A report being distributed via the Associated Press, says that the Florida Supreme Court has been urged by an accident victim’s lawyer to rule that rental car companies can be held liable for damages in an accident they did not cause in Florida, despite the existence of a new Federal law intended to shield car rental companies from just such issues.
The legal concept in question, “vicarious liability,” refers to holding non-negligent owners responsible for damages, no matter who was actually driving the vehicle. The 2005 Graves Amendment, a federal law, prohibits such liability, except in states that have insurance or financial responsibility requirements for rental car companies. Representative Samuel Graves (R-MO), the law’s sponsor, believes it will save consumers $100 million a year, nationally.
So what’s the issue in Florida? The Supreme Court is investigating whether or not a Florida “Financial Responsibility” law meets the Federal exception criteria. The existing Florida state law says that if the person who drives or leases a rental vehicle is either uninsured, or has combined insurance limits of less than $500,000, the rental car company, “…shall be liable for up to an additional $500,000 in economic damages.”
Marjorie Gadarian Graham, representing the accident victim, told the court, “It is implicit that there is a requirement to maintain insurance albeit it is not expressly stated.” She also argued that the state legislature intended it to be an insurance requirement and that it’s explicit enough to except Florida from the Graves Amendment.
Enterprise Leasing Company’s attoriney, David C. Boruke, disagreed, and countered by saying, “Nothing is required. It’s an option. It’s an opportunity to make a cost-benefit analysis, but it is not required insurance by any stretch of the imagination.”
A trial judge in Palm Beach County and the 4th District Court of Appeal, in a 6-4 opinion, sided with Enterprise. Accident victim Rafael Vargas’s vicarious liability claim was rejected by both courts. Vargas had been injured when an Enterprise-owned vehicle rear-ended his car in February 2006. Vargas never alleged that the rental car company was at fault or negligent, nor did he allege that the lease was improper.
Despite siding with Enterprise, The 4th District certified the issue to the Supreme Court calling it a “…question of great public importance…” There are severall similar cases on hold pending a ruling, in Flordia, and other states are facing similar issues. One such state is Minnesota, where the state Supreme Court ruled that the Graves Amendment pre-empted a similar state law already on the books there.
Most of the resultant litigation has been at the federal level. The 11th U.S. Circuit Court of Appeals in Atlanta, GA, ruled that Florida’s law was also pre-empted. This means that the Florida court’s decision would apply only to state courts.