McKinnon v. Dollar Thrifty Automotive Group, Inc. et al

Filing 47

ORDER by Judge Samuel Conti denying 33 Defendants' Motion to Strike ; granting in part and denying in part 34 Defendants' Motion to Dismiss. The status conference now scheduled for Friday, March 15, 2013 is hereby VACATED and rescheduled for Friday, May 24, 2013. (sclc2, COURT STAFF) (Filed on 3/4/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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)
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SANDRA McKINNON and KRISTEN
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TOOL, individually and on behalf )
of all others similarly
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situated,
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Plaintiffs,
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v.
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DOLLAR THRIFTY AUTOMOTIVE GROUP, )
INC. d/b/a DOLLAR RENT A CAR;
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DOLLAR RENT A CAR, INC.; DTG
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OPERATIONS, INC. d/b/a DOLLAR
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RENT A CAR; and DOES 1-10,
)
inclusive,
)
)
Defendants.
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)
)

Case No. 12-4457 SC
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS'
MOTION TO DISMISS AND DENYING
DEFENDANTS' MOTION TO STRIKE

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I.

INTRODUCTION
Plaintiffs Sandra McKinnon ("Ms. McKinnon") and Kristen Tool

23

("Ms. Tool") (collectively "Plaintiffs") bring this putative class

24

action against Dollar Thrifty Automotive Group, Inc., a Delaware

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corporation headquartered in Oklahoma, and its subsidiaries Dollar

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Rent A Car, Inc. and DTG Operations, Inc. (collectively

27

"Defendants"), both Oklahoma corporations.

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of Defendants, allege that Defendants defrauded Plaintiffs and

Plaintiffs, customers

1

other customers in California and Oklahoma, and potentially

2

elsewhere as well.

3

dismiss Plaintiffs' FAC and strike Plaintiffs' class allegations.

4

ECF No. 33 ("MTS"); ECF No. 34 ("MTD").

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briefed,1 and are suitable for determination without oral argument,

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Civ. L.R. 7-1(b).

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motion to dismiss is GRANTED in part and DENIED in part, and

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Defendants' motion to strike is DENIED.

ECF No. 26 ("FAC").

Defendants now move to

The motions are fully

For the reasons explained below, Defendants'

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United States District Court

For the Northern District of California

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II.

BACKGROUND
Defendants are car rental companies.

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FAC ¶¶ 5-7.

Named

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Plaintiffs were customers of Defendants who rented cars in

13

California (Ms. Tool) and Oklahoma (Ms. McKinnon).

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Plaintiffs allege that Defendants organized a scheme to defraud

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consumers either by fraudulently signing customers up for collision

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damage waivers, car insurance, and other added services, or by

17

misleading customers into signing up for such services.

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Plaintiffs claim that Defendants' conduct amounted to a systematic,

19

nationwide program through which Defendants' employees and agents

20

would dupe customers into buying services that those customers had

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specifically declined or attempted to decline.

Id. ¶¶ 3-4.

Id. ¶ 1.

Id. ¶ 12.

Ms. McKinnon, a California resident, alleges that she made an

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online reservation through Defendants' reservation system and

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specifically declined all available optional add-ons at that time.

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Id. ¶ 13.

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up her car from Defendants' facility in the Tulsa airport,

However, Plaintiffs aver that when Ms. McKinnon picked

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28

1

ECF No. 40 ("Opp'n to MTD"); ECF No. 41 ("Opp'n to MTS"); ECF No.
44 ("Reply ISO MTS"); ECF No. 45 ("Reply ISO MTD").
2

1

Defendants' agent tried to offer her a variety of additional

2

services, all of which she orally declined.

3

was asked to sign an electronic signature pad to complete her

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transaction, Defendants' agent told her to initial certain areas in

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order to decline the add-ons.

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folded-up copy of her rental contract, though the agent allegedly

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did not discuss the total amount charged.

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returned the car to Defendants, she was allegedly charged an

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additional $359.65, almost the total cost of the rental car.

Id.

Id.

When Ms. McKinnon

She did so and was handed a

Id.

When Ms. McKinnon

Id.

United States District Court

For the Northern District of California

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Defendants' manager at the Tulsa airport would not discuss the

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charges with her, and Defendants' other employees allegedly said in

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reference to Defendants, "They never give the money back.

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not going to get your money back."

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contacting Defendants after that, including by sending them a

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written demand for the return of her money, but to no avail.

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Ms. Tool's experience was substantially similar, though she (unlike

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Ms. McKinnon) allegedly disputed her charges with her credit

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company.

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consumers' reviews of Defendants' services, all reporting

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experiences similar to Ms. McKinnon's and Ms. Tool's.

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17-20.

22

See id. ¶ 15.

