11th Circuit Says Car Rental Companies Cannot Be Held Liable for Negligent Acts of Renters

The 11th Circuit Court of Appeals (the federal appellate court governing appeals in Florida) ruled yesterday that recently enacted federal legislation known as "the Graves Amendment" (49 U.S.C. § 30106) preempts state tort claims against car rental companies under a theory of vicarious liability.  In English, what the Court said was that the statute passed by Congress, and signed into law by President Bush in 2005, prevents a plaintiff from suing a car rental company for "negligent entrustment" of the vehicle to a person renting the car.  Thus, if the car rental company rents the car to someone that is later found to be at fault in an accident, the car rental company cannot be held liable for renting the car to the person that caused the injuries even if the company knew or should have known that the driver had a bad driving record.

 

Critics of the Graves Amendment claim that the law provides too much protection to car rental and leasing companies, and such companies should be held accountable for placing a vehicle into the hands of a dangerous driver under the "dangerous instrumentality doctrine."  According to these critics, leasing companies in particular do little to ensure that a driver has a safe record before leasing a vehicle to a driver.  Others argue that the law should shield car rental and leasing companies against liability because these companies cannot always know if a driver is safe.

 

Given the rancor over this particular law, it is likely that this or another case will reach the United States Supreme Court.  Whether the Court will hear the case is another matter.

 

Case: Garcia v. Vanguard Car Rental USA, Inc., No. 07-12235, (11th Cir., Aug. 19, 2008).

Overzealous Prosecutors Cited for "Sloppy" Investigation That Put Small Business Out of Business

In a sad tale of yet another case of overzealous prosecutors, the USA Today reported on a story this week of a small business owner in Alabama that was driven to financial ruin by a former employee that embezzled funds from the company then allegedly told federal investigators that the business was selling military secrets to China in order to give herself a "get out of jail free card." Federal prosecutors indicted the business owner despite knowing that the information it had obtained came from an employee that had been arrested for fraud, and despite knowing that the business owner had done nothing illegal.

The judge presiding over the case called the investigation by prosecutors "sloppy" and dismissed all charges against the business owner. The judge also ordered that the government pay the owner's $364,000 legal bill. But all of that does not repair the reputation of the owner, restore his business, or put his employees back to work. Putting the business out of business was a "taking" in every sense of the word and the business owner should be fully compensated for both his economic and non-economic injuries.

Cases such as this are thankfully rare, but when rogue prosecutors unfairly victimize business owners, the business owners should be made whole. One can only imagine the agony suffered by a man who had worked for 5 or 6 years of his life to build a business, only to have his dreams shattered when armed federal law enforcement officials knocked on his door at 8:00 a.m. on a Tuesday in April, 2004. Prosecutors should be permitted the freedom to make good faith mistakes, but should be held to account in cases such as this, the Duke larosse team rape case, and the Aisenberg case, where prosecutors strayed far beyond what might otherwise be considered a good faith mistake.

Taxpayers Rejoice!: Florida Taxing Authorities Dealt Serious Blows in Tax Cases

The Florida Department of Revenue and local taxing authorities suffered two significant losses within the past week. In one case, Crossings at Fleming Island Cmty. Dev. Dist. v. Echeverri, No. SC07-1556, the Supreme Court of Florida ruled that "a property appraiser does not have standing in his or her official capacity to raise the constitutionality of a statute as a defense in a tax suit filed by a taxpayer." In another case, the First District Court of Appeal ruled in Marcus and Patricia Ogborn, etc. v. Jim Zingale, Dept. of Revenue, 1st DCA Case No. 07-1831, that the trial court erred when it characterized a taxpayer's facial constitutional challenge as an as-applied constitutional challenge and consequently dismissed the taxpayer's case as untimely pursuant to Florida Statute Section 202.23.

These cases are significant to Florida taxpayers in that they establish that a taxpayer may attack a taxing statute as facially unconstitutional and, in that instance, will not be subject to the limitations of the tax refund procedure established in Fla. Stat. Sec. 202.23. Additionally, a property appraiser may not raise the constitutionality of a statute granting a tax exemption as a defense in a lawsuit brought by a taxpayer for failing to provide the taxpayer with the exemption granted by the statute.

These issues are closely related to the tax issues the parties faced in the Sun Aviation and Paris Air cases, in which the property appraiser for Indian River County sought to deny a tax exemption to two airport FBOs (Fixed Base Operators). The FBOs sued the property appraiser and he raised the defense that the tax exemption was unconstitutional. The Fourth District Court of Appeal held that the property appraiser had failed to preserve that issue and therefore did not address it. However, the Court ruled in favor of the FBOs on the basis that the FBOs were exempted from paying certain property taxes under the statute.

Taxpayers should rejoice because these cases send a clear message to taxing authorities that they cannot exceed the scope of their authority merely because tax revenues have declined with a troubled economy. Perhaps now our state and local tax officials will get back to the business of serving the citizens and businesses of Florida rather than seeking new and "innovative" ways of squeezing yet another drop of tax revenue out of them.

