[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 19, 2008
No. 07-12235
THOMAS K. KAHN
________________________
CLERK
D. C. Docket No. 06-00220-CV-OC-10-GRJ
MARIA D. GARCIA,
as surviving Spouse, as Administrator and
Personal Representative of the Estate of
Jose Garcia, and on behalf of her minor children
Gabriela Garcia and Luis Garcia,
Plaintiff-Cross-Defendant-Appellant,
SANTOS RUIZ,
individually, and as administrator and personal
representative of the Estate of Nelson Ruiz, and
on behalf of and as legal guardian of the minor
Nelson Xavier Ruiz, et al.,
Plaintiffs,
versus
VANGUARD CAR RENTAL USA, INC.,
a Delaware corporation,
NATIONAL RENTAL (US), INC.,
a Delaware corporation, f.k.a. National
Car Rental,
ALAMO FINANCING, L.P.,
a foreign limited partnership,
ALAMO RENT-A-CAR (CANADA) INC.,
a Florida corporation, et. al.,
Defendants-Cross-Plaintiffs-Appellees,
VANGUARD RENTAL (BELGIUM), INC.,
a Florida corporation, et. al.,
Defendants-Appellees,
UNITED STATES OF AMERICA,
Intervenor,
GREGORY DAVIS, et al.,
Defendants.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(August 19, 2008)
Before EDMONDSON, Chief Judge, KRAVITCH and ALARCÓN,* Circuit
Judges.
KRAVITCH, Circuit Judge:
These consolidated declaratory judgment and wrongful death actions require
us to interpret the Graves Amendment, 49 U.S.C. § 30106, a federal tort reform
statute which purports to shield rental car companies from certain vicarious
liability suits. We conclude that the tort claims at issue are within the
*
Honorable Arthur L. Alarcón, United States Circuit Judge for the Ninth Circuit, sitting
by designation.
2
Amendment’s preemption clause and not within its savings clause. We further
conclude the statute is within Congress’s Article I powers. Accordingly, we affirm
the grant of summary judgment in favor of the rental car companies.
I.
The pertinent facts are undisputed. The appellee rental car companies1
leased a car to Gregory Davis on February 2, 2005. They were not negligent or
otherwise at fault in so doing. Davis rented the car in Orlando, Florida and drove it
north towards Georgia. The record does not establish whether Davis embarked on
his trip intending for it to be an interstate journey. On the trip, Davis was involved
in a three-car accident in Marion County, Florida, for which he was allegedly at
fault. The collision caused the deaths of Jose Garcia, appellant’s decedent, and
Nelson Ruiz, whose estate was a party in the district court but has not appealed.
Israel Lopez was also severely injured, but fortunately was not killed.
Anticipating a suit alleging vicarious liability for Davis’ negligence,
Vanguard filed a declaratory judgment action in the district court against Lopez
and the estates and surviving spouses of Garcia and Ruiz. Jurisdiction was based
on diversity. The Vanguard companies sought a declaration that the Graves
Amendment preempted any claims against them for wrongful death or bodily
1
The appellees, referred to as Vanguard hereafter, own interests in the rental car at issue.
3
injury caused by their lessee Davis. The estates and surviving spouses of Garcia
and Ruiz then filed separate wrongful death actions in Florida state court. The
state court actions were removed and consolidated with the declaratory judgment
action, and the district court dismissed several corporate parties it found were
fraudulently joined to defeat diversity jurisdiction. On cross-motions for summary
judgment, the district court issued a thorough and well-written opinion holding that
the Graves Amendment validly preempted all the tort claims, and thus, it granted
summary judgment for the rental car companies in all three cases. This appeal
ensued.
II.
We must first determine whether the Graves Amendment, by its terms,
preempts these wrongful death actions. Of course, a valid federal statute preempts
any state law with which it actually conflicts. See, e.g., Foley v. Luster, 249 F.3d
1281, 1286 (11th Cir. 2001).
These suits were brought against Vanguard, which concededly was not
culpable in renting a car to Davis, because of the so-called dangerous
instrumentality doctrine. Through that doctrine, Florida common law “imposes
strict vicarious liability upon the owner of a motor vehicle who voluntarily entrusts
that motor vehicle to an individual whose negligent operation causes damage to
4
another.” Aurbach v. Gallina, 753 So. 2d 60, 62 (Fla. 2000) (citing Southern
Cotton Oil Co. v. Anderson, 86 So. 2d 629, 637 (Fla. 1920)). The doctrine applies
to commercial motor vehicle lessors such as Vanguard.