Id. ¶ 14.

You are

Ms. McKinnon tried

Id.

Plaintiffs' FAC includes a litany of other

See id. ¶¶

In both Ms. Tool and Ms. McKinnon's cases, Defendants' records

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allegedly show that Plaintiffs' electronic signatures and checked

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boxes from the touchpads they were offered when picking up their

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cars indicate that Plaintiffs accepted Defendants' additional

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services instead of declining them, as Defendants' agents allegedly

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led Plaintiffs to believe.

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Plaintiffs that, since their records indicate that Plaintiffs opted

See id.

3

Defendants therefore told

1

into all charges, Plaintiffs have no recourse against Defendants.

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Id. ¶¶ 16-17.

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any of these charges and that Defendants' agents instructed them

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that signing and checking the electronic forms they were offered

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would decline the add-ons.

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allege that Defendants never reviewed the final contract or final

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charges with them, suggesting that Defendants rely on the hustle

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and rush of airports to send their customers away without having

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reviewed their rental charges.

Plaintiffs aver that they never intended to accept

See id. ¶¶ 15-20.

Id. ¶¶ 19-20.

Plaintiffs further

According to

United States District Court

For the Northern District of California

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Plaintiffs, Defendants' business model is built on incentivizing

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this sort of fraud, because Defendants' employees are paid minimum

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wage but make commissions of up to 12 percent on the sales of add-

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ons, while employees who fail to obtain "an average 30 per day up-

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sales of additional options for three months" may be terminated

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without eligibility for unemployment.

Id. ¶ 18.

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Plaintiffs therefore brought this action on behalf of

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themselves and other similarly situated customers of Defendants,

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asserting the following causes of action: (1) violations of

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California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code

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§§ 17200 et seq., for unlawful, unfair, and fraudulent business

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acts and practices; (2) violations of California's Consumers Legal

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Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750 et seq.; (3)

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violation of the Oklahoma Consumer Protection Act ("OCPA"), Okla.

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Stat. tit. 15, § 751 et seq.; (4) breach of contract; (5) breach of

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the covenant of good faith and fair dealing; (6) unconscionability;

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and (7) common counts, assumpsit, unjust enrichment, and

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restitution.

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Plaintiffs' FAC and strike Plaintiffs' class allegations.

Id. ¶¶ 29-78.

Defendants now move to dismiss

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III. LEGAL STANDARD

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A.

Motions to Dismiss

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A motion to dismiss under Federal Rule of Civil Procedure

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12(b)(6) "tests the legal sufficiency of a claim."

Navarro v.

5

Block, 250 F.3d 729, 732 (9th Cir. 2001).

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on the lack of a cognizable legal theory or the absence of

7

sufficient facts alleged under a cognizable legal theory."

8

Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

9

1988).

"Dismissal can be based

"When there are well-pleaded factual allegations, a court

United States District Court

For the Northern District of California

10

should assume their veracity and then determine whether they

11

plausibly give rise to an entitlement to relief."

12

Iqbal, 556 U.S. 662, 664 (2009).

13

must accept as true all of the allegations contained in a complaint

14

is inapplicable to legal conclusions.

15

elements of a cause of action, supported by mere conclusory

16

statements, do not suffice."

17

Twombly, 550 U.S. 544, 555 (2007)).

18

complaint must be both "sufficiently detailed to give fair notice

19

to the opposing party of the nature of the claim so that the party

20

may effectively defend against it" and "sufficiently plausible"

21

such that "it is not unfair to require the opposing party to be

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subjected to the expense of discovery."

23

1191, 1204 (9th Cir. 2011).

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dismiss is generally "limited to the complaint, materials

25

incorporated into the complaint by reference, and matters of which

26

the court may take judicial notice."

27

F.3d 989, 994 n.2 (9th Cir. 2005).

28

///

Ashcroft v.

However, "the tenet that a court

Threadbare recitals of the

Id. at 663 (citing Bell Atl. Corp. v.
The allegations made in a

Starr v. Baca, 633 F.3d

A court's review of a motion to

5

See Kourtis v. Cameron, 419

1

B.

2

Federal Rule of Civil Procedure 12(f) provides that a court

Motions to Strike

3

may, on its own or on a motion, "strike from a pleading an

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insufficient defense or any redundant, immaterial, impertinent, or

5

scandalous matter."

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. . . [and] are generally not granted unless it is clear that the

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matter sought to be stricken could have no possible bearing on the

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subject matter of the litigation."

9

Supp. 2d 1177, 1180 (N.D. Cal. 2001).

Motions to strike "are generally disfavored

Rosales v. Citibank, 133 F.

United States District Court

For the Northern District of California

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IV.

DISCUSSION

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A.

