Legal Roundup: Gambler Sues and Prevails in Horse Doping Case, Uber’s Driver Status Questioned and More

The latest court cases and their impact on the risk management and insurance industry.
By: | August 19, 2020

Uber and Lyft Must Reclassify California Workers

The Case: Are Uber and Lyft drivers misclassified as independent contractors?

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California leaders like Attorney General Xavier Becerra think so. He sued the ride-sharing giants for violating a broad state law requiring workers to be treated as employees, meaning they should have access to health plans, paid leave and unemployment insurance, among other benefits.

The companies argued that drivers like the flexibility that comes with being independent contractors and that such a mandate would increase prices. The government argued that Uber and Lyft were unlawfully skipping out on obligations that other companies must fulfill.

Scorecard: San Francisco Superior Court Judge Ethan Schulman sided with Becerra and ruled that Uber and Lyft must stop classifying drivers as independent contractors.

Schulman said, according to Politico, that “ ‘substantial public harm will result’ if the state did not order the companies to change their ways, writing that the status quo deprives Uber and Lyft drivers ‘of the panoply of basic rights to which employees are entitled under California law.’ ”

The companies are not taking the ruling laying down and have already threatened to suspend service in California, according to CNBC.

They are also funding a ballot initiative to allow them to continue using independent contractors.

Takeaway: Politico said the results of the case “could be seismic.”

It reports that “the companies’ business models rely on fleets of app-dispatched independent contractors who set their own hours but are not entitled to labor guarantees like state minimum wage, paid sick leave and unemployment insurance and could trigger a ripple effect across their operations in other states. Schulman’s order could shatter that framework while imposing enormous new costs on the companies.”

Horse Racing Bettor Gets $20K After Doping Led to Loss

The Case: Any horse racing bettor knows the agony of defeat. Jeffrey Tretter is no different.

At the Meadowlands Racetrack on Jan. 15, 2016, he picked a group of horses to finish first through fourth. They finished in that order — but just behind a longshot named Tag Up and Go.

“Meadowlands later revealed that Tag Up and Go had tested positive for EPO, a banned performance-enhancing substance, based on blood samples taken in December,” according to the Associated Press.

Tretter claims “he correctly picked the horses that finished second, third, fourth and fifth behind the doped horse in a variety of wagers that would have paid a combined $31,835 if Tag Up and Go had been disqualified.”

So he sued the trainer Robert Bresnahan Jr., and the horse’s owner, J.L. Sadowsky.

Scorecard: The two sides reached a settlement, paying Tretter $20,000. Tretter agreed to donate $7,500 to a racehorse adoption agency.

Takeaway: The AP called the case a “first-of-its-kind” in sports betting. Typically, if a horse had been disqualified after a race, the purse is reallocated to other owners — not to an aggrieved bettor.

The case also has a horse safety implications. The AP reports that it was “financed by People for the Ethical Treatment of Animals to open the gates for more litigation by bettors, which the animal rights group hopes would dramatically curtail illegal horse doping. PETA contends that injured horses are sometimes dying on the tracks because they were doped illegally or overmedicated to keep them running when they should be recuperating.”

Tretter’s case could set a precedent for a wave of bettor litigation and portend an evolution in racehorse safety.

Egg Company Sued for Alleged Pandemic Price Gouging

The Case: New York Attorney General Letitia James sued Hillandale Farms over alleged price gouging during the pandemic.

The Associated Press reports: “James claims that in March and April, Hillandale Farms price gouged more than 4 million cartons of eggs sold to grocery store chains, U.S. military facilities and wholesale food distributors. The lawsuit seeks restitution for consumers.”

The company is accused of charging up to four times the price per carton. Hillandale said eggs are subject to price fluctuations and that the pandemic caused serious disruptions. It plans to fight the case in court.

Scorecard: The case has just recently been filed and has not yet come to a resolution.

Takeaway: Hillandale Farms is not the only company accused of artificially raising the price of goods during the early days of COVID-19.

The nation’s largest egg producer Cal-Maine Foods was accused of selling eggs at a 300% markup while people were in a mad rush to buy food. Expect authorities to pursue these claims vigorously.

Judge: Business Owners Can Sue Insurers for Pandemic Business Interruption

The Case: Since pandemic shutdowns began, many business owners were shocked and outraged when insurance companies denied business interruption claims.

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Typically, business interruption coverage kicks in only when the property suffers physical damage — something not commonly known by the average business owner.

It’s led to thousands of lawsuits across the country. One such suit pits a group of Missouri restaurant operators and salon owners against Cincinnati Insurance Co., who moved to have the case dismissed.

In similar cases, insurers had been victorious by “successfully arguing that coverage was not warranted because the virus travels through the air and does not cause physical damage,” according to Reuters.

Scorecard: U.S. District Judge Stephen Bough in Kansas City did not dismiss the case, and instead allowed it to proceed, according to Reuters.

Takeaway: Judge Bough’s decision gives some credence to the business owners’ argument. Reuters said the ruling “appears to be the first victory for policyholders suing insurers for improperly denying claims related to shutdowns caused by COVID-19.”

With this precedent, only time will tell if similar rulings follow. &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]