On the Road: Safer Rental Cars
by David B. Bobrosky
A mind boggling number of cars are on the recall list for safety problems – including about 34 million American vehicles for defective Takata airbags alone. Additionally, last year was a record for the National Highway Traffic Safety Administration, which levied nearly $300 million in fines against Takata, Honda, Chrysler and BMW, according to Car and Driver.
Recalls and fines are all well and good for holding automakers and their suppliers accountable for safety but sometimes, it takes solid legislation to curb the defects that injure and kill drivers and their passengers. That may come with the Raechel and Jacqueline Houck Safe Rental Car Act.
The Safe Rental Car Act is named for two sisters driving north from Ojai to Santa Cruz in a rented PT Cruiser in 2004. While driving, the car swerved off California Highway 101, hit an oncoming 18-wheeler and then burst into flames.
Initially the rental company blamed bad driving, and even speculated the accident wasn’t an accident at all – that Raechel (the driver) committed suicide and killed her sister as well. The truth however, is that there was a recall for PT Cruisers because of faulty power steering hoses, which potentially could lead to loss of steering and fires.
There were no laws prohibiting vehicle rental companies from continuing to loan out cars despite these dangerous recalls. In fact, an area manager for Enterprise (the company that rented the car to the Houck sisters) said that it was corporate policy to rent out unrepaired, recalled vehicles if no other cars were available.
Cally Houck, mother of Raechel and Jacqueline, spearheaded a campaign to put a stop to this policy, which she considers “corporate malfeasance”. Enterprise admitted liability and was ordered by a jury to pay the Houck parents $15 million in 2010. The company began supporting the Houck Bill shortly thereafter, and was soon followed by Hertz and Avis.
The Houck Bill: Corporate Roll Call
Since then, several organizations and corporations (including the American Car Rental Association, Honda and General Motors) eventually helped champion Houck’s cause.
On the other hand, the Alliance of Automobile Manufacturers and the National Automobile Dealers Association opposed the bill, citing less dangerous defects like mislabeled parts and other minor issues which may prohibit companies from getting their cars leased or sold.
Chrysler, maker of the PT Cruiser and company subject to some of those NHTSA fines mentioned above, was opposed to the Safe Rental Car Act.
The bill also found opposition with car dealers, who feared a law that could pit large rental companies against consumers – who should the dealerships service first, given a finite number of parts and services available? Auto dealers also argued that they shouldn’t be treated like rental companies, as they only keep a few cars on hand as “loaner vehicles” when customers come in for service.
Safer Cars: Where Do we Stand Now?
The Houck Safe Rental Car Act passed both the U.S. House of Representatives and the U.S. Senate and was then signed by President Obama as part of the Fixing America’s Surface Transportation (FAST) Act. It amended §30102(a) of title 49, U.S. Code. The law now affects (a) vehicles under 10,000 pounds, (b) rented without a driver for less than four months, (c) that are part of a fleet of 35 or more vehicles (most auto dealers providing “loaner” vehicles will be exempt from the law under this condition) used for rental purposes.
- Rental companies will not be able to rent or sell vehicles once they receive notification of a recall approved by the NHTSA until the defect is remedied.
- Companies must comply within 24 hours of notice, unless the company has more than 5,000 vehicles in service. In that case, vehicles must be grounded within 48 hours of notice.
- A company may rent, but not sell or lease, recalled vehicles if the remedy is not immediately available and if the company takes action to eliminate the risk (i.e. the company may remove defective floor mats that may jam under gas and brake pedals, should replacement mats not be immediately available from the manufacturer).
The Secretary of Transportation will submit a congressional report within a year of enactment of the Safe Rental Car Act, regarding the effectiveness of the amendments and findings of related studies.
This may not be the far-reaching safety bill that Cally Houck initially intended, but hopefully, it will help prevent or at least minimize the number of truly horrible accidents like the one that took her daughters’ lives, from occurring in the future.
David B. Bobrosky is a Shareholder in our Personal Injury Practice Group.