H. Rept. 106-774 - RENTAL FAIRNESS ACT OF 2000106th Congress (1999-2000)
Committee Report
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106th Congress Rept. 106-774
HOUSE OF REPRESENTATIVES
2d Session Part 1
======================================================================
RENTAL FAIRNESS ACT OF 2000
_______
July 20, 2000.--Ordered to be printed
_______
Mr. Bliley, from the Committee on Commerce, submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1954]
[Including cost estimate of the Congressional Budget Office]
The Committee on Commerce, to whom was referred the bill
(H.R. 1954) to regulate motor vehicle insurance activities to
protect against retroactive regulatory and legal action and to
create fairness in ultimate insurer laws and vicarious
liability standards, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 3
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 6
Committee Oversight Findings..................................... 9
Committee on Government Reform Oversight Findings................ 9
New Budget Authority, Entitlement Authority, and Tax Expenditures 9
Committee Cost Estimate.......................................... 9
Congressional Budget Office Estimate............................. 9
Federal Mandates Statement....................................... 10
Advisory Committee Statement..................................... 10
Constitutional Authority Statement............................... 10
Applicability to Legislative Branch.............................. 10
Section-by-Section Analysis of the Legislation................... 10
Changes in Existing Law Made by the Bill, as Reported............ 12
Minority Views................................................... 13
amendment
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.-- This Act may be cited as the ``Rental Fairness Act
of 2000''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. General fairness and responsibility rule.
Sec. 5. Preservation of State law.
Sec. 6. Preservation of liability based on negligence.
Sec. 7. Applicability and effective date.
SEC. 2. FINDINGS AND PURPOSES.
The Congress finds that--
(1) The vast majority of State statutes and common law follow
the generally accepted principle of law that a party should be
held liable only for harm that the party could guard against.
(2) A small number of State common laws and statutes still do
not recognize this accepted principle of law, and continue to
subject companies that rent or lease motor vehicles to
vicarious liability for the negligence of their rental
customers in operating the motor vehicle simply because of the
company's ownership, even where the rental company has not been
negligent in any way and the motor vehicle operated properly.
(3) An even smaller minority of State laws impose unlimited
liability on the companies for the tortious acts of their
customers, without regard to fault.
(4) These small number of vicarious liability laws pose a
significant competitive barrier to entry for smaller companies
attempting to compete in these markets, in contravention of the
fundamental legal principle of fairness prohibiting liability
without fault.
(5) Furthermore, because rented or leased motor vehicles are
frequently driven across State lines, these small number of
vicarious liability laws impose a disproportionate and undue
burden on interstate commerce by increasing rental rates for
all customers across the nation.
(6) Due to high liability costs and unwarranted litigation
costs, consumers face higher vehicle rental costs in all States
because of the increased insurance expenses required to provide
coverage in the interstate insurance and rental markets.
(7) Rental fairness will lessen burdens on interstate
commerce and decrease litigiousness.
(8) Legislation to address these concerns is an appropriate
exercise of the powers of Congress under clauses 3, 9, and 18
of section 8 of article I of the Constitution of the United
States, and the 14th amendment to the Constitution of the
United States.
SEC. 3. DEFINITIONS.
For the purpose of this Act--
(1) Harm.--The term ``harm'' means--
(A) any injury to or damage suffered by a person;
(B) any illness, disease, or death of that person
resulting from that injury or damage; and
(C) any loss to that person or any other person
resulting from that injury or damage.
(2) Motor Vehicle.--The term ``motor vehicle'' shall have the
meaning given to this term under section 13102(14) of title 49,
United States Code.
(3) Owner.--The term ``owner'' means a person who is--
(A) a record or beneficial owner or lessee of a motor
vehicle;
(B) entitled to the use and possession of a motor
vehicle subject to a security interest in another
person; or
(C) a lessee or bailee of a motor vehicle, in the
trade or business of renting or leasing motor vehicles,
having the use or possession thereof, under a lease,
bailment, or otherwise.
(4) Person.-- The term ``person'' means any individual,
corporation, company, limited liability company, trust,
association, firm, partnership, society, joint stock company,
or any other entity (including any governmental entity).
