An almost unheard-of alliance of automakers, autoworkers and car dealers is pushing state lawmakers to amend an 80-year-old liability law that they say has forced car leasing companies out of the state and driven up costs for consumers.
The partnership of the Alliance of Automobile Manufacturers, United Autoworkers and the Niagara Frontier Automobile Dealers Association claims that the "vicarious liability" law has led to a loss of choice for consumers, as 18 automakers and every major retail bank in the state has dropped out of the business since May 2003. The law holds the owner of the leased vehicle, often the manufacturer, ultimately liable for the driver's actions.
Specifically, the three groups cite a 72 percent drop in leasing statewide in the first quarter from a year earlier, compared with a 23 percent drop in leasing nationwide. That includes drops of as much as 92 percent by vehicle segment, and declines of more than 50 percent in 13 of the 15 western counties.
As a result of the exodus of leasing companies, they say, consumers must pay more to buy a car outright, or may pay higher lease fees if they can find a company that still offers leases. Vicarious liability has cost consumers $130 million in sales taxes and leasing fees in 2003 and will likely cost another $150 million this year.
"It's a burden to consumers, a bane to automakers, and a boon to trial lawyers," said Charles Territo, spokesman for the Alliance of Automobile Manufacturers. "New York consumers have lost the ability to affordably lease cars and trucks."
The drop in leasing also poses a threat to auto workers and communities, the groups claim, because automakers may be forced to cut back production or shut down plants altogether. The jobs of more than 3,500 employees are at risk at a Syracuse assembly plant that makes parts for DaimlerChrysler AG's Jeep Cherokees. About 60 percent of Cherokees sold in New York State are leased and Chrysler is one of the companies that has gotten out of leasing.
The groups are calling for a repeal of the 80-year-old law or at least for limits on the liability for lenders or automakers.
"It's time to change the law because it's affecting jobs in New York State," said Geri Ochocinska, director of Region 9 for the UAW, covering Pennsylvania, New Jersey and New York. "It's just a matter of time until it filters to Western New York."
But the New York State Trial Lawyers Association rejects the assertions, saying that many banks such as Bank of America, Bank One and KeyCorp got out of leasing or cut back nationwide because it had become unprofitable for reasons unrelated to New York and liability.
The group also defended the vicarious liability statute, saying it protects consumers and guarantees they can be compensated when a driver's insurance policy doesn't cover them in an accident. And they say it hasn't hurt sales at auto dealers. "It protects the public by making sure the owner of a car is ultimately responsible for it," said Shoshana Bookson, president of the trade group.
Under "vicarious liability," the owner of a leased car is ultimately responsible for injuries caused by a driver's negligence.
The law was originally passed in 1924, in response to reckless and poor livery drivers in New York City who couldn't afford to pay for claims arising from their driving. To help victims and reign in the drivers, the law made the owners responsible. But today those owners are lenders and carmakers with deep pockets.
Until recently, only eight states still had vicarious liability on their books, while only New York, Connecticut and Rhode Island had no limits on damages. But Rhode Island and Connecticut changed their laws in response to giant verdicts -- a Rhode Island verdict came in at $27 million in one case -- and the threat of leasing companies pulling out. That left New York alone among the 50 states.
The state Senate has passed legislation for the last two years to change the vicarious liability statute, but it has stalled in the Assembly Transportation Committee. So the auto groups are going on the offensive statewide, with the help of the autoworkers, to force change.
"It has to get on the floor of the Assembly," said James Duncan, state political director for the UAW. "It's time for the Assembly to act."
TABLE: Lackluster leasing
Car dealers blame the vicarious liability law for the dropoff
County 2002 2003 % decline
Allegany 181 45 75%
Cattaraugus 390 152 61%
Chautauqua 716 330 54%
Erie 16,874 6,590 61%
Genesee 314 164 48%
Niagara 2,858 1,113 61%
Orleans 148 60 59%
Wyoming 185 62 66%
Source: R.L. Polk and Co.