The following is a guest post written by Ariel Yehezkel and Allison Wu Troianos of the law firm Sheppard Mullin.
With e-commerce consumer expectations constantly rising with the ubiquity of same-day delivery, startups and established corporations alike are focusing on developing and investing in efficient last-mile delivery and e-commerce fulfillment solutions. Specifically, online grocery retail is one of the most rapidly growing e-commerce sectors for home delivery, with a projected 70 percent of consumers purchasing their groceries online and a market value of $100 billion within the next two to four years. Consequently, there is also a trend towards acquisition activity focused on disrupting and supplementing traditional logistics systems and developing technologies that facilitate various aspects of the direct-to-consumer grocery supply chain as corporations seek to secure a foothold in the market.
Several companies are using sorting robots in warehouses to assist in order fulfillment and other companies have been using and developing autonomous delivery robots that facilitate the last-mile logistics of direct-consumer-delivery.
With these technological developments come novel legal questions that potential acquirers or investors that develop and manufacture delivery robots and that use robotic systems in warehouses need to consider. Such legal considerations include tort liability, privacy and data protection issues and regulatory concerns regarding traffic and motorized vehicle laws.
Tort law in many legal systems would impose liability on the person or entity in control of a device that causes damage. Therefore, liability in the event of a traffic accident or other tortious activity caused by a delivery robot would likely fall on the company that was controlling or steering the delivery robot at the time of the incident. Further, the designer or manufacturer of a delivery robot that injures a pedestrian or damages property could also be held liable under the theory of strict product liability if an injured party alleged that the robot was dangerous due to a defect in their manufacturing or design. Under a strict product liability theory, such injured party could argue that a reasonable person would not expect a small robot autonomously operating on the sidewalk without a conspicuous design feature such as a flag, which in turn creates unlawfully dangerous situations for pedestrians or drivers.
However, traditional civil liability frameworks may not be sufficient enough to address the potential issues that may arise from accidents or damage caused by delivery robots. The level of autonomy of robots and the level of influence humans have over their operation could affect how liability is allocated, as current tort laws assume human involvement in the operation of robots. As innovations enable robots to become more autonomous, current liability frameworks may not be able to adequately assign liability because the more autonomous a robot is, the less it can be treated simply as a tool of a human user. It is yet to be seen how legal frameworks will evolve to account for liability arising from damage caused by autonomous delivery robots, but they will necessarily need to adapt as technological advances make it possible for robots to operate without as much human control or oversight.
Privacy and data protection issues could be implicated due to delivery robots using camera recording and collecting other consumer data through the delivery process. Certain federal, state and local laws restrict and regulate data collection and retention, so companies must be aware of all relevant data protection regulations and make sure any data delivery robots collect is handled in compliance with such regulations.
For example, the collection of personal data is restricted and regulated under certain data protection laws, which would include any information relating to an identifiable natural person. An individual may need to be given with notice or be required to give consent if their personal data will be collected, and the controller of such collected data would be the principal party responsible for compliance with the applicable privacy law. Any personal data collected and transmitted by a delivery robot, including the consumer’s address and biographical data, and any pictures, video or audio recordings, would need to be stored and processed in compliance with applicable privacy laws.
Certain local and state regulations regarding motor vehicles will also need to adapt to accommodate autonomous delivery robots, especially if they operate in public traffic. States have been adopting statutes permitting delivery robots up to a certain weight limit to operate on sidewalks and crosswalks. Starship Technologies, a leading company in the robot delivery space, has been actively involved in getting legislation passed in various states such as Virginia and Idaho. Starship has been advocating for proposals that allow Starship’s robots to operate, but that would exclude some of its competitors’ products from autonomous operation due to weight limits or other restrictions. Starship has demonstrated its robots in hearings for these proposed bills, which set forth the parameters for legal operation of these delivery robots, such as restricting their weight, requiring robots to have their own insurance and requiring a certain level of human monitoring, which could implicate some of the data privacy or liability issues discussed above.
Though several states have adopted such legislation, densely populated urban areas have been slower to follow suit. It could be quite some time before some large cities such as New York City pass legislation allowing delivery robots to operate in their streets and sidewalks. Reportedly, when a same-day delivery robot appeared in Manhattan in November 2019, New York City officials promptly issued a cease and desist order, claiming that the delivery robots violated vehicle and traffic laws that prohibit self-driving cars and motor vehicles on sidewalks, and citing job loss and traffic congestion as their main concerns. Other critics cite accessibility and safety issues, asserting that the delivery robots pose undue obstacles to the disability community and violate the Americans with Disabilities Act of 1990.
The growth in the autonomous delivery space has been exponential over the last several years and is expected to continue to grow as home grocery delivery becomes the standard. The legal considerations raised above are not necessarily roadblocks to further autonomous delivery innovation, but compliance with all relevant regulations and potential liability concerns should be taken into account as companies continue their foray into the autonomous delivery space and as investors continue to invest and acquire such companies.
Ariel Yehezkel is the Practice Group Leader of Sheppard Mullin’s Corporate practice group. Allison Wu Troianos is an associate in the firm’s Corporate practice group. They regularly handle transactions in food and beverage industry, and have developed extensive knowledge in this sector. They can be reached at ayehezkel@sheppardmullin.com and atroianos@sheppardmullin.com, respectively.
