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Uber Faces Onslaught Of Legal Challenges, Both At Home And Abroad – Updated

Posted on July 12, 2015 by Eric G. Young

Back in February, this blog featured an article discussing a pair of lawsuits filed against tech startups, Uber and Lyft, challenging the companies’ characterization of their drivers as independent contractors. According to a website providing information about the Uber lawsuit (and created by the plaintiffs’ attorneys in that case), the suit is set for a hearing on class certification in August. The outcome of that hearing may determine whether the Uber plaintiffs can proceed in their class action lawsuit or face arbitration of their claims.

On June 17, 2015, in a case brought by an Uber driver seeking reimbursement of out-of-pocket expenses, the California Labor Commissioner ruled that the driver was, in fact, an employee, not an independent contractor. As a matter of California law, that ruling is non-binding on the class action lawsuits (and Uber has appealed the ruling in any case, seeking a trial de novo in the trial court), the Labor Commissioner’s ruling may, nevertheless, have some effect on the class action lawsuits. Even if it does not, there remains the possibility of additional Labor Commissioner proceedings brought by other drivers, which could – as one article described it – “clobber” Uber.

In the meantime, since the class action lawsuit was filed against Uber, the company’s legal problems have accumulated faster than a speeding rideshare. In August 2014, for example, an Uber customer filed a $2 million lawsuit against the company, alleging that an Uber driver stabbed him repeatedly in the chest and arm.

But that’s not all.

On September 9, 2014, the National Federation of the Blind brought suit [PDF] against Uber in California federal court, alleging its drivers refused to provide rides to blind customers with service dogs in violation of the Americans With Disabilities Act and California state law. The suit claims that Uber’s drivers abandoned blind customers when the drivers realized they were accompanied by service dogs. The suit further alleges that, in at least one instance, a driver placed the customer’s service dog in the trunk of the car, then refused to pull over and let the customer exit the vehicle when the customer realized what had happened. Uber sought to dismiss the suit, but a federal judge ruled that Uber must defend the matter. You can read more about this lawsuit here from the Washington Post and here from the Consumerist.

In January 2015, a New Delhi woman sued Uber in California federal court, alleging that she was violently raped by one of its drivers. Her suit specifically faulted Uber for approving the driver based on faulty credentials and without doing a proper background check.

Speaking of background checks…Enter yet another class action lawsuit against Uber. Filed in California federal court on June 29, 2015, this lawsuit alleges that Uber violated the Fair Credit Reporting Act when conducting background checks of its drivers. Lyft was also named in a similar, separate class action lawsuit.

Apart from these legal woes, Uber faces other challenges to its business model. For example, drivers unhappy with their working conditions have begun organizing online under the title UberPeople. Uber drivers in Southern California have formally associated with the Teamsters Union as the California App-Based Drivers Association. It remains to be seen how effective these developments will be.

Abroad, Uber faces additional obstacles – nothing new for the company. According to an article in Legal Tech News, Uber has been forced to suspend its French operation after “two of its senior European managers were detained on July 6 and ordered to stand trial, charged with ‘deceptive commercial practices’.” In Mexico, regulations are in the works “that will require drivers and cars to be registered, and also require Uber to pay into a fund for transportation infrastructure.” Uber has already suspended operations in Spain and New Delhi, India.

As the saying goes, “there is no such thing as bad publicity.” However, the reality of that is open to debate. At some level, the considerable negative publicity Uber earns with each lawsuit – particularly lawsuits questioning rider safety – will start harming its bottom line. And no one should think that Uber has yet seen the last of its legal troubles. Actions by foreign countries, like those taken in France and elsewhere, may impede Uber’s expansion into new, lucrative markets. Back in the U.S., the class action lawsuit seeking to declare Uber drivers as employees threatens to upend the company’s business model entirely.