In 1999, the Florida legislature imposed statutory caps on the amount of
vicarious liability rental car companies could face under the dangerous
instrumentality doctrine. As pertinent here, the statute provides that
The lessor, under an agreement to rent or lease a motor vehicle for a
period of less than 1 year, shall be deemed the owner of the vehicle
for the purpose of determining liability for the operation of the vehicle
or the acts of the operator in connection therewith only up to $100,000
per person and up to $300,000 per incident for bodily injury and up to
$50,000 for property damage. If the lessee or operator of the vehicle
is uninsured or has any insurance with limits less than $500,000
combined property damage and bodily injury liability, the lessor shall
be liable for up to an additional $500,000 in economic damages only
arising out of the use of the motor vehicle.
Fla. Stat. § 324.021(9)(b)(2). Thus, the statute explicitly countenances the type of
lawsuits at issue here – those imposing strict liability against a rental car company
for the negligent acts of its lessee – while imposing a damages cap on them. It also
reduces the rental company’s liability exposure if a lessee is insured for $500,000
or more.
The Graves Amendment takes aim at precisely these types of lawsuits. The
Amendment has two operative provisions, a preemption clause and a savings
clause. The preemption clause provides as follows:
5
An owner of a motor vehicle that rents or leases the vehicle to a
person (or an affiliate of the owner) shall not be liable under the law
of any State or political subdivision thereof by reason of being the
owner of the vehicle (or an affiliate of the owner) 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, if (1)
the owner (or an affiliate of the owner) is engaged in the trade or
business of renting or leasing motor vehicles, and (2) there is no
negligence or criminal wrongdoing on the part of the owner (or an
affiliate of the owner).
49 U.S.C. § 30106(a). The instant wrongful death claims are clearly within the
scope of this provision. Vanguard and its affiliates are in the rental car business.
Vanguard owned the rental car driven by Davis and leased it to him, and the
accident occurred during the lease period. Plaintiffs seek to recover solely under a
vicarious liability theory: Vanguard is allegedly liable “by reason of being the
owner of the vehicle” negligently driven by Davis, not because of any negligent
entrustment or other wrongdoing of its own. Thus, assuming for now that the
statute is constitutional, these wrongful death suits are preempted by § 30106(a)
unless they are within the statute’s savings clause. It provides that
Nothing in this section supersedes the law of any state or political
subdivision thereof –
(1) imposing financial responsibility or insurance standards on the
owner of a motor vehicle for the privilege of registering and operating
a motor vehicle; or
(2) imposing liability on business entities engaged in the trade or
business of renting or leasing motor vehicles for failure to meet the
financial responsibility or liability insurance requirements under state
law.
6
49 U.S.C. § 30106(b). Appellants contend their suits are within the savings clause
because Florida’s imposition of vicarious liability on rental car companies for the
negligence of their lessees is a financial responsibility law. To evaluate this
argument, we must review the pertinent law of statutory interpretation.
The Graves Amendment does not define the term “financial responsibility.”
When statutory terms are undefined, we typically infer that Congress intended
them to have their common and ordinary meaning, unless it is apparent from
context that the disputed term is a term of art. Konikov v. Orange Cty, Fla., 410
F.3d 1317, 1329 (11th Cir. 2005) (citation omitted). When Congress employs a
term of art, it presumptively adopts the meaning and “cluster of ideas” that the
term has accumulated over time. Medical Transport Mgmt. Corp v. Comm’r,
Internal Revenue Service, 506 F.3d 1364, 1368-69 (11th Cir. 2007) (citations
omitted). In construing an ambiguous statute, we also employ canons of
construction which embody sound generalizations about Congressional intent.
One such canon is noscitur a sociis, which is the commonsense principle that
statutory terms, ambiguous when considered alone, should be given related
meaning when grouped together. See, e.g, S.D. Warren Co. v. Maine Bd. Of Env.
