State Senate panel foresees easy path for bill to protect Uber, Lyft from product liability lawsuits

PIERRE — A bill to shield ride-hailing companies from product liability lawsuits earned unanimous support from a South Dakota legislative committee.

The Senate Judiciary Committee took up that legislation, Senate Bill 166, on Tuesday at the Capitol.

The idea, according to Republican Sen. Carl Perry of Aberdeen, is to make sure companies like Uber or Lyft aren’t held accountable under civil law in a manner that matches the standard applied to products like toothpaste, coffee makers or car seats. The one-sentence bill says product liability “may not be maintained” against a “digital network.”  

In a South Dakota law, that means ride-hailing companies. 

SD lawmakers previously eased path for Uber, Lyft

Under a bill passed in 2016 with the support of app-based taxi companies like Uber and Lyft, a “digital network” is defined as “any online-enabled application, software, website, or system offered or utilized by a transportation network company that enables a prearranged ride with a transportation network company driver.”

In 2022, state lawmakers passed a bill clarifying that drivers for such companies are independent contractors, not employees. That put the state on the side of tech companies in an issue that’s divided state legislatures and voters for years. 

California voters, for example, passed a measure in 2020 to classify such drivers as independent contractors in a campaign that received financial backing from tech companies. A lawsuit from labor groups attempted to overturn the law and won in a lower court, but the state’s supreme court overturned the lower court’s decision last summer.

Minnesota lawmakers, however, advanced worker protections for Uber drivers last year. Washington state and New York also have minimum pay provisions for such drivers.

Perry called his legislation “a common sense bill to further clarify the rule in an already regulated industry.”

Uber Industries lobbyist Grace Beck told committee members the ride-hailing business is fundamentally different from one that makes things.

“These companies do not manufacture, design or sell physical products,” she said. “It’s only a phone app. Uber operates a digital platform that offers an important service to South Dakotans.”

Uber: Insurance requirements protect riders

Brad Nail, a public policy lobbyist for Uber, pointed out that state law requires a ride-hailing company to carry $1 million in liability insurance to cover “death, bodily injury, and property damage” to cover potential issues that might arise during a ride.

“The bill before you does not change that, and does not decrease the amount of insurance required,” Nail said.

The bill isn’t tied to a South Dakota case, but to what Nail called “a novel situation that has arisen in other states” where plaintiffs have tried to sue under product liability laws. 

Nail didn’t elaborate, but a case filed last fall in California alleges that the company failed to design an app that considers or adequately protects against the possibility of sexual assault by a driver.

Nail told lawmakers the $1 million liability coverage required by state law renders product liability lawsuits unnecessary.

The committee heard no opposition testimony. It voted unanimously to send SB 166 to the Senate floor. It then certified the bill for the consent calendar, meaning the Senate will vote for or against it without debate as part of a package of uncontroversial bills, unless any senator asks for the bill to be moved to the regular calendar.

Sen. Amber Hulse, R-Hot Springs, said the bill “makes sense.”

“Obviously there wasn’t any opposition testimony,” Hulse said. “If there was a problem, I would assume somebody would be up here saying it.”