VARGAS v. ENTERPRISE LEASING CO

FARMER, J., dissenting.

Straightaway I concede the daunting length of this dissent. So I begin with a précis of my essential disagreement with the majority, their analysis and the authorities on which they rely.

Buried within this Graves Amendment litigation lie two inescapable truths about the statutes in this preemption argument:

First, the only State laws invalidated by Graves § (a) are those imposing vicarious liability on lease/rental car Companies for the fault of others, but Graves § (b)(2) does not relieve these Companies from any insurance responsibilities they have under State law.

Second, the applicable Florida insurance laws, including § 324.021(9)(b), eliminate the vicarious liability of these Companies when thier force their Customers to have liability insurance coverage, which must be backed up if necessary by the Companies' own blanket insurance.

Both of these realities about statutory substance and purpose have been obscured or simply missed by all the decisions on the Graves Amendment.

In this case, preemption turns on the relationship between two statutes. If they are harmonious, each achieving essentially the same ends, there can be no preemption. If they were antagonistic, really opposed to each other, this federal law would preempt State law. To find out how they relate, one must necessarily appreciate the purpose, substance and function of each statute.

In this case these essential statutory aspects are accessible to those without law degrees. Understanding does not come to us from parsing particular words and phrases in search of arcane meanings, for both statutes employ plain and common terms, now widely used in and outside of legal forums. The failure of the majority to recognize their purpose, substance and function actually arises from their inquiry into the incunabula of the State statute. Thus with traditional statutory construction they hope to learn "what the meaning of is is." This instead of searching for core ideas.

The striking thing about the majority's reliance on Garcia, the federal appellate decision holding § 324.021(9)(b) preempted by Graves § (a), is its utter misapprehension of these statutes. In truth, neither court offers to explain how they arrived at the inherent premise for its holding. How does a State law ending the vicarious liability of the Companies when they provide security for financial responsibility through minimum insurance requirements have any conflict with a federal law not affecting financial responsibility insurance obligations imposed under State law and which preempts only the vicarious liability of the Companies? Where's the clash? How is the one antagonistic to the other? What is the conflict between these statutes? We are not told.

Garcia and the majority seem to think that Congress must have further abolished any duties Companies might have to secure financial responsibility for an injured victim. They apparently believe that when Congress preempted vicarious liability it also meant to relieve Companies of any role in providing security for payment of injuries. Indeed, both contend that allowing § 324.021(9)(b) to stand against preemption as a financial responsibility law would "swallow" the preemption provision. But they fail to explain how that would be so.

That might be true, if the federal statute ended with the text of Graves § (b)(1). But it does not end there. Graves § (b)(2) is part of the law, too. And so — ironically — Garcia and the majority actually end up interpreting Graves § (a) to swallow Graves § (b)(2). Both courts use statutory construction to devour another entire provision in the same statute. By this process do we arrive at the meaning of is. Garcia and the majority read Graves § (b)(2) to mean just those State laws making minimum liability insurance compulsory for the registration of vehicles by Companies. They argue that § 324.021(9)(b) does not in so many words directly compel Companies to procure liability insurance. To be a financial responsibility law within Graves § (b)(2), they seem to say, a State statute must directly compel the Company to purchase the insurance as a condition to register and hence operate a lease or rental vehicle. Thus § 324.021(9)(b) is not a financial responsibility law because its minimum insurance amounts are not compulsory and are not tied to a Company's registration of a vehicle.

I hate to harp on text, but Graves § (b)(2) does not say anything about directly requiring Companies to buy the insurance for registration of vehicles, as Graves § (b)(1) does. Congress composed Graves § (b)(2) to save State laws entailing either a financial responsibility or a minimum insurance requirement. Graves § (b)(2) foreswears any specification as to how the requirement is to function, directly or indirectly. The text of Graves § (b)(2) applies to all State financial responsibility laws imposing a minimum insurance without limit. We are simply left to divine why it would be necessary to include the text of Graves § (b)(2) if Congress intended to save only those laws described in Graves § (b)(1). Graves § (b)(2) is superfluous.

