In 2005, President Bush signed a transportation bill into law, which included 49 USC § 30106, commonly known as the "Graves Amendment." This Amendment prohibits states from imposing liability on vehicle owners "for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease."
In Graham v. Dunkley , after Sharon Graham was injured in a two-car collision, she filed suit against the other driver Rayon Dunkley, and the vehicle's lessor, NILT Inc. Graham sought damages from NILT under § 388, claiming vicarious liability for her injuries. NILT responded with a motion to dismiss and argued that the Graves Amendment overrode or "preempted" New York Law.
The Queens County Supreme Court denied NILT's motion, and found that the federal law was an unconstitutional exercise of congressional power under the United States Commerce Clause. The court believed that the link between "state vicarious liability and interstate commerce [was] too attenuated to support the legislation," and therefore rejected the preemption argument.
On appeal, the Appellate Division, Second Department, reversed.
Since Congress has the constitutional power to regulate interstate commerce, its authority extends to "conditions under which motor vehicle lessors operate," and those activities which "substantially affect interstate commerce." Because vicarious liability statutes would discourage businesses from leasing vehicles in the state, and would impact insurance premiums nationwide, the AD2 found a rational basis for the federal law's enactment.
That left Graham without a case against NILT.
Think we need a new lease on this?
To download a copy of the Appellate Division's decision, please use this link: Graham v. Dunkley