Protection, 547 U.S. 370, 378 (2006) (citations omitted). By construing proximate
statutory terms in light of one another, courts avoid giving “unintended breadth to
7
the acts of Congress.” Gustafson v. Alloyd Co. Inc., 513 U.S. 561, 575 (1995)
(quoting Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307 (1961)). Another
pertinent canon is the presumption against surplusage: we strive to give effect to
every word and provision in a statute when possible. Lowery v. Alabama Power
Co., 483 F.3d 1184, 1204 (11th Cir. 2007) (citations omitted). In addition to
canons of construction, we may turn to legislative history as an interpretive aid.
We may consult legislative history to elucidate a statute’s ambiguous or vague
terms, but legislative history cannot be used to contradict unambiguous statutory
text or to read an ambiguity into a statute which is otherwise clear on its face. Id.
at 1205 (citations omitted). Moreover, when we consult legislative history, we do
so with due regard for its well-known limitations and dangers. See Exxon Mobil
Corp v. Allapattah Svcs., Inc., 545 U.S. 546, 568-70 (2005) (discussing potential
pitfalls in employing legislative history).
With these interpretive principles in mind, we conclude that Congress used
the term “financial responsibility law” to denote state laws which impose
insurance-like requirements on owners or operators of motor vehicles, but permit
them to carry, in lieu of liability insurance per se, its financial equivalent, such as a
bond or self-insurance.2 First, statutory context and the noscitur a sociis canon
2
Such duties may arise as a condition of licensing or registration, or, as in Florida, after a
motorist has been involved in an accident. See Fla. Stat. § 324.011; see also Lynch-Davidson
8
suggest as much. Both provisions of the savings clause strongly imply that
financial responsibility is closely linked to insurance requirements: the savings
clause exempts from preemption laws “imposing financial responsibility or
insurance standards,” § 30106(b)(1), or laws penalizing the “failure to meet the
financial responsibility or liability insurance requirements under state law.” §
30106(b)(2). This pairing of terms strongly suggests that “financial responsibility”
refers to insurance-like requirements.
Second, the most common legal usage of the term “financial responsibility”
is to refer to state laws which require either liability insurance or a functionally
equivalent financial arrangement. Florida law is representative in providing that
the owner of a motor vehicle “may prove his or her financial responsibility” by
furnishing proof of liability insurance, posting a bond, furnishing a certificate
showing a deposit of cash or securities, or furnishing a certificate of self-insurance.
Fla. Stat. § 324.031. These other financial arrangements, like insurance, provide
“proof of ability to respond in damages on account of crashes arising out the use of
a motor vehicle,” which is Florida law’s definition of “proof of financial
responsibility.” See Fla. Stat. § 324.021(7). Appellant provides no reason for us to
believe Florida law is exceptional in so defining financial responsibility. Likewise,
Motors v. Griffin, 182 So.2d 7, 8 (Fla. 1966).
9
Black’s Law Dictionary defines financial responsibility only to include
requirements that motorists have proof of “insurance or other financial
accountability.” See Black’s Law Dictionary at 663 (8th ed. 2004). Again, we see
the ubiquitous association of “financial responsibility” with insurance
requirements. An insurance treatise relied upon by appellants suggests a similar
meaning to Black’s, but also notes that “financial responsibility” laws may be used
to refer to statutes which suspend a motorist’s license or vehicle registration if they
fail to satisfy a judgment resulting from an accident. 15 Russ & Segalla, Couch on
Insurance, §§ 109:34, 109:45-46. Appellants seize on this definition and urge that
Florida’s vicarious liability regime is therefore part of a financial responsibility
scheme: it gives rise to judgments against lessors, which they must pay on pain of
cancelled registration. See Fla. Stat § 324.121 (suspension of license or
registration upon notice of an unsatisfied judgment). Therefore, appellants argue,
vicarious liability is part of the financial responsibility laws.
This argument is unpersuasive because it runs afoul of the presumption
against surplusage. If we construe the Graves Amendment’s savings clause as
appellants wish, it would render the preemption clause a nullity. Every vicarious
liability suit would be rescued because it could result in a judgment in favor of an
accident victim, even though the judgment is premised on the very vicarious
10
liability the Amendment seeks to eliminate. The exception would swallow the
rule. We will not choose such an interpretation when another one is feasible.
