Minority Assembly Members today called for reform of an antiquated state law that costs New York consumers millions of dollars each year and is making it increasingly difficult to lease an automobile in the state. They were joined by a local auto dealer, urging the Legislature to immediately overturn the state’s vicarious liability law that has largely driven auto leasing out of New York.

Assembly Minority Leader Charles H. Nesbitt (R,C,I-Albion), the former general sales manager of Moore-Nesbitt, Inc. and Nesbitt Chrysler Plymouth Dodge, Inc. in Orleans County, said, "Not only does New York’s outdated vicarious liability law put dealers and leasing companies at risk, but it also means that New York consumers have one less option than consumers in every other state. 2005 must be the year that we end the gridlock on this issue and restore auto leasing in New York State."

New York State is the only state in the nation to hold lessors of automobiles liable for the negligent act of their lessees. Under the state’s vicarious liability law, car accident victims can sue the financial companies that provide auto leases even though the companies are in no way responsible for the accidents.

Vicarious liability claims between January 2000 and June 2003 totaled in excess of $6.5 billion dollars. Since then, nearly 20 automakers and every major retail bank have stopped or limited leasing in the state. Companies no longer leasing in New York include: Chase Auto Finance, General Motors, Ford Motor Company, DaimlerChrysler, Buick, Cadillac, Chevrolet, Dodge, Hummer, Hyundai, Jeep, Oldsmobile, Pontiac, Porsche, Subaru, among others.

Assemblyman Chris Ortloff (R,C,I-Plattsburgh), who has sponsored legislation to end vicarious liability in New York, said, "New York’s vicarious liability law has outlived its purpose and is threatening an important and popular consumer option. How do we fix this problem? By repealing vicarious liability immediately. It’s that simple."

New York consumers have paid more than $132 million since the automakers and banks began pulling out of leasing in the state. The additional costs are derived from the extra sales taxes paid by consumers, forced out of leasing and by the high lease acquisition fees that New York consumers are charged. Leasing of new cars in New York has decreased by 36 percent.

Assemblyman David G. McDonough (R,C,I-Merrick), ranking member of the Assembly Consumer Affairs and Protection Committee, said "New York’s unfair vicarious liability law means that New York consumers have one less option than consumers in every other state. Rather than face a constant stream of litigation, many leasing companies have chosen to abandon the New York market altogether, threatening to put an end to auto leasing here."

Assemblyman Matthew Mirones (R,C,I-Staten Island, Bay Ridge) said, "I have heard first hand from several auto dealers in my district about the dangers of the current vicarious liability law. New York was once a lucrative market for auto leasing companies, yet it’s now one that most major lease companies have abandoned in order to escape this unfair law. It is essential to both New York consumers and the state’s significant auto industry that we get them back."

When New York’s vicarious liability law was instituted in 1924, most automobile owners were wealthy individuals or livery companies. The law was designed to protect the people injured by uninsured hired drivers. Leasing was generally not available at the time.

A survey recently released by the Alliance of Automobile Manufacturers revealed that New Yorkers strongly support auto leasing reform by a two-to-one margin.

Assembly Minority members have strongly advocated vicarious liability reform for several years. The Senate Majority has also called for reform, and just last week Senator Owen Johnson introduced a bill to repeal the archaic law. Assembly Minority members are hopeful that this year the Assembly Majority will seriously consider the public policy arguments for repeal, recognize the magnitude of the current problem and act to reform this antiquated measure.

Jon Waterhouse, Vice-President of Operations for Keeler Motor Car Company said, "As the price of new and used vehicles increase, leasing has become a popular method for New York consumers to enjoy a higher priced vehicle for a lower monthly payment. Unfortunately, due to the vicarious liability law, leasing companies have been forced to raise their rates or stop doing business altogether in New York State."