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The PEOPLE of the State of New York, by Dennis C. VACCO, as Attorney-General of the State of New York, Petitioner, v. ALAMO RENT A CAR, INC., Respondent.
The PEOPLE of the State of New York, by Dennis C. VACCO, as Attorney-General of the State of New York, Petitioner, v. BUDGET RENT A CAR CORPORATION, Respondent.
The PEOPLE of the State of New York, by Dennis C. VACCO, as Attorney-General of the State of New York, Petitioner, v. HERTZ CORPORATION, Respondent.
The PEOPLE of the State of New York, by Dennis C. VACCO, as Attorney-General of the State of New York, Petitioner, v. NATIONAL CAR RENTAL SYSTEM, Respondent.
The PEOPLE of the State of New York, by Dennis C. VACCO, as Attorney-General of the State of New York, Petitioner, v. AVIS RENT A CAR SYSTEM, INC., Respondent.
The PEOPLE of the State of New York, by Dennis C. VACCO, as Attorney-General of the State of New York, Petitioner, v. ENTERPRISE RENT A CAR, INC., Respondent.
The PEOPLE of the State of New York, by Dennis C. VACCO, as Attorney-General of the State of New York, Petitioner, v. DOLLAR SYSTEMS, INC., Respondent.
The PEOPLE of the State of New York, by Dennis C. VACCO, as Attorney-General of the State of New York, Petitioner, v. THRIFTY CAR RENTAL, INC., Respondent.
In these special proceedings, petitioners prevailed on their claim that respondents violated General Business Law (“GBL”) § 391-g, by refusing to rent motor vehicles to persons under the age of 25. Petitioners now seek the imposition of penalties of $500 for each GBL § 391-g violation and costs pursuant to CPLR 8303(a)(6). For the reasons that follow, petitioners' applications for penalties are denied. The requests for costs are granted. The essential facts underlying these proceedings were discussed in prior decisions. See, 162 Misc.2d 636, 620 N.Y.S.2d 695, aff'd, 226 A.D.2d 294, 642 N.Y.S.2d 213, aff'd, 89 N.Y.2d 560, 656 N.Y.S.2d 196, 678 N.E.2d 882.
GBL § 391-g contains two components relevant here: (1) unlawful refusal to rent motor vehicles to drivers under the age of 25 and (2) liability for penalties for such refusal.
The first component provides:
1. It shall be unlawful for any person, firm, partnership, association or corporation engaged in the business of renting motor vehicles to refuse to rent such vehicle to any person eighteen years of age or older solely on the basis of age provided that insurance coverage for persons of such age is available. Any actual extra cost for insurance related to the age of the person renting such motor vehicle may be passed on to such person. (emphasis added).
As determined by this Court, and affirmed by the Appellate Division and the Court of Appeals,1 by refusing to rent motor vehicles to drivers under the age of 25, respondents discriminated unlawfully because, for statutory purposes, insurance was “available” through the New York Automobile Insurance Plan (“NYAIP”). An order was entered permanently enjoining respondents from continuing this practice.
This Court severed the issue raised by the second component:
2. A knowing violation of this section shall be punishable by a fine not to exceed five hundred dollars. (GBL § 391-g[2].)
Petitioners argue that, by severing the issue of the sums to be imposed as penalties, the court has already determined that respondents must pay a fine. This argument is without merit. The September 18, 1995 Judgment and Order provided:
ORDERED that the issue of the sums to be imposed as penalties pursuant to GBL § 391-g and costs pursuant to 8303(a)(6) is severed and a hearing shall be held ․ to determine the amount of those sums;
Petitioners argue that respondents had to move to reargue within the thirty-day appeal period and, having failed to do so, respondents may not seek to have the Court reverse its prior judgment.
In making this argument, petitioners are impliedly relying upon the doctrine of law of the case. This doctrine provides that once an issue is judicially determined, either directly or by implication, it is not to be reconsidered by courts of coordinate or subordinate jurisdiction in the same litigation. Martin v. City of Cohoes, 37 N.Y.2d 162, 371 N.Y.S.2d 687, 332 N.E.2d 867, rearg. denied, 37 N.Y.2d 817, 375 N.Y.S.2d 1029, 338 N.E.2d 332 (1975); Holloway v. Cha Cha Laundry, Inc., 97 A.D.2d 385, 467 N.Y.S.2d 834 (1st Dept.1983). Law of the case applies only to legal determinations that were necessarily resolved on the merits in the earlier decision. Baldasano v. Bank of New York, 199 A.D.2d 184, 605 N.Y.S.2d 293 (1st Dept. 1993). Neither this Court nor the two appellate courts determined the issue of penalties. None of these courts was required to do so to resolve the then present issue, namely, whether respondents should be enjoined from continuing their rental practice. Thus, the merits of the contentions concerning penalties are still litigable.
