TECHNOLOGY AND FHV INSURANCE

Dashcams and other telematics devices are often used to enable for-hire vehicle fleets to improve their safety operations and obtain better insurance coverage and prices. These technological and integrations are not new, but insurance companies tend to look to insurance companies that have safety as the pillar of their fleet. 

Small and midsize fleets often lack the resources necessary to impact safety in the same ways as some of the more successful fleets. A for-hire vehicle and/or transportation entity need safety and risk-management tools as well as end-to-end solutions. These can be obtained, but one thing that is lacking in New York City is the ability to obtain a one-on-one relationship with a dedicated fleet services representative with an insurer.

Fleets desire to improve safety and want to work with insurance companies to form a relationship with their loss control representative but underwriters still seem to care more about how safe you have been over the past three years and less about how much you’re willing to invest in safety going forward. Insurance companies can deliver more tailored and effective products and services by leveraging real-time data. Data also is what powers services and tools fleets can use to achieve insurance cost savings.

Risk management typically begins with high-quality telematics—including interior and road-facing dashcams. However, great telematics are not enough to protect fleets from all risks they face. The data generated by the telematics devices has to be incorporated into a well-managed risk management program for fleets to see safety results. Fleets often are overwhelmed with data and don’t have the time or resources to fully evaluate and learn from it.

Also, being able to coach drivers on their specific patterns of behavior can go a long way toward improving safety. Additionally, fleets need to demonstrate they have done everything the right way to avoid nuclear verdicts. The data obtained also can and should be used to coach, manage, and reward drivers which tends to significantly improve their safety and engagement. 

In many cases, insurance companies are not keeping up with the evolution of technology within the for-hire transportation industry. The reality is that today, many insurers don’t offer price breaks to a fleet that has ADAS systems in their vehicles. Even if a fleet fits its vehicles with the latest and greatest technology, they will not realize immediate, upfront savings. The best way for a fleet to ensure that they get an excellent insurance policy is to constantly think of safety, not just in the short period when they are actively shopping for insurance.

Implementing safety technologies, such as road-facing dashcams, can be costly upfront. However, they will provide both immediate and long-term benefits that will far outweigh the temporary challenges. Integrating baseline technology will quickly help improve a fleet’s safety performance and efficiency of their operation and help reduce the probability of losses. 

The NYC Transportation Crisis

Dear Fellow For-Hire Vehicle Stakeholder:

 I know that these are trying times, and we have all been struck. What started off as news of a virus, seemingly no different than the common cold, has now turned into a worldwide emergency that is quickly transforming the situation into one of the gravest political and societal challenges of the modern age. Initially, most of us believed the effects would be short term and limited to those who became infected. Now, in only a short period of time, it has turned into not just mass isolation for purposes of self-preservation but is leading to disaster to those who have not been infected with the Coronavirus. In order to protect the health and safety of the residents of the City of New York, and the entire world, businesses have been forced to close and lay off untold numbers of people. Out of work, with no pay, limited availability for food and everyday supplies, like toilet paper and paper towels, can and is quickly leading some into despair. And rightly so.

The For-Hire Vehicle (“FHV”) industry in New York City (“NYC”) was already reeling from years of overregulation, unchecked growth of the marketplace, over saturation of the arena with new drivers, and what I call the “Uber Effect” (massive disruption of the FHV industry due to the entrance of the app companies). FHV drivers were already bringing home less and less money as well as spending more and more time on the road away from their families. Taxi medallion owners were already going bankrupt. Traditional FHV base owners were doing their best to keep their business afloat amid the loss of drivers to Uber and Lyft. Some were on the brink of going out of business. And this was all before the Coronavirus hit NYC.

Now that the Coronavirus has infiltrated NYC, as a precautionary measure, restaurants have been forced to closed, and the schools are shut down. People are afraid to come into contact with one another. Most of all, no one is travelling. The three NYC area airports are virtually empty which means FHV drivers and FHV bases have no one to transport. It is as if society has shut down and our elected leaders are trying to help take measures to stop the spread and contain the virus all while attempting to offer some relief to those affected the most.

In the meantime, we all have to put food on the table and pay the rent. How does one do this when you are essentially out of work? The bills you have don’t get paid on their own. For the over 100,000 FHV drivers in NYC, this is a recipe for disaster. Questions are coming in asking, “when will this end”, “what will I do in the meantime,” how do I feed my family when I have no work.” These are all genuine and valid questions. No one in the FHV industry is immune to the effects that this virus has caused. It is a vicious cycle. If an FHV base is not receiving calls, then drivers will have no one to transport. If drivers have no one to transport, then they will be unable to pay the rental on their vehicle or their vehicle loan. If a FHV driver cannot pay their vehicle rental, then the rental companies will not be able to pay their loan, thus a loss of the vehicle for the rental company and the driver. When will this cycle end? The reality is that no one knows for sure. Some industry experts are predicting as low as 2-3 week but potentially up to 2 to 3 months.

So, the real question is what do you do? I would like to believe some people have some savings to be able to weather the ill effects of having no income for a few weeks. But we all know that most in the FHV industry are lucky to still be operating, much less to have a savings account to weather this storm. No one could have prepared for this disaster. But there are steps you can take to help yourself. First, no matter what part of the industry you work in (a FHV base owner, FHV driver, FHV vehicle rental company, medallion owner), you have to all come together and work on this together. If you don’t come together as a team, then your chances of surviving this crazy situation will likely be bleak. Remember, there is strength in numbers. Remember, there are many others out there who are in the same situation as you. Most of all, you must take action and take it now.

