Facts
In the recent decision in Barnes v. State Farm, A240852, the Georgia Court of Appeals held that rideshare companies, such as Uber and Lyft, are motor carriers subject to the direct action statute under Georgia’s Motor Carrier Act.
In Barnes, the plaintiff was injured in a crash that a Lyft driver negligently caused. The plaintiff sued the Lyft driver, Lyft, and State Farm as Lyft’s liability insurer.
The plaintiff asserted claims against State Farm under Georgia’s direct action statute, which allows a plaintiff to join as a defendant the liability insurer for a motor carrier (this statute was recently amended to narrow the circumstances under which the insurer can be named, as discussed below; however, the prior version of the statute applied to this case).
State Farm moved for summary judgment, arguing that Lyft was not a motor carrier under Georgia law. Because liability insurers are not proper parties to a tort case, State Farm contended it should be dismissed from the lawsuit.
The trial court agreed with State Farm, concluding Lyft was not a motor carrier and granting State Farm’s motion for summary judgment. The plaintiff appealed the ruling.
Issue & Holding
This issue in this case was: Are rideshare companies motor carriers that make their liability insurers subject to the direct action statute?
The Court of Appeals held that rideshare companies like Uber and Lyft are motor carriers and, as a result, the direct action statute applies to claims against their drivers and their insurers.
Reasoning
The Court of Appeals started its analysis by evaluating the language of the Motor Carrier Act and the direct action statute, O.C.G.A. §40-1-112(c). The Motor Carrier Act defined a “motor carrier” as:
[e]very person owning, controlling, operating, or managing any motor vehicle, including the lessees, receivers, or trustees of such persons or receivers appointed by any court, used in the business of transporting for hire persons, household goods, or property or engaged in the activity of nonconsensual towing pursuant to Code Section 44-1-13 for hire over any public highway in this state.
O.C.G.A. § 40-1-100(12)(A). The Act exempted certain vehicles from the definition, including certain taxicabs and limousine carriers. See O.C.G.A. § 40-1-100(12)(B)(ii), (iii).
After surveying the relevant statutes under the Motor Carrier Act, the Court looked at the language under the “Ride Share Network Services and Transportation Referral Services” statutes that were enacted in 2015. This section was added under the Article applicable to Motor Carriers.
The parties all agreed that Lyft was a “ride share network service,” which was defined as:
any person or entity that uses a digital network or Internet network to connect passengers to ride share drivers for the purpose of prearranged transportation for hire or for donation. The term “ride share network service” shall not include any corporate-sponsored vanpool or exempt ride share as such terms are defined in Code Section 40-1-100, provided that such corporate-sponsored vanpool or exempt ride share is not operated for the purpose of generating a profit.
O.C.G.A. § 40-1-190(4).
The Court of Appeals observed that nothing in the rideshare statutes specifically exempted rideshare services from the definition of “motor carrier,” or from the applicability of the direct action statute.
In looking at the plain language of the statutory definition of “motor carrier,” the Court of Appeals held it “is broad enough to include ride share network services.”
The Court of Appeals noted that the General Assembly specifically chose to exempt taxicab and limousine services from the definition of motor carrier, but it did not exempt rideshare services. The Court of Appeals concluded that “the decision not to list ride share network services in the list of exceptions implies a deliberate choice to include them within the definition of motor carrier.”
In short, the Court of Appeals concluded that rideshare network services like Lyft “are clearly engaged in ‘the business of transporting for hire persons’ over the public highways in the State of Georgia, and, as such, fall within the definition of a motor carrier in Part 2 of the Georgia Motor Carrier Act.”
Furthermore, there was no statutory provision that exempted rideshare services from the definition of motor carriers. Accordingly, the Court of Appeals reversed the trial court and held that State Farm was a proper party to the lawsuit.
Conclusion
The General Assembly amended the direct action statute in 2024. Now, the statute only allows a liability insurer for a motor carrier to be joined in a lawsuit under two scenarios:
- When the motor carrier is insolvent or bankrupt
- When personal service cannot, after reasonable diligence, be effected against either the driver or the motor carrier
If one of these two scenarios exists, the amendment allows a plaintiff to add the insurance carrier to the lawsuit by filing an amended complaint joining the insurance carrier. Leave of court is not required to join the insurance carrier. The insurance carrier must then be served with the amended complaint and it will then have 30 days after service to file an answer.
While plaintiffs cannot join liability insurers in every case against a motor carrier under this recent amendment, the Barnes decision is still important because it allows the motor carrier’s insurer to be joined when the driver cannot be located or served.
There may be times when the plaintiff does not know the name of the rideshare driver or is unable to locate them. If that happens, the insurance company for the ride share cannot get off the hook based on a technicality. Instead, it still must provide the coverage it is statutorily required to provide for rideshare drivers.
It is unclear if rideshare networks or their insurers will push for a legislative change to address this case. Hopefully, any such efforts will not be successful because there are valid public policy reasons for allowing the ride share’s insurer to be joined in a lawsuit when the driver cannot be located. Allowing the insurer to be joined in the actions helps ensure that injured plaintiffs have access to insurance if they are injured by a negligent rideshare driver.
Citation: Barnes v. State Farm Fire and Casualty Company, No. A24A0852 (Ga. Ct. App. August 26, 2024)