Petitioners contend that respondents are liable to pay a fine because (1) they intentionally refused to rent to drivers under the age of 25, (2) they knew that the statute existed, and (3) insurance was available. Respondents first contend that fines cannot be imposed in a special proceeding pursuant to Executive Law § 63(12). This contention is without merit. See, People v. Apple Health & Sports Clubs, Ltd., 80 N.Y.2d 803, 587 N.Y.S.2d 279, 599 N.E.2d 683 (1992) (trial court properly ordered respondents to file a $500,000 bond to insure the availability of funds for amounts owed and payment of fines); People v. Two Wheel Corp., 71 N.Y.2d 693, 530 N.Y.S.2d 46, 525 N.E.2d 692 (respondents ordered to pay a $5,000 penalty), rearg. denied, 72 N.Y.2d 910, 532 N.Y.S.2d 758, 528 N.E.2d 1231 (1988).
Second, respondents assert that they did not “knowingly” violate the statute because their rental practice was based on the good faith belief that insurance was not “available.” Petitioners meet this by arguing that once it is established that respondents acted with full knowledge of the law, the fact that respondents misconstrued the law does not negate their knowing violation. This argument is in error, and it mischaracterizes respondents' defense.
Generally, ignorance of the law is not a defense. United States v. Aguilar, 883 F.2d 662 (9th Cir.1989), cert denied, 498 U.S. 1046, 111 S.Ct. 751, 112 L.Ed.2d 771 (1991). This principle has no application when the circumstances made material by the definition of the offense include a legal element. United States v. Golitschek, 808 F.2d 195 (2d Cir.1986). Here, a “knowing violation” is a material element of the penalty statute.
The fact that respondents did not rent to persons under the age of 25, and they knew that § 391-g existed, is insufficient, by itself, to make respondents liable for fines. Petitioners must establish that respondents were aware that their conduct was unlawful. People v. Coe, 71 N.Y.2d 852, 527 N.Y.S.2d 741, 522 N.E.2d 1039 (1988); People v. Spence, 232 A.D.2d 434, 648 N.Y.S.2d 636 (2d Dept.1996).2 The use of the word “knowingly” indicates the requirement of “some mental state.” Liparota v. United States, 471 U.S. 419, 424, 105 S.Ct. 2084, 85 L.Ed.2d 434 (1985). As in all other situations requiring mens rea, however, petitioners may prove, by reference to facts and circumstances surrounding the case, that respondents knew that their conduct was unlawful. Liparota, supra, 471 U.S. at 434, 105 S.Ct. at 2092-2093. Moreover, petitioners need not prove that respondents acted with an “evil motive, bad purpose or corrupt design.” People v. Coe, supra, 71 N.Y.2d, at 855, 527 N.Y.S.2d 741, 522 N.E.2d 1039.
Petitioners' reliance upon United States v. Aguilar, supra, and American Timber & Trading Co. v. First Natl. Bank of Oregon, 511 F.2d 980 (9th Cir.1973), cert. denied, 421 U.S. 921, 95 S.Ct. 1588, 43 L.Ed.2d 789 (1975) is misplaced. Respondents' defense is not that they misconstrued the law. Rather, it is that they were unaware that, for statutory purposes, insurance was “available” and, therefore, they did not know that their conduct was unlawful. United States v. Aguilar, supra, recognized a defense that refuted the mens rea element of the crime of a knowing transportation of an illegal alien. 8 U.S.C. § 1324(a). What Aguilar rejected was a “mistake of law” defense based on an erroneous interpretation of the statute. In the cases at bar, we confront no dispute over the statutory interpretation of GBL § 391-g. Rather, the defense goes to the knowledge of available insurance just as Aguilar recognized a defense of lack of knowledge that the aliens were unlawful. 883 F.2d at 672. This is a mistake of fact, not of law. See, United States v. Fierros, 692 F.2d 1291, 1294 (9th Cir.1982), citing United States v. Petersen, 513 F.2d 1133 (9th Cir.1975).
Thus, to prevail petitioners must establish that respondents knew that their refusal to rent to persons under age 25 was unlawful because they knew insurance was available. This does not present petitioners with an unreasonable burden because respondents' conduct is judged by an objective standard. The test is whether they “knew or should have known.” Otis Eastern Service, Inc. v. Hudacs, 185 A.D.2d 483, 485, 586 N.Y.S.2d 348 (3rd Dept.1992). The record supports respondents' contention that their policy of not renting vehicles to persons under the age of 25 was based upon a good faith belief that it was lawful because insurance was unavailable.
