Leasing Company Seeks Appeals Court Review after Being Found Partially Liable in Crash

This story appears in the Sept. 8 print edition of Transport Topics.

A truck leasing company is seeking an appeals court review of a federal judge’s ruling in a lawsuit alleging a leasing company is “vicariously liable” for potential negligence damages in a fatal 2009 crash in New York.

The judge said the company is not protected by the federal Graves Amendment, which normally shields truck and car rental and leasing firms from vicarious liability.

The crash in question involved a truck leased by Great River Leasing, based in Black River Falls, Wisconsin, to its parent company, Millis Transfer Inc., also of Black River Falls.

“Run-of-the-mill Graves Amendment cases — where the vehicle’s owner and operator are related only by an arm’s length contract — are generally simple,” U.S. District Judge Richard Arcara of New York said in his written opinion. “What differentiates this case from ordinary Graves Amendment cases is the fact that, here, the lessor and the lessee are related by more than just a lease agreement. In this case, the lessor and the lessee are owned by the same parent company.”

Arcara decided the truck leasing company, Great River, was liable because allegations of negligence are involved in the lawsuit.

The amendment, sponsored by Sen. Samuel Graves (R-Mo.) and included in the 2005 federal transportation law, pre-empts any state statute that holds rental or leasing agencies vicariously liable for their driver’s negligence, except when the owner itself was negligent or engaged in criminal wrongdoing.

Arcara’s decision came in a 2011 federal lawsuit filed by Michael Stratton, the husband of a woman who in December 2009 hit a deer on Interstate 90 near Pembroke, New York, disabling her vehicle to the side of the road.

Moments later, Thomas Wallace, a truck driver employed by Millis Transfer who was driving a tractor-trailer owned by Great River, struck the woman’s car and killed Julie Stratton.

The driver, who was using his laptop and had falsified his logbook, was sentenced to three to nine years in prison in September 2010 for his part in the crash.

The civil case, however, is still winding its way through the courts and has yet to go to trial.

In his decision, Arcara said the Graves Amendment is ambiguous. But he said that it “requires both the vehicle’s owner and the owner’s affiliate — that is both Great River and Millis Transfer — to be free from negligence in order for the Graves Amendment to shield Great River from vicarious liability.”

Unlike rental car companies who have little control over who they rent to, Great River was not required to lease its vehicles to all qualified customers, Arcara wrote.

Thomas James, president of the Truck Renting and Leasing Association, said he does not agree with some media reports billing Arcara’s decision as a landmark ruling.

Decisions rejecting the Graves Amendment are very rare, James said.

“The Graves law has certainly held to the test of time,” he said. “In fact, the judge in this case even goes out of his way to say that the Graves law has been working, though he doesn’t seem to be very fond of it.”

Joel Schechter, a Buffalo, New York, attorney representing Millis and Great River, said he has requested that Arcara reconsider his decision and that he certify the case to allow an immediate appeal to the U.S. Court of Appeals for the 2nd Circuit.

“His interpretation of the Graves Amendment was that if a company that owns a vehicle leases it to an affiliate, and the affiliate company is negligent, then that somehow voids the Graves Amendment protection for the owner of the vehicle,” Schechter told Transport Topics. “It is a decision that has an interpretation of the Graves Amendment and the applicability of it that we don’t agree with.”

Francis Letro, a Buffalo attorney representing Stratton, did not return a phone call seeking comment.