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The Debate over Commercial Insurance Coverage and Ride-sharing Reaches a Boiling Point

Commercial liability insurance protects the owner of a company against claims of liability for bodily injury and property damage. As opposed to personal passenger vehicles which only require minimum state limits for liability insurance, vehicles used in the course of a business are usually required to carry insurance with higher coverage for bodily injuries and property damage in the event of an accident. Pretty simple and not much room for debate, right? Wrong.

Ride Sharing InsuranceMuch to the dismay of both insurance companies and taxicab companies, ride-sharing start-ups such as Uber, Sidecar, and Lyft have swept across the country in the last few years. All are venture capital funded, San Francisco-based companies that have grown into billion dollar industries, operating in almost every state in the U.S.

Transportation Service or Technology Company?

These companies have long argued that they are merely technology companies and should not be subjected to all the rules, regulations, and permits that state and local agencies mandate for other transportation companies like taxi services. More importantly, they argue that they should not have to maintain the type of commercial insurance that is required for vehicles used in the course of a business. Consequently, states, counties, departments of insurance and public utilities commissions are scrambling to deal with this debate across the country. California’s struggle is a perfect example of the conflicts presented in the majority of states.

When Uber, Sidecar, and Lyft first started operating in San Francisco, they required their drivers to carry personal minimum liability insurance, which in California is $15,000 for injuries, $30,000 for total liability and $5,000 in property damage.

Taxi companies’ primary concern is eventually going out of business because, they argue, licenses, permits and insurance premiums make it impossible to compete with ride-sharing prices. On the other hand, insurance companies maintain that they want ride-sharing companies to continuing to prosper, as long as they are adequately insured. They claim that do not want to get stuck with the bill if the drivers only have personal insurance policies, but they refuse to admit they are trying to upset these companies business models.

Consequences of the Insurance Gap

Adding more fuel to the fire, in January of 2014, a 6-year-old girl was run down by an Uber driver in San Francisco. Although, Uber had a $1 million umbrella insurance policy, they maintained the driver was not covered because he didn’t have a passenger in the car. Here lies the problem. In San Francisco, authorized taxis are required to provide $1 million of liability coverage per incident, 100% of the time.

Now there were real-world consequences to the perceived gap in insurance coverage, where the umbrella commercial policy was not yet in effect because the driver did not technically have any passengers.

The insurance industry’s stance is that any time drivers are logged into a ridesharing smartphone app and looking for a ride they are providing a commercial service. The argument is that, because drivers are going to go where potential riders are, based on the pings the apps send to them, they will inevitably be driving to crowded urban areas. This often occurs at night when there is a greater chance for accidents, triggering insurance pay-outs. Therefore, when they enter these areas based on their running apps, they are engaged in “changed behavior” and transition to commercial drivers. Essentially, insurers argue, the drivers are no longer entitled to personal liability coverage and must now have commercial coverage.

In California, the Public Utility Commission (PUC) stepped in and set regulations for ride-sharing companies, such as Uber, Lyft, and Sidecar. Not technically exclusive to these companies, the regulations targeted all “New Online Enabled Transportation Services” (TNC.) They defined this as an organization that provides pre-arranged transportation services for compensation using an online enabled app or platform to connect passengers with drivers using their personal vehicles. Included are requirements that the TNC get a permit from the PUC, a criminal background check be issued for each driver, there be a driver training program, a zero tolerance policy on drugs and alcohol and increased insurance coverage. As for insurance coverage PUC mandates that a TNC maintains commercial liability insurance policies of not less than $1,000,000 per incident coverage if the accident occurs while the driver is providing services.

The new PUC regulations did little to satisfy the insurance companies and they insisted the commercial coverage extended to whenever the driver had their app running. In response, several proposals backed by insurance company lobbyists, were presented to the California legislature calling to overwrite PUC’s regulations and include stricter rules for permits and licensing. However, their principal demand was for mandatory commercial liability insurance for drivers even when they have no passengers.

The Compromise

At this point the legislature has conceded that PUC, and PUC alone, has regulatory authority over ridesharing companies. Local taxi cab regulators have no authority, meaning special city permits and licensing requirements do not apply. The bill, which was passed by the California State Assembly and State Senate in late August of 2014, will require drivers to have $50,000 coverage per person for death and injuries; $100,000 damage coverage per accident; and $30,000 coverage for property damage. The ride-share companies also must have $200,000 in excess liability to cover costs of accidents that exceed policy limits. However, the question remains, which insurance policy provides the extra $200,000 in coverage for drivers who cause accidents on personal trips while running on apps on their smartphones. This has yet to be adequately addressed and resolved.

