TRALA Invokes Graves Amendment in IL Supreme Court Brief
The Truck Renting and Leasing Association (TRALA) is urging the Illinois Supreme Court to overturn an "absurd" ruling which held that a self-insured motor vehicle rental company is not protected by the federal Graves Amendment, which preempts state vicarious liability laws for non-negligent owners of rented and leased vehicles. The case of Enterprise Leasing Company of Chicago v DeShaw Nelson will be heard by the Supreme Court because the Appellate Court of Illinois, First District, ruled that Enterprise was not protected by the Graves Amendment because they self-insure. The ruling by the Appellate Court was a reversal of a Circuit Court of Cook County decision which ruled in favor of Enterprise.
In its ruling which reversed the Circuit Court's decision and held Enterprise liable for the default judgment initially issued to the rental vehicle's negligent operator, the Appellate Court judge differentiated between motor vehicle rental companies that purchase insurance policies and those that self-insure. Justice John Simon notes that one section of Illinois law states the minimum requirements for policies purchased from insurance companies, while there is an additional section of law that states how motor vehicle rental companies can self-insure. He notes that "If the entity chooses self-insurance, it is then required to pay all judgments entered against itself pursuant to the plain language of section 7-502." This interpretation is apparently based on the fact that section 7-502 (regarding self-insurance) does not explicitly state that rental vehicle companies that self-insure are subject to the same limits as those who purchase insurance policies.
Justice Simon and the other judges of the Appellate Court rejected precedents which show that in other states, self-insured motor vehicle rental companies are subject to the same limits as rental companies that purchase insurance. Their ruling states "...we do not find the interpretation of foreign statutes in the above-cited authorities to be sufficiently compelling to overcome our conclusion that the Code does not limit a self-insured rental car company's financial responsibility to the same minimum amounts that are required of an insurance policy." The court then also rejected the idea that the Graves Amendment would preempt the Illinois statute in question if the statute held that self-insured motor vehicle rental companies are subject to liability without limit, because it is a "financial responsibility" law that would be preserved by the Graves Amendment's savings clause.
In an amicus brief filed with the Court, TRALA emphatically states that the Appellate Court's interpretation "is preempted as it directly conflicts with the Graves Amendment. If that decision is allowed to stand, self-insured vehicle lessors would be exposed to unlimited liability, the very danger Congress sought to end with passage of the Graves Amendment." To elaborate on this position, TRALA's brief cites statutes and precedents to show that "the term financial responsibility is commonly used to refer to minimum insurance or surety requirements, and not maximum levels of vicarious liability as imposed by state law." Accordingly, non-negligent motor vehicle rental companies that self-insure under Illinois statue cannot be ordered to "pay all judgments entered against" them.