Molly Freyer and David Freyer, Jr., Individually and Independently as Next Friends of D.C.F. and J.M.F., Minors v. Lyft, Inc., and Rebecca Blaser

Citation: Not availableDocket: 05-20-00310-CV

Court: Court of Appeals of Texas; December 12, 2021; Texas; State Appellate Court

Original Court Document: View Document

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The Court of Appeals for the Fifth District of Texas affirmed the trial court's summary judgment in favor of Lyft, Inc., determining that Lyft was not liable for the injuries sustained by Molly Freyer while riding in a vehicle operated by one of its drivers, Rebecca Blaser. The court addressed Freyer's appeals regarding the Transportation Network Companies (TNC) statute and its implications for independent contractor status. The key points included: 

1. The TNC statute recognizes drivers as independent contractors under certain conditions, and the court found that Lyft met the statutory requirements, thus triggering this provision.
2. The court examined whether common law negligence claims could still be pursued even if the independent contractor status applied and concluded that Freyer did not present sufficient evidence to challenge the summary judgment.
3. The court evaluated Freyer’s claims of negligent hiring and retention against Lyft but determined that she failed to demonstrate genuine issues of material fact that would preclude summary judgment.
4. Blaser's background checks prior to her driving for Lyft revealed no criminal history or driving offenses, and she had driven without incident until the day of the accident when she experienced a medical emergency while transporting Freyer.

As a result, the court affirmed the trial court's decision, concluding that Freyer did not provide adequate evidence to support her claims against Lyft.

Freyer experienced a slow acceleration that caused her body to be pinned between a vehicle's back door and a concrete barrier, resulting in her foot being dragged for 150 to 200 feet before the car stopped. Emergency responders transported Blaser to the hospital, where she was diagnosed with an upper respiratory infection and vasovagal syncope. Consequently, the Texas Department of Public Safety (DPS) temporarily suspended Blaser's driving license, but it was reinstated after the Texas Medical Advisory Board deemed her medically fit. Lyft's Trust Safety Response Team determined Blaser violated Lyft’s Terms of Service due to her involvement in a collision, leading to her permanent account deactivation.

Freyer suffered permanent injuries, including the amputation of her right big toe and part of her foot, and subsequently sued Lyft and Blaser. She settled her claims against Blaser, who is not part of this appeal. Against Lyft, Freyer filed multiple claims including respondeat superior, negligent hiring, negligent entrustment, negligent hiring/retention, negligent training/supervision, and negligent undertaking, arguing Blaser acted within the scope of her employment and that Lyft was aware or should have been aware of Blaser's reckless driving history and lack of insurance.

Lyft responded with a traditional and no-evidence motion for summary judgment, asserting that Blaser's incapacity was unforeseeable, that she was an independent contractor under Texas law, that Lyft had confirmed her competency as a driver, and that it had not undertaken any duty that led to Freyer's injuries. Lyft contended that Freyer could not demonstrate negligence on Blaser's part or any breach of duty by Lyft that caused her injuries. Freyer countered that Lyft did not comply with the TNC statute regarding independent contractor status and that factual disputes existed concerning her claims.

The trial court denied Lyft's motion for summary judgment concerning Freyer's negligent undertaking claim but granted judgment on all other claims. Lyft sought reconsideration of the negligent undertaking claim, which the court granted. A final judgment was entered on January 20, 2020, and an amended judgment followed on February 19, 2020, after a new trial motion was denied. An appeal ensued.

Summary judgment is reviewed de novo, meaning the appellate court evaluates the case as if it were being heard for the first time. A traditional motion for summary judgment requires the moving party to demonstrate the absence of a genuine issue of material fact and entitlement to judgment as a matter of law, as outlined in TEX. R. CIV. P. 166a(c). If successful, the burden shifts to the nonmovant to present evidence raising a genuine issue of material fact. Evidence favorable to the nonmovant is accepted as true, with all reasonable inferences and doubts resolved in their favor. 

Under TEX. R. CIV. P. 166a(i), a no-evidence summary judgment can be requested if there is no evidence of essential claim elements or defenses where the opposing party bears the burden of proof at trial. The court may grant this motion unless the nonmovant produces more than a scintilla of evidence to challenge the motion, with "more than a scintilla" defined as evidence sufficient to allow reasonable minds to differ. Evidence that merely creates suspicion or surmise is insufficient.

In the case at hand, Freyer contends that Blaser was not an independent contractor under the TNC statute because she lacked liability insurance at the time of the accident, arguing this should allow her respondeat superior claim against Lyft to proceed. Lyft counters that Blaser qualifies as an independent contractor according to the TNC statute, asserting Freyer's interpretation undermines the statute's intent. The statute defines independent contractor status, stipulating that a driver is considered an independent contractor if the transportation network company does not control specific work parameters and if there is a written agreement between the driver and the company affirming this status.

