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

Filing 68

Order by Hon. Samuel Conti GRANTING IN PART and DENYING IN PART 51 Motion to Dismiss portions of Plaintiffs' Second Amended Complaint.(sclc2, COURT STAFF) (Filed on 7/3/2013)

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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
)
situated,
)
)
Plaintiffs,
)
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v.
)
)
DOLLAR THRIFTY AUTOMOTIVE GROUP, )
INC. d/b/a DOLLAR RENT A CAR;
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DOLLAR RENT A CAR, INC.; DTG
)
OPERATIONS, INC. d/b/a DOLLAR
)
RENT A CAR; and DOES 1-10,
)
inclusive,
)
)
Defendants.
)
)

Case No. 12-4457 SC
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS'
MOTION TO DISMISS PORTIONS OF
PLAINTIFFS' SECOND AMENDED
COMPLAINT

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I.

INTRODUCTION
Plaintiffs Sandra McKinnon and Kristen Tool (collectively

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"Plaintiffs") bring this putative class action against Dollar

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Thrifty Automotive Group, Inc., a Delaware corporation

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headquartered in Oklahoma, and its subsidiaries Dollar Rent A Car,

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Inc. and DTG Operations, Inc. (collectively "Defendants"), both

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Oklahoma corporations.

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in their second amended complaint that Defendants defrauded

Plaintiffs, customers of Defendants, allege

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Plaintiffs and other customers in California and Oklahoma.

ECF No.

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50 ("SAC").

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SAC.

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55 ("Opp'n"), 60 ("Reply"), and is suitable for determination

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without oral argument, Civ. L.R. 7-1(b).

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below, Defendants' motion to dismiss portions of Plaintiff's SAC is

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GRANTED IN PART and DENIED IN PART.

Defendants now move to dismiss portions of Plaintiffs'

ECF No. 51 ("Mot.").

The Motion is fully briefed, ECF Nos.

For the reasons explained

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9 II.

Defendants are car rental companies.

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United States District Court

For the Northern District of California

BACKGROUND
SAC ¶¶ 5-7.

Named

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Plaintiffs were customers of Defendants who rented cars in

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

Id. ¶¶ 3-4.

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

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online vehicle reservation with Defendants via their partner

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Southwest Airlines's website.

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apparently offered her a daily rental rate, including "approximate

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taxes and fees," and stated that additional taxes, surcharges, or

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fees "may apply."

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information to Defendants via their website in order to confirm her

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reservation, at which point she received a confirmation number from

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Defendants, as well as a "rate breakdown" of two weeks' rental time

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at $147.56 plus one extra day at $20.69 (totaling a "base rate" of

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$315,81") and $160.46 in taxes and fees.

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("Confirmation").1

At that time, Defendants

Ms. McKinnon submitted her payment

Id.; see also SAC Ex. 1

Defendants offer their own damage waivers and insurance, but

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26

Id.

Id. ¶ 13.

at no point during the reservation process did Defendants disclose

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1

Plaintiffs refer to the Confirmation as if it generally
represents the "initial reservation agreements" they claim to have
entered. The Court does the same.
2

1

that some of the waivers or insurance they offer might be

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duplicative of what customers might already have through credit

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card companies or private insurers.

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allege that Defendants should have known such duplicative coverage

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would be likely.

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Defendants' representations or agreements during their online

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reservation process provided specific information about potential

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add-on fees, though the Confirmation stated that additional fees,

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surcharges, and taxes may apply.

United States District Court

For the Northern District of California

10

See id.

See SAC ¶ 13.

Plaintiffs

Further, Plaintiffs state that none of

See id.; see also Confirmation at

1-2.

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Plaintiffs aver that when Ms. McKinnon picked up her car from

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Defendants' facility in the Tulsa airport, Defendants' agent tried

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to offer her a variety of additional services, all of which she

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orally declined.

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electronic signature pad to complete her transaction, Defendants'

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agent told her to initial certain areas in order to decline the

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add-ons.

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rental contract.

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total amount charged.

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car to Defendants, she was allegedly charged an additional $359.65,

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almost the total cost of the rental itself.

