On August 10, 2005, President Bush signed into law the “Safe, Accountable, Flexible and Efficient Transportation Equity Act of 2005,” which amended Sub-Chapter 1 of Chapter 301 of Title 49, United States Code, colloquially referred to as the “Graves Amendment.” This has become one of the most significant dates in the vehicle rental business. Among other items, the Graves Amendment, a section of the highway bill, prevents all states from imposing vicarious liability on rental and leasing businesses.” Here’s what you need to know about rental car liability and the Graves Amendment.
The Graves Amendment, codified in 49 U.S.C.A. § 30106, prohibits a motorist’s liability under the law of any state or political subdivision thereof, by reason of being the motorist’s owner (or an affiliate of the owner’s owner) of a motor vehicle (or an affiliate of the owner’s owner), for injury to persons or property that occurs or arises from the vehicle’s use, operation, or possession during a rental or lease, if the owner (or an affiliate of the owner) is engaged in the business of leasing or renting automobiles and there is no negligence or criminal malfeasance on the part of the owner. See 49 U.S.C.A. § 30106(a) (emphasis added).
Codified in 49 U.S.C.A. § 30106, the Graves Amendment provides in pertinent part:
“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.”
See 49 U.S.C.A. § 30106(a) (emphasis added).
What the Graves Amendment Means for You
Many attorneys on both sides of the fence still do not understand its broad applicability against a wide backdrop of potential uses. Even before the amendment was passed, car rental companies were in the practice of drafting contract language that released them from vicarious liability, offering temporary rental insurance for those otherwise lacking coverage. Generally, the at-fault driver (either personally or through their own insurer) are liable for any injuries caused by a rental car that are determined to be your fault. However, if the injuries were the result of the company’s negligence — dangerously worn brakes, for instance — then the victim may pursue a claim against the car rental company. Similarly, the rental company will be liable for any injuries resulting from criminal activity. Typical negligence claims against rental companies include negligent entrustment, negligent maintenance, and failure to properly train or manage employees. Under the Graves Amendment, vicarious liability against the rental company may be generally be precluded.
The majority of courts that have considered the issue have concluded the Graves amendment preempts conflicting state law and is constitutional. (See, e.g., Green v. Toyota Motor CreditCorp (E.D.N.Y.2009) 605 F.Supp.2d 430; Pacho v. Enterprise Rent-A-Car Co. (S.D.N.Y.2008) 572 F.Supp.2d 341; Merchants Ins. Group v. Mitsubishi Motor Credit Ass’n (E.D.N.Y.2007) 525 F.Supp.2d 309; Johnson v. Agnant (D.D.C.2006) 480 F.Supp.2d 1; Carton v. General Motors Acceptance Corp. (N.D.Iowa 2009) 639 F.Supp.2d 982 (affirmed 611 F.3d 451); Green v. Toyota Motor CreditCorp (E.D.N.Y.2009) 605 F.Supp.2d 430; Dupuis v. Vanguard Car Rental USA, Inc. (M.D.Fla.2007) 510 F.Supp.2d 980; Garcia v. Vanguard Car Rental USA, Inc. (M.D.Fla.2007) 510 F.Supp.2d 81 (affirmed 540 F.3d 1242).) However, some courts have reached the opposite conclusion. (See, e.g., Vanguard Car Rental USA, Inc. v. Drouin (S.D.Fla.2007) 521 F.Supp.2d 1343; Vanguard Car Rental USA, Inc. v. Huchon (S.D.Fla.2007) 532 F.Supp.2d 1371.)
In sum, Graves eliminated the premise that renters of vehicles are agents of the rental entity. When considering vicarious liability and the Graves Amendment, litigants need to bear in mind that regardless of what state law states if the owner of the rental car is: (1) in the business of renting or leasing vehicles, and (2) was not directly negligent, then Graves may provide a cloak of protection from vicarious liability against a car rental company.
Whether it’s a simple fender bender or an accident causing serious injury, you want to make sure you understand the law and follow the right procedures. If it’s unclear who’s responsible for your injuries or how to get started with a claim, you’ll want to speak with an injury attorney knowledgeable about the Graves Amendment and rental car liability. Mandelaris Law has advocated for victims of rental companies’ negligence and their families, helping them recover fair compensation for their losses, pain, and suffering. Schedule a free consultation with a trusted Denver, Colorado accident attorney by calling (303)357-9757.