Update on Judicial Action Involving Federal Law Eliminating Vicarious Liability (Graves Amendment)

Court cases continue to be filed following the enactment of federal vicarious liability preemption on August 10, 2005 challenging the authority of the law known as the Graves Amendment. The following are brief summaries of the major cases in which the court has issued rulings. The Industry Council for Vehicle Renting and Leasing is tracking these and other court cases where application and/or interpretation of the federal vicarious liability repeal statute is involved. TRALA and the Industry Council have filed amicus briefs on behalf of the industry in six of these cases, four of which have subsequently resulted in positive decisions (Graham v. Dunkley and NILT, Inc., Bechina v. Enterprises Leasing Company, Kumarsingh v. PV Holding and Avis Rent-A-Car System and Poole v. Enterprise Rent-A-Car). The two other cases in which TRALA and the Industry Council have filed amicus briefs are still pending (Garcia v. Vanguard Car Rental USA Inc. and Merchants Insurance Group v. Mitsubishi).

Graham v. Dunkley and Nilt, Inc. – Supreme Court – Queens County, New York
NEGATIVE DECISION - POSITIVE RULING ON APPEAL

On September 11, 2006, the Supreme Court in Queens County, New York denied a motion made by Nissan Infiniti, LT in Graham v. Dunkley and NILT, Inc. to dismiss a vicarious liability claim. The motion to dismiss was based on the federal statute (49 USC 30106) that prohibits states from imposing liability solely on the basis of ownership. Judge Thomas Polizzi, in denying the motion, held that the federal statute “is an unconstitutional exercise of congressional authority under the Commerce Clause of the United States Constitution, Article I, Section 8.” The action in Graham v. Dunkley and Nilt, Inc. is the first case in which a court has ruled against the constitutionality of the federal statute. Court Opinion - Denial of Motion to Dismiss Graham v. Dunkley and Nilt, Inc.

The trial court decision in Graham v Dunkley was reversed by the Appellate Division, Second Judicial Department of the Supreme Court on February 1, 2008. In its decision, the appellate court stated that “we agree with the weight of precedent that the Graves Amendment was a constitutional exercise of Congressional power pursuant to the Commerce Clause of the United States Constitution.” The appellate court declared unequivocally that “actions against rental and leasing companies based solely on vicarious liability may no longer be maintained.” Appellate Court Opinion and Order

Bechina v. Enterprise Leasing Company - Circuit Court of the 11th Judicial Circuit – Miami Dade County, Florida
POSITIVE DECISION - POSITIVE RULING ON APPEAL

On April 24, 2007, the court granted a Motion for Summary Judgment made by defendant Enterprise. In granting the motion, the court agreed with the Enterprise arguments detailing the preemptive authority of the 49 US 30106 (the Graves Amendment). The court also agreed with the defendant that Florida’s statute capping vicarious liability involving motor vehicles rented for less than one year (Section 324.021) is not a financial responsibility statute preserved by the Graves Amendment language. Court Order Granting Motion for Summary Judgment and Notice of Appeal

Florida’s Third District Court of Appeals on December 12, 2007 upheld the preemptive authority of the Graves Amendment (49US30106) by affirming the 11th Circuit Court decision. In its opinion, the appellate court held that “motor vehicle leasing transactions unquestionably affect the channels of interstate commerce, the instrumentalities of interstate commerce, and intrastate activities substantially related to interstate commerce.” A copy of the appellate court opinion is attached. Apellate Court Opinion

Traitouros v. Wheels, Inc., Hoffman, La Roche and The La Roche Group - Supreme Court, Nassau County, New York
POSITIVE DECISION

On October 23, 2007, the Supreme Court, Nassau County, New York, granted defendant Wheels, Inc.’s motion to dismiss the plaintiff’s claim of vicarious liability pursuant to New York’s Vehicle Traffic Law Section 388. In response to the defendant’s motion based on the preemptive authority of Graves Amendment (49 USC 30106), the plaintiff cited the Graham v. Dunkley decision as an example that the New York Courts "have not had one view on this issue." In its order granting the motion to dismiss, the court stated that "this Court does not share the view held only by the Graham v. Dunkley Court. Rather, for the purposes of deciding this motion, the Federal statute is constitutional." Court Order Granting Motion to Dismiss

Deopersad Kumarsingh and Rosalie Kumarsingh, his Wife v. PV Holding Corporation and Avis Rent A Car System, Inc. – Circuit Court of the 11th Judicial Circuit – Miami-Dade County, Florida
POSITIVE DECISION - POSITIVE RULING ON APPEAL

