Reuters

Questions over just who can be held liable in the "sharing economy" are coming to a head.

On New Year's Eve in San Francisco, a 6-year-old child was struck and killed by a car driven by an Uber driver on his way to pick up a fare. Today, the child's family is expected to file a wrongful death suit in Superior Court in California, naming, among other defendants, Uber Technologies, Inc.

A case like this has inevitably hovered over the so-called "sharing economy" for some time now: Someone was bound to be badly hurt – or in this case, killed – forcing the question of who bears responsibility when strangers rent rides or cars (or power drills) from each other, all with scant regulation.

Doug Atkinson, a California lawyer representing a driver in an earlier car crash involving Uber, made this point to me last September.

"In another case, someone could be killed," he said. "Or someone’s kid could be killed. And who’s going to say to that person that there’s no liability when this is a business making a huge profit? The risk here of someone getting injured in a car accident is right in the wheelhouse of the foreseeable risk of operating a business like this."

One key circumstance in this newest case is identical to the car crash we wrote about last fall. The Uber driver did not actually have an Uber passenger in the back seat at the time of the collision, enabling the company to draw a fine distinction that it bears no responsibility for this incident at precisely the moment of tragedy.

The suit counters that the Uber driver was logged into the app at the time, and was publicly advertising his availability within the network, implicating the company. This is a key argument in the lawsuit that could have broad implications for companies like Uber that, until now, have tried to argue that they serve the sole function of connecting people to each other. From the suit:

[Uber] derive[s] an economic benefit from not only having USERS transported by DRIVERS collecting a portion of the charge for transportation, it derives an economic benefit, and competitive advantage, by displaying the location of available vehicles near the USER’s location. USERS seeing the ready supply of UBER and/or Uber X vehicles have greater consumer confidence that they will be able to obtain one-to-one prearranged transportation services rapidly and are therefore more likely to be repeat customers... Therefore, regardless of whether a DRIVER actually has a USER in their car, is on the way to a USER who has engaged the DRIVER through the APP, or simply is logged on to the APP as an available DRIVER, UBER... derives an economic benefit from having DRIVERS registered on the service.

The lawsuit also contends that Uber drivers violate a California law against driving a vehicle while using a wireless communications device, precisely because the service is built around an app.

The high-profile suit will now force into a courtroom a number of thorny questions that speak to how we define these new companies in the first place, particularly in the transportation sector: Is Uber just an information platform? Is it responsible for what happens after riders and drivers use that information to get into a car together? If it is responsible for what happens in the car during an Uber ride, does that same liability extend when there's no passenger on board at all? Where does any liability begin and end with a service that may involve people driving their private vehicles for pay?

David Streitfield makes an excellent point in The New York Times this morning about why start-ups like Uber have gotten themselves into such a uniquely difficult spot:

Uber and its abundance of imitators represent a new stage for technology companies. These businesses directly insert themselves into the physical world, arranging on-demand transportation, meals or even clean laundry in exchange for a sweet commission. Unlike Facebook or Twitter, which thrive in the safe confines of cyberspace, these start-ups live on the streets. 

That is a much messier place. Regulators, courts and city halls are struggling to define Uber. Is it a taxi company or a technology platform? Are the drivers, who often use their own vehicles, employees, as some are arguing in court, or “partners” — that is, freelancers — as Uber maintains?

Undoubtedly, the companies on this new stage are about to enter a new era of much tougher scrutiny.

Top image: Lucy Nicholson/Reuters.

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