An appellate court in NY has ruled that federal law trumps state law with regard to vicarious liability of car-rental and long-term leasing companies. While NY law imposes vicarious liability on car owners – including rental and leasing companies – for accidents involving permissive users, the Transportation Equity Act of 2005 bars the imposition of vicarious liability on companies in the car rental and leasing businesses. With this decision, NY recognizes the primacy of federal law on this point. This is the first appellate ruling on the issue in NY and it now remains to be seen if the matter will be heard by NY’s highest court.