(5) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa, the Northern
Mariana Islands, any other territory or possession of the
United States, or any political subdivision of any such State,
commonwealth, territory, or possession.
SEC. 4. GENERAL FAIRNESS AND RESPONSIBILITY RULE.
(a) In General.--No owner engaged in the trade or business of renting
or leasing motor vehicles may be held liable for harm caused by a
person to himself or herself, to another person, or to property, which
results or arises from that person's use, operation, or possession of a
rented or leased motor vehicle, by reason of being the owner of such
motor vehicle, except to the extent of any required financial
responsibility statute.
(b) Construction.--Subsection (a) shall not apply if such owner does
not maintain the required limits of financial responsibility for such
vehicle, as required by State law.
SEC. 5. PRESERVATION OF STATE LAW.
(a) State Financial Responsibility Requirements.--Nothing in this Act
shall relieve any owner engaged in the trade or business of renting or
leasing motor vehicles from the obligation to comply with a State's
minimum financial responsibility, motor vehicle, or insurance statutes
or regulations imposed by that State for the privilege of registering
and operating a motor vehicle within that State.
(b) Priority of Payments.--Nothing in this Act shall preempt any
State law regarding priority of payment requirements or whether
coverages provided under such statutes or regulations are primary or
secondary.
SEC. 6. PRESERVATION OF LIABILITY BASED ON NEGLIGENCE.
Nothing in this Act shall preempt the ability of the States to impose
liability based on acts of negligence or criminal wrongdoing.
SEC. 7. APPLICABILITY AND EFFECTIVE DATE.
Notwithstanding any other provision of law, this Act shall apply with
respect to any action commenced on or after the date of enactment of
this Act without regard to whether the harm that is the subject of the
action or the conduct that caused the harm occurred before such date of
enactment.
Purpose and Summary
The purpose of H.R. 1954, the Rental Fairness Act of 2000
is to protect consumers and businesses from the imposition of
vicarious liability to motor vehicle rentals in different
States. The Rental Fairness Act establishes the simple legal
rule for rental vehicles that the party at fault should bear
the responsibility for any liability incurred. Where a party is
not negligent, or not at fault for an action, then that party
should not be held liable for another's harm. Specifically, the
bill provides that vehicle rental companies will not be held
liable for the negligent or intentional acts of others solely
because of ownership of the vehicle. State laws other than
those imposing vicarious liability are not affected. Companies
that own or operate motor vehicles within a State are still
fully subject to that State's financial responsibility laws and
are explicitly subject to any claims for negligence or criminal
wrongdoing. The legislation thus does not in any way limit
actions against a rental or leasing company for their
wrongdoing or malfeasance. It further allows all current
recovery rights against such companies (including those based
solely on ownership), but only up to the coverage amounts
required under a State's financial responsibility insurance
laws, with compensation procured through the State's insurance
regime with all accompanying consumer protections and
regulations.
Background and Need for Legislation
Vicarious liability is liability for the tort or wrong of
another person. It is an exception to the general legal rule
that each person is accountable for his own legal fault, but in
the absence of such fault is not responsible for the actions of
others. In a small minority of States, companies that rent or
lease motor vehicles are held ``vicariously'' liable for the
negligence of their renters or lessees. This means that in a
few States, a court can impose unlimited liability on a car
rental company for the actions of the renter, even if the car
operated perfectly and the company was not at fault for an
accident in any way. For example, Ms. Sharon Faulkner, a former
small business owner of Capitaland Rental Car, testified at the
October 20, 1999 hearing of the Subcommittee on Finance and
Hazardous Materials that she decided to sell her company and
lay off all her employees after a vicarious liability lawsuit.
A Capitaland customer rented a car and loaned it to the
customer's son (an unauthorized driver). The son, without his
mother's knowledge, drove the car into New York City. He struck
a pedestrian, who then sued the rental company for ``enormous
sums'' of pain and suffering damages. Even though Ms.
Faulkner's small business was in no way responsible for or at
fault in the accident, she was concerned that her company faced
potential bankruptcy because the accident occurred in one of
the few States which imposes unlimited vicarious liability--
liability without fault--on rental companies.