So, what about that business model? Uber functions on a business model that attempts to transfer all of the company’s risk to its drivers and customers, while retaining little risk – or accountability – for itself. If just the lawsuits currently filed are believable, Uber’s business model has already endangered customer safety and possibly violated its customers’ civil rights. While Uber’s business model may, for now, be sound from the perspective of the company’s balance sheet – Uber is, after all, worth $50 billion – do we need to question whether it is a sound business model from a public policy perspective?

Update, 7/18/2015

To add to its growing list of legal problems, Uber was fined $7.3 million by a California administrative law judge on July 15 for refusing to provide information to state regulators about its business operations. Providing this information was a condition of Uber being allowed to operate its taxi alternative company in California. In light of the lawsuit brought against Uber on behalf of blind riders, it is interesting that one piece of information Uber was required to show California regulators is how accessible its cars are to the disabled.

Lawyer Disbarred For Unethical Use Of Social Media

Posted on July 8, 2015 by Eric G. Young

Lawyers really should learn how to use technology, particularly social media, appropriately. We read story after story about lawyers getting into trouble for tweeting, how a blog post jeopardizes a lawyer’s career or reputation, or simply how a lawyer’s use of social media is in plain bad taste.

Enter the latest example in this string of lawyers using new technology unwisely. According to an article from the ABA Journal, a Louisiana lawyer, Joyce Nanine McCool, has been disbarred by that state’s Supreme Court for using Twitter and an online petition-signing drive to influence the actions of two judges in a custody case. McCool tweeted

McCool argued that her use of social media was protected speech under the First Amendment. In a 4-3 ruling, the Court characterized McCool’s argument as an “artful” attempt to use the First Amendment as a shield against “clearly and convincingly proven ethical misconduct.” The Court went on to write that McCool showed an “utter lack of remorse” and that her social media postings contained “false, misleading and inflammatory statements” about the way the two judges handled the case.

Notably, McCool apparently tweeted that the judges refused to admit certain evidence in the case when the evidence had not even been presented. She also encouraged readers of her social media posting to contact the judges directly to express their feelings about the case.

Like so many of the other stories of lawyers behaving badly with social media, let McCool’s fate serve as a cautionary tale – be careful what you post on social media. It could come back to haunt – or even disbar – you.

You can read the full text of the ABA Journal article here.

Google Earth Evidence Is Not Hearsay, 9th Circuit Rules

Posted on June 20, 2015 by Eric G. Young

In 2013, Border Patrol agents arrested Paciano Lizarraga-Tirado in Arizona, near the U.S.-Mexico border, and charged him with illegally re-entering the U.S. Mr. Lizarraga-Tirado had been removed from the U.S. in 2012.

At his trial, Mr. Lizarraga-Tirado argued that the agents had crossed into Mexico when they arrested him. However, one agent had recorded the coordinates of the arrest using a handheld GPS device. To demonstrate these coordinates, the government introduced a Google Earth satellite image, which placed the arrest on the U.S. side of the border. Mr. Lizarraga-Tirado was, subsequently, convicted.

On appeal to the U.S. 9th Circuit Court of Appeals, Mr. Lizarraga-Tirado argued that the Google Earth satellite image and digital tack amounted to impermissible hearsay because they asserted where the agents worked and where they responded. The 9th Circuit disagreed. In an opinion authored by Judge Alex Kozinski, the Court ruled that machine-generated proof is not hearsay, writing:

Here, the relevant assertion isn’t made by a person; it’s made by the Google Earth program. Though a person types in the GPS coordinates, he has no role in figuring out where the tack will be placed. The real work is done by the computer program itself. The program analyzes the GPS coordinates and, without any human intervention, places a labeled tack on the satellite image. Because the program makes the relevant assertion—that the tack is accurately placed at the labeled GPS coordinates—there’s no statement as defined by the hearsay rule.

In United States v. Washington, 498 F.3d 225 (4th Cir. 2007), a DUI case, the majority wrote that machine-generated data of a positive test in a blood sample was not a statement and, therefore, not subject to the hearsay rule. Rather than being a statement by lab technicians, the 4th Circuit found that the proof was generated by a computer analyzing the sample.

