By Steven J. Shanker, Esq.
Most licensed bases, whether livery or black car, utilize for-hire vehicle (FHV) drivers who are believed to be independent contractors. When the base does not own the vehicle and does not employ the driver, then most believe there can be no liability on the part of the base when a driver gets involved in a motor vehicle accident, while on a dispatched call.
I have been litigating cases on behalf of black car bases and livery bases for the past 20 years. Good case law has been made over that period of time by vigorously defending the independent contractor model. Unfortunately, the legal landscape has changed over the past few years. It is essential for every base to know the legal and financial ramifications of these changes. Let me explain…
At one time or another, each base has or will be sued when a driver who receives a dispatch from the base gets involved in a motor vehicle accident while on the dispatched call. The base is potentially liable for the accident from the moment the driver turns on their device to receive dispatches.
Since most bases do not own the vehicles that transport passengers, most bases do not have auto liability insurance. This means that if and when a base is sued, the base has to pay for a lawyer and must defend the case. If you don’t defend the case, you will lose by default and get a judgment against your company. It is extremely hard and sometimes impossible to vacate a default judgment. Most base owners ask me how it is that the base can be sued in a case where the base does not own the vehicle or employ the driver. My first response is that anyone and any company can be sued. It is a matter of whether the case has any legal merit. Proving that the base does not own the vehicle is easy. Whether the driver involved in an accident is an independent contractor or an employee is another story.
The issue of whether a driver is an independent contractor or an employee is a fact-intensive inquiry that is only determined by the court, typically after years of litigation, including depositions and document production. Of course, years of litigation can be costly. The base must affirmatively prove via actual evidence that the driver is an independent contractor. The reason this defense is so important is that if a base is found to be the employer of the driver, then the base is vicariously liable for the negligent acts of an employee driver.
Vicarious liability does not mean the base committed a negligent act. It literally means let the entity (employer) answer for the misdeeds of the employee (driver). The reasoning: an employer has the ability to control the driver and as such, is in a better position to prevent accidents by properly instructing and training the driver. So, the question goes back to whether the base utilizes drivers who are independent contractors or employees.
It is always a good idea to perform a yearly audit of the operations of your base. The reason is that the law evolves and changes over time. What was once considered to be a relatively easy case of proving the driver is an independent contractor has turned into a much harder fight. Also, the lawyers who represent persons injured in a motor vehicle accident believe all bases operate like Uber and Lyft, who tend to exert more direction and control over the drivers who receive their dispatches than the traditional black car and livery bases do. Moreover, a company is always seen as the proverbial “deep pocket” that can afford to pay out monies just to make a case go away. Hence, each and every base is a target. While the injured Plaintiff must prove their case at trial, if a base seeks to get out of the case and have it dismissed, the base must prove their case before trial. A trial is also a very costly endeavor.
Aside from the issue of whether the base utilizes drivers who are independent contractors or employees, there are two relatively new legal theories that lawyers who represent persons injured in motor vehicle accidents have been advancing. The first is a theory known as negligence in hiring, training, supervising and/or retention. This is a cause of action that is filed against many companies where the Plaintiff’s attorney claims the base is liable for the accident because the base knew or should have known that the driver had a propensity for operating a vehicle in a negligent manner. To prevail, the base must affirmatively prove either that the driver did not have a propensity for operating a vehicle in a negligent manner or that the base did not know or have reason to know of such propensity. The most significant part of this legal theory is that it applies to the base even if the driver is an independent contractor. Unlike vicarious liability, negligence in hiring, training, supervising and/or retention is a claim of direct negligence on the part of the base. As stated above, while the injured Plaintiff must prove their case at trial, if a base seeks to get out of the case and have it dismissed before trial, then the base must prove their case before trial.
Next, with the advent of new technologies such as smartphones and various dispatch software, FHV drivers have become more distracted. Sometimes the temptation to look at emails or texting while driving is too great. While FHV drivers should not use their smartphones or other technology while driving, the reality is that sometimes they do. While most FHV drivers must use their smartphone or tablet as part of their job, they should not have to use it while they are driving. Because of the prevalence of distracted driving by drivers using their smartphones for one reason or another, Plaintiff’s lawyers have been suing FHV bases on the legal theory of negligence on the part of the base by causing distracted driving. In other words, the lawyers who represent persons injured in a motor vehicle accident are advancing claims that by a base requiring a FHV driver to use their smartphones as part of their job, the base is causing the driver to become more distracted. This is a novel legal theory. While no final decisions have been made in any case in New York as to whether this is a viable legal theory, the reality is that I am seeing these claims more and more often. Again, while the Plaintiff has to prove at trial that the driver was distracted in the first place, if a base wants to get out of the case before trial, then the base must prove that the driver was not distracted before the accident. In the alternative, the base must prove that the driver was not required to use their smartphone while driving as part of their job.
Whether they know it or not, these are just some of the new legal landmines that livery and black car base owners are facing. This holds true with every single job that each base dispatches to an FHV driver. So, what can a base do? First, each base should stay abreast of developments in the law. Next, a base must be able to defend these cases. In order to effectively defend a base in cases like these, they must have certain operational policies in place before an accident occurs. Also, base owners must ensure they have a witness from the base who can effectively testify regarding its operations and how its dispatch technology works. Testifying at a deposition or trial is no walk in the park. Lawyers ask tough questions. Witnesses are often nervous. Being able to testify effectively is an art that a witness must master if they are going to prevail in any case. I prepare all my clients before each and every deposition. I do this so my clients are prepared not just for the questions they will be asked but the story that must be told via their testimony. In other words, the client must know the facts that they must prove via documents and testimony so they can prevail in these cases. You can never be overprepared.
It is essential for each base owner to not only know their potential liabilities with each dispatch but to have a plan of action in place. This will ensure that in the event the base is sued, the base is ready, willing, and able to defend itself in Court. Ignoring a problem never makes it go away. Preparing for the worst while hoping for the best is always a prudent course of action.