Are There Any Other Alternative Solutions?

Many states are claiming that the ride-share companies are coming into their communities in full force, blatantly ignoring any regulations or restrictions that are passed. However, ride-shares have agreed in several states to provide $1 million in commercial coverage for whenever a ridesharing driver has a passenger. They claim to have offered solutions to deal with the insurance gap but, at this point, they have not agreed to the level of commercial coverage during the times that insurers are demanding.

State governments and other regulators have varied on their methods when trying to deal with ride-sharing companies. The following are some examples of the different approaches:

  • In Washington, D.C. the state legislature is considering a bill that would set minimum commercial insurance. There is a proposal from the D.C. Taxi Cab Commission to regulate ride-sharing companies so that their commercial insurance coverage would be the primary coverage for personal vehicles.
  • Connecticut and Kansas send alerts to ride-sharing drivers that they may not be covered by their personal auto insurance policies while driving for the company.
  • In Washington State there was a proposed state bill mandating a study of ride-sharing companies that must provide a report to the legislature examining issues such as insurance coverage requirements and safety regulations. This bill was defeated. However, the Seattle City Council passed an ordinance that requires drivers to have commercial insurance coverage whenever that driver is available for a ride.
  • The Chicago City Council passed an ordinance requiring ride-sharing companies to provide $1 million of primary noncontributory coverage. Additionally, they must have $1 million in liability coverage for themselves, and $1 million for the drivers from acceptance to the conclusion of the ride.
  • Cease and desist letters have been issued to ridesharing companies by cities in Michigan, Missouri, Nebraska, New Mexico, Ohio, Pennsylvania and the Texas cities of Austin, Dallas, Houston and San Antonio.

Although the ride-sharing companies have agreed to comply with some state legislation, critics continue to argue that the legislature is not entitled to regulate the “sharing economy” and interfere with legitimate technological business models. With the rise of technology will come an increased number of unforeseen issues concerning insurance coverage, the state legislatures will continue to wrestle with new snags in the system and the law will change at a rate that the public has never before seen?

Why American Citizens Should Be Concerned about Deportation Hearings

The Obama administration predicts that 90,000 illegal immigrants may be apprehended this year. Most of the new illegal immigrants are either unaccompanied minors or mothers with small children. Public reaction to the problem has ranged from sympathy for the illegal immigrants to open hostility. Most concerns about surge are focused on economic or humanitarian issues.

Deportation HearingHowever, the illegal immigration question has opened up questions about other areas of the law:

  • Refugee and Asylums – Most of the minors coming from Central and Southern American could qualify for refugee status, although it is unknown how many of the stories are actually authentic. Deportation proponents might try to change the law regarding refugees and political asylum in an effect to keep the newcomers out. However, that could have ramifications for people who are actually fleeing from political oppression or natural disasters.
  • Immigration Court Backlogs – Immigration courts are notoriously slow. Between the mountains of paperwork and low budgets, getting through the immigration system is slower than a glacial moving downstream. The recent influx of cases could mean that your petition for your relative’s entry into the country could be backlogged.
  • Erosion of Due Process – Proponents of deportation might question why illegal immigrants should have rights like due process. The reason is that the Constitution confers rights onto persons, regardless of immigration status. If Homeland Security is willing to deport immigrants without trial, the federal government could ignore due process for citizens as well.
  • Erosion of Equal Protection – The government should stop illegal immigration, but it should not make the mistake of confusing ethnicity or race with immigration status. Ferguson exposed the fact that racial tensions still exist, but we shouldn’t assume that racial profiling is limited to African Americans.

If you are involved in or are facing immigration proceedings, you should seek the advice and representation of an immigration attorney. Having an attorney represent you is critical since your immigration status could be at stake.

The Law of Burning Man

For those unfamiliar with Burning Man, it is a gathering in “Black Rock City” in the middle of the Nevada desert. The event focuses on fostering principals of love, creativity, self-reliance, community, and being in the moment. As such, it is hard to imagine that the long-arm of the law has anything to do with the event.

burning manHowever, as a 5-square-mile pop-up metropolis, law enforcement is absolutely, and understandably, present. Moreover, the land where Burning Man awakens every year is federally owned, meaning the event and event-goers (“Burners”) are subject to both federal and state law.

What Is the Law of Burning Man?

