By Jeremy D’Amico and Michael D’Amico of D’Amico & Pettinicchi, LLC – Connecticut
There are three general scenarios where an injury lawyer may be consulted when a person is injured or killed involving a Transportation Network Company Driver (“TNC driver”). Scenario 1 is where the driver is injured through the negligence of a third party. Scenario 2 is where the TNC driver’s passengers are injured through the TNC driver’s negligence. Scenario 3 is where a person outside of the TNC driver’s car is injured through the TNC driver’s negligence. This article focuses on Scenario 3.
Each scenario poses nuanced issues of law. When representing the TNC driver, worker’s compensation will be a factor. When representing the passengers, contractual issues involving waiver and arbitration may become an issue.[1] When representing a person outside of the of TNC driver’s car, issues exist surrounding adequate insurance and holding the TNC company liable for the injuries caused by the TNC driver’s negligence.
1. What Is a Transportation Network Company?
Forty-eight states have enacted legislation regulating insurance requirements for Transportation network companies. [2] A House Bill was introduced in Oregon and Vermont, but neither made it out of committee.[3] The other forty-eight enacted some variation of model legislation borne out of a joint effort of the insurance and Transportation Network Company industry.[4] Uber spent more than $1,300,000 in lobbying efforts throughout 2016 and 2017.[5] As a starting point, read your state’s statute. Throughout this article, I will use the model legislation as a reference.
In general, a TNC is a business entity that “uses a digital network to connect transportation network company riders to transportation network company drivers to provide prearranged rides.”[6] Essentially, a TNC “provides a service whereby individuals in need of vehicular transportation can log into the [TNC] software application on their smartphone, request a ride, be paired via the [TNC] application with an available driver, be picked up by the available driver, and ultimately be driven to their final destination.”[7] TNC drivers use personal vehicles to provide this service.
2. Minimum Insurance Coverage Requirements For TNC Drivers.
a. Minimum Coverage
Before the enactment of TNC statutes, it was very difficult to obtain fair compensation for a client’s injuries. Most TNC drivers’ personal policies contain coverage exclusions while the TNC driver is engaged in transporting passengers for a fee. This required injured parties to test legal theories such as vicarious liability and respondeat superior to bring in the TNC itself. More on this is discussed below.
Under Scenario 3, a person can be injured by a TNC driver’s negligence when the TNC driver is available to receive transport requests from TNC riders or when the TNC driver is already engaged in a ride.
With the enactment of TNC statutes in most states, there is a greater understanding of the minimum available limits for each situation. For example, the model legislation calls for the TNC driver to be covered by at least $50,000 per person when the TNC driver is available to receive transport requests.[8] Once a TNC driver is engaged in a prearranged ride, the TNC driver must be covered by at least $1,000,000.[9] The model legislation defines a prearranged ride as:
a. Beginning when a TNC driver accepts a TNC rider’s request for a ride through a digital network controlled by a TNC;
b. Continuing while the TNC driver transports the requesting TNC rider; and
c. Ending when the last requesting TNC rider departs from the vehicle.[10]
The model legislation does not define when a TNC driver is “logged on” and “available to receive transportation requests” but not yet engaged in a prearranged ride. For those unfamiliar with how a TNC driver finds TNC riders, the TNC driver logs onto the TNC’s application and becomes available to accept TNC riders requesting transportation in the TNC driver’s area. It is this situation in which $50,000/$100,000 is necessary. Once the TNC driver accepts the ride, the coverage immediately increases to $1,000,000. This difference can be crucial to obtaining fair compensation for your clients.
The way most TNC statutes are worded, either the TNC driver can obtain her own TNC insurance, or the TNC must provide the minimum coverage on her behalf. Most statutes are also worded in a way that requires the TNC to maintain coverage on the TNC driver’s behalf in case the TNC driver’s insurance lapses. In this sense, the purpose of the statute is to ensure at least some coverage is available to those injured by a TNC driver’s negligence.
b. Who to Contact?
There are innumerable stories of frustrated injured parties and attorneys because TNCs and their insurance companies are difficult to get ahold of to report a claim. The model statute addresses this problem too.[11] A TNC driver must “carry proof of coverage,” and in the event of an accident, a TNC driver must “provide this insurance coverage information to the directly interested parties.” And whether the TNC driver was “logged on” and available to accept rides or on a “prearranged ride” at the time of the crash.[12]
Let’s assume the TNC driver flees the scene, or fails to produce the information, who does the injured person or her attorney contact? A TNC may be registered as a foreign corporation in your state, so check your state’s business entity database. Here are some common names and their legal entities:
- Uber – “Uber Technologies, Inc.”[13]
- Lyft – “Lyft, Inc.”
