Ballard Spahr LLP Alert: Florida Supreme Court Rules State Vicarious Liability Law Preempted

Ballard Spahr LLP Alert: Florida Supreme Court Rules State Vicarious Liability Law Preempted

By the Ballard Spahr Consumer Financial Services Group 

The Florida Supreme Court has ruled in Vargas v. Enterprise Leasing Company that the State law imposing vicarious liability on short-term car lessors is preempted by the federal Graves Amendment.

The Graves Amendment is a provision of the Safe, Accountable, Flexible, Efficient Transportation Equity Act of 2005: A Legacy for Users. It preempted state laws imposing vicarious liability on car leasing companies but contained a savings clause for state "financial responsibility laws."

Florida law imposed vicarious liability on lessors of vehicles leased for a term of less than one year. Finding that law to be preempted by the Graves Amendment, the Florida circuit court entered summary judgment for the leasing company in an action filed against it by an individual who had been injured in an accident involving a leased car. That ruling was affirmed by the Florida district court, which certified the preemption issue to the State's Supreme Court.

The Florida Supreme Court, in its opinion issued on April 21, 2011, rejected the plaintiff's argument that the State vicarious liability law was not preempted because it was a "financial responsibility law" and affirmed the district court's grant of summary judgment for the leasing company.

The State's high court also agreed with the district court's conclusion that the Graves Amendment did not violate the Commerce Clause of the U. S. Constitution. In reaching that conclusion, the district court had followed the reasoning of other courts that rejected such a Commerce Clause challenge on the grounds that vehicle leasing is a commercial activity with substantial effects on interstate commerce.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). For more information, please contact group Chair Alan S. Kaplinsky, 215.864.8544 or kaplinsky@ballardspahr.com; Vice Chair Jeremy T. Rosenblum, 215.864.8505 or rosenblum@ballardspahr.com; John L. Culhane, Jr., 215.864.8535 or culhane@ballardspahr.com; Mercedes K. Tunstall, 202.661.2221 or tunstallm@ballardspahr.com; Barbara S. Mishkin, 215.864.8528 or mishkinb@ballardspahr.com; or Mark J. Furletti, 215.864.8138 or furlettim@ballardspahr.com. 


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