In this they overlook a most important feature about the substance and function of Graves § (b)(2). It does not refer to, or specify, any single part or aspect of any State's financial responsibility laws or minimum insurance requirements. Hence, Congress is here referring unmistakably to a whole category or class of laws — not to a single aspect or one part of any such laws. The plain meaning is thus not about narrow subsets of the category, as the majority concludes. By referring to these State laws generically, Congress plainly meant for Graves § (b)(2) to apply to any law a State has made part of its universe of financial responsibility and minimum insurance laws.

How do we know that? The answer is that Congress intentionally and purposefully omitted any special definition of financial responsibility laws of its own because this term is widely used and understood to refer to an entire class of laws. Congress said not a single word constricting the meaning of Graves § (b)(2) to some narrow part of these laws — such as the limited definition conceived by Garcia and the majority. The majority say their interpretation is the common understanding of the critical terms of Graves § (b)(2). In American English, the words financial responsibility — whether used in federal or State law — are not obscure or ambiguous and do not require interpretation. Far from constituting applicable legal arcana, these words connote what has become a countrywide institution touching the lives of nearly everyone. They verbalize a simple idea: security requirements for those owing a monetary obligation to someone affected by or involved in a motor vehicle accident. When the context is motor vehicles, the words plainly impart the duty of making provision for security to pay for injuries inflicted by a vehicle on a victim in an accident.

Because the analysis in Garcia and the majority opinion focuses solely on what they conceive as a single aspect of all financial responsibility laws, they have actually reconstructed Graves § (b)(2) to their own liking. Their method of statutory construction really became an exercise in law-making rather than law-interpreting. They openly add terms to Graves § (b)(2) Congress chose to omit.

They also use this purposeful Congressional omission of specificity to imply — without saying so in clear words — that this provision is legally ambiguous. If Graves § (b)(2) were ambiguous, I suppose such vagueness might justify some resort to a proper use of the substantive or linguistic canons of statutory construction to ascertain the substance and purpose of the law.

But Congress and the Supreme Court have given us two separate interpretive presumptions for a surer-footed understanding when preemption of insurance regulations seems lurking. The problem for Garcia and the majority, however, is that these Congressional and Supreme Court presumptions are set strongly against their analytical method and conclusions. Garcia and the majority simply ignore these presumptions.

The first interpretive presumption is statutory. Congress has long since made clear that federal law does not involve itself in the regulation of insurance — leaving that subject exclusively to the States under their traditional police powers. In the McCarran-Ferguson Act, Congress declared "that the continued regulation and taxation by the several States of the business of insurance is in the public interest, and that silence on the part of the Congress shall not be construed to impose any barrier to the regulation or taxation of such business by the several States."

And as the Supreme Court points out, McCarran-Ferguson removed all dormant Commerce Clause scrutiny of State insurance laws. But the analysis of Garcia and the majority depend heavily on a dormant Commerce Clause scrutiny for its conclusion. They construe Graves § (b)(2) and § 324.021(9)(b) with undue strictness and Graves § (a) with undue broadness, when the McCarran-Ferguson presumption counsels powerfully against these interpretive attitudes. The proper mindset laid down in the McCarran-Ferguson Act is that where federal regulation of insurance seems arguably involved — as with Graves § (b)(2) — judges must read federal legislation to avoid that construction.

Second, the Supreme Court has adopted a specific and pertinent presumption on preemption of State laws involving public health and safety, which obviously applies with special force to federal legislation referring to motor vehicle liability insurance and financial responsibility. Preemption of State law by federal statute is founded on the Supremacy Clause of the Constitution, not the omnipotence of absolute monarchy. It is a necessary constituent in a federal system of shared powers. The Government of the United States has been afforded primacy only in matters exclusively assigned to it by the Constitution. The powers given to the federal government deal primarily with commerce among the states, military affairs and foreign policy. On the other hand, the authority left with the several States is prominently the police powers for public health and welfare.

