Rental Car Firm Vicarious Liability Case Goes Before Florida High Court

An accident victim’s lawyer this week urged the Florida Supreme Court to rule that rental car companies can be held liable for damages in an accident they did not cause in the state, even though a new federal law is designed to shield the companies.

The legal concept of holding non-negligent owners responsible regardless who was behind the wheel is known as “vicarious liability.” It is prohibited for rental vehicles by the 2005 federal Graves Amendment except in states that have financial responsibility or insurance requirements for rental companies.

The law’s sponsor, Rep. Samuel Graves, R-Mo., predicted it would save consumers $100 million nationally.

At issue in the Supreme Court is whether a Florida law titled “Financial Responsibility” meets the federal exception criteria in what could be a precedent-setting case.

State law says if the person who leases or drives a rented vehicle is uninsured or has combined insurance limits of less than $500,000, the rental company “shall be liable for up to an additional $500,000 in economic damages.”

“It is implicit that there is a requirement to maintain insurance albeit it is not expressly stated,” Marjorie Gadarian Graham told the justices. She argued the Legislature intended it to be an insurance requirement and that it’s explicit enough to except Florida from the Graves Amendment.

David C. Boruke, a lawyer for Enterprise Leasing Co., disagreed.

“Nothing is required,” Boruke said. “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, agreed with Enterprise. Both lower courts rejected a vicarious liability claim by Rafael Vargas, who was injured when an Enterprise-owned vehicle rear-ended his car in February 2006.

Vargas did not allege Enterprise was negligent nor at fault nor that the lease was improper.

The 4th District certified the issue to the Supreme Court as a question of great public importance. Several similar cases in Florida are on hold pending a ruling.

It has also been an issue in other states including Minnesota, where the state Supreme Court in January ruled the Graves Amendment pre-empted a similar state law there.

Most of the litigation has been at the federal level. The 11th U.S. Circuit Court of Appeals in Atlanta also ruled Florida’s law was pre-empted in 2008. As a result, the Florida justices’ decision would apply only to state courts, Graham said. They did not indicate when they would rule.