Groups Pedal Misinformation About Ridesharing Reforms

Lawmakers and bureaucrats in Washington, D.C. seemingly never tire of ideas to bury innovators in reams of red tape and runaway litigation. For all its faults, the recently-marked-up surface transportation reauthorization bill contains a laudable provision cutting against this terrible trend. During the markup process, Reps. Vince Fong (R-Calif.) and Laura Gillen (D-N.Y.) managed to include an amendment limiting out-of-control liability for rideshare companies, ensuring lower costs for millions of consumers. Unfortunately, groups such as the American Association for Justice (AAJ) have unfairly attacked the provision as an “unprecedented attempt” to give immunity to well-off corporations. This could not be further from the truth. As lawmakers debate transportation reforms, taxpayers and consumers deserve all the facts—not tall-tales.

Skyrocketing legal payouts are making everything more expensive, fueling inflation and driving economic anxiety. As reporter Camila Domonoske notes, car insurance premiums are up nearly 50 percent over the past five years, and the increasing cost of accidents is a key contributor. According to Patty Kuderer (insurance commissioner for the state of Washington), “the claims paid really drive the cost of the premiums.”

Congress addressed the issue of lawsuit abuse for rental car and leasing companies in 2005. The Graves Amendment, introduced by House Transportation and Infrastructure (T&I) Committee Chairman Sam Graves (R-Mo.), established a clear national standard: rental and leasing companies should only be held liable for their own negligence, not simply for owning a vehicle. But the exclusion of rideshare apps and “Transportation Network Companies” (TNCs)—which connect riders with drivers on a mass scale—from Graves Amendment language has posed a significant issue for taxpayers and consumers. In the past two decades, the automotive market has been absolutely transformed by the advent of rideshare apps and TNCs.

TNCs have been sued in instances where the driver didn’t even work for a TNC, or when the driver wasn’t on the clock at the time of the accident. TNCs have bizarrely been taken to court even when the driver at fault was an inebriated third-party or ran a red light. While states in general should be in the driver’s seat when it comes to designing their tort systems, legal certainty is sorely needed at the federal level because of the nationwide design and operating model of TNCs. State jurisdictions allowing plaintiffs to sue TNCs when the plaintiff is clearly at fault jeopardize the ridesharing experience in all jurisdictions. And because TNCs have deep pockets, unscrupulous lawyers will always have an incentive to pursue meritless claims.

The Fong-Gillen Amendment wisely protects TNCs from these out-of-control vicarious liability suits and would lower costs for millions of Americans as a result. Groups such as AAJ pretend otherwise. AAJ CEO Linda Lipsen claims, “While Americans are struggling to put food on the table, fill their gas tanks, and pay for medical care, the House Transportation Committee is focused on advancing legislation to provide giveaways to billion-dollar corporations at the expense of the very people they represent,” and zeroes in on alleged “bailouts to companies including immunity for Uber and other rideshare platforms when passengers are sexually assaulted or catastrophically hurt.” This completely ignores the fact that the Fong-Gillen Amendment protects ridesharing apps from vicarious liability—the legal doctrine that holds one person or entity liable for the actions of others. It prevents platforms from being sued solely because they provided the software connecting a driver to a rider, but it does not protect them from the consequences of their own corporate negligence.

Accountability is not eliminated; it is shifted to the individual who caused the harm. If a driver causes a catastrophic crash or commits an assault, that driver remains completely legally responsible. 

Lawmakers now have a choice to make: they can defend the status quo and “bail out” trial lawyers and a broken system driving up the cost of living or they can deliver real savings for hardworking families by passing reforms to increase affordability. For the sake of millions of rideshare consumers and Americans struggling with soaring auto insurance costs, lawmakers should extend commonsense Graves Amendment protections and steer clear of out-of-control litigation.