CASE COMMENT :: Ethan Ruby, a twenty-five-year-old Wall Street trader and former college athlete, was crossing Delancy Street in Manhattan when the driver of a Budget rental vehicle ran a red light. The Budget vehicle struck a van, which subsequently plowed into Ruby, hurling him into the windshield of another vehicle fifty feet away and paralyzing him from the chest down. In December 2003, a jury awarded Ruby $24.5 million in damages, holding Budget Rent A Car liable under New York’s strict vicarious liability law. The jury verdict was one of the highest ever returned in a New York state court; however, it is unlikely that New York or any other state will ever again see such a mammoth judgment against a car rental agency.
In August 2005, Congress passed and President Bush signed into law a comprehensive transportation bill titled Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Included in the bill was an amendment sponsored by Representative Samuel Graves (R-Missouri) now known as the “Graves Amendment.” The amendment called for preemption and abolition of any state statute or common law precedent that held rental or leasing agencies vicariously liable for their driver’s negligence, except when the owner itself was negligent or engaged in criminal wrongdoing. Multiple Florida courts and federal district courts held the Graves Amendment unconstitutional, stating that Congress exceeded its authority granted to it by the Commerce Clause. However, in August 2008, the Court of Appeals for the Eleventh Circuit was the first federal appellate court to weigh in on the issue, reaffirming the Graves Amendment’s constitutionality and leaving little doubt that Florida’s statutory and common law had been preempted.
November 2014, Vol. 66, No. 6
Lily Kahng, The Taxation of Intellectual Capital