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How Much Will the Wave of Uber And Lyft Assault Lawsuits Hurt Investors?

Uber and Lyft have been under fire for several years regarding allegations by passengers of sexual assault by rideshare drivers. Most of the allegations were handled in secretive arbitration negotiations because rideshare customers agree to use arbitration to settle disputes when they agree to the platform’s terms of use. The results of the assault allegations against Lyft and Uber are not known because of the confidentiality agreements tied to the arbitration.

However, several lawsuits against Lyft and Uber alleging sexual assault by drivers, corporate negligence, and other matters have been filed in courts throughout the country. Riders claim that they have been sexually assaulted in the vehicle, their homes, and outside of the vehicles.

According to Manly, Stewart & Finaldi, a law firm that is involved with these lawsuits said “failure to fulfill any of a rideshare company’s duties of care, contributing to sexual abuse, could be grounds to file a civil lawsuit against the company for negligence.”

Because both rideshare companies heavily promote their services, in part, as being safe for female riders. The rideshare companies also advertise that they are safe alternatives for anyone who is too drunk to drive home. This claim could be problematic in the future for the companies because many of the sexual assaults occurred when women were intoxicated. As platforms that claim to be committed to providing safe transportation, the allegations of sexual assault against rideshare drivers and rideshare companies could have a negative impact on the companies’ investors.

How Do Criminal Allegations Impact a Company’s Investors?

Investors are repaid and/or receive a return on their investment when the company is successful and earns a profit. If the company loses business because their rideshare drivers are sexually assaulting clients, the loss of business could translate into a loss for investors. Furthermore, the cost of defending rideshare sexual assault lawsuits can be extremely expensive. Attorneys’ fees, arbitration fees, court costs, investigation expenses, higher insurance costs, and other expenses related to the lawsuits can also drive profits lower.

The expense of the lawsuits added to a decline in business could result in an investor having a very low rate of return on their investment. If the companies continue to experience legal problems to the point that the company closes, investors stand to lose their entire investment.

Typically, investors are not held personally responsible for the company’s debts or liabilities, including criminal charges. However, if an investor also works for the rideshare company as an employee, the investor could be held criminally liable if the investor was an accomplice in the criminal act by encouraging, assisting, aiding, or instructing another employee to commit a crime or engage in criminal activity.

If an investor holds a position with Uber or Lyft that included any duties that directly impact the liability of the company for the actions of rideshare drivers, such as performing background checks or addressing allegations of misconduct, the investor have some criminal liability if the investor failed to take action to prevent the conduct or future conduct.

Typical Investors Could Feel an Impact in Their Wallet

The key is whether an investor is also an employee or holds management authority with the rideshare services. If the person is a typical investor who only has a financial stake in Uber or Lyft, the lawsuits regarding assault allegations will probably only impact the investor’s finances. The amount of financial loss and business loss Uber and Lyft might experience because of the sexual assault allegations will not be fully known until the pending lawsuits are fully litigated.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.

By Sheena Jordan
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