These small number of vicarious liability laws pose a
significant competitive barrier to entry for smaller companies
attempting to compete in these markets who cannot afford
insurance coverage for potentially unlimited liability. This
results in less competition and less access for consumers.
Further, because rented or leased motor vehicles are frequently
driven across State lines, these small number of vicarious
liability laws impose a disproportionate and undue burden on
interstate commerce by increasing rental rates for all
customers across the Nation. Due to high liability costs and
unwarranted litigation costs, consumers face higher vehicle
rental costs in all States because of the increased insurance
expenses required to provide coverage in the interstate
insurance and rental markets. Enactment of the Rental Fairness
Act of 2000 will lessen burdens on interstate commerce and
decrease litigiousness.
This theory of vicarious liability for motor vehicle
rentals has its foundation in the last century before the
advent of the automobile, when a town's livery stable was
deemed to know the disposition of a horse it was lending. The
livery shop's owner was held liable for the disposition of the
horse which was presumed to cause any accidents. However, the
vast majority of States have agreed that motor vehicles do not
generally have dispositions which are likely to cause
accidents. If a car is defective in any way, the rental company
can be held liable for negligence. However, if the car
functioned properly, but the accident was caused by the renter
or someone taking the car from the renter through no fault
whatsoever of the rental company, then almost all States have
agreed that vicarious liability should either not be applied,
or should be capped at the coverage level of the State's
minimum financial responsibility insurance laws.
To provide appropriate levels of protection for people
injured by motor vehicles, every State has established minimum
financial responsibility laws. These laws establish a minimum
level of insurance coverage that must be maintained on every
vehicle. In most states the financial responsibility laws
operate to cover the liability of any driver who operates a
car. Some states have broader no-fault insurance laws which do
not require liability on the part of the driver to trigger
coverage. Only five States and the District of Columbia have
not yet replaced their unlimited vicarious liability laws.
(See, Conn. Gen. Stat. Ann. 14-154a; D.C. Code Ann. 40-408;
Iowa Code 321.493; Me. Rev. Stat. Ann. 29-A 1652-53; N.Y. Veh.
& Traf. 388; R.I. Gen. Laws 31-33-6, 31-33-7). A few States
have restricted the application of their vicarious liability
laws only to those cases when the rental or leasing company
does not maintain the required insurance coverage under the
State's minimum financial responsibility laws, (See, Nev. Rev.
Stat. 482.305; Ariz. Rev. Stat. 28-324; Neb. Stat. 25-21,239
(applying only to trucks)), or have capped the liability of
their companies at the same level as the financial
responsibility laws (See, Cal. Veh. Code 17150-51; Idaho Code
49-2417; Mich. Comp. LawsAnn. 257.401). These latter two groups
of States would not be affected by the Rental Fairness Act, as it
similarly conditions the protection against vicarious liability on
maintenance of the required insurance coverages and allows recovery up
to the level of such minimum financial responsibility levels. Two
States have recently enacted laws which begin to limit the application
of vicarious liability, but with liability exposures set at a higher
level than the preexisting financial responsibility requirements (See,
Minn. Stat.170.54; Fla. Stat. 324.021).
The mandatory financial responsibility laws represent
decisions by the States as to the appropriate levels of
liability for which its resident motor vehicle owners should be
required to insure. Unfortunately, no State is able to protect
its residents from being subjected to unlimited liability, as
rental cars are frequently driven through multiple states, or
renters may get into accidents with plaintiffs who reside in
one of the remaining vicarious liability states. For example,
the Commonwealth of Virginia has no way of protecting its
companies against the vicarious liability laws of the District
of Columbia if someone drives a rental car into the District or
hits a District resident.
Vicarious liability cases are estimated to cost more than
$100 million annually in settlements and jury verdicts alone,
not including expenses for additional insurance costs and
attorneys fees (American Car Rental Association, study of
vicarious liability costs, 1999). These costs are passed
through to consumers in all States, through increased rental
rates. As one of the leading historical jurists in the
development of tort law, Justice Benjamin Cardozo, stated,
``[t]he whole doctrine [of vicarious liability] is foolish,
antiquated, unjust, and ought to be abolished. But I suppose we
will leave that change to the clumsy process of legislation.''
