Emerging technology and its impact on automotive litigation.

• Author: Browning, John G.
• Position: Reprinted from IADC Technology Committee newsletter, September 2013 - Reprint

This article originally appeared in the September 2013 Technology Committee newsletter.

NEARLY 150 years ago, in Bridge Proprietors v. Hoboken Co., the U.S. Supreme Court lamented the fact that "the most remarkable invention of modern times"--the steam engine--had caused the legal system to "be met by difficulties of the greatest character." (1) The truism that law will always be outpaced by the speed of technological innovation, and the uncertainty that has always existed at the intersection of technology and the law, has been illustrated time and time again, from the age of railroads to the digital age of today. And while virtually every area of the law can provide its own examples of time-honored doctrines struggling to adapt to a world of Google, Facebook, and Twitter, the area of automotive litigation provides perhaps the best demonstration of the uneasy relationship between new technology and traditional legal concepts of duty. From ride-sharing apps and services like Uber, to the "driverless car" of the future, to black box technology and its ability to shed light on an accident, to whether the sender of a text should be held liable to third party victims struck by the recipient of that text, technology issues promise to change the legal landscape in a big way.

1. Whose Ride Is It Anyway?

   One of the newest transportation alternatives is "ride-sharing" or "car-sharing" services, facilitated through mobile apps. Companies like Uber, RelayRides, Lyft, and Sidecar own no vehicles at all, but purport to function instead primarily as technology platforms that connect clients with drivers through a smartphone app. Riders are connected with drivers using their phones' GPS, much like a taxi company's dispatch system would send the nearest available cab. The drivers could be existing car services or even individuals. Uber, for example, stresses that it "does not provide transportation services," "is not a transportation carrier," and that the independent contractors or businesses that sign up with it are the true "transportation companies." Uber got its start connecting people to town cars provided by taxi and limo services, while others have a broader approach. RelayRides permits car owners to rent their personal vehicles to others when they're not using them, while Lyft and Sidecar both allow drivers to provide rides in their own cars to strangers.

   Ride-sharing has been controversial for a number of reasons. Virtually all states and major cities have different regulations for taxi services. In cities like Dallas, for example, where the taxi industry has powerful political connections, the city council mulling a strict new limousine ordinance (that was coincidentally drafted in part by a cab company attorney) and promises to crack down on ride-sharing services. (2) Cities claim that services like Uber circumvent the regulations and licensing fees that taxicab companies have to contend with. In cities like Houston and Denver, for example, Uber and other ride-sharing services have been essentially shut out by rules governing limousine services that restrict charging based on time elapsed or distance traveled; in Houston, limos must be called at least 30 minutes before they arrive and charge a minimum of $75. In California, the Public Utilities Commission reached an interim agreement to allow ride-sharing companies to operate while it weighs proposals that would make them full-fledged, legally operating "transportation network companies." This would likely involve state licensing, required criminal background checks on drivers, and mandatory insurance coverage even more stringent than that required of limo companies. Meanwhile, states like Oregon and Washington have laws that are "ride-sharing friendly." Individuals have an explicit right to legally rent out their private vehicles, and auto insurers aren't permitted to drop a policy holder just because he or she is renting out a personal vehicle (however, the ridesharing company does have to take out commercial policies covering the personal vehicles while they're in commercial use). The problem, as RelayRides founder Shelly Clark puts it, is that "These are 21st century businesses that are operating with 20th century laws." (3)

   Beyond political controversy, there is the issue of insurance. Some ride-sharing companies insist that the situation presented is no different than it would be for Hertz or Avis, where drivers renting the car can choose from several different insurance levels for their own liability while the vehicle owners maintain a commercial policy. RelayRides offers a $1 million policy to cover vehicle owners while others are using their cars, while Lyft carries a $1 million excess liability policy. Uber, which contracts only with licensed limousine operators and thereby ensures that users of its app are covered by that operator's insurance policy, nevertheless carries a $5 million excess liability policy.

   Liability, of course, is the elephant in...