California First In U.S. To Regulate Ride-Sharing: Rules Highlight Potential Consumer Claims for Accidents

As a resident of Los Angeles, I began seeing cars around town with big, pink fuzzy mustaches on them and wondered what this was all about. It turns out that this is one indication of a “ride-share” vehicle. The concept is to allow drivers to connect with people needing rides via smart phones and the internet as an alternative means of transportation to taxis or public transport like buses.

Various companies like “Lyft” , “Uber X” and “Side Car” have been operating in major cities in California for some time now but, have run into resistance from some municipalities and taxi companies. The California Public Utility Commission finally decided to create a separate category for these programs labeling them, “Transportation Network Companies” and to issue regulations related to these entities. The regulations will allow these companies to keep operating in the Golden State if they obtain a CPUC license, which will require the following:

• Every ride share driver must be subject to a criminal background check
• Every ride share driver must undergo a driver training program
• There is a “zero tolerance” policy for any alcohol or drug use on the part of ride share drivers. (Meaning, presumably, that one instance where a driver was found to have consumed any amount of drugs or alcohol prior to picking up a rider would ban that driver from the program).
• Every ride share vehicle must undergo a 19 point safety inspection
• The companies must carry insurance with a minimum limit of $1,000,000 per occurrence for any accident involving injury to a rider

Regulations Highlight The Need for Consumer Protection for Accident and Injury Claims Related to Ride Sharing

All of our major cities in California like San Diego, Los Angeles and San Francisco have some forms of public transportation but, could always use new and inventive ways to move people from point A to point B. However, ride sharing highlights the need to make sure people are transported safely and, in the event of a car accident, that the consumer is protected.

The principle legal issue in play in the event of a traffic collision involving a ride share driver or vehicle would be “negligent entrustment”. California case law has held that a person [or business] who knowingly or negligently entrusts an automobile in a defective condition to another is liable for injuries arising from the operation of the automobile. Merry v. Knudsen Creamery Co. (1949) 94 Cal.App.2d 715, 721. Likewise, a person [or entity] who knowingly or negligently entrusts an automobile to an incompetent driver is liable for injuries arising from the operation of the automobile.” Perez v. G&W Chevrolet, Inc. (1969) 274 Cal.App.2d 766, 767-768. The courts have held that the negligence involved with entrusting a vehicle to another person is a separate act of negligence to the negligence of the driver in causing an accident.

The other legal concept in play is that of “agency”. California law holds businesses liable for the persons they hire and contract to perform services on their behalf under certain circumstances. The California Vehicle Code (“CVC”) already imposes liability of an employer for the negligent operation of a vehicle by their employee if the employee or agent is acting in the course of the working relationship. (CVC 17150).

In the case of ride sharing companies, the regulations will actually serve to better protect them from allegations of negligent entrustment. I think it will also serve to protect riders from incompetent drivers or drivers with nefarious, ulterior motives. The ride share companies have attempted to address the issue of agency by calling the drivers independent contractors but, this may not fully shield them from legal exposure for bodily injury claims. They are receiving profits from the operation of vehicles being operated by persons who contract with them to transport people and it could certainly be argued that these drivers are their “agents” for purposes of imposing liability. For that reason, the requirement that the companies carry a minimum of $1,000,000 per occurrence for personal injury claims is also needed to supplement any auto coverage that the driver may have.

Sources: Forbes, “California PUC Proposes Legalizing Ride Sharing Companies”