As a consequence, the Supreme Court has set a long-standing presumption against any Congressional intent to supersede the historic police powers exercised by the States in matters of public health and safety unless Congress has made such a purpose "clear and manifest" in plain language. As the Court said:

"It should never be held that Congress intends to supersede . . . the exercise of the police powers of the states, even when it may do so, unless its purpose to effect that result is clearly manifested. This court has said — and the principle has been often reaffirmed — that `in the application of this principle of supremacy of an act of Congress in a case where the state law is but the exercise of a reserved power, the repugnance or conflict should be direct and positive, so that the two acts could not be reconciled or consistently stand together.'").

More recently the Court has made quite explicit the correct judicial policy focus for determining preemption of this kind of State police power legislation:

"interpretation [of federal statutes for preemption] is informed by two presumptions about the nature of preemption. First, because the States are independent sovereigns in our federal system, we have long presumed that Congress does not cavalierly pre-empt state-law causes of action. In all preemption cases, and particularly in those in which Congress has `legislated . . . in a field which the States have traditionally occupied,' we `start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.' Although dissenting Justices have argued that this assumption should apply only to the question whether Congress intended any pre-emption at all, as opposed to questions concerning the scope of its intended invalidation of state law, we used a `presumption against the pre-emption of state police power regulations' to support a narrow interpretation of such an express command in Cipollone. That approach is consistent with both federalism concerns and the historic primacy of state regulation of matters of health and safety, [c.o., e.s.]

To find § 324.021(9)(b) preempted by Graves § (b)(2), we must disregard this entire line of Supreme Court decisions. In direct opposition to them, we must impose a broad meaning on the preemption text in Graves § (a) and a strict interpretation on the saving provision in Graves § (b)(2).

Indisputably, these Supreme Court decisions require just the opposite. These holdings require us to understand that the text of Graves § (a) is limited solely to that which is stated clearly and manifestly. Correspondingly they also necessarily require less strictness in discerning the meaning of Graves § (b)(2). We must hold saved from preemption any law even arguably within the terms of the savings provision. That necessarily means any law the State itself has explicitly denominated a financial responsibility law or minimum insurance requirement.

What is the justification for the majority's disregard of these "basic tenets" of preemption analysis? Is it enough to rely solely on general principles used in ordinary statutory construction when the weighty Constitutional principles of federalism and State public safety responsibility for vehicle liability insurance law are not involved? The answer to those questions is found in still another Supreme Court precedent on preemption.

Kesler v. Department of Public Safety, 369 U.S. 153, 82 S.Ct. 807, 7 L.Ed.2d 641 (1962), is unusually apt because it dealt with — as here — a supposed conflict between federal legislation and a State financial responsibility law. Federal bankruptcy law discharged the obligation to pay a judgment debt. At the same time, a Utah law authorized the judgment creditor to continue to pursue payment of the discharged debt by forcing compliance with a State financial responsibility law provision making payment of damages from an accident a condition for reinstating State driving privileges. Justice Frankfurter's opinion for the Court rejected the usual modes of statutory construction in favor of ascertaining the substance and purposes behind the two statutory provisions to determine whether there really was a conflict between them. He first recalled why the Court had earlier upheld a similar New York law:

"This Court was of course aware of the practical pressures of the New York statute as a device to collect debts discharged in bankruptcy; the argument was pressed upon it in the dissent. Yet the statute was upheld. Why? Because the `police power' of a State, especially when exerted for the protection of life and limb, is as pervasive as any of the reserved powers of the States and should be respected unless there is a clear collision with a national law which has the right of way under the Supremacy Clause of Article VI. The facts that the consequences of the New York Safety Act may in fact have subjected a debtor to the payment of money of which as an obligation in the creditor-debtor relation he was quit did not lead this Court to hold that the State had intruded into the bankruptcy domain or subverted the purpose of the bankruptcy law. Why? At the heart of the matter are the complicated demands of our federalism." [e.s.]