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Defendants argue that all of Plaintiffs' claims, except Ms.

Defendants' Motion to Dismiss

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Tool's UCL claims, should be dismissed because (1) the presumption

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against extraterritorial application of statutes means that

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Plaintiffs' UCL, CLRA, and OCPA claims all fail where Plaintiffs'

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allegations would cause these statutes to operate

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extraterritorially; (2) Plaintiffs' OCPA claims are barred by the

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voluntary payment doctrine, a defense that a payment knowingly made

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may not be recovered; and (3) Plaintiffs' common law claims fail

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because Plaintiffs fail to plead essential elements of those

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claims.

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about whether Plaintiffs have sufficiently pled elements of the

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UCL, CLRA, and OCPA, but since Defendants' arguments concern

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whether Plaintiffs' claims are barred for threshold reasons, the

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Court does not address the substance of Plaintiffs' claims at this

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point.

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///

Plaintiffs' opposition brief includes extensive argument

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a.

OCPA and the Voluntary Payment Doctrine

OCPA prohibits, among other things, knowingly making false or

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3

misleading statements or trade practices concerning consumer

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transactions.

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Plaintiffs claim that Defendants' acts in the Tulsa airport violate

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OCPA because Defendants' agents allegedly "knowingly made false and

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misleading statements, and engaged in deceptive trade practices"

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when they misled Ms. McKinnon into paying for services she did not

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want.

Okla. Stat. tit. 15, §§ 751, 753, 753(13).

FAC ¶ 58.

Defendants argue that Ms. McKinnon's claim under

United States District Court

For the Northern District of California

10

OCPA is foreclosed by the "voluntary payment doctrine, under which

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money voluntarily paid with full knowledge of the facts under which

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it was demanded cannot be recovered."

13

and quotations omitted).

14

MTD at 7 (internal citations

California law treats the voluntary payment doctrine as an

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affirmative defense.

See, e.g., Ellsworth v. U.S. Bank, N.A., --

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F. Supp. 2d. --, No. C 12–02506 LB, 2012 WL 6176905, *14 (N.D. Cal.

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Dec. 11, 2012).

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can be granted if the complaint's allegations, with all inferences

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drawn in the plaintiff's favor, nonetheless show that the

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affirmative defense is obvious on the face of the complaint.

21

Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954,

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969 (9th Cir. 2010).

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defense of the voluntary payment doctrine was obvious on the face

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of the FAC.

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made "with full knowledge of the facts," and the cases Defendants

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cite to resolve this issue, C9 Ventures v. SVC-West, L.P., 202 Cal.

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App. 4th 1483, 1501 (Cal. Ct. App. 2012), and Marin Storage &

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Trucking, Inc. v. Benco Contracting & Eng'g, Inc., 89 Cal. App. 4th

Motions to dismiss based on affirmative defenses

See

The Court does not find that the affirmative

The parties dispute whether Ms. McKinnon's payment was

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1042, 1049 (Cal. Ct. App. 2001), are inapposite because they state

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the rule that parties to a valid contract must be held to the

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provisions of that contract regardless of whether they were aware

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of those provisions.

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party actually had knowledge of those provisions for purposes other

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than contract enforcement.

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Plaintiffs' OCPA claims as to Ms. McKinnon are therefore

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undisturbed.

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below.

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United States District Court

For the Northern District of California

That is a different question from whether a

b.

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12

Plaintiffs' OCPA claims as to Ms. Tool are discussed

Extraterritorial Application of the UCL, CLRA, and
OCPA

The UCL makes actionable any "unlawful, unfair or fraudulent

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business act or practice."

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Similarly, the CLRA prohibits "unfair methods of competition and

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unfair or deceptive acts or practices."

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OCPA prohibits, among other things, knowingly making false or

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misleading statements or trade practices concerning consumer

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transactions.

19

Cal. Bus. & Prof. Code § 17200.

Cal. Civ. Code § 1770.

Okla. Stat. tit. 15, §§ 751, 753, 753(13).

California law presumes that the Legislature did not intend a

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statute to be "operative, with respect to occurrences outside the

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state, . . . unless such intention is clearly expressed or

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reasonably to be inferred from the language of the act or from its

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purpose, subject matter or history."

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Cal. 4th 1191, 1207 (Cal. 2011) (citations and quotations omitted).

25

With regard to the UCL and CLRA, non-California residents' claims

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are not supported "where none of the alleged misconduct or injuries

27

occurred in California."

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Cal. App. 3d 605, 612–13 (1987) (citing Norwest Mortg. Inc. v.

Sullivan v. Oracle Corp., 51

Clothesrigger, Inc. v. GTE Corp., 191

8

1

Superior Court, 72 Cal. App. 4th 214, 222 (Cal. Ct. App. 1999));

2

Banks v. Nissan N. Am., Inc., 2012 U.S. Dist. LEXIS 37754, *3 (N.D.

