San Francisco's Yellow Cab Files For Bankruptcy (cnn.com)

Applehu Akbar writes: Yellow Cab Cooperative, the largest taxi company in San Francisco, has filed Chapter 11. While competition from those newfangled ride-sharing services is a natural target for blame, a more proximate cause is Yellow Cab losing an $8 million accident liability suit by a passenger who is now paralyzed. Apparently the Yellow Cab drivers are...registered as independent contractors. So much for the medallion cab argument that they offer superior liability coverage.

Comments

How about a link to a story?

[ClickOnThis]

Like this one?

Re:How about a link to a story?

[Anonymous Coward]

"In the court filings, Yellow Cab said it is handling around 150 ongoing liability claims stemming from taxi accidents. The company was found liable for $8 million last June after a Yellow Cab crashed and left a passenger partially paralyzed. "

So, in other words, the taxi company had no liability insurance, hoping to use the "independent contractor" excuse. Fuck 'em for being greedy incompetent assholes.

Re:How about a link to a story?

[FlyHelicopters]

Well you have to understand that a lot of us are driving around cars worth only just a bit more than the deductible. The vast majority have just the minimum required by law liability insurance. That is if they have any insurance at all.

Liability insurance does not have a deductable, the point of it is to cover damage to persons or property that you cause.

If you carry the minimum amount, which is often less than $50K, you can't even cover the damage to someone else's nice car, much less their injuries.

If you total someone's luxury car, your liability insurance has to pay for that, but if you have only $40k of coverage, that isn't going very far. You're then liable for the difference.

Now you might be judgement proof, you can even declare bankruptcy, but those options suck in their own ways.

---

Example: You crash into my truck and total it. It is worth more than your insurance will cover. Your insurance will pay the first $40K, my insurance will cover the difference (since I have what is called underinsured motorist coverage that makes up such gaps).

Now you become subjugated to my insurance company, which has the legal right to come after you for the difference. You aren't at risk of being sued by me, but by my insurance company, who has the time and resources to come after you, at least to the extent to force you into bankruptcy, at which point they go away.

The problem is that we allow people to buy just $40K of liability coverage in the first place. Given the price of cars and medical treatment, that number should be much higher.

As for not having insurance at all, that is being irresponsible, since you likely lack the means to cover damage that you cause out of your own pocket. The penalties for not having insurance are not nearly harsh enough, IMHO...

Re:Please don't post a fucking link

[threephaseboy]

There is a link, it's just in tiny print next to the title, and is the same color as the bar behind it.

Thanks Dice!

Re:If they went bankrupt

[whoever57]

If they went bankrupt because of a lawsuit related to an injury then there is clearly more financial backing there as the plaintiff was able to go after their assets. Someone like Uber would have walked away from the case and thrown the driver under the bus (which they've already done at least once) and the person that got hurt would have never gotten a dime.

Did you not read the article? The Yellow Taxi company operates as a co-operative and argued that the driver was an independent contractor, just like Uber does. Apparently this position did not fly with the court, and it seems reasonable that if Uber made the same argument, the court would also make Uber liable.

Super old news; done for debt shedding.

[tlambert]

TL/DR version: Super old news; done for debt shedding.

This was publicly announced 3 weeks ago, but it's been known for a month and a half (since 10 Dec 2015), when a letter was sent out to co-op members, and it was primarily done to shed debt, and because the coop (which is how it's organized) is not attracting new drivers; with a limited number of medallions, taxi coops compete to attract those with medallions. Yellow cab isn't doing as well in this as other companies and co-ops. Primarily they are losing medallioned drivers to Flywheel Taxi (formerly, DeSoto Cab) and Luxor Cab.

"The bankruptcy filing will allow the co-op to shed its mounting debts."

"Fewer drivers mean fewer profits for Yellow Cab, the co-op admitted in a letter to its members."

"The company told the San Francisco Examiner its ridership numbers are healthy. But in a letter to shareholders obtained by the Examiner, Yellow Cab Co-Op President Pamela Martinez wrote that they must do more with less to survive."

^^^^---- note: not losing business to ride sharing services ----^^^^

“In reality, we have the best color scheme there is in the world, we’ve got a lot of loyal customers, we still get a high volume of calls to our color scheme on a daily basis,” he [Jim Gillespie] said.

"Financially, he said the straw that broke the camel’s back were a number of lawsuits which ended up hurting the company’s bottom line."

"On background, multiple sources told the Examiner that cab companies are having a tough time hiring competent drivers and may be hiring drivers with spotty driving records. Gillespie denied this, but he did say the lawsuits were harmful to the co-op."

http://www.sfexaminer.com/yell...

Liability Coverage.

[Firethorn]

It took a court to break the company's argument that since it's drivers were independent contractors, the company itself shouldn't be found liable.

Indeed, I think there's a misconception on what liability coverage is, and how liability insurance works.

You see, any liability insurance police is limited by a maximum payout - For example, a common one is $100k per person, $300k per incident coverage, my 'step up' from that which is $250k per person/$500k per incident. This is generally enough to cover most claims. But liability itself doesn't have a limit unless a statute(law) has been passed limiting it.

So the taxi driver gets into an accident and causes $8M of damage. Must of been nasty. But he's carrying the minimum insurance. $100k is paid to the harmed individual via the insurance. Obviously this is 'no where near enough'. So the harmed party would go after the rest of the cab driver's assets. Problem: Most people in the USA are effectively 'judgement proof' because their debts exceed their assets, and as a matter of law, their home, primary vehicle, and such are generally untouchable*. Most cab driver's aren't rich enough to have a spare yacht that can be sold. So lawyer and court fees would quickly drive the driver bankrupt. You can't get money from a stone.

So in this case they then go after the parent company - Yellow Cab. It does it's best to argue that it's not liable. Hell, it doesn't have insurance for this. Thus, when the verdict is handed down, they're 'forced' to file for bankruptcy, if one of the more minor versions of it.

When people mention 'liability coverage', they generally mean insurance, which this isn't. This is straight up liability.

*They can force the sale of extra vehicles, if not used for work. But for something like a primary residence, if the judge determines that selling the residence/vehicle and buying a more modest version won't actually yield a significant amount of money, they won't do so. Figure on losing 20-40% of the value of the property in question, and suddenly while there might be 'modest' gains to be had, kicking a taxi driver out of a $200k lousy home and forcing him into an apartment would actually COST money. You're not getting much selling a $10k car to the dealer only to buy an $8k car.