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manager at the Tulsa airport would not discuss the charges with

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her, and Defendants' other employees allegedly said in reference to

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Defendants, "They never give the money back.

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get your money back."

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Defendants after that, including by sending them a written demand

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for the return of her money, but she never received a refund or any

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form of redress.

Id.

Id.

When Ms. McKinnon signed Defendants'

She did so and was handed a folded-up copy of her
Id.

The agent allegedly did not discuss the
Id.

When Ms. McKinnon returned her rental

Id. ¶ 14.

Id.

Defendants'

You are not going to

Ms. McKinnon tried contacting

Id.

3

1

Ms. Tool's experience renting a car from Defendants was

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substantially similar, though she (unlike Ms. McKinnon) allegedly

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disputed her charges with her credit card company, and Plaintiffs

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allege that she (also unlike Ms. McKinnon) prepaid her reservation.

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See id. ¶ 15.2
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

United States District Court

For the Northern District of California

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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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told Plaintiffs that they had no recourse against Defendants, since

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Defendants' records indicated that Plaintiffs opted into all

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charges.

See id. ¶¶ 15-17.

Defendants therefore

Id. ¶¶ 16-17.

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Plaintiffs aver that they never intended to accept any of

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these charges and that Defendants' agents instructed them that

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signing and checking the electronic forms they were offered would

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decline the add-ons.

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that Defendants rely on the hustle and rush of airports to send

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their customers away without having reviewed their rental charges,

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thereby giving Defendants a basis for claiming that their customers

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routinely agree to the add-on charges.

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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 twelve percent on the sales of

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

See id. ¶¶ 15-20.

Plaintiffs further suggest

Id. ¶¶ 19-20.

According to

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2

Plaintiffs' FAC includes a long list of other consumers' reviews
of Defendants' services, all reporting experiences similar to Ms.
McKinnon's and Ms. Tool's. See id. ¶¶ 17-20.
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1

up-sales of additional options for three months" may be terminated

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without eligibility for unemployment.

Id. ¶ 18.

Based on the facts described above, Plaintiffs' SAC asserts

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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; (4) violation of California's Consumers Legal

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Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750 et seq.; (5)

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

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United States District Court

eight causes of action against Defendants: (1-3) violations of

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For the Northern District of California

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Stat. tit. 15, § 751 et seq.; (6) breach of contract and breach of

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the covenant of good faith and fair dealing; (7) declaratory

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relief; and (8) unjust enrichment.

SAC ¶¶ 32-85.

Now Defendants move to dismiss Plaintiffs' UCL and CLRA claims

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as to Ms. McKinnon, and their breach of contract and breach of the

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implied covenant claims as to all Plaintiffs.

See MTD at 1-2.

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17 III.

LEGAL STANDARD

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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.

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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

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sufficient facts alleged under a cognizable legal theory."

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

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1988).

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should assume their veracity and then determine whether they

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plausibly give rise to an entitlement to relief."

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

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

"Dismissal can be based

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

Ashcroft v.

However, "the tenet that a court

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1

is inapplicable to legal conclusions.

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elements of a cause of action, supported by mere conclusory

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statements, do not suffice."

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

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complaint must be both "sufficiently detailed to give fair notice

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

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may effectively defend against it" and "sufficiently plausible"

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

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subjected to the expense of discovery."

United States District Court

For the Northern District of California

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Threadbare recitals of the

Id. at 678 (citing Bell Atl. Corp. v.
The allegations made in a

Starr v. Baca, 652 F.3d

1202, 1216 (9th Cir. 2011).

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12 IV.

DISCUSSION

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A.

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Plaintiffs make UCL and CLRA claims as to both named

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Plaintiffs, but Defendants only challenge these claims as they

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concern Ms. McKinnon, who picked up her rental car in Oklahoma.

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Defendants argue that California's presumption against

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extraterritoriality precludes Plaintiffs' claims as to Ms.

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McKinnon, and also that Plaintiffs' allegations about Defendants'

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violations of California laws are insufficiently pled.

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Plaintiffs' UCL and CLRA Claims

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).