Machine-generated proof has also been addressed by the 3rd Circuit. In United States v. Khorozian, 333 F.3d 498 (3rd Cir. 2003), the Court ruled that “neither the header nor the text of [a] fax was hearsay.” (Id. 506.) According to the 3rd Circuit, the rule against hearsay bars only statements made by persons. Therefore, “nothing ‘said’ by a machine…is hearsay.” (Id.)

Other federal courts have reached similar conclusions in a variety of contexts. In United States v. Safavian, 435 F.Supp.2d (D.D.C. 2006), for example, the District Court for the District of Columbia held that certain portions of email communications were nonassertive verbal conduct falling outside the rule against hearsay. Likewise, in Telewizja Polska USA v. Echostar Satellite Corp., 2004 WL 2367740 (N.D. IL 2004) (summary available here), the Court ruled that images and text posted on a website offered to show what the website looked like on a particular day were not “statements” within the meaning of the hearsay rule.

For some time now, state courts have reached the same conclusion regarding machine-generated proof. An early example of such a case is State v. Armstead, 432 So.2d 837 (La. 1983), which involved the admission of computer printouts to prove obscene telephone calls originated from the defendant’s telephone. There, the Louisiana Supreme Court ruled that digital evidence is not hearsay when it is “the by-product of a machine operation which uses for its input statements entered into the machine” and “was generated solely by the electrical and mechanical operations of the computer and telephone equipment.” More recently, the Mississippi Court of Appeals ruled in a capital murder case that Facebook notifications were not hearsay because there was no assertion made by a human. (State v. Smith, Case No. 2012-KA-00218-COA).

The ruling by the 9th Circuit Court of Appeals joins a growing list of courts across the U.S. ruling that machine-generated proof is not hearsay. Rulings such as these should make it easier to admit such proof. You can read the full text of the 9th Circuit’s opinion here, provided by Justia.

Exploding E-Cigarettes Can Cause Severe Injuries

Posted on February 21, 2015 by Eric G. Young

What Are E-Cigarettes?

First patented in 2003, e-cigarettes (or, “e-cig,” “personal vaporizer“) are battery-powered devices that simulate tobacco smoking by producing a heated vapor resembling smoke. Since becoming commercially available in 2007, e-cigarettes have grown popular as an alternative to smoking, but are even popular with those who have never smoked traditional cigarettes or other tobacco products. The rapid rise in the popularity of e-cigarettes is due, in part, to the many brands and “flavors” which have become available for sale in just a few years’ time. According to the U.S. Fire Administration, a division of the Federal Emergency Management Agency (FEMA), as of January 2014, 2.5 million Americans partake of the 466 brands of e-cigarettes and 7,764 unique flavors available.

E-cigarettes’ designs vary widely. Some look like traditional cigarettes, cigars, or pipes; others resemble flashlights. Some e-cigarettes appear to be a pack of cigarettes with a protruding tube. Like their design, the cost of these devices has a wide range – from $30.00 to over $300.00 – depending on the device’s battery size, liquid capacity, and vapor output.

How Do E-Cigarettes Work?

E-cigarettes have a heating element that vaporizes a liquid solution, also known as “juice.” Juice typically contains a mixture of propylene glycol (PG) (which increases flavor); vegetable glycerin (VG) (which increases vapor); nicotine; and flavorings. “Automatic” e-cigarettes activate the heating element when a user takes a drag from the device; whereas, manual e-cigarettes have a switch that the user depresses. This switch energizes the heating element to make the heated vapor.

According to the U.S. Fire Administration, “most manufactured devices have built-in timeout features that prevent overheating.” In addition, “many have locking features to prevent the switch from being activated in a pocket or purse.”

Can E-Cigarettes Explode?

Despite such design protections, numerous reports have surfaced, indicating that e-cigarettes may have a tendency to explode when not handled properly. In its report entitled “Electronic Cigarettes Fires And Explosions,” the U.S. Fire Administration found that, between 2009 and August 2014, U.S. media sources had reported at least 25 incidents of exploding e-cigarettes. In most of these incidents, the devices exploded while the battery was being charged, but in some cases, the devices exploded while being used. Injuries, including severe burns and disfigurement, occurred in a few of the incidents.