Appellants protest that their reading would not render the preemption clause
superfluous because regimes like Fla. Stat. § 324.021(9)(b)(1)-(2), which cap the
amount of vicarious liability damages, would be preserved, while uncapped
damages would be preempted. In support, they cite statements from the
Amendment’s legislative history, where its sponsors express concern with
“unlimited” vicarious liability. See 151 Cong. Rec. H1034-01 at 1201 (Statement
of Rep. Boucher); id. at 1202 (Statement of Rep. Graves). Yet read in context, the
statements expressing concern with unlimited vicarious liability do not manifest
any approval, explicit or implicit, of limited vicarious liability. More importantly,
we see no textual support in the Graves Amendment itself for such a distinction.
The distinction Congress drew is between liability based on the companies’ own
negligence and that of their lessees, not between limited and unlimited vicarious
liability.
Appellants also argue that we should construe Florida’s vicarious liability
regime as a financial responsibility law to serve statutory and public policy goals.
They urge that Fla. Stat. § 324.021(9)(b)(2) is a financial responsibility law
because it induces car rental companies to ensure that their lessees are adequately
11
insured, thereby serving the purpose of the financial responsibility laws, ensuring
compensation for accident victims. The Florida statute achieves this purpose by
reducing the companies’ liability exposure if their lessees meet the statutory
minimum requirements for liability insurance or other financial responsibility. But
not every inducement to lease only to the insured thereby becomes a financial
responsibility law. As explained above, financial responsibility laws are legal
requirements, not mere financial inducements imposed by law. Moreover, the
inducement appellants rely upon is again premised upon the very vicarious liability
the Graves Amendment seeks to eliminate. This argument, too, fails to convince
us that imposition of vicarious liability is within the Amendment’s savings clause.
In sum, neither the common law imposition of vicarious liability on rental
car companies, nor the Florida legislature’s endorsement of and limitations on such
vicarious liability, constitutes a “financial responsibility” requirement. To the
contrary, the import of the Graves Amendment is clear. States may require
insurance or its equivalent as a condition of licensing or registration, or may
impose such a requirement after an accident or unpaid judgment. 49 U.S.C. §
30106(b)(1). They may suspend the license and registration of, or otherwise
penalize, a car owner who fails to meet the requirement, or who fails to pay a
judgment resulting from a collision. 49 U.S.C. § 30106(b)(2). They simply may
12
not impose such judgments against rental car companies based on the negligence of
their lessees. 49 U.S.C. § 30106(a).
III.
Because the Graves Amendment purports to preempt this lawsuit, we must
next determine its constitutionality. Appellants contend the statute cannot be
applied to preempt their suits because it is outside Congress’s commerce powers.
The commerce power – that is, the combination of the Commerce Clause per
se and the Necessary and Proper Clause – encompasses authority to regulate three
categories of activities. The first is the use of the “channels” of interstate
commerce, the “interstate transportation routes through which persons and goods
move.” See, e.g, United States v. Ballinger, 395 F.3d 1218, 1225 (11th Cir. 2005)
(en banc) (citations omitted). It is clear that the Amendment does not directly
regulate the channels of commerce nor their use. Neither the rental car market, nor
the imposition of vicarious liability on rental car firms, are in any respect a
regulation of roads as such. Nor is the Graves Amendment an effort to protect
roads from harm, nor to prevent them from being used for harmful purposes. See
id. at 1226.
Second, Congress may regulate the so-called “instrumentalities” of
commerce. This category includes at a minimum “persons and things themselves
13
moving in interstate commerce.” Ballinger, 395 F.3d at 1226. And Ballinger
arguably suggests, without explicitly stating, that persons and things moving in
interstate commerce is the full extent of the instrumentalities category. But there is
also some authority for the proposition that methods of interstate transportation and
communication are per se instrumentalities of commerce, regardless of whether the
car (or the like) at issue in a particular case has crossed state boundaries or is
otherwise engaged in interstate commerce.3 If cars are per se instrumentalities of
commerce, even when not employed in interstate commerce, this is an easy case.
Congress may protect instrumentalities of commerce from purely intrastate threats
and burdens, United States v. Lopez, 514 U.S. 549, 558 (1995), and there is no
authority prohibiting preemption of burdensome state laws as a means of doing so.