3

Cal. Mar. 20, 2012).

4

presumption against extraterritoriality.

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& Rubber Co., 164 P.3d 1028, 1037 (Okla. 2007) ("Courts have

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generally determined that the focus of the inquiry concerning

7

application of [consumer protection statutes] to out-of-state

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consumers is whether the offending consumer transaction occurred

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with[in] the state.")

United States District Court

Harvell v. Goodyear Tire

Defendants argue that Ms. McKinnon's UCL and CLRA claims are

10
For the Northern District of California

Oklahoma law is in accord with the

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barred by the presumption against extraterritoriality since they

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"depend on actions and alleged injuries occurring in Oklahoma,"

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because Plaintiffs allege that Defendants' agents "tried to up-

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sell" Ms. McKinnon in the Tulsa airport, that she was fraudulently

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charged by Defendants in Tulsa, and that she paid Defendants in

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Tulsa.2

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injuries took place in Oklahoma, then no California statute can

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encompass those injuries.

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argument as to Ms. Tool's OCPA claim, since the core of Ms. Tool's

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allegations about Defendants' behavior is located in California,

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not Oklahoma.

See MTD at 7.

Defendants conclude that if Ms. McKinnon's

Defendants make the same territorial

Id. at 7-8.

Plaintiffs allege that Defendants do business in California

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23

through their website and at California airports, thereby linking

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Defendants to this jurisdiction.

FAC ¶¶ 5-7.

Further, as to Ms.

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26
27
28

2

Defendants' footnotes also raise the argument, which Plaintiffs
join, that applying California statutes to an Oklahoma transaction
would violate the Dormant Commerce Clause. See MTD at 7 n.7; Opp'n
to MTD at 8 n.2; Reply ISO MTD at 4 n.3. The Court declines to
address this argument at this point, because the Court finds that
the presumption against extraterritoriality bars Plaintiffs' claims
as to Ms. McKinnon as pled in Plaintiffs' FAC.
9

1

McKinnon's injuries, Plaintiffs argue that "even though [Ms.

2

McKinnon] picked up the vehicle in Oklahoma, she made the

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reservation for the rental, where she specifically placed

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[Defendants] on notice that she specifically declined all available

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additional optional add-ons, in California.

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also occurred in the State of California."

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As such her injury
Opp'n to MTD at 8.

With regard to Ms. McKinnon, Plaintiffs also argue that

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"California residents . . . may bring claims under the UCL and CLRA

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regardless of where the 'injury' took place."

Opp'n to MTD at 7.

United States District Court

For the Northern District of California

10

In support of this, Plaintiffs cite Allstate Ins. Co. v. Hague, 449

11

U.S. 302, 315 (1981), for the principle that "[n]umerous cases have

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applied the law of a jurisdiction other than the alleged situs of

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the injury where there existed some other link between that

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jurisdiction and the occurrence."

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holding correctly, but the issue in Allstate involved choice of

16

law, not the reach of one particular state's statute.

17

does not support Plaintiffs' broad claim that California residents

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can bring UCL and CLRA claims regardless of where their injuries

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take place.

20

Id.

Plaintiffs cite Allstate's

Allstate

Plaintiffs further cite Stop Youth Addiction v. Lucky Stores,

21

Inc., 17 Cal. 4th 553, 570 (Cal. Ct. App. 1998), to argue that

22

because the California Legislature deleted the language "in this

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state" from the UCL in 1992, they meant for the UCL to encompass

24

past activity and out-of-state activity.

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courts have already rejected this argument.

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4th at 223-24 ("The 1992 amendment did not expand the conduct

27

regulated by the UCL. It clarified the scope of injunctive relief

28

available to a plaintiff who was already entitled to pursue a claim

10

Id.

However, California
Norwest, 72 Cal. App.

1
2

under the UCL.").
None of Plaintiffs' other cases are apposite.

Both Yu v.

1999), and Speyer v. Avis Rent A Car System, Inc., 415 F. Supp. 2d

5

1090, 1099 (S.D. Cal. 2005), affirm the rule that California

6

residents can bring claims against out-of-state defendants if their

7

injuries occurred in California.

8

similarly situated plaintiffs could state a UCL claim if they were

9

harmed at the moment they received unlawful online rental quotes

10

United States District Court

Signet Bank/Virginia, 69 Cal. App. 4th 1377, 1381-82 (Cal. Ct. App.

4

For the Northern District of California

3

from the out-of-state car rental defendants, but that is not what

11

Plaintiffs pled here.

12

underlying California statute that specifically prohibited car

13

rental companies from offering misleading quotes to customers.

