may become part of the legal strategy when defending ride-hailing or car-sharing cases.

In more complex cases, such as those involving catastrophic injuries or death, attorneys should be retained shortly after an accident. Why so quickly? Evidence disappears, so inspecting and preserving the scene and the vehicles involved in an accident is critically important. Witness statements must be taken early on because recollections can change. Sometimes, experts are needed. On rare occasions, additional counsel is added in the late stages of litigation as a case approaches trial. At that point, more experienced litigators are brought in to represent the client and manage the trial.

Despite having so many moving parts, representing an independent ride-hailing or car-sharing driver often involves the assertion of fundamental commercial auto defenses, which include:

•     No negligence on the part of the driver.

•    Comparative fault on the part of the plaintiff.

•    Fault on the part of a non-party.

These defenses usually stem from the initial accident investigation, including obtaining information from the crash report, taking statements from parties or witnesses, scene investigation, vehicle inspections, black-box downloads, and accident reconstruction. Other defenses might include the seatbelt defense, failure to mitigate damages, and setoffs.

Complications can arise when there is a misunderstanding as to what a ride-hailing driver is. In Florida, for example, that individual is not a common carrier, so there is no heightened duty. Instead, the regular negligence standard of reasonable care should apply.

Lawsuits involving a platform like Uber and Lyft typically revolve around vicarious liability. One issue becomes whether the driver is an independent contractor or is an employee or agent of the platform. The drivers are independent contractors, and thus there is no vicarious liability on the part of the platform under the theory of respondeat superior for the negligence of an independent driver. 

In the context of car sharing, the applicability of the Graves Amendment is often an issue. The Graves Amendment generally protects those in the business of renting or leasing motor vehicles from vicarious liability. 

Finally, with increasing regulations, there may be defenses based on both state and federal laws.  Knowledge of the applicable regulations can be crucial to a successful defense.  

As the sharing economy continues to grow, more lawsuits in the ride-hailing and car-sharing space may be expected. Efficient resolution of these claims is possible when experienced defense counsel is retained.