Hearings
The Subcommittee on Finance and Hazardous Materials held a
hearing on H.R. 1954, the Rental Fairness Act of 1999 on
October 20, 1999. The Subcommittee received testimony from: Ms.
Sharon Faulkner, Premier Car Rental Corporation; Mr. Raymond T.
Wagner, Jr., Enterprise Rent-A-Car Corporation; and Mr. Richard
H. Middleton, Jr., Association of Trial Lawyers of America.
committee consideration
On November 2, 1999, the Subcommittee on Finance and
Hazardous Materials met in open markup session and approved
H.R. 1954 for Full Committee consideration, without amendment,
by a record vote of 12 yeas to 11 nays. The Full Commerce
Committee met in open markup session on March 15, 2000, and
ordered H.R. 1954 reported to the House with a favorable
recommendation, amended, by a record vote of 26 yeas and 23
nays.
committee votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
following amendments were agreed to by voice vote:
An Amendment in the Nature of a Substitute by Mr. Bryant,
No. 1, striking title I of the underlying bill, changing the
definition of the term ``harm,'' expanding the findings and
purposes contained in title II, improving the ``General
Fairness and Responsibility Rule,'' explicitly preserving the
ability to file actions under State law against automobile
owners for negligence or criminal wrongdoing, and preserving
State law regarding the priority of payment for insurers.
An Amendment to the Amendment in the Nature of a Substitute
by Mr. Deal, No. 1b, clarifying that an owner engaged in the
trade or business of renting or leasing motor vehicles may not
held liable for harm caused by a person's use, operation, or
possession of a rented or leased motor vehicle, except to the
extent of any required financial responsibility statute.
The Committee took record votes on the following amendment
and motion. The names of Members voting for and against follow:
An Amendment to the Amendment in the Nature of a Substitute
by Mr. Engel, No. 1a, providing an exception to the General
Fairness and Responsibility Rule for pedestrians or other
persons who were not the driver or passenger of the rented
motor vehicle involved in the incident, was not agreed to by a
record vote of 16 yeas and 22 nays (Record Vote No. 24).
A motion by Mr. Bliley to order H.R. 1954 reported to the
House, as amended, with a favorable recommendation was agreed
to by a record vote of 26 yeas and 23 nays (Record Vote No.
25).
committee oversight findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a legislative
hearing and made findings that are reflected in this report.
Committee on Government Reform Oversight Findings
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, no oversight findings have been
submitted to the Committee by the Committee on Government
Reform.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
1954, The Rental Fairness Act of 2000, would result in no new
or increased budget authority, entitlement authority, or tax
expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 23, 2000.
Hon. Thomas Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1954, the Rental
Fairness Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Lisa Cash
Driskill.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 1954--Rental Fairness Act of 1999
CBO estimates that enacting H.R. 1954 would have no impact
on the federal budget. Because the bill would not affect direct
spending or receipts, pay-as-you-go procedures would not apply.
H.R. 1954 contains an intergovernmental mandate as defined in
the Unfunded Mandates Reform Act (UMRA), but CBO estimates that
the costs would not be significant and thus would not exceed
the threshold established in that act ($55 million in 2000,
adjusted annually for inflation). The bill contains no new
private-sector mandates as defined in UMRA.
H.R. 1954 would establish that companies that rent or lease
cars are not subject to unlimited liability under state law for
damages caused by the operator of a rented or leased vehicle.
Such companies would still be responsible for damages to the
extent of the minimum insurance or financial responsibility
required by state law.
The bill would preempt the liability laws of as many as
seven states and the District of Columbia, and thus would be a
mandate as defined in UMRA. The bill would no longer allow
these states and the District to impose unlimited liability on
rental and leasing car companies and would cap the damages for
which such companies are responsible to the minimum financial
or insurance requirements set by state law. Because the bill
would not require state to take any specific action, however,
it would impose no significant costs on state, local, or tribal
governments.