It’s important to mention that the law governing this five-day (up to ten-day, for some) desert soirée is incredibly vast. From a Burner’s perspective, the law of Burning Man is likely akin to “be nice, be safe, have fun.”

However, from the perspective of the Federal Bureau of Land Management, Nevada Highway Patrol, and a handful of Nevada Sheriff’s Officers and law enforcement bodies, the law is the black letter, on-the-books law of the Nevada, and, to top it off, any applicable federal law.

Here’s a simple breakdown of relevant criminal laws that may affect Burners:

  1. Speeding – While entering the event, the speed is a strict 10 m.p.h., and while in Black Rock City, the speed is 5 m.p.h. While Burner’s are generally strictly prohibited from driving once they arrive at their campsite, arriving at and leaving from could land speeders with a hefty moving violation.
  2. DUI – Similarly, driving under the influence is just as serious of an offense in Black Rock City as it is anywhere else in the country. Again, while Burner’s are typically not driving around during the festival, it’s possible to get a vehicle permitted to do so. Additionally, certain types of vehicles, such as electric bicycles or other devices that are not solely human powered may fall within the ambit of Nevada’s DUI laws.
  3. Contraband – This is potentially the biggest overlap with federal law the event faces, and consequently the one with the most potential for serious legal issues. Since the event is on federal land, and marijuana is illegal under federal law, any marijuana—even medicinal marijuana—is strictly forbidden.

It’s also worth noting that dog sniffs of vehicles do not constitute a search. There is an argument to be made that a camp has a higher expectation of privacy; however, that argument wouldn’t have an audience until after a search based on probable cause and potential arrest, thus ruining an otherwise fun party.

How Else Could the Law Affect the Party?

Wrongful death and personal injury lawsuits all have a quiet potential at Burning Man. Sadly, this year a young woman was killed by a bus transporting participants. This is the first tragedy of this sort in 7 years, but it is a universal truth that accidents happen. Additionally, the back of the Burning Man ticket may attempt to waive liability for such accidents.

However, courts frequently disregard such waivers. Meaning quite simply that if the surviving family is so inclined, they may be entitled to seek compensation for their untimely loss.

Is Burning Man Just Filled with Eager Police?

Each year, there is roughly 1 police officer per 1,000 participants. While that seems low, consider that New York City has roughly 4 police officers per 1,000 residents. And, remembering that New York City is a city of over 8,000,000 compared to Burning Man’s 50,000-70,000, that figure becomes pretty staggering.

Still, arrests are rare for an event of this size and duration. From 2010 to 2013, only 38 participants were arrested of the 227,248 who attended. However, drug citations are remarkably higher, creeping in at just under 1,000 issued during that same time frame.

These numbers provide a pretty clear message: come for the fun, but if you break the law or bring drugs, don’t be surprised if you get burned.

Big Business Restricted from Mandatory Arbitration

On July 31, 2014, President Obama signed the “Fair Pay and Safe Workplaces Executive Order.” The order was inspired by previous legislation passed by Congress in 2010, which was in response to an attempted suit by a woman who was gang-raped while working in Iraq for a defense contractor. However, the woman was prevented from actually filing suit because she signed a mandatory arbitration agreement before the rape occurred.

Fair Pay and Safe Workplaces Executive OrderThis new law restricts companies with more than one million dollars in federal contracts from entering into mandatory arbitration agreements for disputes relating to sexual assaults or harassment. These two violations are actionable pursuant to both tort law and Title VII of the Civil Rights Act. The effect on modern employment law because of this order may be limited due to the confines of the offenses. However, significant debates within the field have already begun to emerge. Many legal experts predict that challenges will surface in the near future. A fear that companies have expressed is that the law will encourage frivolous lawsuits, which may force a business into bankruptcy.

One such challenge may be based on the theory that the new order conflicts with the Federal Arbitration Act (FAA). The FAA was passed in 1925 and provides for binding arbitration, as opposed to a judgment by a court of law. Unfortunately, it usually favors the defendant (often the corporation) and the plaintiff gives up the right to any appeal. Additionally, any state law that opposes the FAA is preempted by federal law and held invalid.

As a result, there is nothing the states can do to invalidate an arbitration agreement the employee signed, even if the employee is unaware they signed it. The U.S. Supreme Court cases upholding arbitration agreements (and usually sympathetic to the FAA) have only been applied to private employment contracts. It has yet to be expanded to a holding for federal employment contracts.

