Does a rental car company have a legal duty to check online DMV records before renting a car to a customer? If there is such a duty, rental car companies could be placed in the position of deciding whether a licensed driver is eligible to rent a car or not.
For example, can a renter with two speeding tickets rent a car? What about three? How about a 5-year-old DUI? Based on cases from around the country and confirmed by recent decisions in California, the answer continues to be that there is no duty. As technology develops, though, this conclusion will continue to be tested in negligent entrustment cases.
A typical negligent entrustment claim will involve an allegation by an injured party, such as a passenger, pedestrian or occupant of another vehicle, that the rental car company should not have rented the vehicle to a particular customer. Occasionally after the accident, the fact that the renter had a poor driving record or a suspended license will be discovered.
In such circumstances, attorneys for plaintiffs of the injured party will argue that the failure to conduct an investigation of the renter’s driving record constitutes negligence on the part of the car rental company.
This article will provide an overview of the current law on negligent entrustment — not to be confused with non-negligent vicarious liability, which is covered by the Graves Amendment — and then will identify some steps to reduce the risk of claims.
Investigation of the Renter
As with many areas of the law, technological developments can create issues for the courts. In this regard, there are services that provide — with various limits — some level of electronic access to state DMV records.
Whether these advances alter the basic issue of whether there is a duty to conduct an investigation, and then presumably an independent assessment of the driver’s record, has been addressed by some courts. As noted, these cases arise in the context of a renter with a poor driving record or a suspended license.
Valid License with Poor Driving Record
With respect to a renter with a valid driver’s license but with a checkered driving record, a 2010 California appellate court decision confirmed that a rental car company does not in fact have an obligation to investigate the prospective renter’s driving record.
The case, Flores v. Enterprise Rent-A-Car Co., confirmed that a car rental company can exercise its own independent guidelines as to whether a driver should be allowed to rent a car. This ruling still holds true even with the claimed availability of services that provide electronic reports on the renter’s DMV record.
Moreover, a California appellate court decision in the 1988 case of Osborn v. Hertz Corp. noted that when a state determines a driver can continue to hold a license, it is not for a rental car company to impose a different standard for the rental of a vehicle. In other words, if the DMV says someone can drive, why should a rental car company have to conduct its own assessment?
Facially Valid but Suspended License
Renting a car to a customer who gives a facially valid but suspended license presents a somewhat different issue.
Most states provide the steps that a rental car company needs to follow in completing a rental. Generally, such as in California, Nevada and Mississippi, the rental car company must visually inspect the renter’s license, compare the signature on the license to that of the customer at the counter and, finally, must keep some record of the transaction.
The challenge, of course, is when customers do not disclose the fact that although they are presenting a facially valid license, the license has in fact been suspended by their state’s DMV. In this scenario, is the rental car company obligated to conduct some further investigation beyond what is outlined by the state’s statute?
A federal district court in California in 2005 touched on this issue. In Snyder v. Enterprise Rent-A-Car, a claim involving a driver that rented a car with a facially valid but suspended license, the court — in an attempt to construe the California Vehicle Code — concluded that even though the rental car company had complied with the applicable statute, plaintiffs were entitled to a presumption of negligence because the license was in fact suspended.