The CBO staff contact is Lisa Cash Driskill. This estimate
was approved by Peter H. Fontaine, Deputy Assistant Director
for Budget Analysis.
federal mandates statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
advisory committee statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
constitutional authority statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
applicability to legislative branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
section-by-section analysis of the legislation
Section 1. Short title and table of contents
Section 1 designates the short title of the Act as the
``Rental Fairness Act of 2000'' and provides a table of
contents for the Act.
Section 2. Findings and purposes
Section 2 sets forth the findings and purposes for the Act.
Section 3. Definitions
Section 3 defines the terms used in the bill.
Section 4. General Fairness and Responsibility Rule
Section 4 establishes the general rule eliminating
vicarious liability for vehicle rental and leasing companies.
This provision does not relieve rental or leasing companies
from any liability for negligence, nor does it relieve them of
any obligation to maintain and apply minimum insurance
coverages as required under any State financial responsibility
statute. State financial responsibility statutes require motor
vehicle owners to maintain insurance coverage for anyone who
drives the vehicle, providing a minimum level of available
compensation for any accident caused by such driver (some
States also require no-fault insurance coverage, which would
similarly not be affected by this Act). This section eliminates
the current practice in some States of requiring that injured
parties go directly to court with the surrounding legal
expenses, often with significant or unlimited liability imposed
on an innocent vehicle renter or lessor merely because of
ownership of the vehicle. Instead, it allows the States to
focus on establishing the appropriate level of coverage and
recompense through their insurance regimes, with all of the
accompanying consumer protections provided by the States'
insurance regulations. While routing compensation claims
through the State insurance regimes, this section makes clear
that any compensation or coverage available to injured parties
in the State before this legislation will continue to apply,
but only up to the amounts specified in any State law
establishing minimum levels of financial responsibility for
motor vehicle injuries and liabilities. Subsection (b) of
section 4 provides that a State's vicarious liability laws will
continue to fully apply without modification if a motor vehicle
owner does not maintain the levels of insurance coverage or
similar financial responsibility required under the applicable
State law.
Section 5. Preservation of State law
Section 5 clarifies that State laws other than those
imposing vicarious liability are not affected. Specifically,
subsection (a) clarifies that a person who owns or operates a
motor vehicle within a State is still fully subject to the
State's financial responsibility laws. Subsection (b) clarifies
that this bill does not in any way effect the determination of
which insurance coverages are primary or secondary, or any
other determination of priority of payments, in any injury or
accident involving a motor vehicle.
Section 6. Preservation of liability based on negligence
Section 6 clarifies that the bill does not affect any
claims against a motor vehicle renter or lessor where such
renter or lessor has itself committed an act of negligence or
criminal wrongdoing. This clarifies that the Act is not
intended in any way to protect the renter or lessor when the
renter or lessor has done something wrong, but only to relieve
the renter or lessor from vicarious liability for the
wrongdoing of other parties beyond the requirements of the
States' financial responsibility requirements imposing minimum
insurance coverages.
Section 7. Applicability and effective date
Section 7 establishes that the Act applies to any legal
action or insurance claim made on or after the date of
enactment of the Act, regardless of when any harm occurred.
changes in existing law made by the bill, as reported
This legislation does not amend any existing Federal
statute.
MINORITY VIEWS
We strongly oppose H.R. 1954, the Rental Fairness Act of
1999. At Committee markup, all Democrats present were joined by
two Republican members of the Committee in voting ``No'' on
reporting this legislation to the House.
Despite its title, there is nothing fair about this
legislation. Instead, H.R. 1954 is special interest legislation
designed to provide unjustified liability protection for the
highly profitable, $14.6 billion a year, car rental industry.
If the driver of the rental vehicle cannot pay, H.R. 1954 would
force innocent motorists and pedestrians to assume
responsibility for their own injuries and damages, even if
these innocent victims were guilty of nothing more than being
in the wrong place at the wrong time.
It is certainly not the case that the car rental industry
is incapable of properly insuring itself for claims brought
against it. ``Vicarious liability'' costs the car rental
industry less than one penny of every dollar of revenue. In
short, this legislation is without merit, without good purpose,
and deserves to be resoundingly defeated if brought to the
floor of the House.