"Utah is not using its police power as a devious collecting agency under the pressure of organized creditors. Victims of careless car drivers are a wholly diffused group of shifting and uncertain composition, not even remotely united by a common financial interest. The Safety Responsibility Act is not an Act for the Relief of Mulcted Creditors. It is not directed to bankrupts as such. Though in a particular case a discharged bankrupt who wants to have his rightfully suspended license and registration restored may have to pay the amount of a discharged debt, or part of it, the bearing of the statute on the purposes served by bankruptcy legislation is essentially tangential."

If used here properly, Kesler analysis would reason thus. It is obvious Florida is not using § 324.021(9)(b) as a devious avoidance to retain a hidden vicarious liability of Companies. The State's financial responsibility laws with their minimum insurance requirement do not create a circuitous route to effectuating vicarious liability for damages not covered by insurance. Their primary effect is not even really directed at the Companies but instead primarily to their Customers, who are the ones initially obligated to secure the financial responsibility, minimum insurance coverage. If § 324.021(9)(b) functions as its text obviously indicates, there is no adverse effect at all on preemption of vicarious liability laws in Graves § (a) because under State law the Companies will have no liability of any kind — vicarious or otherwise — to pay for the injuries. Payment comes from the insurance. Properly understood, therefore, Florida's statute proceeds harmoniously along with the Graves Amendment, together achieving the same results.

We shall find ourselves seriously distorting preemption analysis if we slight Justice Frankfurter's method here. Neither Garcia nor the majority ask the pertinent questions. Indeed, like the opinions of the other courts on which they rely, they give the impression that the only role of judges is to find some rationale for sustaining preemption of Florida laws affecting any responsibility of these Companies touching leased/rented vehicles. They do not try to ascertain genuine conflict between the actual substance and function of the Graves Amendment and § 324.021(9)(b). They do not ask how their substances are so incompatible with each other that Congress must be understood to have expressed an implied intent to preempt even the clear minimum insurance requirement in § 324.021(9)(b).

Understanding the Graves Amendment is not a mystery. This statute was not meant to eliminate just any liability imposed on the Companies by State law. Congress was addressing consequences after a vehicle has been let by lease or rent to someone else, whose negligence causes an accident, leaving a victim with injuries. Our traditional system of tort liability has always been based on fault. Congress was concerned about imposing unlimited vicarious liability on the Companies for all damages. After they lease or rent a vehicle to another, these Companies are in no position then to exercise any control over the operation of the vehicle. Congress found the legal rule making the Companies pay for the full range of damages caused by the fault of their Customers an undesirable effect on commerce.

The text of the Graves Amendment makes obvious that its purpose was to end vicarious liability under the dangerous instrumentality doctrine but only while insisting on keeping intact State duties, responsibilities or liabilities requiring security for the payment of damages to victims of accidents. Hence vicarious liability could be abolished but not the role of the Companies to make certain an existing mechanism to provide security for the payment of damages. The very existence of Graves § (b)(2) makes obvious that Congress refused to impinge on anything having to do with such security under any applicable form of financial responsibility laws. In Graves § (b)(2) Congress explicitly declared that it had laid no hand on minimum liability insurance requirements in such laws. And this whether or not such laws directly or only indirectly impose some responsibility on Companies for failing to meet these insurance requirements.

Before the Florida Legislature enacted § 324.021(9)(b) in 1991, a Company faced full vicarious responsibility under its Common Law for all injuries caused by its vehicles. By this 1991 State statute, however, the Company would have to provide in its contracts that the Customer is primarily obligated to obtain liability insurance coverage. If a Customer fails to have the specified liability insurance in effect, the Company could protect itself under a blanket policy affording a specified minimum of coverage. If the Company does so, it avoids any vicarious liability for any accident. When a Company complies with the statute, it has no further liability or responsibility. Thus instead of vicarious liability, with § 324.021(9)(b) the only liability of the Companies is a duty to secure the placement of minimum insurance specified in the statute.

