SAN FRANCISCO, CA – An Alameda County Superior Court jury has awarded a Ojai Valley, Calif. family $15 million in damages after Enterprise Rent-A-Car admitted that it caused the deaths of two sisters in a fatal crash, when it rented to them a PT Cruiser that went unrepaired under a safety recall for defective power steering hoses.

Raechel Houck, 24, and her 20 year-old sister, Jacqueline Houck died in a 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 Cruisers 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.

The Houcks were represented by Larry Grassini, of Grassini & Wrinkle, based in Woodland Hills, Calif.

Enterprise, the nation’s largest rental car company, had claimed that Raechel Houck’s driving, rather than the defect, caused the crash. But, in deposition testimony gathered during discovery, numerous Enterprise managers testified that the company regularly rented recalled vehicles to customers if no other cars were available. 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. In an affidavit, Mark Matias, an area manager in the San Francisco Enterprise operation, admitted:

“As an Area Manager, I knew how operations were handled. When demand called, we rented out recalled vehicles. It happened; I won’t lie. If the vehicle left on the lot was a recalled vehicle, the branch would rent that vehicle to a customer.”

Despite the September 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 managers-in-training who rented the PT Cruiser to the Houcks sisters affirmed that Enterprise regularly overbooked vehicles “to get customers in the front door” and knowingly rented out vehicles in need of service and maintenance, according to Grassini.

Thomas Moulton, Group Vehicle Repair Manager for Enterprise of San Francisco who headed the company’s recall responses, testified that he never “considered the possibility that Enterprise should not rent cars to the public after they have received recall notices from the manufacturer.” He also testified to have “no idea” whether “it’s a good idea . . . to rent cars that can catch fire to the public,” or if Enterprise had any response to the PT Cruiser recall.

Further, Enterprise’s Vice President of Service Operations, Thomas Gieseking, testified that he was unaware of any changes Enterprise plans for the way it handles recalled vehicles.

But the jury never heard about Enterprise’s policy of renting recalled vehicles. In 2005, the girls’ parents, Carol Houck and Charles Houck, had 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. After fighting the case for five years, Enterprise admitted its negligence on the eve of the June 1 trial. The jury only determined damages for loss of affection and companionship.

Grassini said, based on the admissions he gathered from high-level Enterprise managers, the company still regularly rents out recalled vehicles to unsuspecting customers:

“They haven’t changed their policy and they don’t intend to change their policy,” Grassini said.

Other examples of Enterprise’s questionable safety practices came to light last year. In August 2009, Safety Research & Strategies discovered that Enterprise had been selling two models of General Motors vehicles without the side airbags, but advertised the vehicles as having the standard safety feature. Beginning in 2006, GM allowed fleet buyers to delete “standard” side curtain airbags in its 2006, 2007 and 2008 Chevrolet Impalas and Chevrolet Cobalts. Enterprise subsequently sold some of the vehicles through its used car division which sells its used rental cars under the slogan: “Haggle-free buying. Worry-free ownership.” The company didn’t mention that the standard safety feature was missing and in some cases, actively advertised the vehicle as having a side air bag, when it was never installed in that vehicle. (More on Enterprise and GM “fleet delete” options: GM Allows Removal of Standard Safety Features for Fleet Buyers; SRS Requests GM to Brand Cars and NHTSA to Change NCAP Designations and NHTSA Agrees to Correct Impala Star Ratings; GM, Enterprise try to Allay Concerns about Deleted Airbags)

Last year, the rental and used-vehicle sales company settled a wrongful death lawsuit in Texas over its failure to maintain safe tread depth on its vehicles’ tires. It was the second worn tire case filed against Enterprise.

Johnny Arguelles, 34, of Edinburg,TX was killed on June 26, 2003, when the 2002 Chevy Silverado truck he had rented from anEnterprise agency spun out of control on a rainslicked highway and struck another vehicle. A passenger in the Enterprise vehicle was also killed, and five persons in the second vehicle were injured, one child seriously.

REHOBOTH, MA – As Enterprise Rent-A-Car and General Motors scramble to correct the false advertising that claimed former fleet vehicles being sold used were equipped with “standard” side curtain airbags, the National Highway Traffic Safety Administration has agreed to correct the information on its consumer website.