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With regard to the UCL specifically, and presumably the CLRA since

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the presumption against extraterritoriality is broad, non-

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Sullivan v. Oracle Corp., 51

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California residents' claims are not supported "where none of the

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alleged misconduct or injuries occurred in California."

3

Village, LLC v. General Elec. Co., 169 F. Supp. 2d 1119, 1126

4

(citing Norwest Mortg. Inc. v. Super. Ct., 72 Cal. App. 4th 214,

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222 (Cal. Ct. App. 1999)).

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UCL and CLRA's application to non-residents was heightened because

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Ms. Tool is not a resident of California.

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motion, that concern is somewhat dampened because Ms. McKinnon is a

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California resident, and Defendants' motion only disputes

United States District Court

For the Northern District of California

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Churchill

In Order I, the special concern for the

In Defendants' present

Plaintiffs' claims about her.

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In Order I, the Court dismissed Plaintiffs' UCL and CLRA

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claims as to Ms. McKinnon because the harm -- being forced to pay

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fraudulent charges -- actually occurred in Oklahoma, not

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California, and Plaintiffs pled no other facts strongly linking

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Defendants' behavior to California or justifying the application of

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California law to Ms. McKinnon's situation.

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Court gave Plaintiffs leave to amend their complaint to explain how

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Ms. McKinnon's alleged harms fall within the territorial scope of

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the UCL and CLRA.

Order I at 9-12.

The

See id. at 12.

Now Plaintiffs plead that Defendants' statements during the

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reservation process in California were harmful misrepresentations

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or omissions giving rise to UCL and CLRA claims, and that Ms.

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McKinnon was also harmed by ultimately paying the fraudulent

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charges from a California bank account.

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37, 54.

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add-ons from California.

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///

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///

See, e.g., SAC ¶¶ 13-15,

Plaintiffs no longer plead that Ms. McKinnon declined any

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a. The UCL
The UCL makes actionable any "unlawful, unfair or fraudulent

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business act or practice."

Cal. Bus. & Prof. Code § 17200.

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three prongs are distinct, and Plaintiffs have accordingly asserted

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claims against Defendants for unlawful, unfair, and fraudulent

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business practices.

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which would tie Plaintiffs' claims as to Ms. McKinnon firmly to

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California because Plaintiffs base this claim on Defendants'

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alleged violations of California laws within the state of

The Court first discusses the unlawful prong,

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United States District Court

For the Northern District of California

These

California.

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claims, which depend on facts inside and outside the state.

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The Court then discusses the unfair or fraudulent

i.

Unlawful Prong

Plaintiffs can plead a UCL violation under the "unlawfulness"

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prong by pleading that one of Defendants' business practices

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violated a predicate federal, state, or local law.

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Commc'ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163,

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180 (Cal. 1999) (citing State Farm Fire & Cas. Co. v. Superior

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Court, 45 Cal. App. 4th 1093, 1103 (Cal. Ct. App. 1996)).

See Cel–Tech

Plaintiffs cite three California laws as predicates for

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Defendants' alleged violation of the UCL's unlawful prong:

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subsections (g)(1), (j), and (t)(2)(B) of California's car rental

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statute, California Civil Code section 1936 ("Section 1936");

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California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code

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§ 17500 et seq.; and California Civil Code sections 1670.5 and

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1671, which set out rules for, respectively, unconscionable

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contracts and liquidated damages provisions in contracts.

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///

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///

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2

1.

Civil Code Sections 1670.5, 1671

California Civil Code sections 1670.5 and 1671 are irrelevant

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in this case, since Plaintiffs have pled nothing about

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unconscionable contracts or liquidated damages.

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clarify these statutory sections' applicability in their opposition

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brief.

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Defendants violated these statutes are insufficient to support

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Plaintiffs' claims under the UCL.

The Court finds that Plaintiffs' conclusory assertions that

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United States District Court

For the Northern District of California

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Nor do Plaintiffs

2.

FAL

Plaintiffs' FAL argument is no clearer than their statutory

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contract claims.