If you have a vehicle lease, call up the vehicle owner work out some payment plan with them. If you have a vehicle loan, call up your bank/lender and ask for your payments to be deferred until the end of the term. Call your insurance carrier to see what your options are for an extension of time for payment. Use what credit cards you may have, make the minimum payment, and/or ask the banks to make an exception to their normal payment requirements.  Reach out to your trade organization to see what they can do to help you, just as you will be asked what you can do to help others too.

People around the world who are employed are being laid off on a massive scale, but they have some short-term options like unemployment.  As independent contractors, FHV drivers do not have the luxury of filing for unemployment. For years I have been an advocate of creating a system for the provision of benefits to FHV drivers and others in the ever-growing “gig economy.” Such benefits include medical, vision, banking services, disability, retirement, and individual savings accounts to be used for the proverbial “rainy day.” If this type of program were in place now, the stakeholders in the FHV industry would have a better fighting chance to weather this storm. It is precisely this type of benefits plan that I am working on providing to FHV drivers and other independent contractors. I will continue to do my best to make this plan a reality, so in the future, the FHV community has more of a safety net to fall back on when hard times hit.  

While most of us have never been through anything like this, we have to remember that NYC and society, in general, has weathered its fair share of storms in the past. World War I, The Great Depression, World War II, The Oil Crisis of the 1970s, the Banking Crisis of the 1980s, the Dotcom Bubble/burst, September 11, 2001, and the Housing Market Crisis, just to name a few. Do what you have to do to survive in the short run but keep a positive outlook. We, as a people, have weathered many crises in the past, and we WILL survive this one.

As always, feel free to contact me with any questions or concerns at http://www.shankerlawfirm.com/questions

Sincerely,

Steven J. Shanker, Esq.

Another Uber Lawsuit Against the NYC Taxi and Limousine Commission

While Uber recently filed a new lawsuit against the NYC Taxi and Limousine Commission seeking the Court to declare the cap on new for-hire vehicle licenses null and void, I have read their moving papers and they seem woefully inadequate. I have reviewed the NYS electronic case folder and there is no memo of law in support of their position and no arguments in their affidavit in support indicating why the cap should be deemed to be invalid. This is rather unusual. The City will undoubtedly file a motion to dismiss and then Uber will file their Memo of Law at that time. In either event, I would expect more form a firm like Boies, Swiller Flexner.

On a related note, back in February, 2019, Uber filed it initial lawsuit arguing that the cap was illegal as it involves the improper delegation of legislative powers, it violated the home rule provision and the state law pre-empts the ability of the City to cap FHVs. Uber has some decent arguments in this case, but ultimately they are not going to win the unlawful delegation of powers argument. While the seminal Court of Appeals case of Boraeli v. Axelrod is still alive and well, the only time it was actually use to successfully defeat the enactment of a regulation is under the sugary soda ban that was nullified by Judge Milton Tingling, who is now the Clerk of the county of New York. That case involved a regulatory agency making legislative decisions. I the FHV cap case, the city council is the legislative body and they gave the TLC the power to cap. While I dont agree with the City’s position from a business perspective and from the perspective of what is best for the FHV industry, I do think the City will ultimately prevail.

But dont take my word for it, read the City’s motion to dismiss, the City’s memo of law in support, Uber’s memo of law in opposition and the City’s memo of law in reply. All are attached here fo your review. I have my own opinions based upon my review of the law, but you can review and see if you agree to disagree and determine who you think will ultimately prevail.

Click Here to Read Uber’s Complaint

Click Here to Read the City’s Motion to dismiss

Click Here to Read the City’s Memo of Law in Support of its Motion to Dismiss

Click Here to Read Uber’s Memo of Law in Opposition

Click Here to Read the City’s Memo of Law in Reply

Data is King!!!

Data is King

In the early days, people though Uber and Lyft were crazy to think people would ride in each other’s personal vehicles. In NYC the number of FHV’s rose dramatically since 2013. Uber and Lyft need massive supply of vehicles and driver to provide on demand service. The increase in the supply lead to an increase in demand which led to a need for more supply of vehicles. The 8.6 Million residents and over 60 million visitors are always seeking to go from point A to point B. All these vehicles are being driven primarily in the 22 square smiles of Manhattan (302 square smiles of all 5 boroughs). Manhattan has a famous grid system that dates back to 1811. What was known to be the Commissioners’ Plan of 1811, which planned Manhattan’s famous grid system, was completed at the end of the 19th century and produced 11 major avenues and 155 cross-town streets still used today. The grid begins north of Houston Street, since the area to its south was well established when the grid came to be in 1811. Broadway, one of Manhattan’s oldest thoroughfares (and the world’s longest) runs perpendicularly as it progresses north from the tip of Manhattan up into the Bronx.  As it crisscrosses the straight avenues, it creates large, open intersections (Union Square, Madison Square, Herald Square, Times Square, Columbus Circle, etc.).