Florida's law was already an existing comfortable fit with the purpose of Congress when the Graves Amendment was being drafted. Chapter 324, Florida Statutes, had already been specifically designated by the Legislature as the State's "Financial Responsibility" Law. One specific statute contained within Chapter 324 explicitly states that the Chapter's purpose is to "provide financial security requirements for such owners or operators whose responsibility it is to recompense others for injury to person or property caused by the operation of a motor vehicle." Florida's Legislature further designated § 324.021(9)(b) with the title "minimum insurance required." Then, in still another part of Chapter 324, namely § 324.032(1)(b), the Legislature provided:

"A person who is either the owner or a les See required to maintain insurance under s. 324.021 (9) (b) and who operates limousines, jitneys, or any other for-hire passenger vehicles, other than taxicabs, may prove financial responsibility by furnishing satisfactory evidence of holding a motor vehicle liability policy as defined in s. 324.031." [e.s.]

The plain text of the Chapter and these statutes therefore express a purpose to have § 324.021(9)(b) impose a requirement on the Companies to see that insurance is maintained. In the face of this clear text, is it really possible to hold that § 324.021(9)(b) is not a financial responsibility, minimum insurance law?

Section 324.021(9)(b) fixes financial responsibility through a liability insurance requirement. Section 324.021(9)(b) fixes minimum insurance requirements as the basis for eliminating vicarious responsibility of the Companies. They force the Companies to place these minimum insurance requirements in every lease or rental contract. If the Customer should fail to comply with the contract and have such insurance in effect, then the Company must itself have back-up coverage or face liability for the fault of the operator of the vehicle. Essentially, the Company's only duty under this statute is to see that insurance is actually in effect at all times.

Why doesn't this mosaic of financial responsibility laws qualify? Where does Graves § (b)(2) specify that financial responsibility laws must be formed from a single stone rather than by a composite? Why are these Florida laws not read together as an adjustment of monetary responsibility by providing security for payment of damages to persons injured by operation of Companies' vehicles? Congress knew that Florida had explicitly designated § 324.021(9)(b) to impose a financial responsibility and a liability insurance requirement on commercial entities renting or leasing vehicles for use on Florida roadways. But Congress added not a single word excluding Florida's laws from Graves § (b)(2).

Folmar v. Young, 591 So.2d 220 (Fla. 4th DCA 1991), explicitly construed § 324.021(9)(b) to be a financial responsibility law. We said:

" Section 324-021(9)'(b) defines the minimum automobile liability insurance requirements. Under the statute, the following factors constitute exemptions precluding the lessor from financial responsibility for acts of drivers.

`(9)(b) Owner/Lessor.-Notwithstanding any other provision of the Florida Statutes or existing case law, the lessor, under an agreement to lease a motor vehicle for 1 year or longer which requires the lessee to obtain insurance acceptable to the lessor which contains limits not less than $100,000/$300,000 bodily injury liability and $50,000 property damage liability; further, this subsection shall be applicable so long as the insurance required under such lease agreement remains in effect, shall not be deemed the owner of said motor vehicle for the purpose of determining financial responsibility for the operation of said motor vehicle or for the acts of the operator in connection therewith.'

The plaintiffs argue that the statute requires that each lessee must carry liability insurance of $100,000/$300,000 and property damage insurance of $50,000, and point out that while there is more than one lessee in the case at bar, only one of them obtained the insurance. In other words, they claim the insurance financial responsibility coverage is `per lessee' and not simply `per vehicle.' . . . Here, the plain meaning of the statute is that each lease agreement requires insurance in the stated minimum amounts." [e.s.]

Nonetheless, the majority say Folmar "rejected the notion that the statute was a financial responsibility law or minimum insurance requirement." Their conclusion is impossible. Rather than rejecting the notion; Folmar openly embraced it. The majority also say that Folmar held that the placement of the statute in Chapter 324 has no bearing on its meaning. What the Folmar court actually said about the placement in Chapter 324 is: "Although section 324.021 (9)(b) is in the financial responsibility chapter, we do not believe that the specific penalties provided for in section 324.051 apply." [e.s.] Again their argument misstates Folmar. And Folmar is not alone. Section 324.021(9)(b) has been repeatedly construed by Florida courts to impose a minimum insurance requirement.