Lyft met the requirements of subsections (1) and (2) of section 2402.114, which Freyer does not dispute. Freyer argues, however, that Blaser was not an independent contractor because she failed to meet the “Driver Requirements” under section 2402.107, which mandates that transportation network companies (TNCs) must confirm a driver's proof of registration and insurance before allowing them to log in. While it is acknowledged that Blaser submitted a valid insurance policy, it lapsed before the accident due to a payment issue, which she was unaware of.

Freyer claims that this lapse means Blaser was not authorized to log in as a driver, thus failing to fulfill the statutory criteria for independent contractor status. Lyft contends that statutory construction principles do not support Freyer's interpretation. The court must analyze the statute’s language and intent, recognizing that section 2402.114 addresses drivers already authorized to operate, whereas section 2402.107 sets requirements that must be met prior to logging in.

Lyft's argument highlights the different temporal language in the sections: section 2402.107's requirements are pre-login, while section 2402.114 pertains to already authorized drivers. The court agrees that the past tense "authorized" signifies a change in status from "individual" to "driver," affirming that the driver requirements do not determine independent contractor status. Adopting Freyer's interpretation would yield an unreasonable outcome contrary to the legislative intent of the TNC statute.

Freyer's interpretation of the statute would obligate Lyft to verify driver requirements, such as proof of insurance, with each login attempt, which is deemed unreasonable and unnecessary. Once Lyft confirms a driver meets age requirements or possesses a valid driver's license and vehicle registration, those conditions are satisfied and remain unchanged. The legislative intent behind the Transportation Network Company (TNC) statute was to create uniform operational standards across Texas, addressing the inconsistencies caused by local regulations. Requiring Lyft to re-confirm driver requirements at each login would undermine this legislative purpose. The statute does not explicitly impose a repeated verification obligation; the legislature chose specific language that excludes such a requirement. Consequently, since Lyft established compliance with the “Driver Requirements” and Blaser’s independent contractor status under section 2402.114, the trial court correctly granted summary judgment against Freyer on her respondeat superior claim. In her second argument, Freyer claims there is a factual dispute regarding Lyft's alleged negligent hiring and retention of Blaser as an independent contractor, but Lyft contends it cannot be held vicariously or directly liable for these claims.

Freyer contended that the TNC statute does not eliminate common law claims for negligent hiring and retention, despite Lyft’s assertion that the statute establishes a higher standard of care for driver hiring than common law. The court must first ascertain whether Freyer's claims are properly before it, as both parties acknowledge that the trial court granted summary judgment against her negligent hiring claim. However, they dispute whether the summary judgment also applied to her negligent retention claim. Freyer alleged negligent hiring of an independent contractor and argued that she presented sufficient evidence to counter Lyft’s summary judgment motion, which claimed no vicarious or direct liability for negligent hiring or retention. The trial court’s order granted summary judgment on claims of Respondeat Superior, Negligent Hiring of an Independent Contractor, Negligent Hiring, and Negligent Retention. Although Freyer did not formally plead negligent retention of an independent contractor, she argued that this claim was tried by consent through the summary judgment process. The court disagreed, stating that trial by consent should be applied cautiously and only in clear circumstances. The evaluation of whether an issue was tried by consent focuses on the actual trial of the issue rather than the evidence presented. In this case, Lyft’s summary judgment motion addressed negligent retention of an independent contractor, but Freyer’s response solely discussed negligent retention of an employee, indicating that the claims were treated separately. The trial court's order specified the dismissal of two negligent hiring claims while only addressing one negligent retention claim, leading the court to conclude that the negligent retention claim was not tried by consent.

Freyer's claim of negligent hiring against Lyft hinges on Texas law, which allows for liability if an employer knew or should have known of an independent contractor’s incompetence, resulting in injury to a third party. An employer must exercise ordinary care in hiring and investigate the contractor’s qualifications, especially if the job involves driving. Freyer argues that Lyft inadequately investigated Blaser's driving competency by outsourcing background checks to an automated system, which allegedly failed to reveal Blaser's past legal violations and accidents. Lyft counters that the Texas statute permits outsourcing background checks and asserts compliance, claiming no indication of incompetence in Blaser’s driving record. The law suggests that compliance with statutory standards reflects reasonable care but does not automatically establish it. An employer is not liable for negligent hiring if the contractor is competent. In this case, even assuming Lyft had reviewed Blaser's driving history, it revealed no evidence of recklessness or incompetence. Furthermore, Freyer's assertion that Lyft should have investigated Blaser's competency specifically “to drive passengers” lacks supporting authority. Courts typically refer to negligent entrustment cases for guidance on determining driver fitness, emphasizing that a valid, unrestricted driver’s license is generally sufficient evidence of competency unless contradicted by other evidence.