Lyft and Uber seem to have a mission of improving people’s lives with the world’s best transportation. But this is more than just about technology or moving into adjacent categories like bikes and scooters. Lyft and Uber seem to see ride-hailing as a way to upend the negative aspects of automobiles. Keep in mind that they are the second highest household expense and a typical car is used only about 5% of the time. Despite all the success, Lyft and Uber are still in the early phases of its market opportunity, as rideshare networks account for roughly 1% of the miles traveled in the US. But to truly achieve the vision of transforming the transportation industry, the company will need to be aggressive with AI (Artificial Intelligence).

By embedding machine learning into its technology stack, Lyft and Uber have the advantage of data on over one billion rides and more than ten billion miles – which allows for training of models to improve the experience, such as by reducing arrival times and maximizing the available number of riders and creating sophisticated pricing models. But when it comes to AI, the holy grail is autonomous driving. Part One is creating the network. The nature of the Manhattan grid and the rise of Uber and Lyft created the network. The path to Autonomous vehicles is largely tied to the continued success of Uber and Lyft. This is because Autonomous vehicles will likely be most effective when managed through sophisticated routing systems which ridesharing networks have. As such, they can manage the network. Part three is autonomous vehicles. Most accident are caused by human error. Take the human partially out and then fully out of the equation and you are left with less and less accidents. The level 5 autonomous vehicle is supposed to be in operation within the next 10 years. Even if you push the timeline out further, the reality is that with partially autonomous vehicles there will be less accidents.

A company must have resources and scale to effectively pursue to collection of data and AI. Data is the “cash cow” of the digital age. Like gold and oil in decades past, there is a rush to accumulate as much data about consumers as quickly as possible. Companies like Facebook and Google are acquiring and making a fortune off the sale of said data. The current environment surrounding data acquisition and the proliferation of sensory technology in our vehicles is astounding. The increased presence of sensors and cameras within modern cars yield greater ability to monitor performance and surroundings. Today’s vehicles can identify which part of the car’s interior needs maintenance or if there are obstacles around us as we drive. These sensors generate data that is analyzed in the hopes of creating self-driving vehicles. Self-driving cars would generate immense amounts of data (1 gigabyte per second). The possibilities created by these acquisitions are equally immense. Vehicles will potentially be able to relay the location of specific landmarks like parking spaces in a crowded lot, for instance. While the ability to locate a parking space from a single application on your phone is beneficial, it is only one positive change self-driving vehicles could bring about.

So how does that affect the workforce. First, self-driving vehicles would remove driver necessity in the transport industry. Taxis, cargo trucks, etc. would find their once human-operated vehicles controlled by a computer receiving incredible amounts of data as it travels.  There would not be payroll discrepancies about overtime wages. Gone would be the days of driver error resulting in accidents (which result in $242 billion a year in the United States). Like the invention of the mechanized assembly line, the widespread implementation of self-driving vehicles would make the use of anything else obsolete.

The presence of affordable autonomous travel would exponentially expand the travel market. Transportation companies would be able to enter and reach people in the developing world who are unable to afford vehicles of their own or transport services operated by human drivers. The presence of vehicles always connected to the internet opens up the avenue for location and time-based advertisements. Companies could not only generate revenue from the use of vehicles and the sale of vehicle data, but also from advertisers trying to reach constituents in a particular region.

Self-driving vehicles can potentially streamline the route optimization and dispatching processes of your fleet – new orders will no longer have to be communicated from headquarters, as the car nearest a request would immediately get the request. Traffic congesting routes would be circumvented as the car receives data on the various paths towards its destination. The advent of the self-driving vehicle will be disruptive to various industries. Companies will have to adjust their processes, but the benefits should outweigh the costs. On the ever-growing hill to cutting-edge technology, there is one item to always keep in mind: Data is King.

Lawyers as Strategic Advisors in the Trucking Industry

The transportation industry is an unpredictable environment in which to do business. The trucking industry is a heavily regulated industry that involves many pitfalls and hurdles. Advisors to the transportation industry know that the best way to handle this challenge is to plan for it. Transportation entrepreneurs often need a full range of services to complement their management team. Such services often include crafting alternate carrier practices, creative planning, utilizing innovative information technology solutions and the implementation of best business practices.

Businesses today don’t need armchair philosophizers; they need business-savvy “real life” counselors who can help guide their company to success. Those in the trucking and logistics segments of the transportation industry often need advisors who can focus on business issues such as carrier profit improvement, enhancing margins, gaining efficiencies and driving down operating costs. Consultants often provide a thorough analysis of the current business operations and identify issues that need improvement. But an outside consultant usually lacks the trust of the leaders of a company and does not often grant them a seat at the decision-making table

Succeeding in the trucking industry requires allocating time and resources to the areas that your business will most benefit your bottom line. Beyond developing your services to target the market, transportation entities most often need advisors who have the heart and soul of your business in mind. The most accomplished lawyers are those that become "trusted advisors" to their transportation clients. This means that their counsel is sought not only for discrete cases, but also on an enterprise level- and not just for "legal" matters. The trusted advisor has a profound understanding of the clients’ business, the industry the client works in and can provide professional judgment, emotional intelligence, candor and experience tailored to the client’s risk tolerance and enterprise objectives. The trusted advisor must be more than just someone who knows the law or who can handle a case. The trusted advisor must be a part of the company's DNA.

Business leaders in the transportation industry today expect their lawyers to counsel them on legal matters, but not all realize that a lawyer who is knowledgeable in the business of transportation can contribute to the success of their business by serving as strategic advisors. While everyone ultimately seeks to earn a seat at the table and be considered a strategic advisor, many lawyers fall short. Nothing is more frustrating for the business team and the lawyer when this relationship doesn’t exist.

