Car-Sharing Company Entitled to Same Liability Shield as Rental Firms, Court Rules

In what appears to be the first reported decision on the issue, a New York judge has ruled that Zipcar, the burgeoning "car-sharing company," may avail itself of the protections set forth by the Graves Amendment, a federal law that shields car rental agencies against liability for most accidents involving their vehicles. The judge found that although the members-only car rental company advertises itself as an alternative to "traditional rental cars," Zipcar may nonetheless claim the rental-car law's protections.

Mark Fass

New York Law Journal

2010-06-15 12:00:00 AM

In what appears to be the first reported decision on the issue, a Queens, N.Y., judge has ruled that Zipcar, the burgeoning "car-sharing company," may avail itself of the protections set forth by the Graves Amendment, a 2005 federal law that shields car rental agencies against liability for most accidents involving their vehicles.

Supreme Court Justice Roger N. Rosengarten found that although the members-only car rental company advertises itself as an alternative to "traditional rental cars," Zipcar may nonetheless claim the rental-car law's protections.

"This bargain -- use of a car in exchange for a fee -- appears little different from ['traditional'] companies, notwithstanding Zipcar's marketing statements that contrast it with those companies," Rosengarten wrote in Minto v. Zipcar New York, 15401/09. "The Court finds that Zipcar is in 'the trade or business of renting or leasing motor vehicles' as those words are traditionally and plainly understood."

The personal injury case against Zipcar and Zipcar member Dale Douglas was brought by Leslie Minto for injuries she allegedly received when her car was rear-ended in May 2009 by Douglas in a Zipcar.

The self-proclaimed "world's largest car sharing and car club service," Zipcar leases cars in more than 50 cities. Founded in Cambridge, Mass., in 2000, Zipcar has 275,000 members in the United States, Canada and Great Britain.

Zipcar bills itself as an alternative to traditional companies, as it requires membership, leases cars by the hour or the day and provides gas and insurance.

In her complaint, Minto claimed Zipcar should be responsible for the accident with Douglas under the Vehicle and Traffic Law, which provides that every "owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle."

In moving for summary judgment, Zipcar argued that any such vicarious liability was precluded by §14 of the Federal Transportation Equity Act of 2005, better known as the Graves Amendment, which states that car rental agencies are not liable "for harm to persons or property that results or arises out of the use, operation, or possession of [their vehicles] during the period of the rental or lease," subject to certain conditions.

Minto contended that the Graves Amendment should not apply, as Zipcar is not, as required under the act, "engaged in the trade or business of renting or leasing motor vehicles." Rather, Minto argued, citing Zipcar's advertising on its own website, the company is a members-only "car sharing" business. She noted that the site proclaims, "You could rent a car (but that would be silly)."

Justice Rosengarten found that, marketing aside, Zipcar is essentially another form of car rental agency, and therefore falls within the protected class for the Graves Amendment.

"Although application of the Graves Amendment in this case will no doubt frustrate the State's policy [as set forth under the Vehicle and Traffic Law] and deny an allegedly injured Plaintiff a viable cause of action, neither the statutory language nor its intent allow another conclusion," the judge wrote. "The Court therefore finds that the Graves Amendment bars Plaintiff's claim based on vicarious liability against Zipcar."

Rosengarten granted Zipcar's motion for summary judgment. In the same opinion, he also granted Minto's motion for summary judgment on the issue of liability with respect to the driver, Douglas.

A Westlaw search found no previous cases addressing Zipcar's potential for vicarious liability for its members' accidents.

Michael G. Conway of Martyn, Toher and Martyn in Mineola, N.Y., represented Zipcar. Conway could not be reached for comment.

Solo practitioner Souren A. Israelyan represented Minto.

"Unfortunately, this decision yet again shows that the Graves Amendment, a last-minute amendment to the large transportation act, was enacted to frustrate our State's public policy and deny injured persons' right to a just recovery," Israelyan said. "All things being equal, the law should protect the injured and not the financial interests of a car-sharing company."