Senate Takes Up Recalled Rental Bill

The Consumer Protection Subcommittee of the Senate Commerce Committee will hold hearings tomorrow on a bill that would prohibit car rental companies from renting vehicles that are under a safety recall until they are remedied.

Called the Raechel and Jacqueline Houck Safe Rental Car Act of 2013, the bill is a bi-partisan affair, sponsored by Democratic Sens. Charles E. Schumer (D-NY), Barbara Boxer (D-CA), and Claire McCaskill (D-MO) and Republican Sen. Lisa Murkowski (R-AK), and supported by the car rental companies.

The namesakes of the bill, Raechel Houck, 24, and her 20 year-old sister, Jacqueline Houck, died in an Enterprise Rent-A-Car 2004 PT Cruiser on October 7, 2004 in a fiery collision while northbound on Highway 101 in Monterey County. The driver, Raechel Houck, lost control of the vehicle, crossing the median and crashing into an 18-wheeled Freightliner tractor trailer. The driver of the truck testified that he could see smoke pouring from the PT Cruiser’s engine compartment just before it veered into the southbound lanes.

Chrysler had recalled 439,000 2001-2004 PT Cruiser and the 2005 PT Cruiser Convertible a month earlier. The September 9, 2004 recall noted that the power steering hose could rub against the transaxle differential cover, eventually resulting in a steering fluid leak and an underhood fire. By the time of the Houck crash, Chrysler had reported a total of 126 PT Cruiser fires, beginning in 2000. Despite the recall notice, Enterprise had rented the PT Cruiser that crashed to three other customers before the Houcks. On the day of the crash, the PT Cruiser was the only vehicle available and Enterprise employees offered it to the Houck sisters as a free upgrade.

The bill would close a longstanding loophole in the recall law, which barred car dealers from selling an unremedied recalled vehicle, but did not prohibit rental car companies from renting or selling such vehicles. The Houck case uncovered Enterprise’s regular business practice of renting out recalled vehicles needing safety repairs. The bill holds rental companies to the same standards as new car dealers – vehicles under a safety recall could neither be rented nor sold without being remedied. Such vehicles would have to be grounded no later than 24 hours after a rental company receives a recall notice and 48 hours for recalls that include more than 5,000 vehicles in their fleets. Rental companies would be allowed to implement manufacturers’ instructions for interim measures to eliminate the safety risk. Finally, the bill would authorize the National Highway Traffic Safety Administration to investigate and police rental companies' recall safety practices.

“Our goals for this legislation are twofold—to protect families, and to prevent undue burdens for employers—and this agreement succeeds on both fronts,” said McCaskill, Chairman of the Senate Subcommittee on Consumer Protection.  “Neither side got everything they wanted, but by everybody giving a little, we’re getting a lot—and that’s what compromise is all about.”

The Houck sisters’ mother, Carol “Cally” Houck, said that the family had been fighting since the fall 2010 for a law to mandate that the rental car companies ensure that recalled vehicles in their fleet be remedied before offering them to customers. They started by working on state legislation, but quickly realized that a federal law was needed, she said.

“I understand through conversation with other advocates that these things take a long time,” she says. “We’re amazed at the progress we’ve made. It’s extraordinarily hard it is to get access to lawmakers, but we’ve been able to stay focused and build an historic agreement with an industry that’s opposed us and my adversary in court. I am cautiously optimistic.”

In 2005, Houck and her ex-husband Charles filed a wrongful death lawsuit in Alameda County Superior Court. Enterprise had offered the Houcks a $3 million settlement in exchange for confidentiality, but they refused. At first, the nation’s largest rental car company had claimed that Raechel Houck’s driving caused the crash. But numerous Enterprise managers testified in depositions taken during the discovery phase that that the company regularly rented recalled vehicles to customers if no other cars were available, that the company had no computerized system for identifying recalled vehicles in its fleet and no codified practice of ensuring that vehicles under safety recall received the remedy. But the jury never heard about Enterprise’s policy of renting recalled vehicles. After fighting the case for five years, Enterprise admitted its negligence on the eve of the June 1, 2010 trial. The jury only determined damages for loss of affection and companionship, awarding the Ojai Valley, Calif. family $15 million in damages.

The bill is supported by all the major car rental companies, comprising nearly 100 percent of the market – Hertz, Enterprise, Avis Budget, Dollar Thrifty, and National, some of which said that the industry is already following voluntary guidelines prohibiting these practices. The legislation is also supported by a host of advocacy groups: Consumers for Auto Reliability and Safety (CARS), Advocates for Highway and Auto Safety, Center for Auto Safety, Consumers Union, Consumer Federation of America, Consumer Action, National Association of Consumer Advocates, and The Trauma Foundation.

Rosemary Shahan, president of CARS, says that when the rental car industry’s reach into the used car market is considered, the bill has the potential to correct a significant problem.

“We are hoping Congress will prohibit rental car companies from including rental companies owned by car dealers from playing rental car roulette,” she said. “Enterprise alone is the biggest purchasers of new cars on the continent, so both in terms of rental safety and used car safety this is really going to make a big difference.”

For Cally Houck, this bill is a necessary step to ensure that the industry honors its obligations to consumers.

“We were dumbfounded that there was no law and unfortunately civil remedies don’t reach accountability. I’m hoping politics sit down for a minute and let logic prevail,” Cally Houck said. “We’ve gotten into this culture that profits trump any risk to human safety. I’m compelled to do this. It’s the only way to make sure nobody else has to experience what we did. I’ll be damned if I’m going to have Rachael and Jackie die for nothing.”

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