It is important to note that there is a provision in the Obama executive order that allows the parties to agree to arbitration after the dispute arises, but not before. Big business critics claim that this provision was included to weaken the argument that the order violates the FAA. However, it is usually against the plaintiff’s interest to submit to arbitration after the dispute arises. Therefore, the ban would likely remain throughout the case to the disadvantage of the business sued.

The fear from these corporations and other entites is that employment defense attorneys may circumvent the order by including other clause, such as a mandatory agreement to waive a jury trial. This kind of agreement will essentially achieve the same result as a mandatory arbitration agreement while still conforming to the law.

Additional provisions of the order include a requirement of disclosure of past violations by the company, a requirement that employers provide documentation to the employee of hours worked and any overtime or deductions from their pay.

The new order is a victory for plaintiffs who seek to be compensated for egregious violations in the work-place. Many employees are unaware that they even signed oppressive arbitration agreements and they are now barred from receiving their day in court. Although the order is not retroactive, it may force these companies to take preventative measures and offer more protection against sexual assault or harassment in the workplace.

Check out LegalMatch.com for more articles and blogs on this issue and other areas of the law. Additionally, sign on to the company’s LinkedIn account to receive updates on connecting clients with attorneys experienced in employment law.

New York Man Acquitted of Murder after Courts Invalidate False Confession

“If you’re innocent, you have nothing to hide.”

With Ferguson in the news, the public’s attention is on what police are doing in the streets. However, police conduct in interrogation rooms shouldn’t be ignored. Police interrogators often engage in tactics that involve wear downing down and even outright lying to suspects to obtain confessions. The problem is that such confessions are often false and lead to innocent people being imprisoned or placed on death row.

Court Invalidates False ConfessionThis problem has long been ignored by judges. Until recently, judges shared the common assumption that suspects do not confess to crimes unless they are guilty. Of course, history has shown that this assumption is wrong. The Spanish Inquisition, Salem Witch Trials, and Red Scare, among many other political disasters in history, have demonstrated that people can be “persuaded” into confessing crimes they didn’t commit. Even without physical abuse, suspects can be pressured into making false statements against themselves.

For instance, in 2008, a man in Rensselaer County, New York, was arrested for the death of his four month old son. The man, Adrian Thomas, allegedly threw his infant son, Matthew Thomas, onto a bed in frustration. Prosecution believed that Thomas’s actions caused trauma and the subsequent death of the boy. After Thomas was arrested, police allegedly told Thomas that his baby would die if he didn’t explain how Matthew hit his head and that the mother could be arrested as well. Unknown to Thomas, his son was already brain dead.

Thomas was sentenced to 25 years after a jury watched his video confession. However, in February 2014, New York’s highest court overturned the guilty verdict and suppressed the video confession because police tactics were too coercive. In June 2014, a second jury, who weren’t shown the confession, acquitted Thomas of the second degree murder of his son.

Police Interrogation Is More Likely to Ensnare the Innocent than the Guilty

Recent studies have shown that current police interrogation tactics often produce false confessions more than real confessions. Police will often tell suspects that unless they talk, there will be consequences. Police say they need information to save a victim’s life even though the victim is already dead. Alternatively, police will threaten to arrest someone else if the suspect doesn’t talk. Of course, if the police had probable cause to arrest someone they would have done so without the suspect’s help. In either case, suspects like Adrian Thomas will be pressured, or coerced, into confessing.

This raises the question as to why suspects confess to crimes they haven’t committed. Some defendants, like Thomas, feel it is necessary to save or help someone else. Other suspects are told that the police already have evidence linking the suspect to the crime. Studies reveal that these suspects will often confess after being told there is evidence, even though the suspect is innocent. The innocent assume that the evidence will eventually prove their innocence and that the false confession will get them home earlier. In most cases though, juries give the false confession more weight than physical evidence.

Work the System So the System Will Work

So what can you do to avoid being falsely imprisoned? Always exercise your Miranda rights. Remain silent except to demand an attorney. Cooperating with interrogators will not prove your innocence because many interrogators have already decided that the suspect is guilty. Most questions will be designed to make the defendant look guilty, regardless of how the defendant answers.

More importantly, you should not assume that the criminal justice system will eventually reveal your innocence. Although the legal system is designed to produce answers, it will only do so if the parties disagree about what those answers are. The best way for a criminal defendant to avoid giving a false confession is to disagree with the police. Innocent people who stand up for their rights will have their innocence vindicated. Innocent people who confess to crimes they didn’t commit will be punished to fullest extent of the law.