Travelers Beware: Tort Liability in the Sharing Economy

• Citation: Vol. 10 No. 4
• Publication year: 2015

Washington Journal of Law, Technology and Arts Volume 10, Issue 4 Spring 2015

Travelers Beware: Tort Liability in the Sharing Economy

Talia G. Loucks(fn*)

Abstract

Participation in the sharing economy makes consumers' lives easier. From the rental of a house or room via room share sites like Airbnb to getting a ride around the city using rideshare apps such as Uber and Lyft, travelers have found less traditional and more affordable ways to explore. With these innovations, however, come risks for users. For example, Airbnb hosts do not owe guests the same duties as a hotel operator. Additionally, drivers' insurance policies may not apply when operating for profit through a rideshare program. This Article examines the current liability issues that arise in the sharing economy. The law lacks clear, uniform guidance, as each city and state chooses to treat these companies differently. Because of this, sharing economy participants must be aware of the potential liability faced in a rapidly growing economy where the law is playing catch-up.

TABLE OF CONTENTS

Introduction .................................................................................. 330

I. Airbnb Hosts Probably Are Not Considered Innkeepers and Owe No Substantial Duty to Guests ..................................... 331

A. Innkeepers Owe a Greater Duty to Guests than Hosts Do .................................................................................. 332

B. Airbnb Hosts May Be Considered Landlords .................. 334

C. Airbnb Is Not Liable As a Travel Agent .......................... 335

II. Rideshare Passengers Are Not Covered by Personal Drivers Insurance ............................................................................... 335

A. Rideshares Are Not Typically Covered by Personal Insurance ........................................................................ 336

1. Rideshare Passengers Are Not Covered by Guest Statutes ................................................................... 337

2. A Vehicle Used for Commercial Purposes Is Not a Private Passenger Vehicle ...................................... 337

B. Legislatures Have Begun to Regulate Ridesharing Companies ..................................................................... 338

1. Taxi Companies Push to Regulate Ridesharing ..... 338

2. New Laws ............................................................... 339

Conclusion ................................................................................... 341

Practice Pointers ........................................................................... 341

INTRODUCTION

Taxi rides can be expensive. The same is true of hotel rooms for a weekend getaway. Consumers need more affordable options. This is where the new "sharing economy" enters into the picture. The sharing economy is an offspring of the peer-to-peer business model that has grown in importance in recent years.(fn1) Owners can make better use out of their underused belongings by renting them out or "sharing" them with others via the Internet. And now, with the widespread use of smartphones, consumers are able to quickly obtain the services they need with a touch of a button. The sharing economy has proven to be very useful for travelers. Many travelers use Airbnb, a website where one can book accommodations around the world through a community marketplace.(fn2) Someone who has an extra bedroom in his or her house can rent that room out to a traveler. Some Airbnb hosts even rent out whole houses or condos to vacationers. Ridesharing is another form of this "collaborative consumption"(fn3) that allows for easy travel around cities. A smartphone application ("app") connects drivers to travelers in need of a ride. Ridesharing is often a less expensive alternative to a taxi ride. As with any new innovation, laws are put to the test by the challenges that arise from these sharing business models. The current legal framework is playing catch-up with this rapidly growing economy, and companies with sharing business models have started to face more outside regulation. As the sharing economy grows, it has become clear that hosts and drivers are at a higher legal risk than those purchasing their services. Thus, hosts must understand the law in their jurisdictions before renting out through Airbnb, and Uber and Lyft drivers must be aware of the extent to which their personal insurance covers passengers in their cars.

I. AIRBNB HOSTS PROBABLY ARE NOT CONSIDERED INNKEEPERS AND OWE NO SUBSTANTIAL DUTY TO GUESTS

One would logically think of Airbnb hosts as akin to an innkeeper or hotel manager. However, the law has surprisingly not recognized them in that way. In the summer of 2014, a woman rented out her Palm Springs, California condo using Airbnb's website.(fn4) Little did she know, a few weeks later she would legally be considered a landlord.(fn5) Under California law, after a person resides somewhere for thirty days, that person obtains a whole host of tenant protections.(fn6) The "landlord" of the condo eventually was able to evict her "tenants."(fn7) More generally, the incident exemplifies how the law is falling behind the realities of the sharing economy.

A. Innkeepers Owe a Greater Duty to Guests than Hosts Do

The duty owed to guests in a hotel is grounded in the common law.(fn8) At common law, innkeepers are strictly liable for injury to guests(fn9) and have a duty to accommodate, a duty to render courteous treatment, a duty to provide safe accommodations, and a duty to protect guests from others.(fn10) The obligations for innkeepers under common law are higher than the duty that an average person owes to a social guest in her home. Innkeepers, and people who run hotels, still face many of the same liabilities, just in a modernized form.(fn11) This duty of care stems from a special relationship that exists between an innkeeper and guest.(fn12) Additionally, The Second Restatement of Torts(fn13) equates innkeepers with common...