X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Tucked inside the recently signed $287 billion federal transportation funding act is a “tort reform” provision eliminating vicarious liability laws applying to auto rental and leasing companies in 16 states and the District of Columbia. The provision, opposed by the National Conference of State Legislators and some consumer groups, was authored by Rep. Sam Graves, R-Mo. It prohibits states from holding owners of motor vehicle rental and leasing companies liable for accidents involving their vehicles, provided there is no negligence or criminal wrongdoing on the owners’ part. States whose vicarious liability statutes are pre-empted are Arizona, Connecticut, Delaware, Iowa, Maine, Nevada, New York, California, Florida, Idaho, Michigan, Minnesota, Oklahoma, Pennsylvania, Wisconsin and Rhode Island. Under those state laws, owners of leasing or rental companies could be held liable for injuries caused by a negligent driver if the driver did not have sufficient insurance coverage. The provision is the culmination of a 10-year lobbying effort by various transportation groups, said Thomas James, vice president for government relations for the Truck Renting and Leasing Association. A similar provision reached President Clinton’s desk in 1996 as part of a larger products liability bill, which Clinton subsequently vetoed. “Aside from the merits of the issue of being held liable without any allegation of fault, we felt federal legislation was necessary because of the nature of the national fleet of rented and leased vehicles,” James said. He added, “Our trucks travel interstate all the time in the daily operation of their business. There is a patchwork of vicarious liability laws. You can be a Mississippi company that has a truck driving up I-95. It crosses into New York and suddenly it’s a bet-the-business situation. We felt federal uniformity was necessary.” Regardless of your position on vicarious liability, “the rescinding of these statutes was a terrible mistake in terms of timing,” said David C. Cook of New York’s Kreindler & Kreindler, who, with Mark S. Moller, earlier this year won a $20.3 million judgment against Budget Rent-a-Car because one of its vehicles ran a red light and struck a van, which careened into 25-year-old Ethan Ruby, leaving him severely paralyzed in 2000. “Nothing was put into force here to protect these innocent victims, such as a pool of benefits or minimum standards for rental companies,” he said. “The next person is not going to have any recourse for pain and suffering, loss of income and, most importantly, a place to live and medical care to stay alive.” Taxpayers will pick up the tab for medical care, but even there, he added, benefits offered through Medicaid or other government programs are minimal. LET ME OFF THE HOOK? The “highly profitable” auto rental and leasing business is in the best position to assume the risk to the public of the misuse of their vehicles, said Moller. “Rental car companies are going to be let off the hook for giving their cars to bad drivers who cause accidents,” he said. “Rental car companies are simply making money without concern for who they put behind the wheel. The people who pay the price are victims of that kind of profit-driven exculpation.” James said the law, which is effective immediately even for claims involving injuries that occurred before the effective date, will save the industry “billions of dollars” in liability awards, attorney fees and supplemental insurance premiums. It also will open or reopen markets avoided by vehicle lessors because of the threat of vicarious liability. The industry’s success in Congress this year was due more to “an educational process than any sort of political maneuvering,” said James. “Many members were surprised that this kind of liability existed.” Moller, referring to the project-laden transportation bill, countered, “Pork was more important than justice.”

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.