14

F. Supp. 2d at 1095.

15

Moreover, Speyer noted that

In any event, Speyer partly concerned an

415

The Court finds that Plaintiffs' UCL and CLRA claims are too

16

attenuated as to Ms. McKinnon.

Everything Plaintiffs plead

17

regarding Ms. McKinnon suggests that any harms actually arose in

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Oklahoma, when Defendants' agents allegedly tricked Ms. McKinnon

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into purchasing unwanted add-ons at the point of sale.

20

McKinnon's online reservation, made from California, was not enough

21

to bring Defendants' Oklahoma activity within the scope of the UCL

22

and CLRA, since Plaintiffs did not plead, for example, that

23

Defendants engaged in any injurious or fraudulent activity at the

24

time Ms. McKinnon made her reservation.

Ms.

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Similarly, as to Ms. Tool's OCPA claims, the injuries in

26

question took place in California, and there is no indication that

27

OCPA encompasses injury to a non-Oklahoma-resident occurring

28

outside Oklahoma.

Plaintiffs argue that Oklahoma courts do not

11

1

follow the "lex loci delicti" rule,3 but rather the "most

2

significant relationship" test, in determining which jurisdiction's

3

law should govern a dispute.

4

Brickner, 525 P.2d at 635-37).

5

choice of law but rather whether a state consumer protection

6

statute should apply extraterritorially -- and the answer is that

7

it cannot.

8

inquiry concerning the application of [a consumer protection

9

statute] to out-of-state consumers is whether the offending

United States District Court

For the Northern District of California

10

Opp'n to MTD at 12-13 (citing
However, the issue here is not

See Harvell, 164 P.3d at 1037 ("[T]he focus of the

consumer transaction occurred with[in] the state.").
Plaintiffs' CLRA and UCL claims as to Ms. McKinnon are

11
12

DISMISSED with leave to amend.

13

plead that Ms. McKinnon's injuries occurred within those statutes'

14

territorial scopes.

15

DISMISSED with leave to amend for the same reasons.

16

OCPA claims as to Ms. McKinnon remain undisturbed, as do

17

Plaintiffs' UCL and CLRA claims as to Ms. Tool.

18

c.

Plaintiffs may amend if they can

Plaintiffs' OCPA claims as to Ms. Tool are
Plaintiffs'

Notice Under the CLRA

Consumers bringing actions under CLRA provisions must give

19
20

notice to the alleged offender at least thirty days prior to the

21

commencement of an action for damages, demanding that the offender

22

"correct, repair, replace, or otherwise rectify the goods or

23

services alleged to be in violation of [the CLRA]."

24

§ 1782.

25

opportunity to cure their alleged violations before they may be

Cal. Civ. Code

The purpose of this requirement is to give defendants the

26
27
28

3

The lex loci delicti rule is a choice of law rule. It states
that "the law of the place of the injury or where the cause of
action arose[] determines the substantive rights and liabilities of
the parties." Brickner v. Gooden, 525 P.2d 632, 634 (Okla. 1974).
12

1

held liable for damages.

2

Cal. App. 3d 30, 41 (Cal. Ct. App. 1975).

3

Outboard Marine Corp. v. Super. Ct., 52

Plaintiffs pled, as to the notice requirement, that "[w]ritten

4

notice pursuant to the provisions of the CLRA was provided to

5

[Defendants] by Ms. McKinnon on behalf of all Class members on June

6

6, 2012."

7

lacks standing to bring a CLRA claim (per the arguments addressed

8

in Section IV.A.b, supra), her notice is insufficient to allow Ms.

9

Tool or other putative class members to bring a CLRA action,

FAC ¶ 56.

Defendants argue that because Ms. McKinnon

United States District Court

For the Northern District of California

10

because no class has yet been certified, and Plaintiffs' prayer for

11

damages under the CLRA as to Ms. Tool would be impermissible

12

without her having filed a CLRA notice of her own.

13

at 6-7 (citing Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d

14

939, 949 (S.D. Cal. 2007) (holding that CLRA claims for damages

15

must be dismissed with prejudice if a plaintiff does not comply

16

with CLRA notice procedures)).

17

Defendants' arguments are unavailing.

Reply ISO MTD

First, the Court has

18

not determined that Ms. McKinnon definitively lacks status to bring

19

a CLRA claim.

20

yet plead a CLRA claim that is not barred by California's

21

presumption against extraterritoriality.

22

As noted in Section IV.A.b supra, Ms. McKinnon may

Second, Defendants' allegations that the named Plaintiffs

23

cannot give notice on behalf of a class that does not exist yet

24

raises an irrelevant issue.

25

State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022-23 (9th Cir.

