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Posts Tagged ‘#Uber’

Need a Lyft? Georgia Court of Appeals Decision Raises Coverage Questions for Ridesharing Services and Their Drivers

Posted on: February 19th, 2018

By: Connor M. Bateman

Most personal automobile insurance policies exclude coverage for damages that result from the ownership or operation of a vehicle used as a “public or livery conveyance.” Although typically undefined in the policy, this phrase has generally been understood to encompass vehicles that are “used indiscriminately in conveying the public, rather than being limited to certain persons and particular occasions or governed by special terms.”

The Georgia Court of Appeals recently weighed in on the scope of this exclusion in Haulers Insurance Co. v. Davenport.  In Davenport, the plaintiff sustained injuries in a car accident, sued the other driver, and served his uninsured motorist carrier (Haulers) with a copy of the complaint. At the time of the collision, the plaintiff was giving a ride to a female friend who would occasionally pay the plaintiff to drive her into town. There was no evidence, however, that the plaintiff ever offered paid rides to the general public. The Court of Appeals rejected Haulers’ argument that the policy’s public or livery exclusion barred coverage, reasoning that the exclusion was inapplicable absent evidence that the plaintiff “used his vehicle indiscriminately to transport members of the general public for hire, or regularly rented out his vehicle for hire.” The court recognized, however, that the exclusion would apply in cases where the driver “presents his services indiscriminately to the general public for hire.”

In light of the rising popularity of Transportation Network Companies (“TNCs”) such as Lyft and Uber, the coverage issues presented by this oft-forgotten exclusion should be carefully reexamined. TNC drivers, who use their personal vehicles to transport passengers, will often have no coverage under their personal policies due to the public or livery conveyance exclusion. This exclusion clearly applies to drivers actively transporting passengers and may even be triggered when the driver is simply using the ridesharing application to “troll” for potential customers. While some of these gaps have been addressed by commercial insurance policies provided by the TNCs, drivers may still be left without coverage in certain situations. For instance, although TNCs typically provide liability coverage for a driver who has the app turned on and is waiting to accept a ride, the TNC policies will not likely cover damages caused by someone or something else during that initial period. To account for this, the TNCs suggest that such damages may be covered by the at-fault driver’s policy or the TNC driver’s personal policy. However, the public or livery conveyance exclusion often extends to uninsured motorist, collision, and comprehensive coverage. And because courts have held that the public or livery conveyance exclusion applies when drivers “present their services” to the general public, the exclusion is arguably triggered even when the TNC driver is merely waiting for the application to connect to a customer.

Although the reach of this exclusion has yet to be fully examined in the context of ride-sharing services, these and other coverage issues will likely continue to arise. For additional information, please contact Connor Bateman at [email protected].

Waymo v. Uber – Addressing the Stakes of Driverless Car Trade Secrets and Intellectual Property

Posted on: February 12th, 2018

By: Courtney K. Mazzio

The litigation surrounded a man named Anthony Levandowski, a former Waymo employee who took thousands of documents with him when he left Waymo in 2015 to pursue his own company. Uber purchased Levandowski’s company, giving Levandowski the lead role in its efforts to get their self-driving vehicle technology off the ground. At issue in the lawsuit between Uber and Waymo was the lidar laser sensor, which Levandowski had helped develop while at Waymo. In short, this technology measures distance to a target, and so, is used in the control and navigation of self-driving cars. As you might imagine, this technology in the infancy of the driverless car development was a highly coveted piece of intellectual property.

Settlement talks were initially in the billions, but the final figure was 245 million, or 0.34 percent of Uber’s current company valuation. The agreement also includes a provision to insure Waymo’s confidential information is not incorporated into Uber technology.

This settlement not only protects Uber’s driverless car momentum in their race to be the first taxi service to successfully utilize the technology at a relatively cheap price, but also maintains Waymo’s position at the forefront of the self-driving technology. To insure this position enjoys longevity, employees of Waymo can expect they will likely be tightening its control and security over confidential information and property developed within its walls.

If you have any questions or would like some more information, please contact Courtney Mazzio at [email protected].

Self-Driving Cars Will Likely Change the Insurance Landscape

Posted on: September 21st, 2016

Self-driving car conceptBy: Melissa Santalone

This week Uber debuts its pilot program for self-driving cars in Pittsburgh.  These lucky Uber users in Pittsburgh will be among the first Americans to come into direct contact with technology that is expected to eventually make its way into our everyday lives.  With the greater implementation of this technology, huge changes are likely to come in the legal and insurance realms and new cyber security concerns will be created.

The increased usage of self-driving cars, while intended to make driving safer, also opens up new opportunities for hackers.  Every car operated by a computer could be at risk of being taken over by hackers or invaded by ransomware or viruses.  This could pose catastrophic consequences for passengers, as well as other vehicles sharing the road.  This is especially true for fleets of vehicles programmed to communicate with each other, a problem which will no doubt be of special interest to Uber.  These new risks create new needs for protection by automakers, fleet operators, and individual vehicle owners.  Insurers will have an opportunity to offer protection from these new risks in the form of additional lines of insurance coverage.

This technology is coming and the inevitable changes it will bring are going to change the auto insurance industry and raise new and serious cyber security concerns.  The time for preparation is now.

The Gig Economy, Uber, and the Future of Worker Classification

Posted on: January 21st, 2016

option 1By: Behnam Salehi and Allison Shrallow

The “gig economy” is a unique business model in which companies connect consumers to various services through internet platforms. Instead of hiring employees to perform the services, most “gig economy” employers hire independent contractors to perform the work.   As independent contractors, they enjoy flexible hours, and the ability to earn money quickly with little to no training time and work for more than one “gig economy” employer at any given time.  This model also appeals to businesses as they benefit from exponential profit growth while avoiding expenses traditionally associated with hiring employees, such as paying insurance premiums and overtime wages, filing payroll taxes and reimbursing workers for employment-related expenses. This model has expanded exponentially in recent years, in both worker participation and corporate growth, and a recent study suggests that nearly one in five adults either derive full or supplemental income through working “gig economy” jobs.