The proponents of H.R. 1954 intend that the legislation
preempt ``vicarious liability'' laws in 11 states (Florida, New
York, California, Iowa, Michigan, Minnesota, Nevada, Idaho,
Maine, Connecticut, and Rhode Island) and the District of
Columbia that are designed to protect innocent victims from the
negligent acts of those who drive rented or leased vehicles.
Without these state liability laws, a child innocently standing
on a street corner may face a lifetime of unmet medical and
other needs, if he or she is hit by an uninsured driver
operating a rented or leased vehicle.
This legislation is nothing more than a liability ``bath''
for large, highly profitable companies that have freely chosen
to engage in the business of renting or leasing motor vehicles.
If H.R. 1954 were to become law, motor vehicle rental or
leasing firms could be virtually certain that, despite the
requirements of state law, they would not have to pay claims
when their vehicles cause injury and damages. While many of our
Republican colleagues on the Committee may think it is fair to
shield such companies from what is nothing more than a normal
cost of doing business, we believe the liability exemption
contained in H.R. 1954 would produce a callously unfair and
wholly unconscionable result.
Instead of a rental or leasing firm being held accountable
for accidents caused by the vehicles it puts on the road, this
legislation would hold liable the victims--innocent children
and other bystanders--for injuries caused by negligent,
uninsured drivers of rented or leased vehicles. Congressman
Engel offered an amendment to prevent rental or leasing firms
from escaping liability when their vehicles injure innocent
bystanders. Congressman Engel's amendment was defeated despite
support from almost all of the Democratic Members of the
Committee present.
This is the way H.R. 1954 would work. Someone comes into a
car rental agency. That person could be a drug user of an
alcoholic. That person could also have a prodigiously bad and
irresponsible driving record, and in fact, may have caused
vehicular accidents that resulted in serious injury or death.
Even though federal law [18 USC 2721(6)(3)] allows car rental
firms to do an on-line background check of rental car
applicants, these background checks are not required and are
often not done.
So, the car rental agency goes ahead and rents the car to
the applicant. That person then takes the rented car and, under
the influence of alcohol or narcotics, runs head on into a
mother driving a carload of children to school. Some of the
victims are killed; others are seriously injured, possibly
requiring a lifetime of treatment and care.
Under H.R. 1954, the rental company could escape all
liability for the injuries caused by the vehicle that it put on
the road, even if the driver of the rental car may be totally
fiscally irresponsible, uninsured, and have no means whatsoever
to address the problems of the people that he has killed or
hurt. That driver may also be in the position of being
bankrupt.
The 11 states and the District of Columbia that have these
``vicarious liability'' laws have said they want to protect
their citizens against this kind of situation. They have chosen
to do that by holding the rental or leasing firm liable.
Whether you agree or disagree with the method of accountability
these states have selected, does it make any kind of sense at
all for this Congress to arbitrarily, and without consultation,
say that these states cannot protect their citizens against
this kind of injury and loss?
We say this effort to remove state protections is not only
wrong; it is unfair, and totally indefensible. Who is going to
pay for the loss, the medical care and treatment, that this
driver causes? H.R. 1954 does not provide any answer at all to
this basic question. If the driver who causes the accident
cannot pay, H.R. 1954 basically says it is the innocent
victim's ``tough luck''. Effectively, the proponents of this
bill are saying they do not care if anyone pays for the care a
kid will need who becomes paralyzed as a result of such an
accident. They make is very clear that it's simply not their
concern. Instead, their only concern is in making sure that the
rental car company does not have to pay.
And this points out another inequity caused by H.R. 1954.
This legislation only gives liability protection to firms that
engage in the trade or business of renting or leasing vehicles.
If a private citizen loans his vehicle to another person who
then injures or kills someone, that private citizen, as the
owner of the vehicle, is held liable and will still be held
liable if H.R. 1954 becomes law. If the proponents of this
legislation are so interested in holding liable only the one
who causes the accident, why do they not think a private
citizen who loans his or her vehicle should be exempt as well?