Plaintiffs assert that the FAL applies to online

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advertising meant to induce action in California, and that a

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violation of the FAL occurs whenever the initial misrepresentation

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or omission of a material fact is made.

15

People ex rel Lockyer v. Fremont Life Ins. Co., 104 Cal. App. 4th

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508, 517 (Cal. Ct. App. 2002); People v. Dollar Rent-A-Car Systems,

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Inc., 211 Cal. App. 3d 119, 129 (Cal. Ct. App. 1989)).

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any violation of the FAL is necessarily a UCL violation, Plaintiffs

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argue that the FAL supports their UCL claim.

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v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008)).

Opp'n at 8-9 (citing

And since

Id. (citing Williams

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The Court finds that Plaintiffs' pleadings on the FAL are

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impermissibly conclusory, and their opposition brief offers no

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application of law to facts that would allow the Court or

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Defendants to respond to Plaintiffs' arguments.

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Plaintiffs think constitutes false or misleading advertising in

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this case, and the Court is not inclined to guess.

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Defendants engaged in "deceptive marketing and advertising in

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California" is not enough to state a violation of the FAL, absent

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It is unclear what

Stating that

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any pleading of a statement to the public that could be actionable

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under the statute.

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for Plaintiffs' claim under the unlawful prong of the UCL.

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5

The Court finds that the FAL is not a predicate

3.

Section 1936

Plaintiffs allege that Defendants violated three subsections

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of Section 1936: subsections (g)(1), (j), and (t)(2)(B).

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finds that Plaintiffs have failed to plead that Defendants violated

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Section 1936.

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The Court

Section 1936(g) states that rental companies offering damage

United States District Court

For the Northern District of California

10

waivers in addition to the rental rate must disclose certain

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coverage-related information in their rental contracts (or the

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holders in which the contracts are placed), in signs posted in the

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company's office, and in locations visible to renters who are

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enrolled in the rental company's membership program.

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1936(g) also requires that rental companies make oral disclosures

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of possible duplication of waiver coverage at the time of rental,

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and that the companies' contracts must also include specific

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language about that issue.

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Section

Plaintiffs have failed to plead that Defendants violated

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Section 1936(g).

None of the Plaintiffs' facts as to Ms. McKinnon

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that would be relevant to Section 1936(g) occurred in California.

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Ms. McKinnon rented her vehicle and received her rental contract in

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Oklahoma, and nothing in Section 1936(g) purports to cover online

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reservations, even if they are made from California.

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strongest argument on this point is that Section 1936(g)'s

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requirements about "oral disclosures" of potentially duplicative

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coverage should be read to apply to online communications as well -

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- an interpretation that would put Defendants on the hook for

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Plaintiffs'

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Section 1936(g) disclosures in California, even if the actual

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rental transaction and its attendant contracts, signs, and

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disclosures occur elsewhere.

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Plaintiffs' proposed interpretation of Section 1936(g)

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unconvincing.

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are to make the requisite oral disclosure at the time the customer

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is presented with the rental agreement itself, at which point the

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customer should initial an acceptance or declination of the damage

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waiver.

See Opp'n at 7-8.

The Court finds

That subsection anticipates that rental companies

The Court finds that because Ms. McKinnon received her

United States District Court

For the Northern District of California

10

rental agreement in Oklahoma, not California, Defendants could not

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have breached Section 1936(g), because it applies only in

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California.

13

F. Supp. 2d 1090, 1098-99, 1100 (S.D. Cal. 2005) (reading a

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different subsection of Section 1936 to apply only to California).

15

See, e.g., Speyer v. Avis Rent a Car System, Inc., 415

Section 1936(j) concerns advertisements in California, and

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Plaintiffs have not pointed to any advertisements.

The

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Confirmation is not an advertisement.

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those are governed by separate parts of Section 1936 that

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Plaintiffs do not cite in support of their UCL claim.

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finds that Section 1936(j) cannot be a predicate to Plaintiffs'

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claim under the UCL's unlawful prong.

It is a reservation, and

The Court

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Section 1936(t)(2)(B) only applies to renters enrolled in the

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rental company's membership program, which Plaintiffs do not claim

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to have been.