But the implications of this argument give us reason to doubt its premise. If
cars are always instrumentalities of commerce, as suggested by Bishop, Congress
would have plenary power not only over the commercial rental car market, but
3
See, e.g., United States v. Pipkins, 378 F.3d 1281, 1295 (11th Cir. 2004) (suggesting
pagers, telephones, and the Internet are per se instrumentalities of commerce, regardless of
whether any interstate communications or routing occur), vacated and remanded on other
grounds, 544 U.S. 902 (2005), opinion reinstated on remand 412 F.3d 1251 (11th Cir. 2005).
See also United States v. Bishop, 66 F.3d 569, 589-90 (3rd Cir. 1995) (Congress may criminalize
intrastate carjackings because cars are per se instrumentalities of commerce); United States v.
Oliver, 60 F.3d 547, 550 (9th Cir. 1995) (same). See also United States v. Williams, 51 F.3d
1004 (11th Cir. 1995), abrogated in part on other grounds, Jones v. United States, 526 U.S. 227
(1999) and United States v. Hutchinson, 75 F.3d 626 (11th Cir. 1996) (both summarily
concluding that federal carjacking statute is constitutional notwithstanding Lopez).
14
over many aspects of automobile use. See, e.g., United States v. Hornaday, 392
F.3d 1306, 1311 (11th Cir. 2004) (Commerce Clause power is plenary within its
scope). Further, because such power would derive from the Commerce Clause per
se, Congress could exercise even broader power to make laws necessary and
proper to effectuate its plenary power over automobiles including, presumably,
regulation of such quintessentially state law matters as traffic rules and licensing
drivers, under the banner of protecting the instrumentalities of commerce. We
have our doubts about an interpretation which produces these results, which makes
us suspect the premise that all methods of transportation and communication are
per se instrumentalities of commerce even when they are not used in interstate
commerce. Moreover, there is sensible authority that channels and
instrumentalities of commerce refer only to “the ingredients of interstate commerce
itself.” Gonzalez v. Raich, 545 U.S. 1, 34 (2005) (Scalia, J., concurring in the
judgment) (citing Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 189-90 (1824)); see
also Bishop, 66 F.3d at 597-600 (Becker, J., dissenting) (automobiles can be used
as instrumentalities of commerce, but are not per se instrumentalities subject to
plenary federal regulation).
Congress has very broad power to regulate wholly intrastate uses of the
means of interstate transportation and communication. But it appears more likely
15
that such authority derives not from their status as instrumentalities, but from the
Necessary and Proper Clause.4 The distinction is not academic; although we
ultimately would reach the same result under Lopez prongs two or three, the
reasons for the outcome would differ markedly. Should we recognize rental cars as
per se instrumentalities of commerce, as appellees and the United States’ amicus
brief would have us do, our analysis ends with the recognition that Congress may
protect instrumentalities of commerce from intrastate threats and burdens. In
contrast, if rental cars are not per se instrumentalities of commerce, and the statute
does not restrict its application to suits involving rental cars that are
instrumentalities, i.e. “in commerce,” then we must analyze the statute as
regulating an activity “affecting commerce,” and as we shall see, the precedent
grows thinner. Given the dubious implications of construing all automobiles as per
se instrumentalities of commerce, we will pass over that question; the more
prudent course is for us to decide the Graves Amendment’s constitutionality under
the third Commerce Clause prong.
The final and most hotly contested facet of the commerce power is the
4
Compare Bishop and Pipkins, supra, with Heart of Atlanta Motel Inc. v. United States,
379 U.S. 241, 271 (1964) (Black, J., concurring) (power to regulate intrastate use of
instrumentalities because such uses burden commerce derives from Necessary and Proper
Clause), and Raich, 545 U.S. at 34 (Scalia, J., concurring in the judgment) (power to regulate
activities that are not actually in interstate commerce must derive from Necessary and Proper
Clause).
16
authority to regulate purely intrastate activities when they “substantially affect” or
have a “substantial relation to” interstate commerce. Ballinger, 395 F.3d at 1226
(citations omitted). “When economic activity substantially affects interstate
commerce, legislation regulating that activity will be sustained.” Raich v.
