3 Risk Management Options for Autonomous Vehicle Makers

If an autonomous vehicle (AV) is involved in an accident, who is responsible? Autonomous vehicle litigation is new and unexplored territory with no case law or liability framework yet developed — so it’s difficult to answer that question. While AVs have been involved in several crashes, confidential settlements and investigations clearing the AVs of fault have left manufacturers without precedent for assigning liability.

Potential defenses are available to makers of autonomous vehicles (also referred to as autonomous driving systems or ADS) — but an ounce of prevention is worth a pound of cure. AV manufacturers who do not wish to be pioneers in autonomous vehicle litigation should take steps to mitigate the risks of litigation and reduce their potential liability in lawsuits. Legal, professional and technological options are available to manage risk.

1. Legal Actions

Indemnity agreements will likely be a major factor in the legal relationships between autonomous vehicle manufacturers and makers of the AV systems’ components, as well as between rideshare companies and the AV manufacturers whose cars they may be using. These indemnity agreements are likely already in use by most manufacturers and component part makers, and future litigation will test the parameters and effectiveness of these contractual provisions. In the meantime, players in this space should be thoughtful and deliberate in how they craft indemnity agreements.

Manufacturers, as well as rideshare companies using AVs, may also want to consider having testers or “safety drivers” sign waivers or similar agreements prior to driving AVs. The driver should affirm that he or she will obey all alerts issued by the AV and that he or she will not do anything that would distract him or her from watching the road. The driver would indemnify and hold the company harmless from the consequences of violating the provisions. Assuming agreements are drafted appropriately, they could potentially provide manufacturers/rideshare companies with liability protection. State contract law and the courts will largely determine the viability and enforceability of such agreements as litigation arises.

AV manufacturers will want to continuously pay attention to new regulations and legislation, which are bound to arise. Most states have passed at least some legislation governing driverless cars, and California, Florida, Michigan, Nevada, Tennessee and D.C. have already passed relevant legislation.¹ Also, NHTSA has announced plans to revisit safety ratings in light of AV technology.² AV manufacturers should stay vigilant to ensure they are up to date with the most recent regulations.

Jurors are likely to be initially skeptical of new AV technology. Manufacturers can counter skepticism by exceeding minimum standards required by the law or industry practice.

2. Professional Actions

Legal scholars have recommended best practices to manage the risk of inevitable autonomous vehicle product liability claims. Jurors are likely to be initially skeptical of new AV technology. Manufacturers can counter skepticism by exceeding minimum standards required by the law or industry practice.³ This technology is developing quickly, and by the time a case gets to trial, it is likely that the jurors will be expecting a higher standard. Taking a proactive approach will prepare manufacturers for litigation by providing them with credible narratives as to why the products were safe, how often the products were tested and checked, any follow-up actions that were taken to promote safety, and anything else the manufacturer did that indicated care for consumer protection.⁴

3. Technological Actions

Technological proposals may preemptively shield manufacturers from liability. These recommendations include making an autonomous vehicle more automated, making the driver more responsible for autonomous activity, and various systematic upgrades.

Ironically, making a car more automated could reduce the number of product liability claims against manufacturers. Removing the human entirely from active driving could negate product liability claims that the manufacturer did not adequately instruct the driver on how to use the driver assistance technology, misrepresented the performance of the AV system, failed to guard against foreseeable misuse of that system, or designed the system without reasonably addressing the question of human-machine interaction.⁵

On the other hand, AV manufacturers could potentially reduce or avoid liability by making drivers more responsible for certain activities in AVs. For instance, several years ago, Tesla proposed a system where drivers would be involved in the timing of passing maneuvers, but the execution of the maneuver would be fully automated.⁶ The driver would thus be taking at least partial responsibility for the consequences by acknowledging that road conditions are appropriate for that particular action.

AV manufacturers should consider a number of system enhancements, if they haven’t already. Major automakers have committed to make automatic braking standard on their vehicles by 2022.⁷ AV manufacturers should ensure they meet this commitment, as NHTSA has predicted that a jury may conclude a new vehicle without this feature is defective after that time.⁸ Additionally, manufacturers should ensure that their AVs have and maintain robust data collection.⁹ Specifically, they should include an electronic data recorder (EDR), which can show the systems in use leading up to, during and after an accident. Information about accidents that is detailed and accurate is likely to enable manufacturers to better take advantage of the defenses described in our first article. And jurors will quickly come to expect this level of accident data.

Finally, in terms of software, it might be wise for manufacturers to invest in “Firmware Over the Air” (FOTA) software for all AVs. FOTA allows manufacturers to send software updates wirelessly as they develop, with little lag time, and at minimal cost.¹⁰ This way, manufacturers can quickly make updates to autonomous vehicle software in a cost-effective manner, and universally “repair” any issues or systems that have been implicated in an accident.

Conclusion

While there are no precedential court decisions involving an autonomous vehicle accident yet, the first one, and many more, are inevitable. In-house counsel should consider the legal, professional and technological actions outlined above to best position themselves to avoid or mitigate the risks of autonomous vehicle litigation. As litigation arises, AV manufacturers should prepare to assert defenses described in our first article and watch how courts and juries assess and apply those defenses.

This article was published in Law360 on September 6, 2018.

The authors wish to acknowledge the assistance of summer associate Olivia Dworkin in preparing this article.

¹ Autonomous Vehicles / Self-Driving Vehicles Enacted Legislation, NATIONAL CONFERENCE OF STATE LEGISLATURES (June 25, 2018), http://www.ncsl.org/research/transportation/autonomous-vehicles-self-driving-vehicles-enacted-legislation.aspx.
² Id.
³ Stephen S. Wu, Product Liability Issues in the U.S. and Associated Risk Management, in AUTONOMES FAHREN 588 (2015). ⁴ Id.
⁵ Bryant Smith, Automated Driving and Product Liability, 2017 MICH. ST. L. REV. 1, 50 (2017).

⁶ Sarah Shelton, Tesla Answers Concerns Over Semi-Autonomous “Automatic Overtaking,” HYBRIDCARS (May 18, 2015).

⁷ U.S. DOT and IIHS Announce Historic Commitment of 20 Automakers to Make Automatic Emergency Braking Standard on New Vehicles, IIHS News (March 17, 2016), http://www.iihs.org/iihs/news/desktopnews/u-s-dot-and-iihs-announce-historic-commitment-of-20-automakers-to-make-automatic-emergency-braking-standard-on-new-vehicles.

⁸ Bryant Smith, Automated Driving and Product Liability, 2017 MICH. ST. L. REV. 1, 49 (2017).

⁹ Id. at 52.
¹⁰ Sean Livesey, Products Liability and Autonomous Vehicles: Who’s Driving Whom?, 23 RICHMOND J. OF L. AND TECH. 1, 37 (2017).