Ride-Sharing Platforms and Tort Liability Exposure: Know and Mean What You Say

While the first legal issue that comes to mind for many when considering the new ride-sharing platforms is the employee v. independent contractor question, exposure to tort liability should also be near the top of the list for platforms, service providers, insurers and consumers.

Several months ago in Search v. Uber Technologies, Inc., No. 15-257, (D.D.C. 2015), Judge James E. Boasberg mostly denied Uber’s motion to dismiss a lawsuit filed by a consumer who allegedly was attacked by a knife-wielding Uber driver.  The action accused Uber of negligent hiring, training and supervision; negligence under respondeat superior and apparent agency theories; and violation of the District of Columbia’s Consumer Protection Procedures Act (“CPPA”).

At the motion to dismiss stage, a court is generally required to accept the allegations contained in the complaint as true, and limit its review to such allegations and attached exhibits, if any.  This explains why for the most part, Uber’s motion, which presented the Court with materials outside of the pleadings, such as an affidavit and Uber’s Terms and Conditions, was unsuccessful.

Plaintiff’s negligent hiring claim does not require the existence of an employer/employee relationship.  “[A]n entity may also be liable for the negligent-hiring of an independent contractor.”  But regardless of how Uber’s driver is properly classified, plaintiff had to allege specific facts from which an inference could be drawn that Uber (i) did not conduct a reasonable background investigation, and (ii) that such an investigation would have uncovered a reason not to hire the alleged tortfeasor.  Because Mr. Search did not make such allegations, his negligent hiring claim (and, on the same grounds, his negligent training and supervision claims) was dismissed.

Plaintiff’s respondeat superior claim does require an employer-employee relationship, as well as a tortious act committed by the employee within the scope of his employment.  As the Court explained, the determining factor when assessing the existence of an employer-employee relationship is usually the right to control an employee.  Upon consideration of plaintiff’s allegations, the Court concluded that “a reasonable factfinder could conclude that Uber exercised control over [its driver here] in a manner evincing an employer-employee relationship.”  In other words, plaintiff’s claim sufficiently alleged a respondeat superior theory of negligence against Uber, and the Court could not determine as a matter of law that the driver was an independent contractor.  As for whether the driver was acting within the scope of his alleged employment, plaintiff also alleged facts suggesting the dispute giving rise to the driver’s alleged attack grew out of an encounter related to Uber’s business. Thus the Court could not conclude, as a matter of law, that the driver’s alleged tortious conduct was an act outside employment, and Uber’s motion to dismiss the claim was denied.

Plaintiff’s negligence claim based upon apparent agency seeks to impute the driver’s alleged liability onto Uber, even if the relationship is one of independent contractor.  This is permitted in cases where the principal places the agent in a position to mislead third persons into believing that the agent is clothed with authority s/he does not in fact possess.  Here plaintiff relies upon Uber representing to customers that it is “your private driver” and “that it subjects its drivers to rigorous screening procedures . . . and continues to monitor the drivers after they are hired.”  While Uber’s Terms and Conditions dictate that its drivers are not its agents, as explained above such materials cannot be considered in ruling upon a motion to dismiss.  Uber’s alleged representations were enough for the Court to deny its motion to dismiss plaintiff’s apparent agency claim.

Plaintiff’s claim under D.C.’s CPPA statute is  that Uber repeatedly represented to the public that its drivers were rigorously screened to ensure they wouldn’t pose a danger to passengers, but that it failed to actually conduct such screenings.  Unlike the negligent hiring claim, the asserted CPPA violation does not require plaintiff to allege that, had Uber performed an investigation, it would have discovered information alerting it to the driver’s dangerous personality.  Plaintiff’s allegations were sufficient, and Uber’s reliance upon its Terms and Conditions were again misplaced.  Uber motion to dismiss the CPPA claim was denied.

There’s admittedly nothing very sexy happening here at the motion to dismiss stage.  Plaintiff may get an opportunity to re-plead his negligent hiring/training/supervision claims, and Uber will eventually get a chance to defend itself on the merits via testimony, contractual terms, or otherwise, possibly by means of a motion for summary judgment.

This decision does suggest though that it’s unlikely certain tort claims against ride-sharing platforms will be resolved at the pleading phase.  While Uber’s Terms and Conditions couldn’t shield it at this early point in the litigation, some of its very own marketing materials functioned as a sword, helping several of plaintiff’s claims here survive Uber’s motion to dismiss.  Ride-sharing platforms, and other Sharing Economy intermediaries, should be mindful to what extent their public statements increase their exposure to tort liability, and, in any event, ensure such statements are truthful as to business operations and dealings.

UPDATE:  As of December 1, 2015, a Settlement Conference is scheduled for February 4, 2016 before Magistrate Judge Alan Kay.

Posted in Litigation, Ride Sharing, Terms of Use, Torts

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