Gonzales, 545 U.S. at 25 (citing United States v. Morrison, 529 U.S. 598, 610
(2000)). One implication of this principle is that where Congress comprehensively
regulates the national market for a particular good or activity, courts may not
pronounce particular intrastate instances of the regulated conduct to have a de
minimis effect on the market and therefore to be outside the commerce power. Id.
at 17-19 (citing, inter alia, Wickard v. Filburn, 317 U.S. 111 (1942)). This
approach to the third prong of commerce jurisprudence, embodied most
dramatically by Raich and Wickard, is commonly described as “aggregation”:
when the aggregate effects of an economic activity substantially affect interstate
commerce, Congress may regulate both interstate and intrastate instances of that
activity, the latter being necessary and proper to effective regulation of the former.
Yet the Supreme Court has made clear that aggregation analysis is not
always appropriate. In the seminal cases of United States v. Morrison, 529 U.S.
598 (2000) and United States v. Lopez, 514 U.S. 549 (1995), the Supreme Court
refused to validate the Violence Against Women Act and the Gun-Free School
17
Zones Act, respectively, because of the purported aggregate effects of gender-
motivated violence and school violence on interstate commerce. Rather, in
considering the permissibility of those statutes under the commerce power, the
Court focused on four “significant considerations”: (i) whether the activity
regulated was economic in nature, (ii) whether the statute contained jurisdictionally
limiting language, (iii) whether Congress made findings concerning the effect of
the regulated activity on commerce, and (iv) whether the connection between the
regulated activity and an effect on commerce is attenuated. Morrison, 529 U.S. at
609-617 (citations omitted). The upshot of Morrison and Lopez is that Congress
may not “regulate noneconomic, violent criminal conduct based solely on that
conduct’s aggregate effect on interstate commerce.” Id. at 617. In practice, review
under the “significant considerations” of Lopez and Morrison is significantly less
deferential than under aggregation analysis. Under the latter, Congress need only
have a rational basis for concluding that the regulated activities, in the aggregate,
substantially affect interstate commerce. Raich, 545 U.S. at 22 (citations omitted).
Appellants argue that the test elaborated in Morrison and Lopez, rather than
that in Raich, should be applied when, as here, we analyze a single subject statute
rather than a comprehensive regulatory regime. They rely chiefly on United States
v. Maxwell, 446 F.3d 1210, 1214 (11th Cir. 2006), where we stated that the salient
18
difference between Lopez and Raich was “the comprehensiveness of the economic
component of the regulation.” (We also noted the possibility for analytic
confusion after Morrison and Raich. Id. at 1216 n.6) Appellants urge that analysis
under the Morrison/Lopez factors is appropriate because the Graves Amendment,
like the statute at issue in those cases, is a “brief, single-subject statute,” with no
statutory element requiring proof that particular instances of vicarious liability
“have any connection to past interstate activity or a predictable impact on future
commercial activity.” See Raich, 545 U.S. at 23.
Despite its brevity, we believe the Graves Amendment is properly analyzed
under the aggregation doctrine of Raich, rather than the considerations elaborated
in Morrison and Lopez. Raich makes clear that when a statute regulates economic
or commercial activity, Lopez and Morrison are inapposite. Instead, when an
economic activity has a substantial effect on interstate commerce, regulation of that
activity must be sustained. Raich, 545 U.S. at 25. There is no question that the
commercial leasing of cars is, in the aggregate, an economic activity with
substantial effects on interstate commerce. This is true both because of the size
and national scope of the industry, and because rental cars are frequently (though
perhaps not uniformly) employed as instrumentalities of interstate commerce.
Appellants protest that the Graves Amendment does not regulate the rental
19
car market at all, but state tort law. This is a distinction without a difference, as the
state tort law preempted by the statute regulates the rental car market; in other
words, the effect of the statute is to deregulate the rental car market. And it has
long been understood that the commerce power includes not only the ability to
regulate interstate markets, but the ability to facilitate interstate commerce by
removing intrastate burdens and obstructions to it. See, e.g., NLRB v. Jones &
Laughlin Steel Corp., 301 U.S. 1, 31-32 (1937). On this theory, the Graves
Amendment protects the rental car market by deregulating it, eliminating state-
imposed laws and lawsuits Congress reasonably believed to be a burden on an
economic activity with substantial effects on commerce. Such a theory is
relatively novel, but only because statutes like the Graves Amendment are novel.
