What began as a simple bill to assure that car rental companies in California provide defect-free cars to their customers has become ensnarled in a full-out campaign by those companies to kill the bill as it moves through the state’s legislature. Ironically, the bill does nothing more than require the rental companies to do what they claim they already do in “the vast majority” of cases.

The bill would prohibit the companies from renting or selling cars that are subject to federal safety-defect recall notices until the defects are corrected – something they now are permitted to do. The legislative battle has national significance for two reasons. First, California is known as a leader in passing safety and environmental laws that eventually are adopted in other states, and second, a U.S. senator has announced plans to introduce a similar bill at the federal level.

There seems to be no sane reason for the rental car companies to oppose the bill. In fact, it would make good PR sense for them to support it. But corporations tend to reflexively oppose anything that interjects government into their decision-making. Thus has it always been, and thus will it likely always be.

The origin of the California bill, AB 753, is memorialized in its name, the “The Raechel and Jacqueline Houck Rental Car Safety Act.” It grows out of the 2004 deaths of the Houck sisters when they rented a Chrysler PT Cruiser from Enterprise Rent-A-Car. The vehicle had been recalled for a defective power steering system which could leak fluid and cause a fire, but Enterprise had failed to have the defect fixed and was renting the vehicle in its hazardous condition. The sisters were killed when the car burst into flames and ended up in a crash with an 18-wheeler.

After denying its role in the sisters’ death for five years, Enterprise finally admitted negligence. A jury awarded $15 million to their parents. Since then Carol Houck, the mother, has devoted herself to working for passage of laws and regulations to prevent such tragedies in the future.

Assemblyman Bill Monning, a Democrat from the Central Coast in whose district the car was rented, introduced AB 753 at a press conference in late March. Several safety groups endorsed the bill. (Full disclosure: I’m involved with two of them, as a board member of the Center for Auto Safety, and as injury policy director of the Trauma Foundation.) AB 753 had been expected to move smoothly toward final adoption, but at an April 5 hearing of the Assembly Judiciary Committee, rental car companies, including Enterprise, Hertz and Avis, testified vigorously against its adoption and made it clear they will fight hard to stop it.

Although the Committee approved the bill by a split vote, it must now survive an Assembly floor vote and, if it passes, Senate consideration. The companies have made it clear they will continue to oppose AB 753 by arguing, among other things, that:

The Houck crash was an isolated incident in which only two people were killed. “There have been NO other events remotely similar to the accident in question” in the industry’s history, states an industry opposition memo.

Aside from the callous suggestion that more than two deaths are needed before the rental companies can be compelled to rent out defect-free cars, the argument implies there have been no crashes similar to the Houck crash. It ignores the fact that the results of  litigation against corporations for injuries caused by defective products are often kept secret by confidentiality agreements, under which a plaintiff is paid a financial settlement in return for promising not to divulge information about a case. Such a settlement was offered to the Houck family before their case went to the jury. They rejected it so that the facts of their daughters’ deaths and Enterprise’s causal role would be a matter of public record.

“…Exceptions to the industry’s standard practice of resolving all recalls before renting the vehicle are infrequent…” The implication is that only a few defective vehicles are being placed into rental customers’ hands.  Since the industry does $3.5 billion worth of car rental business in California every year, “infrequent” rentals of unrepaired defective vehicles could endanger the lives of thousands of their customers. Moreover, its “standard practice” could be revoked at any time unless it was required by law.

“Not all recalls are created equal.” Actually, they are. Federal law requires that when a safety defect represents an “unreasonable risk” to vehicle owners or users, it must be recalled by the manufacturer and repaired. Lower-risk defects are handled under under other procedures, such as “customer satisfaction” campaigns, that don’t involve formal safety recalls.

In California, thousands of people rent or buy cars from rental car companies every month. Most of them probably aren’t aware that unless AB 753 passes, there’s no guarantee that those cars will be safe – which is how the companies want it.

Related Post:

Auto Safety Groups Call for Enterprise to Stop Renting Faulty Cars