The Four Biggest Legal Problems Facing Uber, Lyft and Other Ridesharing Services

By | LXBN | June 4, 2014

Uber, Lyft, Sidecar and other ridesharing apps are praised for disrupting that transportation industry, but they’re cruising into legal trouble along the way.

Photo Credit: Tribute/ Homenaje

Photo Credit: Tribute/ Homenaje

Rideshare companies connect mobile app users with people willing to drive strangers around in their personal vehicles within minutes and offer the convenience of payments via app. But just as quick as Uber and Lyft are gaining customers and millions from venture capitalists, they’re being hit with lawsuits just as quickly.

1. Americans with Disabilities Act Compliance

On Monday, three disabled people in Texas filed a federal complaint against Uber and Lyft because the companies’ cars are not wheelchair friendly. Under the ADA, private taxi services cannot discriminate against the disabled and must have vehicles that can transport wheelchairs. Because rideshare drivers are mostly app users driving people around in for extra cash, they don’t follow ADA requirements, which the suit hopes to change.

Uber and Lyft do not provide vehicles-for-hire services to mobility impaired consumers such as Plaintiffs who require wheelchair accessible transportation vehicles or other accommodating services. Uber and Lyft allow their vehicles-for-hire to deny service to the disabled. In addition, Uber and Lyft provide no training or guidance to the vehicles-for-hire that use their service concerning lawfully meeting the needs of disabled consumers.

While this is the first lawsuit of this kind against the booming transportation companies, employment lawyer Kristina Launey pointed to potential accommodation issues surrounding the apps in ADA Title III News & Insights. The Department of Justice is working towards regulations for ADA compliant websites, but according to Launey, there has been interest in “a settlement regarding mobile app accessibility of ridesharing services; and a suit and investigations into the accessibility of payment point of sale devices in the back of taxi cabs.”

2. Local Regulations

Just as Uber and Lyft are trying to crush each other in the marketplace, traditional taxi services are picking their own fights with the new industry by pointing out that rideshare drivers do not have to follow the same requirements as taxi drivers. City councils and local governments are paying attention. In Seattle, the Western Washington Taxi Cab Operators Association filed a lawsuit against deceptive and unfair business practices in March as the city council contemplated local regulations. The suit wasn’t filed to push out rideshare companies completely, reported Taylor Soper of GeekWire, but to make them follow local regulations.

A year’s worth of frustration for taxi drivers stems from the fact that they’ve had to abide by city rules — which include licensing fees, commercial insurance laws, uniform rates and a bevy of other requirements — for decades, while Uber and others have come into town and conducted business in their own manner.

In Seattle, as in most places, taxi drivers are required to have a commercial drivers license and undergo regular car inspections, while Uber and Lyft drivers only have to meet an age requirement, have a regular drivers license and fully functioning car. Taxi drivers are also held to stricter pricing models while Uber and Lyft’s prices change according to demand for drivers.

A similar suit was filed in the Connecticut District Court in May but demands an injunction on behalf taxi companies because they claim that rideshare companies are deceptive and unsafe for customers.

3. Insurance

One sticking point that has been brought up in both lawsuits is the insurance requirements for drivers. Uber and Lyft’s websites both say that they offer $1 million liability insurance plans for their drivers, but 14 states have issued warnings to passengers that rideshare companies may not cover them in an accident. According to attorney George Green and writer for the Insurance Coverage Corner, the insurance ambiguity depends on who is liable: the company or the driver.

If an Uber or Lyft driver gets into an accident, who is liable?  The driver alone, or both the driver and the company?  In a traditional employee-employer relationship, if an employee is in the course and scope of his employment, and his negligence results in bodily injury or property damage, then the employer is vicariously liable for the employee’s actions.

Uber and Lyft officials, however, maintain that drivers are not their employees; but rather, are independent contractors.  As independent contractors, the drivers are solely liable for property damage and bodily injury caused while transporting passengers or while driving in search of passengers.  The companies claim that they do not have influence over the drivers or the cars they operate; rather, they merely control the application that facilitates the connection between passengers and drivers, and thus are not liable for the negligence of the driver.

4. Airport Policies

The rideshare fight is heading to airports. Houston, San Francisco and Chicago are considering banning rideshare pick ups and drop offs because it takes a bite out of airport fees and permits, according to Dug Begley of the Houston Chronicle.

In all cases, the airports are huge revenue engines for the cities, which treat the airports as quasi-governmental entities that operate under a board of commissioners. With so many taxis, shuttles and others using the airports to make money, the airports take a cut by requiring permits. Ideally, that means roads are improved and the airport is designed with huge taxi and shuttle demand in mind. The permits and fees are nothing new, and they’re similar in their setup to the paid parking common at airports.

San Francisco International Airport’s officials even went as far as placing drivers under citizens arrest for trespassing at the airports last year. According to aviation attorney Paul Fraidenburgh for Aviation & Airport Development Law News, airports are not aiming to blanket ban these newer services.

With mounting political and consumer support for car sharing and ride sharing, airports are under increased pressure to adopt policies regulating these services instead of prohibiting them.  Developing practical, sustainable policies that address issues such as airport congestion, service monitoring, and revenue sharing may prove to be a more profitable and efficient solution than denying airport access to car sharing and ride sharing companies. … Airports that maintain outright bans on car sharing and ride sharing services may face challenges under the Dormant Commerce Clause and the Equal Protection Clause of the Fourteenth Amendment, among other sources of law.  … Thus, airports may profit by shifting focus away from how to exclude car sharing and ride sharing services and towards how to include and regulate these companies.

That’s the prevailing attitude towards ridesharing services, which have become insanely popular. Love them or hate them, rideshare services are going to stick around.

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