Although respondents did not prevail in these proceedings, their belief-that insurance was not available-was not unfounded. In affirming this Court's decision, the Appellate Division granted leave to appeal to the Court of Appeals, certifying that the correctness of its decision deserved review. In addition, the Court of Appeals found that “it appeared that no insurance was available” stating:
Before 1994, the Attorney-General did not seek to enforce this statute against appellants, because of the requirement that there be insurance “available” to cover the costs of renting to young drivers. With a higher incidence of accidents and therefore increased liability for this group, commercial carriers did not provide such coverage and therefore it appeared that no insurance was available. 89 N.Y.2d at 563-564, 656 N.Y.S.2d 196, 678 N.E.2d 882.
That determination was based on the finding that commercial carriers did not provide coverage and that coverage was only available through the NYAIP, the assigned risk plan approved by the Superintendent of Insurance to insure motor vehicles in New York for applicants who cannot obtain insurance in the voluntary market.
Moreover, in construing GBL § 391-g, reference to legislative intent was required. As pointed out by this court, “[t]he legislative intent of GBL § 391-g is of the foremost importance.” (People v. Alamo Rent A Car, 162 Misc.2d 636, 639, 620 N.Y.S.2d 695.) The Appellate Division stated that the “overriding purpose of section 391-g is to prevent discrimination against young drivers, not to protect rental companies from the increased risk associated with renting to this market.” People v. Alamo, supra, 226 A.D.2d at 295, 642 N.Y.S.2d 213. The Court of Appeals based its conclusions in part on legislative memoranda in support of the bill. Furthermore, respondents were found to have violated the statute even though the insurance that was available did not cover physical damage to the vehicle. Thus, the finding that respondents violated the statute was not based simply upon a reading of the plain language of the statute.
Furthermore, the record supports respondents' contention that various governmental agencies, either expressly or impliedly, agreed with their statutory interpretation. Petitioners argue that respondents never sought an opinion from any state agency nor commenced a declaratory action to test the validity of their rental policies. The record does not indicate, however, that the Attorney General's office, or any other enforcement entity, ever warned respondents to discontinue their rental policies. Therefore, respondents' alleged failure to test their rental policies was not unreasonable.
To the contrary, respondents' repose was reinforced. For example, according to respondent The Hertz Corporation, since 1983 it had conversations with the Attorney General's office regarding its policy, and the Attorney General took no action, apparently satisfied that there was no violation. In addition, New York State itself entered into contracts with Hertz containing the very same age restrictions at issue in this proceeding.3 Moreover, in 1990, the New York City Department of Consumer Affairs commenced a formal investigation as to Hertz's compliance with GBL § 391-g. Two years later, Hertz entered into an “Assurance of Discontinuance” with the City, in which Hertz agreed to rent to drivers under age 25, provided insurance “at any time becomes available to Hertz from responsible carriers on a practical and reasonably business-like basis.”
For another example, according to respondent Enterprise Rent A Car, Inc., in 1990, the Attorney General's office contacted it regarding the same policy that was challenged in this proceeding. An understanding was reached that, in the absence of a practical and economically viable solution through the voluntary insurance market, the Attorney General's office would not consider Enterprise in violation of GBL § 391-g.
Thus, respondents' rental practices were open to public scrutiny and examined by various governmental entities over an extended period of time. Hence, the record does not establish that respondents continued their rental policies while “knowing” that such policies were unlawful. Sewer Environmental Contractors, Inc. v. Goldin, 98 A.D.2d 606, 607, 469 N.Y.S.2d 339 (1st Dept.1983).
These proceedings resulted in judgments being entered and, pursuant to CPLR 8303(a)(6), petitioners are awarded costs in the sum of $2,000 against each respondent in addition to their statutory costs and disbursements.
Accordingly, it is
ORDERED that petitioners' application for a hearing to determine fines pursuant to § 391-g(2) of the General Business Law is denied; and it is further
ORDERED that petitioners' application for an award of costs is granted and petitioners shall recover from each respondent costs in the sum of $2000, for the total amount of $16,000 and that petitioners have execution therefor.
FOOTNOTES
1. 162 Misc.2d 636, 620 N.Y.S.2d 695, aff'd, 226 A.D.2d 294, 642 N.Y.S.2d 213, rearg. denied, 229 A.D.2d 394, 644 N.Y.S.2d 643, aff'd, 89 N.Y.2d 560, 656 N.Y.S.2d 196, 678 N.E.2d 882.
2. These cases, construing statutes using the word “willfully,” are relevant. See, e.g., People v. Coe, 71 N.Y.2d 852, 855, 527 N.Y.S.2d 741, 522 N.E.2d 1039 (“the Legislature, in using the term ‘willfully’ in Public Health Law § 12-b, intended a culpable mental state generally equivalent to that required by the term ‘knowingly’ ”); See also People v. Spence, supra.
3. No state employees under age 21 were permitted to rent Hertz vehicles, and no state employees under age 25 were permitted to rent them within the City of New York.
STEPHEN G. CRANE, Justice.
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Decided: October 03, 1997
Court: Supreme Court, New York County, New York.
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