Insights

Automated vehicles (AVs) have received heightened attention from the automotive industry and regulators this summer when it comes to improving and expanding AV technology in the US. Here are some developments:

On April 24, the Department of Transportation announced the Trump Administration’s new framework for the regulation of Automated Vehicles (“AVs"). According to the release, “NHTSA’s AV Framework” has three principles:

On January 10, NHTSA published a Supplemental Notice of Proposed Rulemaking (SNPRM) detailing its plan to update 49 C.F.R. Part 577, the regulations covering required recall notifications. This proposal stems from the Fixing America's Surface Transportation (FAST) Act’s mandate that NHTSA amend its regulations to require recall notifications be sent to vehicle and equipment owners and purchasers by electronic means, in addition to first-class mail. The SNPRM supplements a 2016 proposed rule, such that anticipated changes may have fallen off many manufacturers’ radars.

On Tuesday, July 11, the Michigan Supreme Court issued a decision that could have profound impacts on the purchase and supply of automotive and other manufactured component parts under contracts governed by Michigan law. In MSSC, Inc. v. Airboss Flexible Products Co., Michigan’s high court found an automotive Tier 1 supplier’s purchase order contract unenforceable to compel future production from its supplier because the purchase order did not specify a quantity of parts to be supplied. In doing so, the Court formally titled a previously unnamed variation on a supply contract—the “release-by-release contract.”

On September 28, 2022, the Food and Drug Administration (FDA) issued Clinical Decision Support Software final guidance. The guidance clarifies the agency’s scope of oversight and regulation of clinical decision support software based on the definition of a device in the Federal Food, Drug, and Cosmetic Act (FD&C Act). It also describes the criteria used to assess whether software functions do not meet the definition of a device.

On December 23, 2020, the federal district court for the Middle District of Tennessee granted Admiral Indemnity Company’s motion to dismiss a restaurant’s COVID-19 business interruption complaint. First, the court held that all claims for coverage were precluded by the policy’s virus exclusion. Order at 8-12. Second, the court held that even if the exclusion did not apply, the claim would not be covered because the plaintiff did not allege that the suspension of its business operations were caused by “direct physical loss of or damage to property.” Id. at 12-17. Lastly, the court rejected the plaintiff’s argument that its claim was covered by the policy’s civil authority clause, because (1) the virus did not cause actual physical damage to the covered property, (2) the closure orders were issued to control the spread of the virus, not because of “dangerous physical conditions” at a neighboring property, and (3) the closure orders did not prohibit physical access to the plaintiff’s restaurant or the area around it. Id. at 18.

On October 7, 2020, the U.S. District Court for the Northern District of Texas granted Cincinnati Insurance Company’s motion to dismiss a restaurant group’s complaint for COVID-19 business interruption losses. The court concluded that the plaintiff failed to plead that it suffered a direct physical loss or damage and therefore could not state a claim for breach of contract due to the conclusory nature of its allegations. Order at 2. The declaratory judgment claim failed for the same reason. Id. at 4-5. The court granted the plaintiff leave to replead because its complaint had been filed under Texas state pleading rules prior to the case being removed to federal court and the court determined that it should be allowed an opportunity to replead under the federal pleading standards.  Id. at 6. 

Last month, the U.S. Supreme Court Office of the Clerk released new guidance in the form of a memorandum directed toward proposed amici seeking to appear before the high court. The memorandum elaborates on the Court’s “core requirements” for amicus briefs set forth in Rules 33.1, 34, and 37, and provides more detailed guidance on issues ranging from the requirement for leave to file, notice, and situations in which multiple amici may seek to participate in a case. Although rules for amicus curiae appearances vary among federal and state courts around the country, courts often follow or look for guidance to the U.S. Supreme Court’s approach in determining their own approaches to amicus practice. 

Senator Ron Wyden (D-OR) and Senator Cory Booker (D-NJ) introduced the Algorithmic Accountability Act in the Senate last Wednesday, federal legislation which would require entities to ensure that their automated algorithmic decision systems do not expose consumers to unfair bias, inaccuracies, or privacy and security risks. The bill “direct[s] the Federal Trade Commission to require entities that use, store, or share personal information to conduct automated decision system impact assessments and data protection impact assessments.”

On March 26, 2019, Kentucky governor Matt Bevin signed House Bill 386 into law, enacting the first InsurTech sandbox in the country. The law will allow companies to test and develop innovative InsurTech programs that are not yet subject to, or protected by, existing regulations.

The Supreme Court of Georgia ruled unanimously on Monday that insurers do not have an affirmative duty to settle in Georgia unless there is first a valid offer to settle within policy limits. The Court held that the insurance company was entitled to summary judgment on a failure-to-settle claim and was not responsible for a $5.3 million verdict entered against its policyholder’s estate.

On December 27, 2018, the Florida Supreme Court accepted review of a case presenting the question whether assignment of benefits (AOB) restrictions should be permitted in homeowner’s policies in Florida. Ark Royal Insurance Company v. Restoration 1 of Port St. Lucie, Etc., No. SC18-1623 and No. SC18-1624, on appeal from a decision from Florida’s Fourth District Court of Appeal. Restoration 1 of Port St. Lucie v. Ark Royal Ins. Co., 2018 Fla. App. LEXIS 12633 (Fla. Ct. App. Sept. 5, 2018). The Florida Supreme Court’s decision will likely resolve conflicting rulings in the Florida lower courts concerning the use of AOBs, which allow assignees to “step into the shoes” of policyholders to sue insurance companies for benefits allegedly owed. AOBs, including fractional AOBs, are particularly common where homeowners authorize contractors to undertake repairs to their homes and assign to the contractors their rights to seek recovery from insurance companies for reimbursement of the cost of those repairs.