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UBER AND LYFT: THE HIDDEN SURPRISE

By Mickey Smith, Shareholder

Most people are surprised to learn they waived their right to a jury trial against Uber or Lyft before they ever get in the vehicle.  The latest U.S. Terms of Use for Uber (1.17.2023) and the latest Lyft Terms of Service (12.12.2022) both, with limited exception, waive a customer’s right to a jury trial and require binding arbitration instead.  Class actions are also prohibited.

Can they do this?  Arbitration agreements are favored in the law (founding fathers be damned).  The fact you did not read the agreement’s terms does not invalidate them, nor does the fact you accepted them via an application on your cell phone.  Indeed, Federal Courts in Florida have upheld the arbitration agreement in claims brought by both Uber and Lyft drivers.

So, what happens if you take an Uber or a Lyft and are involved in an accident?  It depends on who is at fault.  The arbitration provision does not apply if the other vehicle involved in the collision is the one at fault.  It only applies to any claim brought against the rideshare company.

What if you are a pedestrian or in another vehicle and the Uber or Lyft vehicle negligently hits you?  The arbitration provision should not apply.  It only applies to “incidents or accidents resulting in personal injury to you or anyone else that you allege occurred in connection with your use of the Services” (Uber).  The Lyft arbitration agreement is more broadly written but should not be construed to extend to situations where you were in no way involved with the rideshare in question, even if you had previously accepted the terms for yourself.

What if your friend ordered the vehicle and you are just in the car?  This is a little trickier. Most likely, the arbitration agreement will apply if you have previously accepted the terms yourself.  If you have not done so, the agreement should not extend to you.

Forget Uber and Lyft, what about a claim directly against the driver?  This is the key.  Rideshare drivers are independent contractors, generally, and not employees.  They are not a party to the agreement with the customer (although they have their own agreement with Uber or Lyft).

Section 627.748, Florida Statutes, requires a policy covering the driver with a minimum of $50,000 whenever the “driver is logged on to the digital network but is not engaged in a prearranged ride.”  That figure jumps to $1 million when the “driver is engaged in a prearranged ride.”  In other words, Florida’s statutory scheme ensures there is insurance coverage in place to cover direct claims against the driver.

That said, it should be noted that the Lyft terms purports to extend the arbitration provisions to “Lyft’s service providers, including but not limited to background check providers and payment processors; and such service providers shall be considered intended third-party beneficiaries of this Arbitration Agreement.”  Drivers are not specifically named as “service providers.”

Lyft is probably more concerned about being vicariously liable for a driver’s negligence, which opens the door for liability exposure above and beyond the insurance limits.  In other words, they fight hard to distance themselves from being vicariously liable for the driver’s negligence and do not really care if the driver is subjected to a judgment more than the insurance policy… so long as they are not.  They want the driver to be independent of them.

Do you take accident cases where an Uber or a Lyft is involved?  Most definitely!  While we are strong believers in the right to a jury trial and believe — like the founding fathers did — this is the best forum to achieve justice, an arbitration provision does not extinguish a claim; instead, it dictates where it can be brought.  Furthermore, in the typical case, a claim is only brought against the driver, as the driver is covered as set forth above.

Lesser, Lesser, Landy and Smith hope you, your friends, and your family are never involved in a rideshare accident.  That said, our firm is here to help if you ever need us following any type of major accident.

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