Blaser held a valid, unrestricted driver's license when applying to drive for Lyft, demonstrating a minimum level of driving competence unless Lyft had knowledge suggesting otherwise regarding her capabilities. Freyer's attempts to challenge Blaser's competence were deemed insufficient to create a genuine issue of material fact for summary judgment. The evidence cited by Freyer included various infractions and incidents from Blaser's driving record, such as multiple periods of no insurance and crash incidents without citations. 

The case of Houston Cab Co. v. Fields serves as a relevant precedent, where a jury found Houston Cab negligent for entrusting a vehicle to Simmons, an independent contractor, after her driving record revealed undisclosed issues. On appeal, Houston Cab contested the sufficiency of evidence showing Simmons' incompetence, arguing that past violations did not indicate recklessness. The appellate court agreed, stating that violations like driving without insurance do not inherently demonstrate reckless behavior and that citations without convictions fail to establish a pattern of incompetence or recklessness. The court emphasized that a driving record showing violations without indications of guilt is inadequate to support claims of habitual recklessness or incompetence.

The court concluded that a single suspension of Simmons' license for failing to maintain insurance did not demonstrate recklessness or incompetence, referencing a precedent where multiple minor infractions were deemed insufficient to establish such claims. The appellate court reversed the trial court's decision, favoring Houston Cab. Similarly, Blaser's repeated license suspensions for insurance issues were considered financially questionable but not indicative of reckless or incompetent driving. Her last suspension occurred eight years prior to the accident in question, and her prior speeding convictions from 2006 and 2008 were also deemed too remote to establish a fact issue regarding her driving competence. The court cited various cases affirming that past infractions or accidents, particularly if not resulting in citations or fault, do not support claims of habitual recklessness. Additionally, Freyer's argument regarding a collision caused by Blaser prior to her hiring by Lyft was dismissed, as Blaser was not cited for that incident, further reinforcing that past violations or accidents alone do not imply incompetency or recklessness.

The case distinguishes itself from Morris v. JTM Materials, Inc. regarding negligent hiring, where JTM's failure to review an employee's driving record revealed past offenses impacting safe driving. Here, Blaser’s record showed no alcohol or drug-related offenses, which was the focus for JTM. The court clarified that negligence cannot be presumed just because an independent contractor caused injury, emphasizing that Freyer failed to demonstrate that Lyft knew or should have known Blaser was unfit to drive at the time of hiring. Even assuming Lyft outsourced the background check, there was no evidence in Blaser's driving history indicating unfitness. Similarly, previous cases indicated that even thorough investigations would not have revealed any disqualifying information about employees. Consequently, the trial court correctly granted Lyft summary judgment on Freyer's negligent hiring claim. Freyer's additional argument for negligent undertaking was also dismissed; Lyft contended it did not voluntarily assume a duty to perform background screening. Freyer alleged that Lyft did undertake such screening services but failed to do so with reasonable care, ultimately increasing her risk of harm.

To establish a negligent undertaking claim, a plaintiff must prove three elements: (1) the defendant undertook services essential for the plaintiff’s protection, (2) the defendant failed to exercise reasonable care in those services, and (3) the plaintiff either relied on the defendant's performance or the performance increased the risk of harm. Lyft contends its role was limited to contracting third-party companies for background checks and argues that Freyer’s claim fails since it did not conduct the checks itself and there is no evidence of negligent contracting. 

The analysis indicates that even if Lyft had a duty by outsourcing background screenings, Blaser’s driving record did not present a basis to prevent her hiring, as it did not indicate recklessness or incompetence. Freyer could not show that Lyft's actions increased her risk of harm, as establishing that conducting background screenings would imply Blaser was a poor driver lacks supporting evidence.

Freyer's assertion of reliance on Lyft's background screening is deemed conclusory; her affidavit does not specify any advertisement related to these services or demonstrate that she relied on Lyft's performance prior to her choice to use the service. Furthermore, her claim that Lyft had a duty to continue background checks based on safety alerts received in 2017 does not substantiate any actionable negligence, as it fails to connect the alleged duty with a resulting harm.

Lyft failed to take further action in response to safety alerts regarding driver Blaser, but evidence shows Lyft had systems in place for driver ratings and safety feedback. Passengers could rate drivers and report safety concerns, with the support team reviewing ratings of three stars or lower. Two incidents involving Blaser were highlighted: one where a passenger gave a four-star rating but also selected a safety emblem, and another where Blaser received a one-star rating along with a safety emblem just days before an accident, indicating unsafe driving. Lyft attempted to contact the rider for clarification but received no response, leading to no further investigation. The court found that Freyer did not present sufficient evidence to demonstrate that Lyft's actions increased her risk of harm or that Lyft failed to adequately investigate the issues raised. The court affirmed summary judgment in favor of Lyft, concluding that Freyer's negligent undertaking claim lacked merit under Texas law, which requires an affirmative action by the defendant rather than a failure to act. The trial court's judgment was upheld, and Lyft was awarded costs for the appeal.