The major source of conflict surrounding the “gig economy” arises from whether “gig economy” workers qualify as independent contractors or employees. Many, if not most, “gig-economy” businesses, like Uber, view themselves as passive platforms that connect consumers with independent contractors to provide services, while maintaining little or no control over the workers.  In contrast, some workers have recently filed lawsuits alleging they are employees of a “gig economy” employer and therefore entitled to certain protections only afforded to employees.  To resolve this dispute, many courts and the U.S. Department of Labor (“DOL”) have used the following Economic Reality Test to determine whether an individual is an independent contractor or employee under the law:

  1. The extent to which the work performed is an integral part of the entity’s business,
  2. The worker’s opportunity for profit or loss depending on his or her skill,
  3. The extent of the relative investments of the employer and the worker,
  4. Whether the work performed requires special skills and initiative,
  5. The permanency of the relationship, and
  6. The degree of control exercised or retained by the employer.

On July 15, 2015, the DOL issued a memorandum expressing the department’s belief that “most workers [classified as independent contractors] are [in fact] employees under the FLSA’s broad definition [of an employee].” Most notably, the DOL expressed that the FLSA, which applies only to employees, applies to workers even if the employer does not exercise the requisite amount of control over the workers as long as they are economically dependent on the employer.

While no one factor in the Economic Realities Test is dispositive, the crux of the analysis seems to focus on factor number six, or the degree of control exercised or retained by the employer, in determining whether an employee-employer relationship exists. As discussed here, as of December 9, 2015, over 160,000 Uber drivers in California are entitled to join a misclassification class action lawsuit scheduled to go to trial in June 2016. While the workers’ ability to work flexible schedules and decide if and when to accept an assignment, weighs in favor of finding them to be independent contractors,  Uber’s right to withhold compensation for route deviations, train employees, and terminate drivers evidences a high degree of control which weighs in favor of finding the drivers to be employees.

While the California Uber drivers’ misclassification lawsuit is pending, other jurisdictions have dealt with this issue.  For example, Florida’s Department of Economic Opportunity found an ex-Uber driver to be an independent contractor holding Uber did not possess the requisite level of control over the worker as well as the performance of the work.   In contrast, however, a California Labor Commissioner of the Division of Labor Standards Enforcement found Uber improperly classified an Uber driver as an independent contractor, reasoning Uber was involved in every aspect of the operation and had the requisite amount of control over the worker to qualify as her employer.

More often than not, California courts set the trend for the rest of the nation’s laws.  Thus, if a California court finds Uber’s workers to be employees, then such a decision would likely affect similar “gig economy” businesses nationwide, which in turn would present economic, regulatory, structural, and financial ramifications for this business model.

A Bumpy Road Ahead: More Uber Drivers to Join Misclassification Class Action Lawsuit

Posted on: December 11th, 2015

option 2By: Allison Shrallow

Living in San Francisco, the mecca of all things tech, can make a person very accustomed to getting everything on-demand. Need groceries? Use Instacart.  Want someone to clean your home? Try Handy.  Looking for a date?  Consider Bumble. The push-button economy has become so commonplace that it is difficult to imagine our lives without it.

Oh but there was a time. For most long-term San Franciscans, the prospect of attempting to hail a cab in 2009 remains in the forefront of their minds.   And then one day a miracle happened.  A little company by the name of Uber came to be.  The idea was simple enough.  Need a ride?  Push a button.  At first Uber only offered Town Cars and was seen as more of a luxury.  However, in an effort to capture more customers, Uber began offering UberX, marketed as a less expensive, more efficient option than taxis.

Uber classified their drivers as independent contractors, granting drivers with the personal flexibility to work when and for as long as they wanted.   As independent contractors, Uber was not required to pay for their drivers’ health insurance, social security, paid sick days or overtime.  Further, Uber was under no obligation to reimburse its employees for mileage and other employment-related expenses.  Uber’s current business model allows drivers to pocket 80% of the fare with the remaining 20% going to the company.   As a result of having very little overhead and expenses, customers receive low fares.

This might all change as a result of a lawsuit filed by three drivers in 2013 alleging Uber misclassified them as independent contractors rather than employees. These drivers sought to represent California Uber drivers in a class action lawsuit against the ride-hailing service.  On September 1, 2015, a court certified a class of all California drivers who have driven for Uber since August 2009 to June 2014, and who did not sign an arbitration agreement.   However, on December 9, 2015, the court expanded the class of drivers to include those who signed Uber’s 2014 and 2015 arbitration agreements, concluding the agreements contained a non-severable Private Attorney General Act waiver that rendered the entire arbitration agreement unenforceable on public policy grounds.  As a result, the majority of Uber’s 160,000 California drivers will be allowed to join the class action lawsuit.  Uber has stated it will file an immediate appeal.

The case is scheduled to go to trial in June of next year. If the court finds Uber misclassified its drivers as independent contractors, Uber could be liable for vehicle-related and phone expenses for all drivers who joined the lawsuit, and,  going forward,  it would be required to pay significant sums on wages, insurance, and reimbursable expenses for its drivers.   It would also most likely create a ripple effect throughout the entire push-button economy, prompting workers at other on-demand app companies to file suit, a move that most likely would require other companies to change their business model to account for the higher cost of doing business.  This in turn would almost certainly result in customers having to pay more for services to which they have grown accustomed and workers losing the flexibility that attracted them to these companies in the first place.