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Ms. McKinnon's claim under the UCL's unlawful prong.

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The Court finds that this subsection cannot support

Plaintiffs' arguments about the policy rationale behind

27

Section 1936 do not override the statute's plain text.

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describe a situation in which Section 1936 arguably does not match

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Plaintiffs

1

the expectations of the modern customer who probably begins the

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car-rental process online.

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not the Court, may properly address this issue.

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5

But only the California legislature,

4. Conclusion on the Unlawful Prong
As explained above, Plaintiff has failed to state a claim

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under the unlawful prong of the UCL.

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that claim is GRANTED, and the claim is DISMISSED WITH LEAVE TO

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AMEND.

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United States District Court

For the Northern District of California

10

ii.

Defendants' motion to dismiss

Unfair and Fraudulent Prongs

Though the parties effectively briefed only the issue of

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whether any California statutes are predicates for the UCL's

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unlawfulness prong, the question remains whether Plaintiffs' have

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pled valid claims for violations of the UCL's unfairness or

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fraudulent prongs.

See SAC ¶¶ 41-49 (unfairness prong), 50-56

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(fraudulent prong).

These two claims are based on Plaintiffs'

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theory that Defendants' reservation system, coupled with its

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alleged practice of tricking customers into paying add-on fees once

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they rent their cars, amounts to a "bait and switch" scheme that

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renders Defendants' quoted reservation prices unfair or fraudulent.

20

See id. ¶¶ 41-56.

21

Plaintiffs' pleadings as to these two prongs can overcome

22

California's presumption against extraterritorial application of

23

its laws.

24

The Court must first consider whether

In support of their argument that the UCL applies even though

25

the allegedly fraudulent transaction itself occurred in Oklahoma,

26

Plaintiffs cite a recently decided Ninth Circuit case, AT&T

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Mobility LLC v. AU Optronics Corp., 707 F.3d 1106 (9th Cir. 2013).

28

In that case, the district court had dismissed a group of telecom

12

1

corporation plaintiffs' state law antitrust claim under the

2

Cartwright Act against several international electronics

3

corporations.

4

The Cartwright Act provides a private cause of action for indirect

5

purchasers of price-fixed goods, though other states' laws do not.

6

Id. at 1108.

7

purchased the allegedly price-fixed goods outside California, the

8

Due Process Clause of the Fourteenth Amendment forbade applying

9

California antitrust law to those claims, since the Due Process

See id. at 1108-09.

The plaintiffs appealed.

Id.

The district court held that since the plaintiffs had

United States District Court

For the Northern District of California

10

Clause requires plaintiffs asserting state law causes of action to

11

allege that the "occurrence or transaction giving rise to the

12

litigation" occurred in that state.

See id. at 1109.

The Ninth Circuit reversed and remanded, holding that the

13
14

antitrust law in question could lawfully be applied without

15

violating Due Process when "more than a de minimis amount" of the

16

allegedly actionable activity took place in California.

17

1113.

18

individual defendant, whether the plaintiffs had alleged sufficient

19

conspiratorial conduct within California that is not "slight and

20

casual," such that the application of California law to that

21

defendant is "neither arbitrary nor fundamentally unfair."

22

1107; see also In re TFT-LCD, No. C 10-4945 SI, 2013 WL 1891367, at

23

*1-4 (N.D. Cal. May 6, 2013) (applying AT&T on remand).

24

Significantly, the Ninth Circuit stated that its analysis was

25

equally applicable to the UCL, even though its holdings

26

specifically discussed the Cartwright Act, since the UCL borrows

27

violations from other laws and makes them independently actionable.

28

AT&T, 707 F.3d at 1107 n.1.

Id. at

This required the district court to consider, for each

13

Id. at

1

AT&T concerned whether application of the California statutes

2

to that case's defenses violated the United States Constitution's

3

Due Process Clause.

4

question is different from California's presumption against

5

extraterritorial application in that it places additional

6

limitations on the extraterritorial application of state law.

7

Sullivan, 51 Cal. 4th at 1207 n.9.