On October 13, 2006, citing the Graves Amendment’s preemption of state vicarious liability laws, Miami-Dade County Circuit Judge Michael A. Genden rendered a final judgment for the defendant ruling that they cannot be held vicariously liable for damages caused by their customer operating a rented vehicle. In his ruling, Judge Genden stated “the ‘Graves Amendment’ has abrogated vicarious liability of automobile lessors in the state of Florida effective August 10, 2005 and, therefore,…the defendants cannot be vicariously liable to plaintiffs…” Judge Genden went on to state that “the maximum liability for short term automobile lessors in section 324.021(9) Fla. Stat. are ‘caps’ on vicarious liability and are not ‘financial responsibility’ requirements for the privilege of owning/operating a motor vehicle in the state of Florida.” Court Decision - Final Judgment for Defendants

On October 3, 2007, Florida’s Third District Court of Appeals ruled to affirm the October 13, 2006 decision of the Circuit Court of the 11th Judicial Circuit Miami-Dade County. In its opinion, the Court of Appeals stated that "the trial court correctly concluded that the Graves Amendment, by its clear and unambiguous wording, supercedes and abolishes state vicarious liability laws." Appellate Court Order Affirming Decision

Castillo v. Bradley and U-Haul Company of Oregon - Supreme Court, Kings County, New York
POSITIVE DECISION

On October 2, 2007, the Supreme Court, Kings County, New York granted defendant U-Haul’s motion to dismiss plaintiff’s vicarious liability claim. In granting the motion, the court affirmed the preemptive authority of federal statute 49 US 30106 and the constutionality of the law.

In its decision, the court stated that "there is ample authority to the effect that the "Graves Amendment" has preempted New York’s vicarious liability law. The court also states that "the constutionality of the statute has been upheld in two out of the three federal court cases found to have considered the question" calling those cases "persuasive and controlling." Court Order Granting Defendant Motion to Dismiss

Merchants Insurance Group v. Mitsubishi Motor Credit Association - U.S. District Court, Eastern District of New York
POSITIVE DECISION

On September 25, 2007 the United States District Court for the Eastern District of New York granted defendant Mitsubishi’s motion for summary judgment based on the preemptive nature of the Graves Amendment (49 USC 30106) over New York vicarious liability law.

In granting the motion, the court stated the "courts have consistently held that the Graves Amendment prohibits states from imposing vicarious liability on owner-lessors such as defendants where the lessor is not negligent." Addressing the constitutionality of the federal statute, the court states that " to date, only one court has found the Graves Amendment unconstitutional. . .Graham [v. Dunkley], however, has not been followed by any other court. To the contrary, a number of courts have explicitly found the statute constitutional."Memorandum and Order Granting Defendants Motion

Vanguard Car Rental USA, Inc. v. Huchon - U.S. District Court, Southern District of Florida
NEGATIVE DECISION

On September 14, 2007, the United States District Court for the Southern District of Florida denied both a motion (by federal court defendant Huchon) to dismiss Vanguard’s Petition for Declaratory Judgment and a motion (by federal court plaintiff Vanguard) for Summary Judgment.

The court denied Huchon’s motion to dismiss based on several provisions of law not directly related to vicarious liability or 49 US 30106 (the Graves Amendment). In considering Vanguard’s Petition for Declaratory Judgment, the court ruled that Huchon’s claim was not being made pursuant to Florida statute limiting liability of companies renting a vehicle for less than one year (Florida Statute Section 324.021). Instead the court ruled that the claim was being made pursuant to Florida’s Doctrine of Dangerous Instrumentality. Therefore, the court declared that “the only remaining issue is whether [the Graves Amendment] is constitutional.”

The court cited its disagreement with the March 5, 2007 ruling by the U.S. District Court for the Middle District of Florida in the Garcia v Vanguard case in which the Graves Amendment was found to be constitutional under three separate tests of the U.S. Congress’ authority under the Commerce Clause. The court in Vanguard v Huchon held that “the direct language of 49 US 30106(b) regulates tort liability and does not directly regulate either channels of interstate commerce or the use of those channels.” Further, the court ruled that the Graves Amendment “does not regulate the use of instrumentalities of interstate commerce.” The court uses these findings to rule that “Congress exceeded the authority granted by the Commerce Clause when it enacted 49 USC 30106.” Based on this conclusion, the court denied Vanguard’s Petition for Declaratory Judgment. Court Order - Denying Motion to Dismiss; Denying Plaintiffs Motion for Summary Judgment

Seymour v. Penske Truck Leasing Company - U.S. District Court, Southern District of Georgia, Savannah Division
POSITIVE DECISION

