Amazon “delivery service partners” are required to sign agreements that “defend, indemnify, and hold harmless Amazon” in the event of an accident, according to a September 5, 2019 article jointly published by ProPublica and the New York Times. Contractors must assume the responsibility for “all loss or damage to personal property or bodily harm including death.”
Behind Amazon Prime’s promise of free, fast delivery is a huge network of contract drivers and logistics companies racing to deliver purchases in the “last mile” to the customer’s doorstep. Failure to meet delivery deadlines can result in loss of business, since Amazon demands that 999 out of 1,000 deliveries arrive on time.
Two key liability considerations will be of interest to insurance defense law firms.
First, the secretive nature of Amazon’s delivery network often hides the fact that Amazon may be in the ultimate driver’s seat. Unmarked cargo vans, box trucks, and personal automobiles form the core of the retailer’s delivery network. In one wrongful death case cited, the truck involved was labeled “Penske Truck Rental.”
Second, Amazon views its drivers as independent contractors despite the fact that Amazon controls significant aspects of the drivers’ jobs. Drivers reportedly use Amazon smartphone apps to guide them in delivery routes and deadlines. Delivery instructions can be specific enough that they exclude left turns, which are considered to be more dangerous, whenever possible.
Some of the material used in the investigation comes from court records and depositions. More than 60 accidents from June 2015 to the present were studied by ProPublica as part of their investigation. Ten fatalities were included in the accident records.
In an unnamed New Jersey negligence case, Amazon sued an insurance company that refused to pay the legal bills of a contractor in a lawsuit filed by a plaintiff physician. In an employment-related case, a Fort Worth delivery company formed to serve only Amazon entered bankruptcy proceedings after disputes arose over compensation practices. The bankruptcy judge questioned why Amazon should not be considered the de facto employer.
Background on Amazon Delivery
Amazon Prime was introduced in February of 2005. Members received free two-day shipping in the U.S. on eligible purchases as part of an annual $79 subscription fee. Fast forward to 2019, and Amazon Prime reportedly has 101 million subscribers in the U.S.
Amazon’s faster “Prime Now” service promises free two-hour delivery on tens of thousands of items across dozens of categories, including household items, groceries, and electronics, gifts. Deliveries from Whole Foods Market are featured, and customers can also order meals from restaurants in select cities.
Amazon expanded delivery capabilities from its Whole Foods subsidiary in April 2019. The service is now available in 75 U.S. metros and will continue to expand throughout 2019. Members can use Prime Now to receive grocery delivery in as little as one hour, according to a news release.
Amazon invited entrepreneurs in June 2018 to form small companies dedicated to serving the retailer’s delivery needs. It was projected that these contractors could employ up to 100 drivers and lease between 20 to 40 vans with the Amazon Prime label.
FedEx used to be a major Amazon supplier but made news in 2019 when it severed ties with the giant retailer.
In June 2019, FedEx revealed a strategic decision to not renew the FedEx Express U.S. domestic contract with Amazon.com, Inc. Instead FedEx will focus on serving the broader e-commerce market. According to a company statement, the “percentage of total FedEx revenue attributable to Amazon.com represented less than 1.3 percent of total FedEx revenue for the 12-month period ended December 31, 2018.”
In August, FedEx Ground announced plans to terminate ground deliveries for Amazon.
UPS remains a leading delivery supplier to Amazon. Industry analysts estimate that almost 10 percent of UPS revenue comes from Amazon deliveries.
What This Means for Insurance Defense Law Firms
Industry sources estimate that Amazon delivered 1.2 billion packages in 2017. Cross reference this with an estimated 45 million traffic/violations cases in state courts annually, and it would seem that the “last mile” delivery is a consideration not to be overlooked.
Click on the link to read The ProPublica article titled “The Deadly Race.”
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Disclaimer
This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.