August 12, 2020

California Bill alert; AB-1286 Shared mobility devices: agreements (2019-2020)

UPDATE 9/2/20. So the legislative year is over in CA as of 8/31/20...whew...The final bill language is set forth below as of 9/2/20. They still did not clean up the issue below in my 8/27/20 update. If the bill is signed by Gov. Newsom it looks like it would take effect January 1, 2021.

UPDATE 8/27/20:

It appears that the mobility industry and or others in the industry were able to remove all the provisions in the bill relating to releases. However in my opinion the definition of a  “Shared mobility device” and a  “Shared mobility device provider” is still too vague which then leads to a problem with this remaining provision "(b) Before distribution of a shared mobility device, a shared mobility service provider shall enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over the area of use. "Distribution" is way too vague and again this could apply to very small rental operations that cannot afford such high insurance limits.

ORIGINAL 8/12/20 POST:

Once again someone in the California legislature got whiff of a bad idea and decided to run with it. Just like the AB 5 bill last year regarding independent contractors and the resulting unwinding of Uber in CA., now we have a "shared mobility bill" that attempts to "fix" a few issues in that sector but does it in a very heavy handed way. 

The first problem is the definition of a "shared mobility device". (ellipses eliminates unneeded verbiage) "Shared mobility device” means an electrically motorized board.... motorized scooter ... electric bicycle... [human powered] bicycle..., or other similar personal transportation device, .... that is made available to the public..". It gets worse.

“Shared mobility service provider”... means a person or entity that offers, makes available, or provides a shared mobility device in exchange for financial compensation..."

So if one person wanted to rent a bike to someone, this law applies to that person renting a bike. Rather overbroad and too all inclusive. Poorly drafted in my opinion. There should be some revenue size threshold added to this definition.

Now for the good part, if you rent one of these devices (regardless of the size of your business or the amount of revenue to you earn) you have to purchase a policy from a California admitted insurer (might be tough from what I know of this insurance market) and the limits have to be 1 million per claim and 5 million dollars in the aggregate. In some respects that is more than Walmart suppliers have to procure to sell to Walmart.

But there is more. The "agreement between the provider and a user shall not contain a provision by which the user waives, releases, or in any way limits their legal rights or remedies under the agreement.". So even though California statutory law and case law allows for such waivers and releases in the recreational sports context, this legislator knows better and is going to go against established law. Such releases are not allowed in a product liability case to begin with. All this does is expose the companies renting (not product manufacturers or distributors) to MORE liability and make it harder for them to extricate themselves from litigation. Also the insurance market has "priced in" those waivers and without them insurance costs will likely rise in this sector. Legislators should think very long and hard before tinkering with existing liability laws and precedent. The law of unintended consequences makes things hard to fix once a new law is unleashed.

It goes on to provide that "A city or county that authorized a provider to operate within its jurisdiction before January 1, 2020, and continues to provide that authorization shall adopt rules for the operation, parking, maintenance, and safety rules regarding the use and maintenance of shared mobility devices..."

Quite frankly I trust the mobility companies to come up with better rules for operation than any government entity. Trust me I have seen this play out before. Government entities are not very adept at this especially considering the hundreds of different devices out there.

It is worth noting that this bill is co-sponsored by the Consumer Attorneys of California (CAOC) (which is a large association of attorneys that represents plaintiff's) and the League of California Cities (which is a group that generally advocates for cities) It is supported by the Environmental Defense Fund and a number of consumer protection groups. It is opposed by a number of shared mobility service providers, TechNet, and the Civil Justice Association of California.

The senate Judiciary Committee Analysis is as follows (in part)

Required prohibition on waiver of rights and remedies

Pursuant to the bill, the agreement and permit must also prohibit provisions in shared mobility provider agreements between providers and users by which the user waives, releases, or in any way limits their legal rights or remedies under the agreement. Writing in opposition, were a coalition of groups, including a number of providers such as Bird and Lime.

What is interesting is that the committee responded to their opposition with:

"It is true that such waivers are generally permitted and widely used, but are subject to certain limitations and requirements laid out in statute and case law. Civil Code Section 1668 provides:All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.Relevant judicial precedent further requires that waivers must be clear, unambiguous, and explicit in expressing the intent of the subscribing parties, as well as comprehensible in each of its essential details. (Benedek v. PLC Santa Monica(2002) 104 Cal.App.4th 1351, 1356; Westlye v. Look Sports, Inc.(1993) 17 Cal.App.4th 1715, 1731."