Over a three-year period, GM had offered fleet buyers as a cost savings the option of deleting the standard side airbags in 2006-2008 Chevrolet Impalas and MY 2008-2009 Chevrolet Cobalt and Buick LaCrosse models. Last month, investigations by SRS and The Kansas City Star revealed that the troubled automaker and Enterprise, its biggest fleet customer and the nation’s largest used car seller, were re-selling these altered fleet vehicles – mostly the Impalas –  to retail consumers and advertising them as having the important safety feature.

After the story received national attention, Enterprise, which had ordered 66,000 Impalas without the standard side air bags, offered to buy back 750 of them sold under false pretenses for $750 over the Kelly Blue Book value. GM offered a desultory defense of the practice, saying that it did not violate NHTSA’s minimum standards for side impact protection and that the discount was an important selling point for its fleet customers.

NHTSA, however, has taken the matter more seriously. On September 2, SRS president Sean Kane wrote to NHTSA Acting Administrator Ronald Medford asking the agency to amend its side-impact NCAP information for the affected models. Medford responded two days later, with a thank-you note to Kane and a commitment to quick action.

“In light of this information, the agency reviewed side airbag data provided by GM for the models in question and found the information provided is misleading,” Medford wrote. “Accordingly, the agency has revised the safercar.gov website to indicate that side curtain airbags are optional equipment for Model Years (MY) 2006-2008 Chevrolet Impalas and MY 2008-2009 Chevrolet Cobalt and Buick LaCrosse models. The agency also amended the crash test ratings information to reflect that the models tested for side impact crash protection were equipped with the optional side curtain airbags.”

Further, Medford said, beginning with model year 2011, the agency would request that vehicle manufacturers specifically state whether fleet models have different safety equipment from those models sold at dealerships and that differences will be noted in the ratings information provided.

The Impala, for example, won a five-star side-impact crash rating for the front driver’s seat and the four-star rating for the rear with the aid of the side curtain air bag. The vehicle would have likely received a lower rating without it.

“NHTSA clearly recognized that this is an important issue to consumers – and not just in this immediate instance with GM vehicles,” Kane said. “By taking the extra step and requesting manufacturers disclose differences in fleet safety equipment, the agency is sending a clear signal that it won’t be party to the obfuscation of what is really ‘standard.’”

Kane also wrote to GM CEO Fritz Henderson in early September, suggesting that GM ought to be an active participant in undoing the damage. While GM did remove the erroneous information from its Certified GM website, many GM dealers continued to advertise the Impalas as having the standard feature. Kane asked GM to re-brand the altered vehicles “to alert all future purchasers and dealers that this safety equipment was not included.” SRS’s request also called on GM to immediately “change its advertising and marketing materials to reflect that the feature is not standard, and that you alert all dealers and car buyer’s guide organizations of this anomaly on the 2006 through 2008 Impala, 2008 through 2009 Cobalt and any other vehicles that GM has marketed with “standard” side curtain airbags that were offered to fleet buyers without the feature.”

GM replied the following day, denying that the status of safety feature was ever hidden from buyers: “When modifications or deletes are made to a GM vehicle for fleet purchase, the deleted equipment is clearly marked on the original window sticker as well as on the invoice. In GM-sponsored closed auctions, the content of each GM vehicle is fully disclosed,” said Brian Latouf, GM’s Director Global Structure & Safety Integration, Center in a letter to SRS.

Otherwise, Latouf said, the information on how to tell if the vehicle actually contained the standard side airbag was tucked away in the owner’s manual. In the case of auctions outside of GM’s control, buyer beware, he added.

In addition, GM said that it had taken steps to prevent further misunderstandings, including: modifying its GM Certified website so that when a dealer printed the window sticker, the side airbag feature would no longer be automatically listed; contacted internet seller sites, such as AutoTrader.com, to inform them about the deletion for fleet vehicles; and asked eBay to change its advertisements for all certified GM used vehicles. The manufacturer also asked dealers with GM certified used vehicles and third party providers to correct their window stickers for the affected vehicles.

SRS estimates that approximately 200,000 fleet vehicles have the deleted side curtain airbags despite GM’s assertion that the feature was standard.

More on side airbag deletion:

SRS letter to GM

SRS letter to NHTSA

GM response to SRS

NHTSA response to SRS

GM Allows Removal of Standard Side Airbag for Fleet Buyers