Florida Man Disfigured By Exploding E-Cigarette

One such incident involved a Florida man, Tom Holloway, who was using e-cigarettes to quit smoking. In 2012, Holloway suffered severe, disfiguring injuries when an e-cigarette exploded in his mouth. In addition to causing facial burns, the explosion knocked out some of Holloway’s front teeth and removed part of his tongue. According to local firefighters, the explosion can be blamed on the device’s battery. One firefighter reported that it would be like “trying to hold a bottle rocket in your mouth when it went off.” You can read more about this incident in an article from FindLaw’s Injured Blog here.

California Man In Critical Condition After E-Cigarette Explosion

Holloway’s case is not unique. Although the U.S. Fire Administration characterized injuries from exploding e-cigarettes as “rare,” reports of serious injuries from exploding e-cigarettes continue to mount. On February 8, 2015, for example, a California man suffered burns and cuts to his face when an e-cigarette exploded at a liquor store where the man worked. The e-cigarette exploded with enough force to break a glass display at the store, and left the man in critical condition at UC San Diego Medical Center’s burn unit.

Exploding E-Cigarettes Cause Severe Injuries, One Death In U.K.

Reports of severe injuries – and even death – have surfaced in the U.K. According to the BBC, in one of these incidents, a 62 year-old man was killed when an e-cigarette exploded, igniting an oxygen tank. It should be noted that firefighters suspect that the device exploded because it was being charged with a charger that was not the one provided with the e-cigarette.

In another incident from the U.K., a 48 year-old man who switched to e-cigarettes for health reasons suffered severe injuries when his e-cigarette overheated and exploded. The explosion showered the man’s legs with metal shrapnel, putting him in the hospital for 9 days. The explosion also caused a fire that consumed the man’s home.

Exploding E-Cigarettes: New Products Liability Cases?

With injuries such as these, products liability lawsuits for exploding e-cigarettes may well be on the horizon. In the U.S., products liability law is rooted in a case involving an exploding product. In Escola v. Coca-Cola Bottling Co., 24 Cal.2d 453, 150 P.2d 436 (1944), a waitress was injured when a Coca-Cola bottle spontaneously exploded in her hand. In a landmark opinion, the California Supreme Court held that the defendant could be liable for the plaintiff’s injuries. Most notably, in a concurring opinion, Justice Roger Traynor wrote that the doctrine of strict liability should be applied to manufacturers whose products cause injury to consumers. Traynor’s theory, ultimately, became the majority rule in Greenman v. Yuba Power Products, 59 Cal.2d 57, 377 P.2d 897 (1963), and the rule of law across the U.S.

Consequently, suits by injured consumers involving exploding e-cigarettes could raise a number of theories for possible financial recovery. Such suits might allege a “design defect,” for example. In other words, the injuries caused by the e-cigarette could have been avoided had a different design been adopted by the manufacturer. Injured parties might also allege a “manufacturing defect” – that is, an error in the manufacturing process rendered the device harmful to consumers. Other theories of possible recovery could include a failure to warn as well as a breach of the implied warranty of merchantability (that a device be sold in good working order).

However, manufacturers of e-cigarettes could still raise a number of defenses to such suits. Misuse of the product by the injured plaintiff is one such defense, and may prove viable in cases (like the death case from the U.K.) where the e-cigarette apparently exploded because the consumer was charging its battery with a device not recommended by the manufacturer.

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Uber And Lyft Face Uncertain Outcome In Lawsuits Brought By Drivers – Updated!

Posted on February 1, 2015 by Eric G. Young

Mobile-app-driven driver services, Uber and Lyft, each face separate lawsuits seeking class action status in San Francisco federal court. The cases have been brought against the companies by their drivers, alleging they have been misclassified as independent contractors instead of employees and are entitled to reimbursements for expenses such as gas and vehicle maintenance.