So even after acknowledging years of case law out there to protect consumer from onerous releases or waivers the Legislature still felt it was appropriate and ban outright the use of waivers and in a very broad fashion (not just for electric devices) or limiting the ban to large providers.

The plaintiff attorneys association responded (some what inaccurately) that:

"The opposition argues that such agreements are common. However, (1) [releases] being common does not make them right and (2) they are different from other rental agreements/operators. The companies manufacture (Editor: that is not true in all circumstances) and place e-scooters into the stream of commerce and are more akin to a product manufacturer and/or retailer and less like an innocent rental agency with no control over the product. Also, the manufacturers have the exclusive control to fix/maintain the scooters. (Editor: this is is also not always accurate) When a driver rents a vehicle, he or she is not required to waive the liability of car defects; neither should a scooter rider."

The Civil Justice Association of California (CJAC) responded that "The scooter manufacturer has no way of exerting control over the scooter rider and does not deserve full legal responsibility for accidents that may occur as a result of a rider’s behavior." The Legislative analyst responded that "assumption of risk" can still be asserted but I would point out if the defendant is in fact a product manufacturer or in the stream of distribution "assumption of risk" is not available as a defense in a pure product liability case.

If you want to see the full bill analysis click here. It is worth a read.

The entire bill as it exists today is set forth below. This bill was last amended in June of 2019 and it is just now coming up for a hearing with the CA Senate Judiciary Committee on August 18, 2020. Don't ask why. It passed out of committee on 8/19/20 and is now set for a 'third reading". This is part of the problem with the CA legislature. Surprise hearings on dormant bills months down the road. Maybe that's planned. August 31 is the last day to pass the bill.

The committee can be reached at:
State Capitol
Room 2187
Sacramento, CA 95814
Phone: (916) 651-4113
Fax: (916) 403-7394
Email: sjud.fax@sen.ca.gov

The bill author can be reached here.

FINAL LANGUAGE OF BILL AWAITING SIGNATURE BY GOV. NEWSOM LIKELY WITHIN 30 DAYS:

The people of the State of California do enact as follows:


SECTION 1.

 Title 10.1 (commencing with Section 2505) is added to Part 4 of Division 3 of the Civil Code, to read:

TITLE 10.1. Shared Mobility Devices

2505.
 (a) For purposes of this title:
(1) “Shared mobility device” means an electrically motorized board as defined in Section 313.5 of the Vehicle Code, motorized scooter as defined in Section 407.5 of the Vehicle Code, electric bicycle as defined in Section 312.5 of the Vehicle Code, bicycle as defined in Section 231 of the Vehicle Code, or other similar personal transportation device, except as provided in subdivision (b) of Section 415 of the Vehicle Code, that is made available to the public by a shared mobility service provider for shared use and transportation in exchange for financial compensation via a digital application or other electronic or digital platform.
(2) “Shared mobility service provider” or “provider” means a person or entity that offers, makes available, or provides a shared mobility device in exchange for financial compensation or membership via a digital application or other electronic or digital platform.
(b) Before distribution of a shared mobility device, a shared mobility service provider shall enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over the area of use. The agreement or permit shall, at a minimum, require that the shared mobility service provider maintain commercial general liability insurance coverage with a carrier doing business in California, with limits not less than one million dollars ($1,000,000) for each occurrence for bodily injury or property damage, including contractual liability, personal injury, and product liability and completed operations, and not less than five million dollars ($5,000,000) aggregate for all occurrences during the policy period. The insurance shall not exclude coverage for injuries or damages caused by the shared mobility service provider to the shared mobility device user.
(c) (1) A city or county that authorizes a provider to operate within its jurisdiction on or after January 1, 2021, shall adopt rules for the operation, parking, and maintenance of shared mobility devices before a provider may offer any shared mobility device for rent or use in the city or county by any of the following:
(A) Ordinance.
(B) Agreement.
(C) Permit terms.
(2) A city or county that authorized a provider to operate within its jurisdiction before January 1, 2021, and continues to provide that authorization shall adopt rules for the operation, parking, and maintenance of shared mobility devices by January 1, 2022, by any of the following:
(A) Ordinance.
(B) Agreement.
(C) Permit terms.
(3) A provider shall comply with all applicable rules, agreements, and permit terms established pursuant to this subdivision.
(d) Nothing in this section shall prohibit a city or county from adopting any ordinance or regulation that is not inconsistent with this title.

