What’s Next in Uber Litigation?

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As technology continues to shape the Commercial Transportation Industry, we can expect to see a rise in personal injury litigation involving “private ride­-sharing services.” Discussed are three recent lawsuits that highlight innovative liability arguments against Uber Technologies, Inc. We will continue to monitor these developments as we enter the New Year.

1. Are Uber’s Drivers Really Independent Contractors?

While the underlying action is not directly related to a personal injury litigation, it will have significant impact on whether Uber can be held liable for the negligent acts of its “partners” under the theory of respondeat superior. The rule of respondeat superior is simple: an employer is vicariously liable for the torts of its employees committed within the scope of the employment.

On December 5, 2013, the Honorable Edward Chen denied Uber’s Motion to Dismiss “misclassification” claims by Uber’s drivers in the putative class action lawsuit entitled O’Connor, et al. v. Uber Technologies, Inc., et al., United States District Court, Northern District of California, Case No. C-13-3826 EMC. Judge Chen left open the issue of employment classification as “[g]enerally, the employee determination is a question of fact that depends on the evidence presented.” The court found that the complaint contained “sufficient allegations about control to make the existence of an employment relationship plausible on its face.”

Uber has alleged the following facts to support its position that the drivers are not employees: drivers supply the instrumentalities of work; drivers are paid by the job; Uber has no control over the drivers’ hours, what geographic areas they target, or whether the drivers choose to accept a passengers’ request for a ride; and the employment contract clearly labels drivers as independent contractors.

Plaintiffs argued that the independent contractor classification is a legal fiction. The drivers’ argument focuses on how Uber dictates job requirements such as: conduct with passengers; cleanliness of vehicles; most direct route to passenger destination; price for services; focus on areas of high customer volume; and punctuality. Plaintiffs also argued that drivers are graded on these requirements and are subject to termination based on them.

While plaintiffs survived an initial attack, it is certain that Uber will seek to resolve this issue on summary judgment.

On a related note, Uber’s CEO Travis Kalanick announced in a conference this November that Uber has arranged for its drivers to qualify for discounted financing of GMC and Toyota vehicles. “We need to make strategic moves so that we can supply those cars onto the system,” Kalanick said. “The demand is there, but if we don’t get the cars on the road — if we don’t help our partners and drivers get cars on the road — then it just doesn’t matter. We’re just not going to be able to grow.” It will be interesting to see how this announcement about how Uber’s stocks its “fleet” factors into the employment classification suit and other litigation.

2. Is Uber’s Software Application Defective?

On September 19, 2013, the California Public Utilities Commission (“CPUC”) unanimously voted to pass proposed rules regulating app-based ride-sharing services like Lyft, SideCar, and UberX. In its appeal of the CPUC’s actions, Uber argued that it not subject to regulation because it is not in the business of commercial transportation – it is simply a technology company that licenses its technology to third-party drivers. Uber’s position is that the CPUC has overstepped its “police power.”

A recently filed action tackles Uber’s position head-on by asserting that Uber is liable for a young girl’s death based on its software design. On New Year’s Eve 2013, Sofia Liu, a 6-year-old girl, was struck and killed by an Uber vehicle while she crossed a San Francisco street with her mother and brother. On January 27, 2014, her mother, brother, and survivors filed suit against Uber and its subsidiary that operates UberX, Raiser, LLC, in Ang Jiang Liu, et al. v. Uber Technologies, Inc., San Francisco County Superior Court Case No. CGC-14-536979. The complaint seeks damages related to wrongful death of Sofia Liu, personal injuries sustained by her mother and her brother, loss of consortium, emotional distress, and punitive damages.

Plaintiffs’ asserted a novel cause of action for strict products liability related to alleged defects in the software designed and distributed by Uber. In a recent interview, plaintiffs’ counsel argued that Uber’s technology is defective because it is a distraction for drivers. While some features in the technology are audible, the software encourages drivers to focus on a screen to see where other drivers are and to communicate with passengers by text message and cell phone.

The Liu complaint also alleges that the use of Uber’s technology is a violation of various vehicle codes sections designed to protect individuals for injury and death due to inattentive or distracted drivers. For example, California Vehicle Code sections 23123 and 23123.5 prohibit the use of handheld wireless telephones and wireless electronic communication devices to “write, send, or read a text-based communication.”

3. Can Uber Disclaim Liability In Its Terms of Service?

This case goes beyond allegations of simple motor vehicle negligence. Plaintiffs mesh two interesting and complex issues in an attempt to hook Uber with liability.

On December 17, 2013, two passengers in an Uber-X Prius sued Uber in Herrera, et al. v. Uber Technologies, Inc., San Francisco County Superior Court Case No.CGC-13-536211. Plaintiffs allege that they sustained significant personal injuries, including head injuries and spine injuries.

The complaint alleges that Uber is a common carrier pursuant to Civil Code sections 2100 and 2101, and therefore, owes its passengers a heightened standard of care. To support their contention that Uber falls within the purview of common carrier provisions, plaintiffs allege that they used Uber’s smartphone app to “hail a vehicle to pick them up for transport,” that Uber used its GPS-locator to determine plaintiffs’ location and sent a driver to them, and within minutes of ordering transportation, Uber’s driver picked them up.

Although the complaint was recently filed, it is likely that Uber will argue, as it has in the past, that it is not liable for passenger injuries based on the app’s Terms of Service, which purports to absolve Uber of liability for accidents caused by drivers. It will be interesting to see how the court handles the issue of waivers contained in an electronic Terms of Service contract and whether such “waivers” can be enforced by a common carrier.

Plaintiffs also claim that Uber “instructed” plaintiffs to file a claim with the Uber driver’s own insurance carrier for their injuries, but that the driver’s personal insurance carrier has denied coverage for the accident. They allege that the driver’s “personal motor vehicle policy specifically excluded instances of driving for profit.” This allegation appears to contradict the mainstream belief that “Uber typically requires drivers to buy their own commercial car insurance, and provides an additional $1 million in insurance coverage above and beyond.”

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