26

2003), and Boyle v. Madigan, 492 F.2d 1180, 1182 (9th Cir. 1974)),

27

rightly state that named plaintiffs in a putative class action who

28

lack standing to bring certain claims cannot litigate those claims

The cases Defendants cite, Lierboe v.

13

1

on behalf of those not present.

2

Plaintiffs lack standing to bring a CLRA claim, and moreover, those

3

cases do not state that plaintiffs cannot give notice under the

4

CLRA on a class's behalf.

5

But the Court has not held that

Third, the CLRA's notice function is in place to ensure that

6

Defendants are aware of alleged wrongdoing and given an opportunity

7

to correct it before they are sued.

8

Ms. McKinnon gave notice to Defendants of an impending class action

9

lawsuit concerning Defendants' add-on service sales practices.

That purpose was served when

United States District Court

For the Northern District of California

10

Defendants were "on notice that [they were] being sued by a

11

putative class, and thus the notice was sufficient 'to facilitate

12

pre-complaint settlement,' which is the purpose of the CLRA notice

13

requirements."

14

Supp. 2d 1030, 1038 (N.D. Cal. 2012) (quoting Outboard Marine, 52

15

Cal. App. 3d at 41).

See In re Apple In-App Purchase Litig., 855 F.

16

Therefore the Court declines to dismiss Plaintiffs' CLRA

17

claims for lack of notice, though as stated above, Plaintiffs' CLRA

18

claims as to Ms. McKinnon are dismissed with leave to amend for

19

other reasons.

20

d.

Plaintiffs' Common Law Claims

21

Defendants also argue that Plaintiffs' common law claims must

22

fail primarily because Plaintiffs fail to plead requisite elements

23

of those claims.

24
25

i.

Breach of Contract

"To state a cause of action for breach of contract, a party

26

must plead [1] the existence of a contract, [2] his or her

27

performance of the contract or excuse for nonperformance, [3] the

28

defendant's breach, and [4] resulting damage."

14

Mora v. U.S. Bank,

1

N.A., No. 11-6598 SC, 2012 WL 2061629, *6 (N.D. Cal. June 7, 2012)

2

(citing Harris v. Rudin, Richman & Appel, 74 Cal. App. 4th 299, 307

3

(Cal. Ct. App. 1999)).

4

existence of a contract, the plaintiff may set forth the contract

5

verbatim, attach it as an exhibit, or plead it according to its

6

legal effect.

7

2011 WL 3607608, at *2 (N.D. Cal. Aug. 15, 2011).

8
9

Additionally, if the plaintiff alleges the

See Lyons v. Bank of America, N.A., No. 11-01232 CW,

Plaintiffs point to the contracts that Ms. McKinnon and Ms.
Tool signed when they picked up their rental cars in Oklahoma and

United States District Court

For the Northern District of California

10

California, arguing that Defendants breached those contracts by

11

tricking Plaintiffs into checking boxes in order to claim that

12

Plaintiffs ordered unwanted products and services, or by "inputting

13

[Plaintiffs'] signature without authorization."

14

Plaintiffs do not cite, attach, or explain in real detail the

15

contract provisions that Defendants allegedly breached.

16

Plaintiffs' allegations appear to align more with a

17

misrepresentation claim or some other cause of action sounding in

18

fraud.

19

this claim is DISMISSED with leave to amend so that Plaintiffs can

20

specify exactly which contract provisions Defendants breached.

21
22

FAC ¶ 66.

Plaintiffs have failed to plead a breach of contract, so

ii.

Breach of the Implied Covenant of Good
Faith and Fair Dealing

23

"The covenant of good faith and fair dealing, implied by law

24

in every contract, exists merely to prevent one contracting party

25

from unfairly frustrating the other party's right to receive the

26

benefits of the agreement actually made."

27

Inc., 24 Cal. 4th 317, 349 (Cal. 2000).

28

a contracting party from taking an action that, although

15

Guz v. Bechtel Nat.
The covenant thus prevents

1

technically not a breach, frustrates the other party's right to the

2

benefit of the contract.

3

3d 1136, 1153 (Cal. Ct. App. 1990).

4

substantive duties or limits on the contracting parties beyond

5

those incorporated in the specific terms of their agreement."

6

24 Cal. 4th at 349-50.

7

covenant of good faith and fair dealing are:

8

10

United States District Court

The covenant "cannot impose

Guz,

The elements of a claim for breach of the

(1) the plaintiff and the defendant entered
into a contract; (2) the plaintiff did all or
substantially all of the things that the
contract required him to do or that he was
excused from having to do; (3) all conditions
required for the defendant's performance had
occurred; (4) the defendant unfairly interfered
with the plaintiff's right to receive the
benefits
of
the
contract;
and
(5)
the
defendant's conduct harmed the plaintiff.

