Court Rules Lyft is a motor carrier and State Farm can be sued directly

Georgia lawmakers this year ended direct-action lawsuits against trucking insurers, but that didn’t come soon enough to prevent lawsuits from people involved in ride-hailing accidents.

The Georgia Court of Appeals found this week that ride-hailing service Lyft is considered a motor carrier under the wording of a 2015 statute. That means a driver injured by a Lyft driver can sue the driver’s insurance company Lyft, which in this case is State Farm Fire and Casualty Co.

“Because State Farm has not met its burden of proving that Lyft is exempt from the Georgia Motor Carrier Act’s definition of motor carrier, it was appropriate for Barnes to directly name State Farm in her lawsuit. We therefore reverse the trial court’s decision,” the appeals court’s Third Division wrote in its Aug. 26 opinion.

Aundray Barnes was involved in a collision with Lyft driver Rome Leite-Brown in 2020. Barnes sued the driver, Lyft and State Farm, arguing that Lyft is a motor carrier, similar to a trucking company.

At the time, Georgia was one of four states that allowed direct lawsuits against trucking companies’ insurance carriers. The rationale behind the 1937 law was that truckers often could not be found to deal with lawsuits and may have had few assets that could be used to pay damages.

In recent years, however, those direct lawsuits have been blamed for driving up insurance premiums for truck carriers. A state official said the litigation has “destroyed our market,” especially for trucking companies.

In March, the Georgia General Assembly almost unanimously approved the charter change. Senate Bill 426, now law, allows direct civil actions against insurers only when the trucking company has gone bankrupt or on the rare occasion that a driver cannot be found. Supporters hailed it as a way to encourage more insurers to write truck lines in the state and lower premiums.

But the law is not retroactive and does not cover the 2020 Lyft crash. Still, State Farm lawyers argued that the previous law, written in 2015 to help govern the burgeoning world of Uber and Lyft, exempted ride-sharing services from the definition of “ motor vehicle carriers”. Ride-sharing networks are governed only by one part of the Georgia Motor Carrier Act, not another, State Farm claims.

The trial court agreed with the insurance carrier and held that Lyft is not a motor carrier. But the appeals court judges strongly disagreed, noting that the various sections of the statutes must be considered as a whole. Lawmakers specifically exempted taxis and limousines from the definition of motor vehicles, but did not include ride-hailing services in that exemption, appeals court Judge Kenneth Hodges III wrote.

The language of the statute “does not declare that shared transportation network services are not motor carriers as defined by OCGA § 40-1-100 (12) (A) of the Georgia Motor Carrier Act, nor does it exempt such companies from the provisions Laws. definition of motor carrier,” explained Hodges. “It simply preempts the scope of administration and regulation for certain types of transportation services to the extent that the rules differ from other parts of the Motor Carrier Act, as the General Assembly did for limousine carriers in Part 3 of the Act .”

The fact that some of the standards set forth in the statute differ from one another is not determinative. “It is implausible that the General Assembly would have allowed ride-sharing network services to remain operational without public safety standards,” the appeals court noted.

It is clear that lawmakers intended the regulations in different parts of the law to coexist and be applied together, the judges said. The Legislature chose to exempt certain taxis and limousines from the definition of motor vehicle, but did not exempt ride share networks from the definition.

If the General Assembly had wanted to exempt ride-sharing network services like Lyft from the definition of motor carrier, it could have included those services in the list of exemptions in OCGA§ 40-1-100 (12) (B), as it did it. for certain taxis and limousines, the court said.

“This suggests that the General Assembly intended the Motor Carrier Act to be read as a whole, with specific regulations applicable to certain carriers and general regulations applicable to all motor carriers,” the opinion said.

Lawyers for State Farm argued that the interpretation would unfairly place Lyft and Uber in a different category than taxis.

“While State Farm correctly asserts that our decision will subject ride-sharing network services like Lyft to laws from which other transportation providers, such as certain taxis and limousines, are exempt in expressly, such as allowing a claimant to directly sue a ride-sharing network service. liability insurer, this court cannot read new exceptions into a statute that has already clearly enumerated its exceptions,” the opinion notes.

The court noted that other states have placed ride sharing in the same boat as other for-hire transportation services. In 2016, a California court rejected the argument that Uber was merely a ride-hailing broker.

The court ruling did not explain how many other pending accident lawsuits may be affected by the ruling. State Farm could not be reached for comment Wednesday.