On July 30, 2007, the U.S. District Court, Southern District of Georgia, Savannah Division, granted defendant Penske Truck Leasing Company’s motion for summary judgment against the plaintiff’s claim for damages. The court found that Penske was not liable for the action of the driver not authorized to operate the vehicle under the rental agreement. The federal court also found that the Graves Amendment is a constitutional federal statute. In its decision, the court states that it has "no trouble concluding that 49 USC 30106...regulates commercial transactions (rentals or leases) involving instrumentalities of interstate commerce (motor vehicles - "the quintessential instrumentalities of modern interstate commerce"). Court Order Granting Defendant Motion for Summary Judgment

Iljazi v. Dugre, et al. (Enterprise Rent-A-Car) – Superior Court – Waterbury, Connecticut
POSITIVE DECISION

On April 13, the Superior Court of Connecticut Waterbury District granted defendant Enterprise Rent-A-Car’s motion to strike the plaintiff’s vicarious liability count against the company. Enterprise based its motion on the “Graves Amendment’s” preemption of Connecticut’s vicarious liability statute. The court cited Davis v. Illama and Dorsey v. Beverly, supra in its decision to strike the vicarious liability count against Enterprise.

The plaintiff filed an objection to the motion to strike the count on the grounds that the Graves Amendment violates the Commerce Clause of the U.S. Constitution. The plaintiff cited the decision of the New York Supreme Court, Queens County in Graham v. Dunkley as authority for its claim. In response to the objection, the court quotes from a 1989 decision in Bottone v. Westport...”(I)n passing upon the constitutionality of a legislative act, we will make every presumption and intendment in favor of its validity…The party challenging a statute’s constitutionality has a heavy burden of proof; the unconstitutionality must be proven beyond all reasonable doubt.” The court goes on to state that “beyond offering the New York lower court decision as authority for the unconstitutionality of the Graves Amendment, the plaintiff has offered no additional case law or argument and accordingly, the plaintiff has not sustained its burden of proving that the statute is unconstitutional." Court Order - Granting Defendant Motion

Garcia v. Vanguard Car Rental USA, Inc. - U.S. District Court, Middle District of Florida, Ocala Division
POSITIVE DECISION - APPEAL PENDING

On March 5, 2007, the United States District Court, Middle District of Florida, Ocala Division ruled that Florida Statute 324.021(9)(b)(2), setting caps on vicarious liability of short-term lessors, is not a "financial responsibility law" protected by 49 USC 30106(b). the court explained that "the Florida Statute in question does not create insurance standards for entities that register and operate motor vehicles within Florida." The court went on to state that its "analysis drive the conclusion that vicarious liability of motor vehicle lessors under Florida’s dangerous instrumentality doctrine is now preempted by federal law. Consequently, Fla. Stat. 324.021(9)(b)(2) also is preempted."

The federal court also finds that "there can be no dispute that leased vehicles routinesly travel between states" and that "the Graves Amendment is constitutional under the first category of Congress’ Commerce Clause powers." The Court "also finds that the Graves Amendment is constitutional under the second category of Congress’ Commerce Clause powers because the statute regulates the leasing and operating of motor vehicles which are the quintessential instrumentalities of modern interstate commerce." The Court further finds that "the Graves Amendment...is constitutional under the third category - regulating instrastate activities that substantially affect interstate commerce." Court Order - Denying Plaintiff’s Vicarious Liability Claims Against Defendant

Jones v. Bill, et al - Supreme Court of the State of New York Appellate Division: Second Judicial Department
POSITIVE DECISION

On November 28, 2006, the Second Judicial Department of the Supreme Court of New York Appellate Division upheld an earlier decision of the Supreme Court, Dutchess County to dismiss a complaint against the vehicle lessor DCFS Trust based on 49 USC 30106, commonly known as the "Graves Amendment." In its decision to uphold the trial court decision, the court explained that the "Graves Amendment abolished vicarious liability of long-term automobile lessors based solely on ownership." Furthermore, the court noted that the "Graves Amendment is applicable to any action commenced on or after the date of enactment" August 10, 2005. Though the initial suit against defendant and vehicle operator Jessica Bill was filed on August 8, 2005, DCFS Trust was not added as a defendant until an amended filing on November 1, 2005. The court rejected as "without merit" the plaintiffs assertion that is claim against DCFS is maintainable under the relation-back doctrine. The Second Judicial Department of the Supreme Court of New York Appellate Division is the same court where the appeal of the Graham v. Dunkley and NILT, Inc. decision declaring 49 USC 30106 as unconsitutional is currently pending. Court Decision and Order Upholding Dismissal of Vicarious Liability Claims Against Defendant