A lawyer can only be viewed as a strategic advisor to a transportation entity if they know the industry and the specific business well enough to selflessly contribute to the issues facing the company. Moreover, if the lawyer views their role as to only weigh in on legal issues or the legal implications of issues instead of the business implications, they will be viewed as a legal advisor and will not be thought of as being able to add value beyond that. The business lawyer is the one who leaders want to invite to participate in meetings which are viewed as strategic. Oftentimes, legal issues are raised in the typical “non-legal” meetings and, if a lawyer is not present, decisions may be made that need to be undone or modified in the future. A lawyer will be viewed as a strategic advisor when they are not just available, but are solution-oriented and well-respected by their peers in the company

The job of the strategic lawyer is to provide advice to the business decision makers regarding the legal risks of the various courses of action, devise practical legal and compliant solutions that get management and the company where they need to go to achieve the company’s goals, and objectives and aid the CEO, COO and Board in making those hard decisions. The strategic lawyer communicates his or her understanding of that role and who the proper decision makers. Too many lawyers think that they should be making the decisions. That’s fatal. Of course, the lawyer needs to always urge compliance with applicable laws and regulations and reports up the chain of command. The strategic advisor lawyer must be focused almost entirely on the company’s business and not just on the competitors of the company. They must be the innovator disruptors in the industry, focusing on executing plans and making the competition irrelevant.

The main reason lawyers fail at being strategic advisors is risk tolerance. Most lawyers are programmed to be risk adverse. How many attorneys have you heard of that won’t make decisions when there is a risk involved in the decision? I know a lot. While I subscribe to the general principle that corporate attorneys are advisors and not usually decision makers for business operations, corporate attorneys in the transportation field need to be ready to help the leaders make decisions and then support those decisions even when those decisions present risks. The best strategic advisors identify the risks for the business and then assist the business to mitigate and manage the risks. If the risks are extreme, a good strategic advisor will highlight those to the business as completely as possible which may include “what if” scenarios and case examples of other companies or other decisions AND if available, alternate decisions that may accomplish the same or similar purpose. A strong lawyer strategic advisor will have to work against the way he or she is programmed to avoid all risk and instead will have to consider the best interest of the company in advising management or the Board. If decisions are made by the company with the right information available and the right approach to manage the known and potential risks, the lawyer has done his or her job.

Lawyers succeed as strategic advisors by being appropriately balanced regarding risk and exercising good judgment. An excellent strategic advisor needs to constantly strive to find the right balance between supporting the business’s operational and strategic objectives and mitigating legal, regulatory, and reputational risk. The calls at either end of the spectrum are easy. The calls in the middle are typically far more nuanced and require good judgement in balancing multiple, often competing, considerations. The other way they fail is by not providing actionable advice or recommendations. A lawyer who simply describes the risks and opportunities of various options without providing a clear recommendation on which option the business ought to pursue is unlikely to be viewed as a good strategic advisor. A good strategic advisor will listen, truly understand, speak up and adapt to the changing needs of the business organization.

Properly serving the company as a trusted advisor means you have to be proactive with your business owner clients. Most lawyers who are serving business owners focus on incorporation or agreement review, intellectual property, trademarks, copyrights – things that are reactive. So they wait until one of their business owner clients comes to them with an issue and then they handle it. If there’s business litigation that’s needed, they handle it.

But what very few lawyers do – and I’m suggesting that transportation clients need – is to create a more proactive advisory relationship with your counsel.

The first thing that proactive counsel is going to do is to really get to know your clients’ business model. How do they earn their money? What types of customers do they have? How can you help them to collect payment and close deals more easily? This is one of the areas that the lawyer as trust counsel can provide, but is often overlooked by business owners. As a corporate trusted advisor, one of the things that counsel can and should do that will help the client make money (more money) right away is to help them to be able to close their deals more quickly and easily. The attorney as trusted advisor has a direct influence on this by how agreements are drafted and how counsel suggests that the agreement be signed. The Council as trusted advisor to a business owner must proactively meet with them at least one time per week. Speaking with the client on a regular basis empowers the trusted advisor to proactively make recommendations and be working on matters that will help to grow the business and secure the perimeter of the business.

The trust advisor must also meet with the company's leadership and financial team. This is one way that the trusted advisor can make a huge impact on their bottom line, by making sure that their financial systems and their financial controls are being maintained properly.

That also allows counsel to support them in getting in place a strong asset protection plan

Once you get involved in coordination and quarterbacking, transportation clients begin to see their counsel as the trusted advisor they can turn to when anything happens in their business and sometimes in their personal life. In the heavily regulated and dangerous field of trucking and transportation, there is simply too much at stake to rely upon old-school methods of business operations. Business leaders in the transportation world are always worried about disruption. Some high-tech rival might, after all, do to their sector what smartphones did to the photography industry, what e-commerce is doing to retail, and what financial technology (fintech) is threatening to do to consumer banking. 

When disruption does affect a company, it is frequently because the enterprise was already vulnerable in some fundamental way; moreover, many incumbent companies accelerate their decline through their efforts to forestall it. Panic-driven efforts to avoid or combat disruption can easily lead to hasty, reactive, short-term-oriented decisions that move a company in many directions at once, distracting its management and squandering its resources. The fear of disruption can thus be worse for a company than the actual disruption itself.

