Proactively managing driver safety is the most effective way to minimize corporate liability

As Brightmile expands to businesses across North America, customers occasionally challenge us with questions around the corporate liability associated with the Brightmile product, specifically: Does gathering and accessing data on work-related driving behavior create additional liability and exposure for a business? 

For example, if Acme Corp. had access to a dashboard stating that Driver X is susceptible to being a distracted driver, and Driver X subsequently caused a fatality whilst driving on a business trip and distracted by their smartphone, what are the implications for Acme Corp.?

Or, in other words, could the best way to minimize liability be for Acme Corp. to “bury its head in the sand”?

We have discussed the US legal implications of these questions with Andrew Smith, a Partner at a law firm in New York who focuses on the transportation industry. Andrew, like many, has personal experience of the tragic impact of unsafe driving. In 2012 his beloved 1963 MGB classic car, loaned to a classic car club in London, was written off in a headlong collision caused by reckless driving. Tragically, the car was not the only thing damaged – the driver was fatally injured - just one of the estimated 1.2 million fatalities that took place on the world’s roads that year.

Corporate liability for unsafe work-related driving practices can be astronomical, so businesses are right to assess this matter seriously. Per The National Safety Council’s paper on smartphone distraction alone, “numerous lawsuits have resulted in large awards or settlements payable by employers and their insurers when employees were involved in motor vehicle crashes while using cell phones”. 

These include:

1. $24.7m – Commercial Transportation Company, 2008 crash in Missouri. A federal judge awarded $18m, a district court awarded $6m, and a jury awarded $700,000 in three cases involving a crash that killed three people and injured 15 others, some seriously. The driver of the tractor-trailer was checking his phone for text messages when his truck ran into 10 vehicles that had stopped in backed-up traffic on a freeway. The driver had reached for his phone and flipped it open, missed seeing the stopped traffic and hit the vehicles without braking first.

2. $21.6m – Technology Company, 2007 crash in Florida. A jury found the driver and the corporation that owned the company car liable when the driver rear-ended another vehicle on the freeway, causing the vehicle that was struck to cross the median into oncoming traffic lanes. The crash resulted in a fatality at the scene. Cell phone records show that the employee driver who rear-ended the vehicle was using a cell phone at the time of the crash.

3. $21m – Soft Drink Beverage Company, 2010 crash in Texas. A company driver was talking on a hands-free headset when she struck another vehicle broadside and seriously injured the driver. A jury held the company liable to pay $21m in compensatory and punitive damages to the injured driver.

Overall corporate liability is a product of two variables: (1) the number of liability creating incidents that occur, and (2) the amount of exposure/liability created for the employer by each such incident.

Looking at each of these two elements in turn:

1. Number of liability creating work-related driving incidents. In all of the cases listed above, the driver was distracted on their smartphone at the time of the collision. Most of our potential customers agree that a tool such as Brightmile that aims to eliminate smartphone distraction, as well as other dangerous behaviors like speeding, will reduce the frequency of collisions, near misses, and incidents of reckless behavior that could each create liability and exposure.

   Andrew agrees that “Given that an employer will generally be liable for its employees actions, steps to drive down the number of incidents creating liability would appear to be a very sensible and effective initiative that a business can take to reduce its overall liability.”

2. Amount of corporate exposure/liability created by each such work-related driving incident.

    

   There are two causes of action that a US company may be worried about with respect to liability caused on the road by drivers that they employ – Vicarious Liability and Negligent Entrustment. 

   1. Vicarious liability in relation to negligence of their employees while driving in the performance of their employment duties. Andrew explains: “An employer is vicariously liable for their employees’ actions when driving in connection with the performance of their job, and generally it is hard for an employer to escape this liability. If an employee causes an accident while driving negligently while performing their job then the employer is liable. That is generally the end of the story.”

      Can the employer’s exposure to vicarious liability increase based on its knowledge of an employee’s poor driving habits? The only concern that we have been able to come up with is that punitive damages could be assessed if a case involved a high degree of complicity by the employer. However, it is a very high standard to show the level of complicity required for punitive damages claims to succeed, and it seems highly unlikely that having access to data flagging Driver X as a distracted driver would implicate an employer as complicit in this behavior (especially if actions are taken to warn the driver and make it clear that behavior should be improved).

