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E-Scooter Surge Kicks Up Cloud Of Legal Issues

August 14, 2019

This article originally appeared in Law360 on August 12, 2019 and was written by Linda Chiem.

A surge in dockless electric scooters has sent regulators scrambling to enact rules tackling public safety concerns and spawned a hazy litigation environment in which e-scooter companies, local governments and riders may face liability.

The mad dash to regulate Lime, Bird and other companies behind e-scooter sharing services has yielded a mixed bag of rules ranging from outright bans or tentative pilot programs to more flexible approaches that allow e-scooter companies to operate with few restrictions. But highly publicized accidents, including several fatalities, and outcry over e-scooters being haphazardly strewn about on sidewalks and private property have raised questions about who’s liable when things go awry.

Here are three facets of the e-scooter legal landscape to keep an eye on.

Cities, States Gauge How to Step In

Since the first of the dockless shared e-scooters in the U.S. began popping up in cities like San Francisco and Santa Monica, California, a few years ago, the companies behind them have largely operated within — and exploited — a regulatory gray area, experts say.

The companies’ general selling point: Consumers log on to an app, track down an e-scooter near them, pay either a flat fee, by the minute or length of the ride, and simply leave the e-scooter almost anywhere along a public street or sidewalk at their final destination when they’re done.

E-scooters, which usually travel at 15 miles per hour, don’t fit into regulations for conventional vehicles or bicycles, and they wouldn’t qualify as typical street vendors that dot city sidewalks selling hot dogs or tchotchkes.

So that’s where cities and local regulators have stepped in, establishing permit requirements for e-scooter companies, restricting where and when e-scooters can be operated, and recommending other rules of the road for consumers such as wearing helmets and following traffic safety laws.

It’s been a balancing act for local regulators, experts say, as consumers continue to demand more "micromobility" and public transit options amid population growth and traffic congestion. They say some of the concerns being raised with e-scooters mirror the concerns raised when bike-sharing and ride-hailing programs first came on the scene.

“The tricky thing is that there are going to be accidents just like with every other mode of transportation — whether it’s a vehicle, a Segway, a skateboard — so as a policy matter, the goal is to create regulations that maximize all the wonderful mobility benefits and reduce the risk and potential for harm,” said Justin Outling, a litigation partner with Brooks Pierce McLendon Humphrey & Leonard LLP and a member of the city council in Greensboro, North Carolina.

Greensboro recently clarified its rules for e-scooters, prohibiting them on sidewalks and on streets where the speed limit is greater than 35 mph. And just last week, Atlanta banned the use of e-scooters at night after officials said accidents involving the vehicles resulted in four deaths in recent months.

States are also still figuring out what roles they’ll play in regulation. For example, Florida legalized e-scooters but gave cities the right to further regulate the vehicles based on local needs under a bill that was signed into law in June.

“The goal of the legislation was to make clear that Florida was going to be welcoming to scooters and bikes, but not overly restrict a local government’s right to regulate [them] in the way they best see fit,” said Chris Carmody, an Orlando-based shareholder with GrayRobinson PA, who lobbied in support of the Florida legislation. “The truth is it’s a good thing. There's a demand for it, not just in urban areas, to give people more options for transportation, but you've got to strike the right balance.”

Experts say that for regulations in the space to be successful, local governments should focus primarily on public safety concerns — rather than economic motivations like taxing schemes, for example — in their approach, according to Stinson LLP litigation partner Roy Goldberg.

“Cities should not be allowed to use taxing or regulatory powers simply to recapture revenues lost because other, more-established transportation modes are disfavored,” Goldberg said. “On the other hand, if the facts bear out genuine safety concerns, the cities will be at their most defensible regulatory position in implementing and enforcing reasonable safety rules and regulations.”

Injury, Public Nuisance Lawsuits Mount

Litigation often follows any new form of transportation, and e-scooters are no different, experts say. A crop of lawsuits leveling a variety of personal injury, public nuisance and Americans with Disabilities Act claims have emerged in state and federal courts against escooter companies or local regulators.