New Filing Fees: The Cost of Justice Just Went Up

Effective July 1, 2008, new court filing fees went into effect in Florida state courts that make filing a claim, including a counterclaim or cross-claim, substantially more expensive in certain cases. Most notably, the filing fee for county court evictions increased from $80 to $270, a 238% increase. Additionally, there was previously no fee assessed for filing a counterclaim or cross-claim, but there is now: $295.00. This means that a defendant who wishes to "counter sue" a plaintiff must now pay slightly more than the plaintiff in filing fees in order to assert a claim against the plaintiff in the same lawsuit. It also means that landlords are likely to do more to try and resolve a claim before filing an eviction action against a tenant, or perhaps engage in "self-help" to ensure that non-paying tenants vacate.

This development is not surprising, given the lack of funding that has been provided to our state court system by the Florida legislature. It is also unlikely to curtail the filing of most lawsuits because, except in eviction cases, filing fees are not substantial enough to serve as a deterrent to filing suit. What is probably of greatest concern is that landlords may attempt to avoid paying the filing fees in eviction actions by taking matters into their own hands, and forcing tenants out by other means. If this occurs, we may see an increase in civil actions against landlords by tenants that claim the landlord violated Florida's landlord-tenant statutes by doing things such as turning off utilities, changing locks, or blocking access to rental units, all of which are prohibited.

There is no doubt that our courts need more funding, the state court system is already operating on a shoestring budget as it is. However, increasing fees is a short term fix to a long-term problem. Electronic case management and filing (ECMF), already being used by most federal courts, is a means by which we can reduce or eliminate the need for future rate increases. Once an initial pleading is filed, ECMF permits the parties and/or attorneys for the parties to file documents with the clerk of the court electronically, bypassing the need for the clerk's office to process the vast amount of paper that is being processed now. It also reduces the cost, and increases the speed, of litigation - a benefit to both plaintiffs and defendants.

The Florida State Court system is working on implementing ECMF, but again, the problem is funding. It amounts to a "chicken and egg" dilemma, where the State is required to invest money in order to save money. Of all of the worthwhile projects that deserve funding, ECMF should be at the top of the list. Perhaps when the new filing fees begin to impact the pocketbooks of attorneys and their clients, we may see a greater interest in addressing our court funding shortfall.

Small Business Owners Unfairly Penalized by ADA Shakedown Suits

An article published in the San Francisco Chronicle last month highlights the plight of small business owners and illustrates why the ADA should be changed. The story provides an account of the frustrations experienced by a small business, XOX Truffles, located in the North Beach area of San Francisco that allegedly failed to comply with the ADA by virtue of a step from the curb to the store that prevented wheelchair access. The store was sued and had to lay off 3 employees to pay its defense costs.

Florida businesses have faced similar suits in the past, mostly from a handful of South Florida attorneys who see it as their mission in life to make all businesses ADA compliant, even if it means putting such businesses out of business. According to an April, 2008 article in the Palm Beach Post, a single plaintiff is responsible for filing 139 lawsuits against small businesses in South Florida after visiting their establishment and finding that it did not comply with ADA requirements.

On one hand, small businesses can and should comply with the ADA. It is an important piece of legislation designed to protect disabled citizens and afford them equal access to businesses. On the other hand, small businesses can be crippled by a lawsuit that is nothing more than a shakedown designed to generate attorneys fees for the lawyer or law firm filing them.

ADA suits rightly enable disabled citizens to become "private attorney generals" to enforce the law, but the ADA wrongly fails to provide small businesses with an opportunity to cure the noncompliance before being sued. The ADA should be amended so that it continues to permit private enforcement, but only after the business is given notice of the noncompliance and a 90 day period in which to cure it. Such an amendment would be fair to both disabled citizens, and to small businesses, and it is long overdue.

Big Brown Settles Class Action Involving Alleged Shipping Overcharges to Businesses

According to the Class Action Reporter, United Parcel Service, Inc. UPS), has settled a class action lawsuit involving packages delivered to commercial locations within the United States from the period January 1, 1998, to May 6, 2008.

The lawsuit claimed that UPS incorrectly charged residential rates, which are higher than commercial rates, for shipping packages to commercial locations.  The settlement requires UPS to issue $4 million in credit to eligible "Contract Settlement Class Members" and an additional $2.25 million in vouchers.  The two settlement classes are defined as follows:

A. Contract Settlement Class

   All shippers in the United States who tendered a packaged to
   UPS for delivery to a location in the U.S. from Jan. 1, 1998,
   to May 6, 2008, where the shipper was assessed a Residential
   Surcharge or a Residential Adjustment in connection with the
   delivery.

B. Declaratory Relief Settlement Class

   All shippers in the U.S. who tendered a package to UPS for
   delivery between Jan. 7, 2002, and August 14, 2005.  Excluded
   from the Settlement Classes are members of the judiciary,
   UPS, UPS employees, and any of UPS's parents, subsidiaries,
   or affiliates, and their officers, directors, and the members
   of their immediate family.

Class members will have until July 25, 2008, to object to the settlement, and until July 29, 2008, to opt out of the settlement.  Affected class members will have until February 9, 2009, to submit a claim form.  More information regarding the settlement is available at the UPS settlement web site: http://www.noticeclass.com/upssettlement.