Of course, complacency or inaction can be just as problematic. Technological changes in the transportation industry, and other external competitive forces, affect many business realities in the transportation world. Proactive measures are often needed. But they should be well thought out. The best means to be proactive is to look to your trusted advisor. While many transportation entities these days have counsel to turn to when there is a problem, many do not have an attorney as a trusted advisor who can be proactive and beneficial in many more ways than the legal industry has traditionally provided service to their clients.

The disruption in the transportation, and in other industries, has also caused a disruption in the traditional modes in which business leaders seek advice. The best means to proceed with a business decision or a corporate transaction is not to seek counseling after the fact, but to receive proactive advice from someone. That someone is increasingly becoming the attorney as trusted advisor. But this type of relationship between the attorney of trusted advisor in the business owner and/or CEO does not develop overnight. Sometimes it takes many years to find a counselor as trusted advisor. This is partly due to the fact that it takes time to find someone who a business leader can share their deepest darkest secrets as well as their confidential business plans. It is also partly due to the fact that not all attorneys see themselves as the person who should be providing proactive counseling to a company.

In my experience over the past 20 years, the businesses who succeed the most and are prepared to deal with the worst-case scenario are the ones who have an attorney as their trusted advisor in the corner to help deal with all aspects of the operations of the company. The transportation industry is changing right before our very eyes. The trucking industry is in a state of flux. The peer to peer car sharing industry has provided a means by which to revolutionize the trucking industry. To stay ahead of the curve in the trucking industry you must not only have a trusted advisor, but such trusted advisor must be able to be proactive for the day-to-day operations while keeping their eye on the horizon for changes and developments in the industry. The failure to do so can lead to disastrous consequences. Remember what happened the Kodak?

ADA Compliance and Transportation offered via Web-Based Booking Engines

In the old days in New York City, if you wanted private for-hire ground transportation, all you had to call was call a car service call center. Some had easy to remember telephone numbers and others you could reach by calling the 311 operator or by utilizing the telephone book. With the advent and proliferation of the internet, most transportation entitles created websites by which to advertise their services. Rapid advances in technology made booking transportation over the telephone a bit outdated and time consuming. Transportation entities then started to integrate their website with a booking engine/booking platform by which people seeking transportation for-hire could check availability and costs and make bookings at lightning speed. Offering a great user experience online became the new expectation. Despite the advent of the smartphone application by which to book transportation for-hire, many car services still provide the public with the ability book private transportation on their websites.  

The ADA was enacted in 1990 to prohibit discrimination and ensure equal opportunity to people with disabilities. This applies to State and local government services, employment, commercial facilities, transportation, and places of public accommodation, which are essentially private entities that affect commerce.  These laws can be enforced by the Department of Justice (“DOJ”) and through private lawsuits. An unresolved legal issue has recently arisen which has led to uncertainty in the law. Uncertainty in the law almost always leads to costly litigation because a company does not clearly know what its legal obligations are. People with disabilities should be able to easily access the Internet, but to accomplish this, the DOJ should have issued regulations. It issued regulations for State and local governments to know what it must do to become compliant with the law, but the DOJ did not issue regulations that would apply to private business.

The lack of regulations has led to the absolute worst-case scenario. People with disabilities have not been served since most companies are unaware this is an issue. Most companies do not even realize this is a problem to consider and resolve until they receive a demand letter from a lawyer or are served with a lawsuit. This leads to a scramble to get compliant. Unfortunately, it can take up to a year to do so depending on the complexity of the website. Transportation companies have relatively complicated websites because customers are presented not just with information about the company, but are provided with a customized web reservation site that is often an extension of main website. Private, customized portals are often created for corporate accounts or large groups. These portals can also accept marketing and/or promotional codes helping to increase both customer loyalty and reservation volume.

At present, a company website that is purely informational or educational in nature is likely beyond the ADA’s accessibility requirements. But a website that sells goods or services directly to the public may be regarded either as a sales or service establishment in its own right, or as a service of such an establishment, and thus covered by the ADA. On the whole, it is hard to argue that a car service that provides a website booking engine by which the public can utilize to arrange for transportation does not engage in some form of commercial activity. Thus, it is safe to assume that car service websites are subject to the ADA. 

The most common allegation in a Website Accessibility Lawsuit is that the company website is inaccessible to visually-impaired customers (some cases now involve mobile apps). Such customers often rely on screen-reader software like JAWS or NVDA to interact with and access a site's content. If the website is not compatible with this or similar screen-reader technology, most visually-impaired customers will not be able to use the website.

Meanwhile, plaintiffs’ attorneys across the country are taking advantage of the confusion. More than 260 website accessibility lawsuits were filed in 2016, and significantly more were filed by the end of 2017. But these numbers do not even begin to cover the cases that are settled pre-litigation. 

As stated above, the DOJ has not issued regulations that apply to private businesses and the law remains unclear because there is a split among the federal courts as to whether the statute applies only to physical structures. According to the more narrow interpretation adopted by several courts outside of New York, a disabled person is entitled to the “full and equal enjoyment” of goods and services only if they are offered at a physical location. Thus, if a business operates exclusively through the internet, without any physical location where customers interact with the business, the ADA’s mandate for accessibility does not apply. Most transportation companies in New York have an office, but they do not offer their services at a physical location where a member of the public can come to book transportation for-hire. The below is just a short indication of how the courts have been ruling on this issue. It has not been uniform and certainly not favorable to businesses in New York.