Follow your state’s service of process rules. Lyft’s principal place of business is currently 185 Berry Street, STE 5000, San Francisco, CA. Lyft is incorporated in Delaware and maintains an agent for service at Incorporating Services, LTD, 3500 S DuPont Highway, Dover, DE. Uber’s principal place of business is 1455 Market St., 4TH Floor, San Francisco, CA. Uber is also incorporated in Delaware and maintains an agent for service at The Corporation Trust Company, Corporation Trust Center 1209 Orange St, Wilmington, DE.
For claims against an Uber Driver, James River Insurance Company is the insurance company.[14] It has an online report form that injured parties or their attorneys can fill out and submit. For Lyft, claims can be reported through its critical response line at 844-313-3667, or the Lyft’s representative insurance company for your state can also be contacted by reviewing Lyft’s website and locating the appropriate certificate of insurance.[15] There are also growing TNCs, which include Sidecar, Rapid, Inc., and Flywheel, to look out for as well.[16]
3. Holding TNCs Accountable For Catastrophic Injuries.
But what happens when a TNC driver negligently causes your client to suffer catastrophic injuries in excess of the $50,000 or $1,000,000 applicable policy minimums? If TNCs had it their way, the only avenue available to the injured person would be the assets of the TNC driver. Uber is a company worth $70 billion.[17] And Lyft is worth over $7.5 billion.[18]
Yet, TNCs routinely take the position that TNC drivers are independent contractors and, thus, that the TNC is not responsible for the injuries. TNCs have taken this position in the worker’s compensation arena[19] and in intentional tort cases.[20] There is no doubt that as more bodily injury claims are brought against TNCs, they will continue to assert that the TNC driver is an independent contractor, and therefore, the TNC will not be vicariously liable for the TNC driver’s negligence. Worse, some of the TNC statutes passed in forty-eight states weigh in on this determination. It is, therefore, very important to read your state’s TNC statute carefully. Some statutes make no reference to whether the TNC driver is an employee or independent contractor[21], some allude that TNC drivers are independent contractors but do not explicitly state so,[22] and others find that a TNC driver is an independent contractor so long as certain conditions are met.[23]
Assuming that the question of whether a TNC can be liable for the negligence of its TNC driver is an open question in your state, one needs to be aware of the potential arguments to be explored in holding the TNC accountable.
a. Vicarious and Direct Responsibility
As one Court noted, TNCs “only make money if its drivers actually transport passengers.”[24] Principles of agency as interpreted in your state will help you parse the theory of vicarious liability available to your client. The reason TNCs painstakingly argue that TNC drivers are independent contractors is because, generally, a principal is not liable for the torts of its independent contractor.[25] The key inquiry is the indicia of control. TNCs retain significant control over TNC drivers.[26] The federal district court for the Northern District of California performed a lengthy assessment of the control Uber retains over its drivers.[27] When exploring vicarious liability, be sure to have an understanding of the amount and manner of control a TNC retains over its drivers. Look to your state’s TNC statute for guidance, as well as the TNC statutes of other states that may be more comprehensive.
Keep in mind that a TNC may be directly liable for failing to perform a duty specified in your state’s TNC statute or as recognized by your State’s common law, such as negligent hiring, negligent retention, and negligent supervision.[28]
b. A Non-delegable Duty?
“For reasons of policy,” principals remain liable for the torts of independent contractors in certain circumstances.[29] Now that TNCs are regulated by statute and required to register with state agencies, there is a stronger argument to be made pursuant to § 428 of the Restatement (second) of Torts. That being, the TNC “carries on” an activity that can be “lawfully carried on” when permitted by state law and which “involves an unreasonable risk of harm to others.”[30] Having a single company operate a network of thousands of TNC drivers transporting passengers across the United States at any given time should be considered to involve an unreasonable risk of harm to others. The focus is not on the sole operation of a single TNC driver but rather on the ability of the TNC to profit off every TNC driver operating on the TNC network and the risks involved to human life and property on this scale.
c. Common-Carriers
If your client falls under Scenario 2, where she is injured as a passenger of a TNC driver, courts have held TNCs to be “common carriers.[31] The model legislation specifically excludes TNCs from being common carriers.[32] Your state’s TNC statute and common law definition of common carriers will impact the success of this theory of liability. Essentially, a common carrier undertakes to carry for hire all persons who apply for passage indiscriminately. Common carriers owe the highest duty of care
4. TNCs are Transportation Companies.
It must be emphasized that TNCs are not just technology companies. To the consumer, TNCs are an easily hailed taxicab. TNCs control, and now must control by statute, who becomes a TNC driver, what condition the TNC driver’s car is maintained in, how much the TNC driver is paid, where the TNC driver is to pick up the passenger and only receive a profit for the services rendered by the TNC driver. Without TNC drivers, consumers would face increased wait times and less convenience and would turn elsewhere for their transportation needs. TNCs need TNC drivers to survive. A TNC should not be permitted to thwart responsibility when its driver injures another through her negligence.
And those are the ABCs of TNCs.
Sources
[1] Uber Terms of Use https://www.uber.com/legal/terms/us/, Last updated March 23, 2017.
