Queens Decision Challenges Graves Amendment

A Queen’s trial judge ruled on September 11 that the Graves Amendment, which effectively bars all states from forcing unlimited vicarious liability on rental and leasing companies, was an unconstitutional invasion of New York common law by the federal government.

In the New York case of Graham v. Dunkley, a party was injured by the lessee of a Nissan long-term lease vehicle. Nissan Infinity LT (NILT) was a defendant in the case.

Judge Thomas V. Polizzi ruled that “49 U.S.C. § 30106 [the Graves Amendment] is an unconstitutional exercise of congressional authority under the Commerce Clause of the United States Constitution, Article I, § 8.”

Legal experts in vicarious liability cases question the decision. “While the court could have upheld the New York vicarious liability law's applicability to vehicles not rented or leased and left intact the Graves Amendment--which applies only to rented and leased vehicles--the court did not discuss this possibility,” says Michael LaPlaca, Esq., senior partner of LaPlaca McKenzie, PA, a Washington, D.C. area law firm that specializes in vehicle rental issues.

LaPlaca notes that this decision affects only the immediate litigants. It will not become law in New York unless the Court of Appeals of New York affirms the decision.

“If Nissan appeals the decision, there will be strong interest from manufacturing companies and their financial arms that lease autos and trucks in New York,” La Placa told Auto Rental News.

“The coalition that brought about the reform to unlimited lessor vicarious liability has expected that a constitutional challenge of the Graves Amendment was inevitable,” Elaine Litwer, legislative coordinator for the National Vehicle Leasing Association, told Auto Rental News.

Litwer points out that in recent litigation involving auto accident cases and with few exceptions, the court used the language of the Transportation Equity Act of 2005 as motivation to dismiss the lessor in third party action.

Litwer believes the decision wrongly interpreted state law.

As it relates to the judge’s constitutional challenge, “A court at nisi prius [trial courts] should not, unless the case is a clear one, declare an act of Congress unconstitutional.” See Parkhill v. Todd Shipyards Corp., 190 Misc.782 (Sup. Ct. New York Cty. 1948).

“As a group we have confidence that the court will handle the Graham v. Dunkley case in this same manor, but the current finding questions the authority of the Transportation Act in issues of the Commerce Clause. We have been advised that these finding are in error and that New York State vehicle and traffic law Section 388 [which originally imposed lessor vicarious liability] does not qualify as a commerce clause provision.”

“We have confidence that if this case is appealed the court will redirect its findings and that this constitutional challenge will not stand,” she says.

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