In 2017, defendant Bang & Olufsen obtained a dismissal in a Florida court because the plaintiff failed to establish a nexus between the company website and its physical locations. In California, a judge dismissed a website accessibility suit against Dominoes, finding that the company had met its ADA obligations by providing a 24-hour toll-free phone line to assist visually-impaired customers. The judge further ruled that to require website accessibility without meaningful administrative guidance would violate Dominoes' due process rights. Yet three months later, another judge in the same federal district ruled otherwise in a case involving Hobby Lobby. Similarly, in the October 2017 Dave & Buster case, the court recognized that providing a disability assistance telephone number may be an alternative means to comply with the ADA, but the court refused to dismiss the lawsuit, in part because it was unclear if the ADA notice and phone number itself were accessible (i.e., could be read via screen-reader software).

On the other hand, the New York Court have been quite favorable to plaintiffs. In July, 2017, the U.S. District Court for the Southern District of New York in Marett v. Five Guys Enterprises, issued a decision directly speaking to the applicability of Title III of the ADA (Title III) to websites, denying Five Guys’ motion to dismiss, and holding that Title III does indeed apply to websites.  Facing a class action lawsuit brought by serial plaintiff, Lucia Marett, Five Guys sought to dismiss the claim that its website (which, among other things, allows customers to order food online for delivery or pick up at its brick and mortar stores) violated Title III and related state/local statutes because it is inaccessible to the blind, on the grounds that Title III does not apply to websites and, even if it did, the case was moot because Five Guys was in the process of updating its website to provide accessibility.  The Court rejected Five Guys’ arguments.  Citing both the text and the broad and sweeping purpose of the ADA, the Court held that Title III applies to websites – either as its own place of public accommodation or as a result of its close relationship as a service of Five Guys’ restaurants (which the court noted are indisputably public accommodations under Title III).  Further, the court was unmoved by Five Guys’ ongoing efforts to make its website accessible because they had yet to successfully do so and there was no absolutely clear assurance that further accessibility issues would be avoided. 

In August 2017, Judge Weinstein of the Eastern District of New York denied retailer Blick Art Materials' motion to dismiss a website accessibility lawsuit under the ADA. The court found that Blick's website was subject to the ADA, even for the goods and services that it sold independently of any physical retail location. The judge rejected Blick's arguments that the court should wait for DOJ guidance on a technical website accessibility standard, and that it would violate Blick's due process rights to require its website to comply with the ADA without any administrative standards or regulations. 

It seems clear that many of the courts that have considered these issues have been unsympathetic to businesses, and plaintiffs are taking advantage of the reality that many businesses are unaware of their obligations under the ADA and do not have fully accessible websites. Website accessibility lawsuits are proving to be challenging to defend and expensive to resolve. If a court finds that a website is inaccessible, it can order the business to make its website accessible and to pay the plaintiff’s attorneys’ fees, costs, and expenses. Additionally, in certain jurisdictions, the court can order the business to pay the plaintiff monetary damages and/or civil penalties under state and/or local law. Many courts and the DOJ have viewed the privately developed Web Content Accessibility Guidelines (WCAG) 2.0, Level AA, as the de facto standard for ADA compliance. Accordingly, transportation entities who offer a web booking engine to their customers should consider reconstructing or redesigning their websites in compliance with this standard. Even if a business successfully defends such a claim, the expense of litigation may exceed the cost of compliance.

 The good news is that the United States House of Representatives recently passed a bill aimed at stemming the floodgate of ADA lawsuits brought by a small number of serial plaintiffs. The bill, the ADA Education and Reform Act of 2017 (H.R. 620) would impose a notice requirement and would allow businesses a grace period to cure alleged accessibility barriers before a lawsuit could be filed. Although not specifically aimed at particular type of ADA lawsuit, the reforms in the bill may provide relief from the large number of website accessibility lawsuits filed over the past few years. The bill will now move to the Senate. Regardless of whether the bill ultimately become law, it reflects a growing acknowledgement that private lawsuits under the ADA have reached a critical mass and until certain reforms are enacted to limit attorney driven suits, it is important for all businesses to understand the need for ADA compliance and the pitfalls posed by non-compliance.

A New Synergy Between Automakers and TNCs

Automakers are in a complex relation­ship with Transportation Network Companies (“TNC’s”) such as Lyft and Uber. In a way, Uber and Lyft and Uber are both competitors and customers. The Uber and Lyft of today do not own vehicles. Their driver’s own them and in the short run, auto man­ufacturers will likely start producing customized vehicles for TNC drivers. In the long run or as soon as the level-5 driverless cars come on the scene, Uber and Lyft may have no choice but to go into the auto manufacturing business.

The Uber and Lyft of today are a quasi-technology company and quasi transportation service provider. They are not one to the exclusion of the other. The transportation industry, as far as the transportation of persons by ground involves 3 parties: the driver, the customer/passenger and the 3rd party intermediary that puts them together. Once the autonomous vehicle takes the driver out of the picture, Uber and Lyft will have no choice but to embrace a new business model that involves ownership of vehicles

Owning and operating a fleet of automated vehicles is vastly different from operating an app-based demand-responsive company that facilitates transportation of persons. Technological advances in transportation have made it inevitable for Motor City to move into Silicon Valley, just as the power of fleet ownership will force TNCs into partnership with vehicle manufacturers.