   2. Negligent entrustment. Andrew explains: “As explained above, generally vicarious liability is the end of the story and puts liability for an employee’s negligent actions on the employer. A claim can also be made against the employer on the basis of negligent entrustment of a vehicle to the employee. To recover for the negligent entrustment of a motor vehicle, the plaintiff must generally prove the following elements. First, the owner of the vehicle entrusted the vehicle to the driver. Second, the driver was incompetent, reckless or unlicensed. Third, the owner knew or should have known that the driver met the factors under element two. Fourth, the driver was negligent in his or her operation of the vehicle. Last, the driver’s negligence caused damages. Punitive damages may be awarded if negligent entrustment is proven, and these damages are not commonly covered by insurance.”

      Claims for negligent entrustment of a vehicle can be used to establish a liability for the employer when an employee is using a vehicle outside of their job. Classic cases in negligent entrustment involve an employer with knowledge that an employee is regularly drunk when driving, or that the employee has no license to drive. There could, however, be an argument that if Acme Corp. had access to data showing, unequivocally, that Driver X has been consistently distracted over a period of time and yet Acme Corp. fails to take action, continues to provide Driver X with a company vehicle, and Driver X subsequently causes a serious incident whilst driving that vehicle, that this would satisfy the third limb of the vehicle provider having knowledge.

However, a number of factors should be taken into consideration here:

1. The Brightmile solution includes various automated mechanisms to ensure that potentially incompetent or reckless driving is never left unmanaged (self-coaching via gamification, rewards, & challenges; email digests flagging poor performance levels; targeted in-app coaching).

2. Additional management interventions can be implemented as part of a corporate safe driving policy, and Brightmile’s customer success team are on hand to help companies design and implement appropriate protocols to deal with risky drivers. For example, persistently bad drivers identified by Brightmile could be required to complete on-road training with a driving instructor. 

3. Acme Corp. might take a view that if, even after the interventions set out in (a) and (b) above, Driver X still does not improve their unarguably risky behaviors like speeding and texting while driving, perhaps this might not be someone to whom they want to entrust a vehicle (or even employment) in any event. Installing Brightmile empowers Acme Corp. with the data to identify high risk drivers and proactively manage them before collisions occur.

4. There is a high bar to proving knowledge of “incompetent” or “reckless” driving, considering the sad truth that the vast majority of drivers are guilty of speeding and distraction at times.

5. Therefore, all in all, it would seem that there are many layers of defense available to Acme Corp. to argue that it has done everything in its power to prevent Driver X from driving in an incompetent or reckless way. 

Overall Acme Corp. is faced with two broad courses of action: (1) bury its head in the sand and avoid measuring driver behavior, thus exposing itself to a higher frequency of potentially huge claims through failure to implement a robust risk management policy, or (2) implement a solution to quantify and minimize risk levels, thus accepting a slight (if highly unlikely) additional risk of a negligent entrustment claim, but benefiting from the greatly reduced frequency of claims and ability to proactively manage occupational risk. And this is looking at liability in a narrow, legal sense, without even considering the broader benefits of protecting employees and other road users, or the brand reputation implications if liveried vehicles are regularly driven recklessly.

Certainly, gathering data on driving behavior is best conducted as part of a robust and holistic safe business driving policy, with processes in place to manage any observed poor performance. But even in a worst case scenario, implementing a cutting edge telematics system like Brightmile would indicate a willingness to address this risk, and ultimately lower exposure to the accusations of negligence and mismanagement that would determine the size of a pay-out in most foreseeable scenarios.

This article provides a general legal information about the relevant law applicable in most US states as at December 2021, but the law will vary from state to state. This article is not intended to be a comprehensive review of the relevant law, or to cover all aspects of those referred to, and does not, and is not intended to, constitute legal advice. The information provided is general in nature, and does not take into account and is not intended to apply to any specific issues or circumstances applicable to any person. You should not act or refrain from acting on the basis of the content without seeking legal or other professional advice. No part of this publication may be reproduced by any process without prior written permission from Brightmile and Andrew Smith. We accept no liability for use of and reliance upon this article by any person. Opinions in this article are those of Brightmile or, where expressly stated, Andrew Smith, and are not the view of his firm. The Brightmile solution is not in any way endorsed or recommended by Andrew Smith or his firm.