9

For the Northern District of California

Love v. Fire Ins. Exchange, 221 Cal. App.

11
12
13
14

Woods v. Google, Inc., -- F. Supp. 2d --, 2012 WL 3673319, at *8

15

(N.D. Cal. 2012) (citing Judicial Counsel of California Civil Jury

16

Instructions § 325 (2011)).
Plaintiffs allege that Defendants breached the covenant of

17
18

good faith and fair dealing by implementing systemic policies and

19

practices meant to trick or mislead customers into buying unwanted

20

services, despite having been placed on notice that those practices

21

were taking place nationwide.

22

a specific part of the contract that serves as the premise for

23

their claim.

24

given their identity with Plaintiffs' breach of contract claims

25

would be superfluous.

26

DISMISSED with leave to amend to correct these errors.

27

///

28

///

Plaintiffs do not, however, point to

The Court finds that allowing these claims to proceed

Accordingly Plaintiffs' claims here are

16

1

iii. Common Counts, Unjust Enrichment,

2

Restitution, and Assumpsit
Count 8 of the FAC pleads a cause of action "[u]nder common

3
4

law principles of common counts, assumpsit, unjust enrichment,

5

and/or restitution," based on Defendants' alleged receipt of money

6

charged to Plaintiffs with the knowledge that those charges were

7

improper or illegal.

8

is no cause of action for 'unjust enrichment' in California."

9

at 13 (citing Wolph v. Acer Am. Corp., No. C 09-0314 JSW, 2009 WL

FAC ¶¶ 75-78.

Defendants argue that "there
MTD

United States District Court

For the Northern District of California

10

2969467 (N.D. Cal. Sept. 14, 2009).

11

even if there were, the Court should dismiss that claim -- as well

12

as claims for assumpsit, common counts, and common law restitution

13

-- because they would be duplicative of other theories of relief.

14

MTD at 13.

15

enrichment can be an alternative claim to breach of contract when,

16

for example, "the parties have a contract that was procured by

17

fraud or is for some reason unenforceable."

18

(citing Monet v. Chase Home Fin. LLC, No. C 10–0135 RS, 2010 WL

19

2486376, at *8-9 (N.D. Cal. June 16, 2010)).

20

that their remaining claims under Count 8 do not fail because they

21

are pled as equitable alternatives to the breach of contract claim.

22

Id.

23

Defendants further argue that

Plaintiffs respond that this Court has held that unjust

Opp'n to MTD at 21

Plaintiffs continue

Plaintiffs are correct that this Court has recognized unjust

24

enrichment as an equitable alternative to breach of contract

25

claims.

26

Boughton, 123 Cal. App. 4th 379, 388 (Cal. Ct. App. 2004)

27

(construing a claim for "unjust enrichment" as an attempt to plead

28

a cause of action giving rise to restitution).

See, e.g., Monet, 2010 WL 2486376, at *8-9; McBridge v.

17

Construing the

1

pleadings liberally, Plaintiffs have pled that the contracts they

2

signed were obtained essentially through fraud, in which case

3

restitution under an unjust enrichment theory could be an

4

appropriate remedy.

5

sufficiently pled an equitable unjust enrichment claim insofar as

6

it is an equitable alternative to and not duplicative of

7

Plaintiffs' other claims.

8

assumpsit, common law restitution, and common counts are DISMISSED

9

because Plaintiffs fail to state a legal basis for those claims,

The Court finds that Plaintiffs have

However, Plaintiffs' claims for

United States District Court

For the Northern District of California

10

and they would be duplicative of Plaintiffs' unjust enrichment

11

claim.

12
13

iv.

Unconscionability

Plaintiffs plead that the contracts they have with Defendants

14

are procedurally and substantively unconscionable, because

15

Defendants did not disclose to Plaintiffs that they would be

16

charged for unwanted add-ons or obtain Plaintiffs' "free and proper

17

affirmative consent" prior to these charges, and because Defendants

18

allegedly forged Plaintiffs' signatures to the rental agreements.

19

FAC ¶¶ 70-75.

20

signed were contracts of adhesion, and the parties' disparate

21

bargaining positions combined with the contracts' unfair terms

22

suffice to make Plaintiffs' claims here actionable under California

23

and Oklahoma statutes allowing Courts to refuse to enforce

24

unconscionable statutes.

25

1670.5 and Okla. Stat. Tit. 12A, § 2-302.

26

Further, Plaintiffs allege that the agreements they

Id. ¶ 73 (citing Cal. Civ. Code section

Plaintiffs' claim must be dismissed because it fails to set

27

forth a cognizable legal theory.

Unconscionability under both

28

statutes Plaintiffs cite, as well as under common law, is a defense

18

1

to the enforcement of a contract, not an independent cause of

2

action.