Currently, the drivers pay for such expenses themselves, an article in Reuters reported. According to Reuters, Uber is the most valuable U.S. startup, valued at $40 billion. Lyft has raised some $331 million from various investors.

At a hearing on Thursday, January 29th, U.S. District Court Judge Vince Chhabria, the judge presiding over the Lyft lawsuit, said that it was “very difficult” to decide whether the drivers were employees or independent contractors. However, according to the judge, California law appeared to favor employee status.

At a hearing the following day, U.S. District Court Judge Edward Chen, the judge presiding over the Uber lawsuit, added that Uber had a “tough argument” to make that its drivers were independent contractors. He further commented that a jury might have to decide the issue.

Both judges have yet to issue final rulings on the cases.

It is unclear how much money is at stake in the lawsuits because the drivers have not stated an amount they are seeking as compensation. However, because the lawsuits seek class action status, the amount could be substantial. In fact, if successful, the lawsuits could potentially undermine both companies’ entire business models, which insist they are nothing more than software platforms pairing up those seeking a ride with those who have cars.

If you’re interested in reading a copy of the Lyft complaint, you can find one here. Links to copies of the Uber complaint as well as other pre-trial filings in that case can be found here.

Update:

On March 11, 2015, U.S. District Court Judges Edward Chen (the judge presiding over the Uber case) and Vince Chhabria (the judge presiding over the Lyft case) both ruled that a jury must decide whether Uber/Lyft drivers are employees or independent contractors. Recognizing that the drivers had the characteristics of independent contractors in some respects, but characteristics of employees in others, Judge Chhabria wrote, “A reasonable jury could go either way.”

The rulings rejected Uber and Lyft’s arguments that the drivers must, as a matter of law, be considered independent contractors.

You can read more about the decisions here.

Pope Francis Says Families Need To Put Down iPhones

Posted on January 26, 2015 by Eric G. Young

On Friday, Pope Francis urged families to learn to talk to one another again. The way to do that? Put down the iPhones and Twitter feeds.

Is the Pope on to something? What do you think? Are we losing the ability to communicate with each other person-to-person because we spend too much time communicating electronically?

You can read more about the Pope’s remarks in this excellent article from The Telegraph.

Taiwan Passes Law Restricting Children’s Use Of Electronic Gadgets

Posted on January 26, 2015 by Eric G. Young

Do you think kids spend too much time fiddling with electronic gadgets? If so, you are not alone. Taiwan has just passed a law which requires parents to restrict the amount of time their children under eighteen years old spend using such gadgets. According to the new law, children on the island nation cannot “constantly use electronic products for a period of time that is not reasonable.”

The law subjects parents of children who become “physically or mentally” ill from their overuse of “electronic products” to a fine of up to $1,600.

Putting aside issues of enforcing such a law – which could be complicated considering the law fails to define what is or is not “reasonable” – Taiwan’s law is not necessarily unique in its attempts to regulate the use of “electronic products.” China has attempted to restrict excessive online gaming since 2005, and South Korea already regulates online games as a form of addictive substance. However, the vast majority of nations – particularly Western nations – leave the use of electronics, even by children, up to “self-regulation.”

Is Taiwan taking the right approach? That is hard to say. Laws can be built on good intentions, and still be flawed. Moreover, not all social ills can be cured by passing punitive laws. Still, Taiwan’s concerns appear well-founded. The American Academy of Pediatrics (AAP) recommends that kids spend no more than two hours per day on “screen time.” However, according to a recent study by the AAP, some teens spend as much as eleven hours per day “on screen.” In other words, some teens spend over 5 times the recommended number of hours each day looking at one form of electronic display or another. That same study found that eight-year-olds spend an average of eight hours per day with electronic media.

According to the AAP, overuse of electronics by kids causes “attention problems, school difficulties, sleep and eating disorders, and obesity. In addition, the Internet and cell phones can provide platforms for illicit and risky behaviors” by children.

What do you think of Taiwan’s approach? Please feel free to respond with any comments about this topic.