SEC. 2.

 The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

 

OLDER VERSION OF THE BILL BELOW:

Introduced by Assembly Member Muratsuchi

February 21, 2019


An act to add Title 10.1 (commencing with Section 2505) to Part 4 of Division 3 of the Civil Code, relating to mobility devices.


LEGISLATIVE COUNSEL'S DIGEST


AB 1286, as amended, Muratsuchi. Shared mobility devices: agreements.
Existing law regulates contracts for particular transactions, including those in which one person agrees to give to another person the temporary possession and use of personal property, other than money for reward, and the latter agrees to return the property to the former at a future time.
This bill would require a shared mobility service provider, as defined, to enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over the area of use. The bill would require that the provider maintain a specified amount of commercial general liability insurance and would prohibit the provider from including specified provisions in a user agreement before distributing a shared mobility device within that jurisdiction. The bill would define shared mobility device to mean an electrically motorized board, motorized scooter, electric bicycle, bicycle, or other similar personal transportation device, except as provided.
This bill would require a city or county that authorizes a shared mobility device provider to operate within its jurisdiction on or after January 1, 2020, to adopt operation, parking, maintenance, and safety rules and maintenance rules, as provided, regarding the use of the shared mobility devices in its jurisdiction before the provider may offer shared mobility devices for rent or use. The bill would require a city or county that authorized a provider to operate within its jurisdiction before January 1, 2020, and continues to provide that authorization to adopt those operation, parking, maintenance, and safety rules and maintenance rules, as provided, by January 1, 2021.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Title 10.1 (commencing with Section 2505) is added to Part 4 of Division 3 of the Civil Code, to read:

TITLE 10.1. Shared Mobility Devices

2505.
 (a) For purposes of this title:
(1) “Shared mobility device” means an electrically motorized board as defined in Section 313.5 of the Vehicle Code, motorized scooter as defined in Section 407.5 of the Vehicle Code, electric bicycle as defined in Section 312.5 of the Vehicle Code, bicycle as defined in Section 231 of the Vehicle Code, or other similar personal transportation device, except as provided in subdivision (b) of Section 415 of the Vehicle Code, that is made available to the public by a shared mobility service provider for shared use and transportation in exchange for financial compensation via a digital application or other electronic or digital platform.
(2) “Shared mobility service provider” or “provider” means a person or entity that offers, makes available, or provides a shared mobility device in exchange for financial compensation or membership via a digital application or other electronic or digital platform.
(b) Before distribution of a shared mobility device, a shared mobility service provider shall enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over the area of use. The agreement or permit shall, at a minimum, require that the provider comply with both of the following requirements:
(1) Requires Require that the shared mobility service provider to maintain commercial general liability insurance coverage with a carrier doing business in California, with limits not less than one million dollars ($1,000,000) for each occurrence for bodily injury or property damage, including contractual liability, personal injury, and product liability and completed operations, and not less than five million dollars ($5,000,000) aggregate for all occurrences during the policy period. The insurance shall not exclude coverage for injuries or damages caused by the shared mobility service provider to the shared mobility device user.
(2) The shared mobility provider agreement between the provider and a user shall not contain a provision by which the user waives, releases, or in any way limits their legal rights or remedies under the agreement.
(c) (1) A city or county that authorizes a provider to operate within its jurisdiction on or after January 1, 2020, shall adopt rules for the operation, parking, maintenance, and safety rules regarding the use and maintenance of shared mobility devices before a provider may offer any shared mobility device for rent or use in the city or county. county by any of the following:
(A) Ordinance.
(B) Agreement.
(C) Permit terms.
(2) A city or county that authorized a provider to operate within its jurisdiction before January 1, 2020, and continues to provide that authorization shall adopt rules for the operation, parking, maintenance, and safety rules regarding the use and maintenance of shared mobility devices by January 1, 2021. 2021, by any of the following:
(A) Ordinance.
(B) Agreement.
(C) Permit terms.
(3) A provider shall comply with all operation, parking, maintenance, and safety rules applicable rules, agreements, and permit terms established pursuant to this subdivision.
(d) Nothing in this section shall prohibit a city or county from adopting any ordinance or regulation that is not inconsistent with this title.

SEC. 2.

 The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
 

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