Many federal statutes expressly or impliedly preempt state tort law as an incident
to federal regulation. But we are aware of only one other statute with the sole
effect and purpose of preempting state-law claims because Congress believed them
to be a burden on an interstate market. That is the Protection of Lawful Commerce
in Arms Act, 15 U.S.C. §§ 7901-7903, which preempts certain tort suits against
gun manufacturers. Despite the novelty of laws like the Graves Amendment and
PLCAA, there is no reason in principle why state laws or lawsuits cannot
20
themselves constitute a burden on interstate commerce.5 Indeed, the PLCAA
recently survived a Commerce Clause challenge for essentially the reasons
explained above: the interstate character of the firearms industry, coupled with the
perceived threat to that industry posed by state lawsuits, justified use of the
commerce power to preempt the burdensome suits. City of New York v. Beretta
USA Corp., 524 F.3d 384 (2nd Cir. 2008). The two cases are not identical because
unlike the Graves Amendment, the PLCAA limits its preemptive effect to suits
involving guns in interstate commerce. Id. at 394. But we do not think that
distinction matters. Congress may foster and protect the entire market for rental
cars because, in the aggregate, that market substantially affects interstate
commerce. So long as the underlying economic activity the federal statute aims to
protect is within the commerce power, we will not second guess Congress’s
decision that preemption is an appropriate means to achieve proper ends. Rather,
Congress may choose any “means reasonably adapted to the attainment of the
suited end, even though they involved control of intrastate activities.” United
States v. Darby, 312 U.S. 100, 121 (1941). For regulation (or deregulation) of
5
For example, the entire premise of dormant Commerce Clause jurisprudence is that
state laws favoring in-state economic interests over those of out-of-state competitors can burden
interstate commerce. See, e.g, Dept. of Revenue of Kentucky v. Davis, __U.S. __, 128 S.Ct.
1801, 1808 (2008) (citations omitted). We do not suggest that vicarious liability against rental
car companies is a form of in-state protectionism; we merely note that state laws, no less than
private practices, may burden interstate commerce.
21
intrastate activities to survive review under aggregation analysis, Congress need
only have a rational basis for concluding that the intrastate activity would
undermine the lawful Commerce Clause goals of a federal statute if left untouched.
See Raich, 545 U.S. at 19.
These principles indicate that the Graves Amendment is valid. It is plain
that the rental car market has a substantial effect on interstate commerce. It is also
apparent that Congress rationally could have perceived strict vicarious liability for
the acts of lessees as a burden on that market.6 The reason it could have done so is
that the costs of strict vicarious liability against rental car companies are borne by
someone, most likely the customers, owners, and creditors of rental car companies.
If any costs are passed on to customers, rental cars – a product which substantially
affects commerce and which is frequently an instrumentality of commerce –
become more expensive, and interstate commerce is thereby inhibited. Moreover,
if significant costs from vicarious liability are passed on to the owners of rental car
firms, it is possible that such liability contributes to driving less-competitive firms
out of the marketplace, or inhibits their entry into it, potentially reducing options
6
Statements in the Graves Amendment’s legislative history suggest that its proponents
indeed perceived vicarious liability as a burden on consumers, and as reducing the number of
firms able to compete in the rental car market. See 151 Cong. Rec. H1034-01 at *H1200
(Statement of Rep. Graves) (stating that vicarious liability costs consumers $100 million
annually and drives small firms out of business); see also 151 Cong. Rec. S5433-03 (Statement
of Sen. Santorum) (similar). We would reach the same result in the absence of such statements.
22
for consumers. We do not know with any certainty the incidence or effect of these
costs, and we do not have to know. It is enough that Congress rationally could
have perceived a connection between permissible ends, namely increasing
competition and lowering prices in the rental car market, and the means it chose to
effectuate them, preempting vicarious liability suits.
In sum, the Graves Amendment preempts the tort claims on appeal, and is
within the boundaries of Congressional power in so doing. Accordingly, the
claims cannot proceed. The district court’s judgment is
AFFIRMED.
23
Garcia v. Vanguard Car Rental USA, Inc.
Court: Court of Appeals for the Eleventh Circuit
Date filed: 2008-08-19
Citations: 540 F.3d 1242
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