No Immunity For Rental Car Companies
In 2005, the U.S. Congress passed the Safe, Accountable, Efficient Transportation Equity Act now. See 49. U.S.C.A. 30106. While I am not sure what was “safe or accountable” about its provisions, I can say that its obvious intended effect was to abolish state statutes and case precedent making car rental companies vicariously liable for accidents caused by their customers.
Every year in Florida there are more than five (5) million rental cars on the roadways and in the hands of foreign and out of state drivers. These drivers are unfamiliar with the vehicles they are driving, as well as the streets and highways upon which they are traveling. According to a Wall Street Journal article in 1997, profits for the just the top eight car rental companies in America was over two hundred forty five million ($ 245,000,000) dollars. Why the U.S. Congress would think it in Florida’s best interest to shift the accountability for a multi-billion dollar industry’s millions of vehicles traveling on Florida roadways from that industry to the State of Florida and its citizens is beyond the understanding of my feeble mind. But, indeed, that was the intended effect.
Fortunately, the attempt has failed. I hope.
49 U.S.C. 30106 provides in pertinent part as follows:
Section 30106. rented or leased motor vehicle safety and responsibility
- In General– An owner of a motor vehicle that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner), for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if–
- the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles ; and
- there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner).
- Financial Responsibility Laws– Nothing in this section supersedes the law of any State or political subdivision thereof–
- imposing financial responsibility or insurance standards on the owner of a motor vehicle for the privilege of registering and operating a motor vehicle; or
- imposing liability on business entities engaged in the trade or business of renting or leasing motor vehicles for failure to meet the financial responsibility or liability insurance requirements under State law.
The drafters of this legislation included language specifically stating that it provisions are not intended to and do not supersede any state’s financial responsibility laws. Fortunately for Florida residents and pedestrians, Section 324.021(9)(b)(2), Fla. Stat.providing that car rental companies are responsible up to certain amounts is a part of Florida’s Financial Responsibility laws. That section makes car rental companies responsible for $ 100,000 per person and $ 300,000 per incident for bodily injury. It further provides that car rental companies are responsible for an additional $ 500,000 in economic damages if the renter is uninsured or has bodily injury liability insurance limits of less than $ 500,000.
Several trial courts have issued orders finding that Florida’s Financial Responsibility law controls over the new federal statute. There are no current appellate opinions on the issue, but there is one case that provides some guidance. Folmar v. Young, 591 So.2d 220 (Fla. 4th DCA 1991) addresses the distinction between the financial responsibility law and the dangerous instrumentality doctrine, which the federal statute is clearly intended to abolish. One would expect that the federal statute’s very language does not supersede the financial responsibility laws applicable to car rental companies, particularly given such case law distinguishing financial responsibility laws and Florida’s dangerous instrumentality doctrine, which is a judicially created doctrine of vicarious liability.
In New York, a recent state court held the new Federal statute unconstitutional as an invalid encroachment of state law. See Graham v. Dunkley, 2006 WL 2596327 (N.Y. Sup. 9-11-060. No Florida court has addressed the constitutionality of the Federal statute. The New York court held that a New York statute defining the scope of vicarious liability is a part of New York’s substantive tort law, having nothing to do with “commerce”. Therefore, the New York court held, the Federal statute is not authorized by the Commerce Clause of the United States Constitution, Section I, Article 8, Clause 3.
It would appear that the attempt to eliminate entirely rental car companies’ vicarious liability for the negligence of renters in Florida was a failed attempt and may have even been unconstitutional. Florida motorists at least have their financial responsibility laws to fall back upon. As limited in its remedy as it may be, the financial responsibility law at least provides that damages of $ 100,000 per person/300,000 per incident for bodily injury, plus $ 500,000 for economic damages in some cases, must be born by the multi-billion dollar industry that places these motor vehicles on our roads.