3

prejudice.

Plaintiffs' claim for unconscionability is DISMISSED with

4

B.

5

Plaintiffs bring this action on behalf of all of Defendants'

Defendants' Motion to Strike

6

customers in California and Oklahoma who, within the last four

7

years, paid for add-ons that they either declined or did not

8

authorize with free consent.

9

all of Plaintiffs' class allegations pursuant to Rule 12(f),

FAC ¶ 21.

Defendants move to strike

United States District Court

For the Northern District of California

10

arguing that "it is apparent from the face of the [FAC] that no

11

class can be certified."

12

on the grounds that it is premature.

MTS at 4.

Plaintiffs oppose this motion
Opp'n to MTS at 1.

Class allegations typically are tested on a motion for class

13
14

certification, not at the pleading stage.

See Collins v. Gamestop

15

Corp., C 10–1210–TEH, 2010 WL 3077671, at *2 (N.D. Cal. Aug. 6,

16

2010).

17

pleadings to determine whether the interests of the absent parties

18

are fairly encompassed within the named plaintiff's claim."

19

Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982).

20

courts have struck class allegations where it is clear from the

21

pleadings that class claims cannot be maintained.

22

Apple Inc., 672 F. Supp. 2d 978, 990 (N.D. Cal.2009).

However, "[s]ometimes the issues are plain enough from the

Gen.

Thus, some

E.g., Sanders v.

Defendants argue that Plaintiffs' class allegations should be

23
24

stricken because (1) the class is not ascertainable; (2) individual

25

inquiries predominate; (3) Plaintiffs' rental agreements

26

demonstrate the absence of any uniform, class-wide proof; and (4)

27

Plaintiffs cannot show class-wide injury and causation.

28

11.

Defendants' arguments on the first three points are

19

MTS at 4-

1

essentially the same: they claim that the Court would have to

2

conduct individualized inquiries or "mini-trials" to decide whether

3

Plaintiffs were really eligible for class membership.

4

4-9.

5

claims sound in fraud, since they involve face-to-face interactions

6

and oral representations between Defendants' employees and

7

Plaintiffs, and that fraud-based claims are generally not amenable

8

to class-wide proof of injury and causation.

See MTS at

Defendants' argument on the last point is that Plaintiffs'

Id. at 9-10.

Whatever the merits of Defendants' claims, they are premature

9

United States District Court

For the Northern District of California

10

at the pleading stage.

The parties have had no time to develop a

11

factual record, and so it is unclear whether Defendants' arguments

12

on this point have any merit.

13

Plaintiffs' pleadings that no class can be maintained.

14

v. Apple, 672 F. Supp. 2d at 990.

15

therefore DENIED.

Moreover, it is not clear from
See Sanders

Defendants' motion to strike is

16
17
18

V.

CONCLUSION
As explained above, the Court GRANTS IN PART and DENIES IN

19

PART Defendants Dollar Thrifty Automotive Group, Inc., Dollar Rent

20

A Car, Inc., and DTG Operations, Inc.'s motion to dismiss Sandra

21

McKinnon and Kristen Tool's complaint, and DENIES their motion to

22

strike.

The Court orders as follows:

23

Plaintiffs' UCL claims are DISMISSED with leave to amend as to

24

Ms. McKinnon, but undisturbed as to Ms. Tool.

25

Plaintiffs' CLRA claim is DISMISSED with leave to amend as to

26

Ms. McKinnon, but undisturbed as to Ms. Tool.

27

Plaintiffs' OCPA claim is DISMISSED with leave to amend as to

28

Ms. Tool, but undisturbed as to Ms. McKinnon.

20

1

Plaintiffs' breach of contract claim is DISMISSED with leave

2

to amend.

3

Plaintiffs' claim for breach of the covenant of good faith and

4

fair dealing is DISMISSED with leave to amend.

5

Plaintiffs' unconscionability claim is DISMISSED WITH

6

PREJUDICE.

7

Plaintiffs' common counts, common law restitution, and

8

assumpsit claims are DISMISSED WITH PREJUDICE, but Plaintiffs'

9

equitable unjust enrichment claim is undisturbed.

United States District Court

For the Northern District of California

10

Plaintiffs have thirty (30) days from the signature date of this

11

Order to file an amended complaint curing the defects described in

12

Section III.A supra, or the Court may dismiss their defective

13

claims with prejudice.

14

Friday, March 15, 2013, is hereby VACATED and rescheduled for

15

Friday, May 24, 2013.

The status conference now scheduled for

16
17
18

IT IS SO ORDERED.

19
20

4
Dated: MARCH ___, 2013

21

UNITED STATES DISTRICT JUDGE

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25
26
27
28

21