Graham v. Dunkley and Nilt, Inc. – Supreme Court – Queens County, New York
NEGATIVE DECISION - APPEAL PENDING

On September 11, 2006, the Supreme Court in Queens County, New York denied a motion made by Nissan Infiniti, LT in Graham v. Dunkley and Nilt, Inc. to dismiss a vicarious liability claim. The motion to dismiss was based on the federal statute (49 USC 30106) that prohibits states from imposing liability solely on the basis of ownership. Judge Thomas Polizzi, in denying the motion, held that the federal statute “is an unconstitutional exercise of congressional authority under the Commerce Clause of the United States Constitution, Article I, Section 8.” The action in Graham v. Dunkley and Nilt, Inc. is the first case in which a court has ruled against the constitutionality of the federal statute. Court Opinion - Denial of Motion to Dismiss Graham v. Dunkley and Nilt, Inc.

Davis v. Ilama et al (We Rent Minivans) – Superior Court – Waterbury, Connecticut
POSITIVE DECISION

On March 14, 2006, the Superior Court of Connecticut granted We Rent Minivans’ motion to strike two counts against it that were based on liability solely due to ownership of the vehicle. In one count, the plaintiff claimed We Rent Minivans was liable by virtue of giving the defendant permission to operate one of its vehicles, with no allegation of negligence against We Rent Minivans. The second count claimed liability pursuant to Connecticut’s vicarious liability statute. The court bases its decision to grant the defendant’s motions to strike the two counts on the federal preemption statute (49 U.S.C. Section 30106) and on the decisions in Infante v. U-Haul of Florida and Piche v. Nugent et al (Enterprise Rent-A-Car). Court Opinion - Granting Motion to Dismiss - Davis v Ilama and We Rent Minivans

Poole v. Enterprise Leasing Company of Orlando – 18th District Circuit Court – Brevard County, Florida
NEGATIVE DECISION - MOTION FOR SUMMARY JUDGMENT PENDING

On January 19, 2006, Judge T. Mitchell Barlow denied Enterprise’s motion to dismiss this case and ruled that Florida’s statute setting caps on the vicarious liability of short-term lessors (Florida Statute 324.021 (9)(b)(2)) is a financial responsibility law and falls under the provision of the federal law preserving a state’s right to impose financial responsibility laws required for registering and operating a motor vehicle (49 USC 30106(b)). During the hearing, there was some discussion of the constitutionality of the federal law with regard to its effective date and the plaintiff’s right to due process of law. The judge did not rule on this question and asked counsel on both sides to refrain from extensive debate on this issue as he felt he could make a ruling based only on the question of financial responsibility laws. This suit was filed on August 10, 2005, the day federal vicarious liability preemption was enacted. The plaintiff’s case was argued by Andre Mura, Senior Litigation Counsel for the Association of Trial Lawyers of America’s Center for Constitutional Litigation. Transcript of Proceedings - Denying Motion to Dismiss - Poole v. Enterprise

Infante v. U-Haul of Florida – Supreme Court – Queens County, New York
POSITIVE DECISION

On January 18, 2006, Judge Augustus Agate granted U-Haul’s motion to dismiss this case ruling U-Haul of Florida was not the titled owner of the vehicle involved in the claim. However, the judge went further in his decision to clarify that regardless of the issue of the defendant not owning the vehicle, the plaintiff’s claim was invalid based upon the enactment of the “Graves Amendment” prohibiting vicarious liability against owners of rented and leased vehicles and its preemption of state laws, including New York’s, that previously permitted it. According to U-Haul, this case is not expected to be appealed. Infante Opinion

Piche v. Nugent et al (Enterprise Rent-A-Car) – U.S. District Court – District of Maine
POSITIVE DECISION

On September 30, 2005, Judge Margaret J. Kravchuk affirmed the effectiveness of federal law (49 U.S.C. Section 30106) preempting state vicarious liability statutes, even though this case was filed prior to enactment of the federal law and was not affected by it. The judge denied Enterprise’s motion for summary judgment centering on whether the law of Maine, which includes statutory vicarious liability, or the law of New Hampshire which does not, would be applicable to this case. In her decision, the judge stated that the question at hand “is not a question likely to repeat itself in the future. On August 10, 2005 President Bush signed into law…SAFETEA-LU”. She further explains that the “law amends U.S. Code Title 49, Chapter 301 to preempt state statutes that impose vicarious liability on rental car companies for the negligence of their renters…Thus, the long term policy debate has been resolved by the federal government.” Memorandum of Decision