Florida's statutes effectually allocate the responsibility to pay damages by shifting it from the Company to the operator of the vehicle causing the accident and insurance. This qualifies them as financial responsibility laws. See Kraemer v. General Motors Acceptance Corp., 572 So.2d 1363, 1364 (Fla. 1990) ("dangerous instrumentality doctrine seeks to provide greater financial responsibility [e.s.] to pay for the carnage on our roads"). If the dangerous instrumentality doctrine is itself a form of financial responsibility law, then manifestly a statute shifting the allocation of responsibility between the Company and its Customer must equally be a financial responsibility law.

The majority assert: "Congress used the term [ financial responsibility] in a specific historical context." This argument masks an implication that because it is historical inquiry theirs has the scientific purity of, say, DNA analysis. It does not. History is subjective — most especially when it claims to be entirely objective. Historical analysis takes the form of plucking from the mass just those facts fitting a thesis. Deciding which to include in the narrative and which to leave out involves preference, purpose and planning. No historical analysis — and this includes the inquiry into and the analysis of legislative history — is free from bias and purpose. Labeling analysis "historical" does not per se make it reliable and authoritative. In this instance their search for "historical context" ends up adding words to a statute rather than purely finding meaning.

Anyway, there is nothing in the Graves Amendment to suggest a "specific historical context". The only context pertinent to the Graves Amendment is the present-day elimination of vicarious liability of Companies without affecting State financial responsibility laws or minimum insurance requirements. Of what relevance is the historical development of financial responsibility laws in place 50 years before Congress acted? How would Graves § (b)(2) involve historical reference when the text enacted does nothing more than save those State laws effective at enactment or becoming effective afterwards?

State motor vehicle financial responsibility laws involve an array of provisions for securing payment of damages to accident victims. These include liability insurance, bonds, certificates of deposit, uninsured motorist insurance, personal insurance coverage, to name only part. They involve pre-accident remedies, and post-accident duties and conditions. But Congress did not lay down any limiting or specified definition of financial responsibility laws in Graves § (b)(2). So the question is this. By what logic of interpretive rules could a court look for a narrow meaning in place of the obvious categorical usage?

Simply put, Garcia and the majority opinion are well outside this compelling body of interpretive law. Because of that conflict, I join in certifying the issue to the Florida Supreme Court.

POLEN, STEVENSON and HAZOURI, JJ., concur in this dissent.

HAZOURI, J., dissenting.

I respectfully dissent. What may seem obvious but not addressed by the majority is that Congress could have preempted any state's statute or decisional law permitting the application of the dangerous instrumentality doctrine as it applies to rental or leasing car companies without exception. So what is the exception and why is there an exception? Is the exception mere surplusage?

Subsection (b) of the Graves Amendment clearly provides for exceptions but the majority in the instant case and those cases cited by the majority to support its conclusion cannot conjure up any example applying the exception. Since subsection (a)(1) does not relieve the rental or leasing car companies of their own negligence, what possible relationship could there be to "financial responsibility" or "liability insurance" unless it is to allow states to enact legislation which addresses the need to protect the citizens of its state for personal injuries or property damages from vehicles placed on the roadway for the commercial benefit of these companies? As rental cars and long term lease vehicles remain on the lots of these enterprises, what possible need is there for any insurance on these vehicles? It is only when these vehicles are rented or leased that they pose any danger to the public at large and only then is there a need for "financial responsibility" or "liability insurance."

To conclude that section 324.021(9)(b)(2) does not fit within the exception of the Graves Amendment seems to me to be a very strained construction of "financial responsibility" and "liability insurance." I would therefore reverse the summary judgment.

FARMER and STEVENSON, JJ., concur in this dissent.