At Committee markup,the bill's proponents spent a great
deal of time discussing among themselves what they believed
H.R. 1954 would or would not do. It was asserted that the
language of subsection (b) of section 4 of H.R. 1954 ensures
that a firm could only be exempt from state vicarious liability
laws, if it pays claims caused by the negligence of those to
whom it rents or leases vehicles up to the amount of whatever
minimum insurance coverage state law requires such firms to
take out on its vehicles.
Unfortunately, there is no such requirement in subsection
(b) of section 4 of the bill. Instead, subsection (b)
conditions the exemption from state vicarious liability laws
only on the requirement that a rental or leasing firm insures
its vehicles according to whatever minimum level state law
requires. Subsection (b) establishes no ``duty'' for the rental
or leasing firm to use this coverage to pay claims. In Michigan
and other states that have vicarious liability laws, there is
no strict liability standard that ensures an innocent bystander
can obtain payment from a rental or leasing firm's insurance
coverage, if the state's vicarious liability law is preempted,
as H.R. 1954 provides.
Subsection (b) could have the net effect, therefore, of
guaranteeing that rental and leasing firms will never be held
liable for the negligence of those that drive its vehicles as
long as such firms insure its vehicles for the amount required
by state law. In this case, insurance coverage should be quite
cheap since H.R. 1954 provides the means to protect such
insurance policies from having to pay claims.
In an effort to address this problem, Congressman Deal, a
supporter of the bill, offered an amendment at the markup that
said state vicarious liability laws are preempted, ``except to
the extent of any required financial responsibility statute.''
This amendment, however, can be read to permit a state
vicarious liability law to be considered a ``required financial
responsibility statute'' and thereby produce the nonsensical
result that the first part of section 4(a) would preempt state
vicarious liability laws while the last part of section (4)(a)
would protect vicarious liability laws from preemption by the
bill. This problem with the amendment offered by Congressman
Deal was raised by Congressman Dingell, the Ranking Member of
the Committee, in the following exchange he had with
legislative counsel during the markup:
Mr. Dingell. Okay, so it is then--a state vicarious
liability statute is then a required financial responsibility
statute. Is it not?
Mr. Meade (Senior Counsel, Office of the Legislative
Counsel). It could be interpreted that way.
Mr. Dingell. It could be. Now, I am trying to understand
then, here we are saying that required--rather, that state
vicarious liability statutes do not apply. But now we find that
state vicarious responsibility statutes meet the definition of
required financial responsibility statutes in the gentlemen's
amendment. So we have a kind of a circular or elliptical
reasoning problem here in which we are saying they don't apply,
but in which we are now saying they do apply.
Mr. Meade. Well, this would only occur in the what--six
states.
Mr. Dingell. No Eleven states.
Mr. Meade. Eleven states have vicarious liability.
Mr. Dingell. So let us not debate where they would occur.
Let us just try to understand the perfection, the scintillating
perfection of this amendment, and how it addresses the problem
that lies before the committee. I sense that we are defining
something which is going to be excluded in Section A, but at
the end, we are putting an amendment now which says it will be
included, because it meets the definition of any required
financial responsibility statute. This is a most extraordinary
amendment to a most remarkable piece of legislation.
This effort by Congressman Deal to clarify the preemption
provision of the bill raises more questions and confuses the
situation even further, but that did not stop the proponents of
this legislation from adopting the amendment.
It is all too clear to us that the principal effect of H.R.
1954 is to protect big firms that rent or lease motor vehicles
at the expense of innocent accident victims. We are appalled at
the effort to leave innocent bystanders who suffer serious
injury to fend for themselves, while large car rental and
leasing firms are protected from what is nothing more than what
11 states and the District of Columbia have decided should be a
normal cost of doing business. We urge members to vote against
H.R. 1954 if it is brought to the House floor.
John D. Dingell.
Edolphus Towns.
Henry A. Waxman.
Sherrod Brown.
Frank Pallone, Jr.
Tom Barrett.
Ron Klink.
Bart Stupak.
Eliot L. Engel.
Lois Capps.
Tom Sawyer.
Ted Strickland.
Karen McCarthy.
Anna G. Eshoo.
Bobby L. Rush.
Bart Gordon.
Edward J. Markey.
Diana DeGette.
Albert R. Wynn.
Bill Luther.
Gene Green.