WASHINGTON, D.C. — The titleholder of a rented or leased vehicle could be back in the crosshairs of vicarious liability should a provision to the Graves Law be repealed.

That's why the American Financial Services Association recently was joined by 29 other companies and organizations in a letter urging Congress not to amend or repeal the Graves Law.

Enacted back in August 2005, AFSA explained this provision uniformly eliminated a state-by-state patchwork of vicarious liability laws impacting the non-negligent owners of the interstate fleet of rented and leased cars and trucks.

Officials who signed the letter believe repealing the Graves Law would not only hurt these owners, it would increase the cost of commercial transportation and limit consumers' choices when acquiring a vehicle.

AFSA was joined in the effort by the National Automobile Dealers Association and the American International Automobile Dealers Association as well as the National Vehicle Leasing Association and major rental-car companies such as Avis Budget Group, Dollar Thrifty Automotive Group, Enterprise Holdings and Hertz Corp.

In an interview with SubPrime Auto Finance News, AFSA executive vice president Bill Himpler explained dialogue about a national highway bill from Sen. Bill Nelson, a Democrat from Florida, triggered Graves Law discussion on Capitol Hill.

"He wanted to entertain the idea of eliminating this provision of law," Himpler stated.

"When we got wind of that, and then the administration's proposal on the highway bill has gone in line with what Sen. Nelson said, we felt it was important to weigh in with our allies on what the rollback of the Graves amendment would mean," Himpler continued.

Prior to the enactment of the Graves Law, Himpler explained unfair "liability without fault" laws in some states drove many small companies out of business and exposed countless more to multi-million dollar claims for accidents in which the rental or leasing company or company employees had absolutely no role.

He added the prohibitive cost of insurance forced some companies to avoid leasing vehicles in certain states, robbing businesses and consumers of an affordable alternative to purchasing.

"What we found was our friends in the plaintiff's bar were using the vicarious liability principle of law to go after leasing companies for something that they probably had no idea was even happening with respect to people who rented a vehicle or were leasing vehicles," Himpler explained.

"Aside from being a party on the title of that vehicle, they really had no involvement whatsoever, whether we're talking about accidents, traffic or parking tickets or the like," he continued.

"But because some of the companies involved are national in scope, they're likely targets because some people see them as having deep pockets," Himpler interjected.

Himpler told SubPrime Auto Finance News his group's response began in late July, going into early August when Congressional activity is slower.

"It all came together right after Labor Day," Himpler said about the letter that was addressed to Rep. John Mica, a Florida Republican and chairman of the committee on transportation and infrastructure.

The letter also was directed to Rep. Nick Rahall, a West Virginia Democrat and ranking member of the same committee.

"We made our case very clear, particularly in the House to chairman Mica," Himpler insisted.

"I'm not sure this issue has been front and center for him. They're dealing with a lot of other issues. I expect that he and his staff being on notice for what's afoot that they're probably going to stake out a position consistent with where he's been," Himpler went on to say.

And what if the Graves Law is eradicated?

"We are still dealing with a lot of the ripple effects from the financial crisis of a couple of years ago," Himpler acknowledged.

"Anything that creates greater uncertainty as opposed to providing more certainty is not going to be good for the overall financial services community," he went on to say. "On the leasing company side of the equation, I can't imagine that creating greater uncertainty with respect to liability is going to be any greater comfort and going to lead to any new job creation."

The following is the letter sent by AFSA and its allies:

Honorable John Mica
Chairman
Committee on Transportation & Infrastructure
United States House of Representatives
2187 Rayburn House Office Building
Washington, DC 20515

Honorable Nick Rahall
Ranking Member
Committee on Transportation & Infrastructure
United States House of Representatives
2307 Rayburn House Office Building
Washington, DC 20515

September 7, 2011

Dear Chairman Mica and Ranking Member Rahall:

We are writing to respectfully request that you oppose any attempt to amend, weaken or repeal the Graves Law (currently codified at 49 USC 30106). This law, enacted in August 2005, uniformly eliminates a state-by-state patchwork of vicarious liability laws impacting the non-negligent owners of the interstate fleet of rented and leased cars and trucks. Repealing the Graves Law would not only hurt these owners, it would increase the cost of commercial transportation and limit consumers' choices when acquiring a vehicle.

Prior to the enactment of the Graves Law, the non-negligent owners of rented and leased vehicles could be held liable in some states for accident claims involving their vehicles solely on the basis of their ownership of those vehicles. These unfair "liability without fault" laws drove many small companies out of business and exposed countless more to multi-million dollar claims for accidents in which the rental or leasing company or company employees had absolutely no role. As a result, insurance coverage for vicarious liability claims was either very expensive or not available at all. This forced some companies to avoid leasing vehicles in states like New York, robbing businesses and consumers of an affordable and fixed-price alternative to purchasing.

The rented and leased fleet is very diverse and includes: automobiles leased to consumers, generally from three to five years; automobiles rented to consumers for periods of one day to 30 days; automobiles leased to businesses, generally for three years; trucks rented to consumers for periods of 1 to 30 days; trucks rented to businesses for periods of 1 to 30 days; and trucks leased to businesses, usually for one to five years. Congress in 2005 correctly recognized the interstate nature of the automobile and truck rental/leasing market as well as the critical need for uniformity in liability laws impacting the non-negligent owners of these vehicles operated by their customers.

It is important to note that the Graves Law provides no protection for any vehicle owners from allegations of their own negligence. For example, if a renting or leasing company provides a defective or unsafe vehicle to a customer, the Graves Law will not shield that company from claims. The Graves Law also preserves the rights of states to mandate minimum levels of insurance coverage required to register and operate motor vehicles. These minimum levels are set by states to ensure that accident victims are not left without recourse to seek compensation from at-fault drivers.

Prior to its enactment, the Graves Law was debated twice on the House Floor and subject to a recorded vote. Since its enactment, the statute has been upheld by the highest courts in New York, Florida and Minnesota; the U.S. Court of Appeals for the 11th Circuit; the U.S. District Courts in the Eastern District of New York, Middle District of Florida, Southern District of Georgia, and the District of Maine; and the Circuit Courts of the 11th and 18th Judicial Circuits in Florida. Markets previously closed to leasing have re-opened and businesses and consumers alike are benefitting from increased choices in financing their vehicle acquisitions.

As the debate and deliberation on the congressional highway reauthorization bill begins to take shape, we ask you to please consider the positive impacts of the Graves Law (49 USC 30106) and oppose any efforts to amend or repeal this common-sense federal law.

Thank you for your consideration.

Sincerely,

Alliance of Automobile Manufacturers
American Automotive Leasing Association
American Automotive Policy Council
American Car Rental Association
American Financial Services Association
American International Automobile Dealers Association
The American Tort Reform Association
American Trucking Associations
Association of Global Automakers
Avis Budget Group Inc.
Dollar Thrifty Automotive Group
Enterprise Holdings
The Financial Services Roundtable
General Electric Company
Idealease, Inc.
The Hertz Corporation
Mack Leasing System – Volvo Truck Leasing System
National Association of Manufacturers
National Automobile Dealers Association
National Vehicle Leasing Association
NationaLease
PacLease
Penske Truck Leasing Co., L.P.
Putnam Leasing
Ryder System, Inc.
Truck Renting and Leasing Association
U-Haul International
U.S. Chamber Institute for Legal Reform
U.S. Chamber of Commerce
Volvo Group North America