[2] Transportation Network Company, States with Enacted Legislation, http://viewer.zmags.com/publication/60841263#/60841263/1.
[3] Oregon, http://gov.oregonlive.com/bill/2017/HB3093/; Vermont, http://legislature.vermont.gov/assets/Documents/2018/WorkGroups/Senate%20Judiciary/Bills/H.143/Highlights/H.143%20Recommendation%20of%20Amendment%20by%20Senate%20Judiciary-%20Unofficial.pdf
[4] http://ncoil.org/wp-content/uploads/2016/04/07232015TNCModelAct.pdf; see also NAIC, Transportation Network Company Insurance Principles for Legislators and Regulators, http://www.naic.org/documents/committees_c_sharing_econ_wg_exposure_adopted_tnc_white_paper_150331.pdf, at 2.
[5] https://www.opensecrets.org/lobby/clientsum.php?id=D000067336&year=2017
[6] Connecticut Public Act No. 17-140, An Act Regulating Transportation Network Companies and Taxicabs. https://www.cga.ct.gov/2017/act/pa/2017PA-00140-R00HB-07126-PA.htm
[7] O’Connor v. Uber Technologies, Inc., 82 F.Supp.3d 1133 (N.D. Cal. 2015).
[8] TNC Model Legislation at C.2 http://ncoil.org/wp-content/uploads/2016/04/07232015TNCModelAct.pdf
[9] TNC Model Legislation at C.3. http://ncoil.org/wp-content/uploads/2016/04/07232015TNCModelAct.pdf
[10] TNC Model Legislation at A.6. http://ncoil.org/wp-content/uploads/2016/04/07232015TNCModelAct.pdf
[11] Model Legislation, C.8., http://ncoil.org/wp-content/uploads/2016/04/07232015TNCModelAct.pdf; see also Connecticut Public Act 17-140 Sec.5(f)(1), https://www.cga.ct.gov/2017/act/pa/2017PA-00140-R00HB-07126-PA.htm
[12]Model Legislation, C.8., http://ncoil.org/wp-content/uploads/2016/04/07232015TNCModelAct.pdf; see also Connecticut Public Act 17-140 Sec.5(f)(1), https://www.cga.ct.gov/2017/act/pa/2017PA-00140-R00HB-07126-PA.htm.
[13] Uber also operates “UberX” and “UberEats.” https://www.uber.com/ride/uberx/; https://www.ubereats.com/connecticut/
[14] http://www.jamesriverins.com/Claims
[15] https://help.lyft.com/hc/en-us/articles/213815188-Lyft-s-Certificates-of-Insurance
[16] Flywheel is a growing TNC network for use by existing Taxicab and livery companies. Flywheel poses interesting legal questions because it bridges the gap between TNC’s and Taxicab companies.
[17] http://fortune.com/2017/06/21/travis-kalanick-net-worth-billions/
[18] https://www.recode.net/2017/4/6/15208672/lyft-value-ride-hail-funding-500-million
[19] O’Connor v. Uber Technologies, Inc., 82 F.Supp.3d 1133 (N.D. Cal. 2015).
[20] Search v. Uber Technologies, Inc., 128 F. Supp. 3d 222, 227 (D. D.C. 2015).
[21]M.R.S. Title 24-A, Ch. 93. (2017) https://www.mainelegislature.org/legis/bills/bills_127th/chapters/PUBLIC279.asp
[22] Connecticut Public Act No. 17-140 defining “Transportation Network Company Driver” as an “individual who is not an employee of a transportation network company.”
[23]Florida Stat. § 627.748(9) (stating “a TNC driver is an independent contractor and not an employee of the TNC” if certain conditions are met); Texas Stat. Sec 2402.114.
[24] O’Connor, supra, 82 F.Supp.3d at 1141-44 (citations omitted).
[25] 1 Restatement (second) of Agency, § 250; 1 Restatement (second) of Tort, §409.
[26] Search v. Uber Technologies, Inc., 128 F. Supp. 3d 222, 227 (D. D.C. 2015)
[27] O’Connor, supra, 82 F.Supp.3d at 1148-53
[28] 1 Restatement (second) of Tort, introductory Note to §§ 410-415 (discussing liability of an employer for conduct falling below the standard of care when entrusting work to an independent contractor).
[29] 1 Restatement (second) of Torts, introductory Note to §§416-429.
[30] 1 Restatement (second) of Torts, § 428; see also Student Note, Alexi Pfeffer-Gillett, When “Disruption” Collides With Accountability: Holding Ridesharing Companies Liable For Acts of Their Drivers, 104 Cal. L. Rev. 233 (Feb. 2016).
[31] Doe v. Uber Technologies, Inc., 184 F.Supp.3d 774 (N.D. Cal. 2016),
[32] Model Legislation, B.2., http://ncoil.org/wp-content/uploads/2016/04/07232015TNCModelAct.pdf