Who is Liable When Ridesharing Goes Wrong?

Popular ridesharing companies like Uber, Lyft and Sidecar have long-operated in a legal gray zone. While the California Public Utilities Commission’s (CPUC) unanimous approval of new regulations around ridesharing services last September helped to clear some of the ambiguity, scores of questions remain. Chief of these are liability issues -- just who is to blame when things go wrong with ridesharing?

Last Monday, Uber found itself slapped with the first wrongful death lawsuit ever brought against a Transportation Networking Company (TNC) after one of its drivers, Syed Muzzafar, hit and killed a 6-year-old girl on New Years Eve in San Francisco.

“This tragedy did not involve a vehicle or provider doing a trip on the Uber system,” the company said. Uber spokesman Andrew Noyes said the company had no comment on the lawsuit.

While at first it may seem that Uber has a point -- Muzzafar was not driving on the Uber clock at the time of the accident -- companies can be found responsible for causing wrongful death and emotional distress even if the party that committed the crime is a completely independent third party.

PandoDaily cites the case of Weirum et al. vs. RKO General, Inc., where a radio station sponsored a contest involving one of its DJs driving around town and having teenagers “find” him for a prize. This resulted in reckless teen driving that culminated in the death of an innocent man, and the radio station was held responsible.

The court said, “It is of no consequence that the harm to decedent was inflicted by third parties acting negligently…The issue here is civil accountability for the foreseeable results of a broadcast which created an undue risk of harm to decedent.”

It doesn’t seem fair that ridesharing companies like Uber should be liable for everything their drivers do all the time, but where do we draw the line?

To be clear, it would be tough for someone to win a case against Uber for "vicarious liability," which usually only applies when a company has full-time employees who represent the business itself. This relationship makes the company liable by proxy for employee actions.

But the fact that the Uber drivers are independent contractors only protects the company from some liability -- when it comes to hiring negligence, wrongful death or causing emotional distress, things are less certain.

A prosecutor could claim of hiring negligence if it proves Uber didn’t do its due diligence to vet Muzzafar, even though he is an independent contractor. Uber acts an awful lot like an employer -- it vets drivers, dictates their appearance and behavior, and takes a percentage cut of each ride. This makes it harder for Uber to claim it is simply and independent platform that connects users to drivers. Taxi companies employ independent contractors and have faced negligent hiring charges in the past.

"We’re in uncharted waters here with Uber," said Jordanna Thigpen, a trial lawyer in Los Angeles and the former executive director of the San Francisco Taxi Commission. "Society is evolving, these apps are evolving, and the court cases are catching up."

As a disruptive business, ridesharing will continue to face difficult legal questions until the law "catches up." The recent CPUC decision granting legitimacy to ridesharing companies, along with their mounting popularity with consumers, means that they likely are here to stay. Ridesharing also offers economic advantages, such as helping to cut down on traffic and saving some $429 million in opportunity cost lost every day to American commuters. While companies like Uber and Lyft continue to duke it out for ridesharing supremacy, consumers will be the ultimate winners.

Let’s just hope no one else gets hurt in the process.

Image Credit: Uber Blog

Based in San Francisco, Mike Hower is a writer, thinker and strategic communicator that revels in driving the conversation at the intersection of sustainability, social entrepreneurship, tech, politics and law. He has cultivated diverse experience working for the United States Congress in Washington, D.C., helping Silicon Valley startups with strategic communications and teaching in South America. Connect with him on LinkedIn or follow him on Twitter (@mikehower)