TNC’s are well on their way to making their vehicles more “passenger centric” by creating a com­fortable and seamless passenger experience — as opposed to today’s driver-centric vehicles. Passengers do not have to concentrate on driving and as such, there will be an increased focus on entertainment, infotainment and connectivity within existing vehicles. This effect of vehicles being more passenger centric will become even more pronounced when we have driverless vehicles. TV, audio, media, video games, video conferencing and high-speed Internet will become more commonplace.

The auto manufacturing industry is already working on the autonomous vehicle, which may place them in a better position to create their own ride-hailing service. They have the experience with vehicle creation and ownership and Uber has shown the world the way to creating a ride-hailing service for on demand ground transportation. But why would big auto create its own ride hailing platform when they can partner with Uber or Lyft. The big auto manufacturers already have name recognition and capital to make the leap and the driverless vehicle will not embroil them in the never-ending saga of whether Uber’s drivers are employees or independent contractors. This is an issue that has the potential to cause Uber to implode, especially in California, its home state. The decision in Dynamex makes that potential crystal clear.

All this points toward an era of transition where automak­ers, TNCs, software companies and other innovators in media and infotainment, such as Vugo, will operate in cooperation and some competition simultaneously. Over the next 5-10 years, they will all fumble their way through a convoluted series of new partnerships and alliances.

Regardless of whether to own or manage a fleet of vehicles, administrators are going to use and monetize their assets to the fullest. That means doing more than just connecting passengers with vehicles. It means finding new ways to unlock hidden value based on the information, communications, processing capabilities and physical location of those assets and the customers that use these vehicles. The cumulative result will be a fundamental shift in the business model for existing manufac­turers and tech companies because a new business model is growing which involves the convergence of data consumption and advertising. The vast frontier of in vehicle advertising and infotainment will create new capabilities and business models that do not quite exist yet in the consumer-produced trans­portation system of today

When driverless vehicles arrive, they will dramatically lower the cost of conveying physical things and create more opportunities for integrating entertainment and advertising into the transportation experience. Inside passenger vehicles, entertainment and retail will turn into major revenue streams. More lucrative will be the ability to mone­tize the process of physically bringing people together through dynamic pooling. All these services will also act as a plat­form for data gathering — helping companies build more sophisticated customer profiles and better understand tastes and preferences which will help advertisers target audiences even better that google already does. Since we all use computers on a regular basis, google has a semi-captive audience. What could be more captive than taking a trip in a vehicle from point A to point B and having ads targeted to you based upon a variety of data driven factors. 

This new wave of creative destruction is likely to devastate traditional auto manufac­turing and is poised to disrupt the business of car services. At the same time, mobility is the perfect hedge. While the profits of auto manufacturing might stagnate, the total revenues in the mobility space might well dwarf anything that currently exists. That is why Big Auto and many others are already betting on mobility. Investments are already in the billions. The rising masses of mobility patrons will create an opportunity for proprietors at a scale the world has never seen. The repercussions for our society and labor sectors will be far-reaching. The proprietors of tomorrow will sell trips and services rather than horsepower, and those services will be delivered more efficiently than ever before. Patrons will consume these services in new configurations. Mobile com­puting and human-dependent transportation have been a toxic cocktail from a safety standpoint, leading to distracted driving and more frequent car crashes.

On the other hand, automakers may be more determined to stop the rush to automation and focus more on the software inside the vehicle because technology can be far more profitable than auto manufacturing making. Unless auto manufacturers are well positioned, they may discourage regulatory approvals of level-5 vehicles, or they could create roadblocks to their usage by having their army of lobbyists put the proverbial brakes on the movement towards automation.

Either way, there is great hope for the future. New technology and new consumer demands already have us on the road toward a more technologically dynamic, less environmen­tally destructive and safer transportation system. Getting there depends largely on policy leadership over the coming 5 to 10 years — and a willingness of societies to bid farewell to the past and embrace the future of technology. History has taught us that if you don’t embrace technological change, you will become the next Kodak.

SCOTUS Ruling: End of the Road for Interstate Transportation Entitles as Arbitration Exemption Applies To All Employment Relationships, Including Independent Contractors

On January 15, 2019, the Supreme Court of the United States of America (“SCOTUS”) ruled on 1/15/19, in a unanimous 8-0 decision, that federal courts cannot force interstate transportation workers, whether classified as employees or independent contactors into arbitration. (See New Prime Inc. v. Oliveira). The Federal Arbitration Act (“FAA”), passed in 1925, enshrined in law a strong pro-arbitration policy. Pursuant to the FAA’s requirements, federal and state courts regularly enforce arbitration agreements. But as described below, there are exceptions. Several recently decided SCOTUS cases interpret the FAA very broadly and have enforced arbitration agreements, including in the employment context. (See Epic Systems Corp. v. Lewis) However, Section 1 of the FAA excludes “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” which the Court previously ruled to include “contracts of employment of transportation workers.”  See 9 U.S.C. § 1; Circuit City Stores v. Adams. Prior to New Prime Inc. v. Oliveira, lower courts interpreted the Section 1 exemption to apply only to employees and not to independent contractors. 