A central California federal judge is currently considering whether to remand a proposed class action filed in October from California residents accusing Lime, Bird Rides Inc., Segway Inc. and other companies of negligently deploying e-scooters and endangering pedestrians.

Meanwhile, another proposed California class action from individuals with disabilities claims the presence of e-scooters and e-bikes has impaired their ability to move about in public spaces in Santa Monica and Los Angeles, in violation of the ADA.

It remains to be seen how those cases, along with scores of personal injury lawsuits stemming from rider accidents, will play out. But the targets of the suits — the companies and vendors that make the e-scooters available and the city regulators that gave them the green light to operate — are hunkering down with hefty defenses.

Ultimately, it’s important for thoughtful regulatory action to take shape to mitigate the legal fallout, according to Barry Salzman, a senior partner with New York personal injury law firm Barasch McGarry Salzman & Penson.

“Obviously inherent in the use of scooters is the danger, mostly because when it comes to the use of these e-scooters, anyone can just jump on them and go,” Salzman said, explaining that many crashes happen from a lack of skill or coordination, or just an unfamiliarity with how to operate e-scooters. “They might be terrific in the right places, such as college campuses or small towns, but in bigger cities, it becomes a magnified problem.”

Liability Question Lingers

Experts say a major hurdle for any lawsuit seeking to hold e-scooter companies strictly liable for accidents will be the user agreement or terms of service that riders agree to in order to “activate” an e-scooter. By agreeing to those terms, riders typically attest that they'll obey local traffic and pedestrian safety regulations, and that they’re at least 18 years old and have a valid driver’s license, if those are required in their city.

“Currently, these are expansive user agreements that aren’t that far away from what we see applying to consumer technology products like smartphones,” said Zachary Adams, a Cleveland-based attorney with Tucker Ellis LLP. “While e-scooters are great for micromobility, they could be seen as dangerous to people who haven’t consented to these agreements.”

It’s typical for user agreements to contain arbitration clauses meant to keep any disputes out of the courts, but plaintiffs attorneys are usually primed to challenge those, experts say.

“User agreements typically run 15,000 to 20,000 words, so let's be honest, most people are not reading these agreements. So if people aren’t reading them, they’re not really understanding what they’re agreeing to or bound to,” Salzman said. “Nor do many of these users understand the dangers associated with some of these e-scooters. If [companies] really want to see an increase in their use and success, they really need to work with the users and the regulatory agencies to make the entire process safer.”

E-scooter companies seeking to enforce their user agreements might believe they’re on solid legal footing, but it remains to be seen how much the courts will push back on what they might consider overly broad and, ultimately, unenforceable agreements, Adams said.

“As these lawsuits continue, it’s not just about the arbitration clauses but the liability clauses under them that then get to the merits of the user agreements and other parts,” he said. “If they’re [found to be] out of sync with civil liability in American courts, that’s when we’re going to see rapid revisions in those agreements or in the way these companies operate.”

Brannon Arnold, a partner with Atlanta-based Weinberg Wheeler Hudgins Gunn & Dial, told Law360 that the specific contract provisions and waivers of liability related to e-scooters are only just being tested. So there’s no definitive answer on the question of liability just yet.

“Let’s say a scooter user collides with a walking pedestrian who hasn’t signed a waiver agreeing not to sue Bird or Lime, those protections aren’t going to insulate them from suits from those who are injured and who are not using the scooter,” Arnold said. “And most automobile insurance policies say they aren’t going to cover these accidents.”

Meanwhile, cities and municipalities might also find themselves shielded from suits courtesy of their sovereign immunity, if they demonstrate they thoroughly considered safety and public policy concerns ahead of approving regulation for e-scooters.

“The ultimate result of it all is that we’ll have more mobility but there’s definitely going to be a steep learning curve,” said Mitch Bierman, a Miami-based government affairs and administrative law attorney with Weiss Serota Helfman Cole & Bierman. “I don’t think the cities in the end are liable just for having scooters.”