The intersection of tort law and the terms of service (ToS) of rideshare companies like Uber and Lyft presents a challenge for both lawyers and lawmakers when it comes to asserting liability in accidents and other incidents. This intersection was highlighted in a recent case involving Uber Eats as New Jersey couple, John and Georgia McGinty, were barred from suing Uber after an accident due to an arbitration agreement accepted through their Uber Eats account, possibly by their minor daughter.
This case is similar in nature to the wrongful death suit brought by Jeffrey Piccolo, who was told he could not sue Disney based on his agreement to the Disney+ Terms of Service. That case, however, was dropped by Disney, and the courts have thus upheld their block of the McGinty’s trial request.
Terms of Service and Arbitration Agreements
Rideshare companies often include mandatory arbitration clauses in their ToS, requiring users to resolve disputes through private arbitration rather than through the court system. These clauses typically also include waivers of the right to participate in class-action lawsuits. The enforceability of such clauses has continued to be a contentious issue. For instance, in Pennsylvania, Uber’s arbitration clause was found to violate the state constitution, as it infringed upon the right to a jury trial. Conversely, New York’s highest court upheld Uber’s arbitration agreement, compelling a user to arbitrate personal injury claims arising from an accident, rather than derive settlement or a verdict from the legal system.
Classification of Drivers and Liability Implications
One key factor in influencing liability is the classification of rideshare drivers as independent contractors rather than employees. This designation allows companies to limit their liability for drivers’ actions under the doctrine of respondeat superior, which holds employers vicariously liable for employees’ actions performed within the scope of employment. In Texas, for example, while drivers are statutorily classified as independent contractors, rideshare companies can still face liability for negligence in hiring or retaining drivers.
Meanwhile, Georgia’s highest court clarified in August 2024 that Lyft acts as a “motor carrier” and is therefore responsible for its passengers; those passengers can therefore directly sue Lyft’s insurance company, State Farm Fire and Casualty Co.
Unfortunately for the McGinty’s, the appeals court decided against the couple, citing Uber’s ToS as an agreement to not sue the company on “three separate occasions,” despite the severity of their injuries. The couple will likely be required to settle via arbitration, a process that most often works out in favor of the sued company.
Insurance Coverage and Liability
Rideshare companies maintain varying levels of insurance coverage based on the driver’s status at the time of an incident:
- App Off/Driver Not Logged In: The driver’s personal auto insurance is the primary coverage.
- App On/Driver Waiting for Ride Requests: The company’s contingent liability coverage applies, providing limited coverage.
- Driver En Route to Pick Up Passengers or Transporting Passengers: The company’s comprehensive insurance policy, often up to $1 million, covers bodily injury and property damage.
Types of Rideshare Accidents
Rideshare accidents, which can occur in Taxis or cars served by rideshare companies like Uber and Lyft, can result in a number of injuries, including the following:
- Brain injury
- Paralysis
- Back injuries
- Partial paralysis
- Loss of limb
- Whiplash
Recent Legal Developments
Courts continue to grapple with the issue of accountability for rideshare companies, who have historically attempted to operate on the outskirts of the law by “employing” drivers as 1099 gig workers and enforcing an aggressive ToS:
- Arbitration Enforcement: In Uber Technologies Inc v Heller, the Supreme Court of Canada held that Uber’s arbitration clause was unconscionable, allowing the class-action lawsuit to proceed. It is possible that the United States may follow suit, though unlikely.
- Driver Classification: The U.S. Supreme Court declined to hear challenges from Uber and Lyft regarding California’s laws on driver classification, allowing lawsuits alleging misclassification of drivers as independent contractors to proceed.
Hire an Attorney for Rideshare Injuries
While the McGinty’s case has thus far resulted in an unfavorable outcome, it is not necessarily indicative of the efficacy of rideshare accident cases as a whole. Georgia and the rest of the country continues to debate the power of arbitration agreements.
The McArthur Law Firm serves all of Georgia, and is ready to hear the details of your case. Call us today to schedule your free initial consultation with our office at 404-565-1621, or fill out our online contact form.
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