Dominic Oliveira, a truck driver brought a class action suit against New Prime alleging that the company failed to pay him minimum wage for all hours worked. Oliveira brought the suit in federal court despite a provision in his independent contractor agreement with New Prime in which the parties agreed to arbitrate their disputes. Oliveira argued that the FAA’s exemption for “contracts of employment” for interstate transportation workers refers to all contracts to do work with employees, including those signed by independent contractors. The term “contracts of employment” was interpreted by SCOTUS according the arguments made by counsel for Oliveira, which was based upon the meaning of the words from the time of the FAA’s passage in 1925. In other words, counsel for Oliveira argued that the Court must interpret the statutory language based on what the words meant at the time the statute was passed. In 1925, when the FAA was enacted, “contracts of employment” referred generally to all agreements to perform work and included both employment agreements and independent contractor agreements. Because labor strife in the 1920s served as partial motivation for passage of the FAA, and because both employees and independent contractors can cause labor strife, it was argued that it would make no sense for them to be treated differently.

The SCOTUS decision was decided unanimously in workers’ favor. On the first issue, the Court ruled that a judge, rather than an arbitrator, should decide the applicability of the Section 1 exemption. In doing so, Justice Neil Gorsuch (writing for the majority) rejected the employer’s delegation clause argument, and instead cited the fact that Sections 3 and 4 of the FAA—which in part require a court to stay litigation and compel arbitration—are limited by the exceptions defined in Section 1 of the FAA. Thus, Justice Gorsuch reasoned that a court should decide whether the Section 1 exclusion applies before ordering arbitration. Justice Gorsuch explained that, in order to invoke its statutory powers under Sections 3 and 4 to stay litigation and compel arbitration, a court must first know whether the contract itself falls within or beyond the boundaries of Sections 1 and 2.

On the second and more critical issue, SCOTUS ruled that the term “contracts of employment” pertains to contracts with employees AND independent contractors.  In reaching this conclusion, Justice Gorsuch explained that then the FAA was enacted in 1925, a “contract of employment” meant nothing more than an agreement to perform work.  So, at the time, the common understanding of the Section 1 exemption meant that Section 1 applied to both agreements between employers and employees as well as agreements for independent contractors to perform work. Justice Gorsuch reinforced his decision by looking at dictionaries from the relevant time period and comparing the word “employment” as a synonym for “work;” with all work being treated as employment. Further, the Court looked at legal authorities from the time period and saw no evidence that a “contract of employment” strictly meant that an employer-employee relationship was formed. 

SCOTUS’s decision to hold that “contracts of employment” in Section 1 of the FAA include independent contractor agreements, transportation employers will now find that the arbitration agreements and class action waivers they signed with their independent contractors are mostly likely to be considered invalid. Further, some state courts applying state law have refused to uphold certain arbitration provisions, such as class action waivers, on unconscionability grounds. This means that a wave of class and collective actions can threatening to overwhelm transportation entities engaged in interstate commerce.

Arbitration is a means to permit disputes to be resolved with less litigation expense. SCOTUS’s ruling will likely raise legal and operational costs for transportation companies. These companies may be forced to pass on the higher costs to consumers who depend on interstate trucking/transportation for the delivery of commercial goods. This decision is a victory for transportation workers’, but if the costs of the goods being transported are increased due to the increased costs of litigation, it will be the public that pays the ultimate costs.

Congestion Surcharge on For-Hire Vehicles is a Sham

A lawsuit was filed against the State and City of New York as a result of the Congestion Surcharge that is set to go into effect on January 1, 2019. The congestion fee on taxis and for-hire vehicles was enacted under false pretense of reducing congestion but is really just a cash source for the strapped MTA. A judge issued a temporary restraining order preventing the Congestion Surcharge from going into effect. A hearing is set for January 3, 2019 for the Court to determine if the Congestion Surcharge should go into effect, as the state wants, or order a stay until the court case is resolved.

The court case was filed by yellow taxi owners, who argue the law discriminates against them.  The fact is, it’s also bad for the for-hire livery industry.  The law, set up to favor behemoths like Uber and Lyft, could put it out of business; residents of Northern Manhattan and the boroughs, who have long relied on local liveries to get around, will also suffer.

Fortunately, there's still time for the state to act and save these small businesses and protect riders. In its rush to pass it, the state ignored the law’s impact on hundreds of for-hire livery bases and some 15,000 drivers. 

Here’s how: the Congestion Surcharge law requires a $2.75 fee to be added to rides below 96th street in Manhattan. The financial responsibility of remitting the money to the state rests with companies, not drivers. This fits perfectly with companies like Uber and Lyft because they collect the fee from the passenger through their apps.

On the other hand, the law is completely incompatible with the livery base model. In our business, the driver, NOT the base, collects the fee (in cash) from passengers. The livery base is then dependent on the driver passing the fee to it before the base can pass it along to the state.

Livery bases will be penalized financially for failing to pass on the collected congestion fees. Yet, the law carries not a single provision protecting livery bases against driver refusal to pass the collected fee. All this for a sector that probably services 1% of its' trips below 96th Street. We can still fix this law and help small car services survive in the age of Uber.

If the judge today allows the law to move forward, New York State should amend the law to either exempt neighborhood livery service, given the very few trips that will apply to them, or replace the per-trip fee with an annual congestion fee that is paid by the driver at the beginning of each year.

This kind of regulatory support will not have a negative financial implication to the state, but will go a long way towards protecting small livery businesses.

To do any less would essentially lead to the extinction of the industry and fewer transportation options for New Yorkers.