July 7, 2016, Trial News | The American Association For Justice

July 7, 2016, Trial News

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Rental cars with open recalls must be repaired under new law

Kate Halloran

photo of car rental sign

On June 1, a new law went into effect requiring rental cars with open recalls to be repaired before renting or selling them to customers. The law—which applies to companies with more than 35 rental vehicles—is part of the Fixing America’s Surface Transportation Act of 2015 that was enacted last December.
 

On June 1, a new law went into effect requiring rental cars with open recalls to be repaired before renting or selling them to customers. The law—which applies to companies with more than 35 rental vehicles—is part of the Fixing America’s Surface Transportation Act of 2015 that was enacted last December. (49 U.S.C. §30101 et seq.)

Known as the Raechel and Jacqueline Houck Safe Rental Car Act, the law was named for two sisters who were killed after the car they rented caught fire and crashed into an oncoming tractor-trailer. The car, a Chrysler PT Cruiser, was rented to the young women despite being under a safety recall because of a fire hazard.

Under the new law, if a manufacturer has notified a rental car company that a vehicle in the company’s fleet is covered by a recall, the company cannot rent the car until the issue is remedied, and it must stop rentals of the recalled vehicle as soon as possible but not more than 24 hours after receiving notice from the manufacturer. For companies with more than 5,000 vehicles in their rental fleet, that time line is extended to 48 hours.

A company may rent a vehicle with an open recall if the part or method for correcting the problem is not immediately available and the company takes temporary measures as instructed by the manufacturer to eliminate the safety risk. But the vehicle cannot be rented even with the temporary fix once the permanent remedy becomes available; then, the company must comply with the recall before renting the vehicle.

The law also enables the federal government to inspect and investigate rental companies to determine compliance, impound vehicles involved in a crash, require rental companies to keep records and make reports to the government regarding compliance, and enforce compliance with the law.

In a press release, the head of the National Highway Traffic Safety Administration, Mark Rosekind, said, “It’s critical that every recalled vehicle, whether new, used, rented or leased, is repaired as soon as possible. Rental agencies operate some of the largest fleets, so this law will go a long way in ensuring the cars and trucks on the road are safe.” Auto recalls have made headlines over the last few years, with more than 800 recalls affecting more than 50 million vehicles in 2015.

Attorney Brett Emison of Lexington, Mo., who handles auto defect cases, called the new law “extremely significant.” “It ends the dangerous practice of ‘rental car roulette.’ Most car renters never knew it, but until very recently, every single car rental company had policies that allowed the company to rent defective vehicles to unknowing customers—even if the vehicle was subject to a safety recall,” he said.  

While the law does not create a new cause of action against rental car companies, it helps define their duty of care. “Rental car companies have always had a duty of care to provide reasonably safe automobiles to their customers. What the law may do is help to define what that duty of care actually is,” Emison said. “Prior to the law, rental car companies were free to argue that their duty was set by the ‘industry practice’—that is, what other similar rental car companies did. This kind of argument—if accepted—can create a ‘race-to-the-bottom’ scenario when an industry may attempt to avoid liability by collectively doing the very least possible and calling the conduct an ‘industry standard.’ The new law should define the industry standard as requiring car rental companies to repair recalled vehicles before renting the vehicles to customers.”

Still, Emison said the law is not without its shortcomings: “In today’s technological age, where each vehicle is tracked electronically, there is simply no reason rental car companies should be permitted to leave defective and dangerous vehicles on the roadway for any length of time—much less up to two whole days.”