S.D.Fla.: Tort preemption violates Commerce Clause

A Florida federal district court held that Congress exceeded its powers under the Commerce Clause in enacting a provision preempting certain tort claims against car rental companies. Vanguard Care Rental USA v. Huchon, 2007 WL 2875388 (S.D. Fla. Sep. 14, 2007) (No. 06-10082-CIV).

Following the Commerce Clause decisions of the Rehnquist Court in Lopez and Morrison (see below), the district court found no rational basis for the conclusion that vicarious tort liability, by itself, substantially affects interstate commerce.

Following an accident in which he was hit and injured by a rental car driver, Huchon filed suit in state court against the rental companies. Huchon sought to hold the companies vicariously liable for the rental driver’s negligence under Florida’s Dangerous Instrumentality Doctrine. Like many states, Florida common law imposes strict liability on a car owner when a driver to whom the car was entrusted negligently causes an accident.

 

Before the state suit was filed, however, the rental companies sought a declaratory judgment that it was preempted under 49 U.S.C. § 30106, known as the Graves Amendment. Appended to the 2005 transportation appropriations bill, the Amendment expressly preempts all vicarious liability in state courts for rental car companies. The effect of the Amendment was to eliminate all vicarious liability for rental companies.

 

After determining that the Florida doctrine did not fall within a narrow exception to the Amendment, the court considered the constitutional question, quoting at length from United States v. Lopez, 514 U.S. 549 (1995) (invalidating Gun-Free School Zones Act), and United States v. Morrison, 529 U.S. 598 (2000) (invalidating civil penalty provision of Violence Against Women Act). 

 

The court quoted at length Lopez’s discussion of federalism “first principles,” and then court asked whether the Amendment regulated (1) the channels of interstate commerce, (2) the instrumentalities of interstate commerce, or (3) activities that substantially affect interstate commerce. Disagreeing with another Florida district, Garcia v. Vanguard Car Rental USA, 2007 WL 686625 (M.D. Fla. 2007), the court held that the Amendment did not regulate the channels of interstate commerce because it “regulates the assignment of benefits and burdens between parties to a commercial transaction, rather than the use of roads and highways.” Similarly, although recognizing that “cars are, by nature, instrumentalities of interstate commerce,” the court found that the Amendment did not fall within that category because it regulated tort liability rather than cars or their use.

 

With regard to the “substantially affects interstate commerce” category of Lopez, the court noted that Congress had made no official findings on the economic impact of vicarious liability in this context, nor had it included any “express jurisdictional element” limiting the scope of the Amendment to cases with an interstate nexus. While acknowledging that “vicarious tort liability does have an economic impact,” the court found that impact too “attenuated” to pass muster under Lopez and Morrison.

 

The court noted that Congress had previously limited tort liability for other industries in the course of enacting national regulations, and that the Supreme Court had previously upheld such legislation. The court distinguished those cases, however, on the ground that in each of them “the statute at issue was part of a larger-scale federal involvement with the regulated industry.” The Price-Anderson Act, for example, created a national system for indemnification and compensation for incidents at nuclear power plants. By contrast, the Graves Amendment was not part of any federal scheme to regulate the car rental industry or compensate accident victims; it was simply a grant of tort immunity tacked onto a spending bill. Thus, in contrast to other preemptive federal laws, the one at issue here did not regulate cars, roads, or the rental industry – all of which are sufficiently tied to interstate commerce – but only regulated the assignment of tort liability between owner and renter.

 

In concluding that vicarious tort liability lacked a sufficiently close tie to interstate commerce, the court noted the absence of any evidence that such liability would “undercut some larger federal regulatory scheme,” or that it was “being used by states to control interstate commerce in rental cars.” It likewise noted the lack of any evidence that car rental as a national industry “requires protection, or is in the least bit of danger.” That left only the assertion, in legislative history, that vicarious liability “may result in increased costs to the business, and thus to the consumer.” The court held that this was an insufficient basis for the exercise of Congress’s commerce power, concluding it was “hard pressed to think of any type of state legislation which could not be preempted by Congress, including state taxes, which could raise the cost of doing business in a particular state.”

 

This is the second court decision finding the Graves Amendment unconstitutional. The other is Graham v. Dunkley, 827 N.Y.S.2d 513 (N.Y. Sup. Ct. 2006).