8

specifically, California courts and federal courts applying

9

California law have held consistently that while out-of-state

707 F.3d at 1107.

That constitutional

See

As to extraterritoriality

United States District Court

For the Northern District of California

10

conduct can be actionable when it results in injury to an out-of-

11

state plaintiff in California, courts must draw a territorial line

12

between actionable and non-actionable conduct under the UCL based

13

on the plaintiff's citizenship and the actionable conduct's

14

connection to California.

15

1100; Norwest, 72 Cal. App. 4th at 222-24; Yu v. Signet

16

Bank/Virginia, 69 Cal. App. 4th 1377, 1381-82 (Cal. Ct. App. 1999).

17

See Speyer, 415 F. Supp. 2d at 1099-

Plaintiffs' pleadings have raised new facts suggesting that

18

the Court's analysis should change -- specifically, Plaintiffs

19

explain how Ms. McKinnon was harmed by reserving a car in

20

California, being promised a certain price, and then being

21

defrauded by a widespread scheme that Defendants have engineered to

22

produce exactly the outcome she suffered.

23

of whether the Court applies the Ninth Circuit's holding from AT&T

24

analogically, or considers the precedent and policy articulated in

25

cases like Norwest, Yu, and Speyer, the Court finds that

26

Defendants' conduct within California, as pled, plausibly suggests

27

that the UCL should apply to Ms. McKinnon.

28

In this case, regardless

Defendants' conduct in California does not only amount to the

14

1

provision of a price quote and the completion of an automated

2

reservation process.

3

pleadings, Defendants have a national scheme involving providing

4

low reservation rates and then tricking customers into paying more

5

once they pick up their cars.

6

sufficiently makes clear that the presumption against

7

extraterritoriality does not apply to limit Plaintiffs' action in

8

this case, and that Defendants' conduct is more than mere endemic

9

dishonesty -- it is actionable under the UCL as an unfair and

Based on Plaintiff's reasonably specific

Plaintiffs' second amended complaint

United States District Court

For the Northern District of California

10

fraudulent business practice.

11

conduct is not "slight and casual," such that the application of

12

California law to that defendant would be "neither arbitrary nor

13

fundamentally unfair."

14

Moreover, under AT&T, Defendants'

707 F.3d at 1107.

Plaintiffs' UCL claims for unfair and fraudulent business

15

practices therefore survive as to Ms. McKinnon.

16

Defendants' motion

is therefore DENIED as to these claims.

17

5. The CLRA

18

Like the UCL, the CLRA prohibits "unfair methods of

19

competition and unfair or deceptive acts or practices."

Cal. Civ.

20

Code § 1770.

21

extraterritorially.

22

cv–06465–JHN–VBKx, 2011 WL 3325891, at *3 (C.D. Cal. Feb. 11, 2011)

23

(since wrongful conduct did not occur in California, plaintiff

24

could not plead CLRA claim).

25

to Ms. McKinnon are virtually identical to their UCL pleadings,

26

Plaintiffs' CLRA claim survives per the Court's discussion above,

27

and Defendants' motion is DENIED as to this claim.

28

holding on this issue does not address Plaintiffs' standing to

And like the UCL, the CLRA is not meant to apply
See, e.g., Murphy v. DirecTV, Inc., No. 2:07–

Since Plaintiffs' CLRA pleadings as

15

The Court's

1

pursue damages or other remedies under the CLRA.

2

B.

Breach of Contract

3

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

4

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

5

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

6

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

7

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

8

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

9

(Cal. Ct. App. 1999)).

Mora v. U.S. Bank,

Additionally, if the plaintiff alleges the

United States District Court

For the Northern District of California

10

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

11

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

12

legal effect.

13

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

14

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

In their first amended complaint, Plaintiffs cited Defendants'

15

rental contracts as bases for their breach of contract claim,

16

alleging that Defendants somehow breached those contracts by

17

tricking Plaintiffs into signing them.

18

Court dismissed Plaintiffs' breach of contract claim because

19

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

20

contract provisions that Defendants allegedly breached, suggesting

21

that their claim sounds more in fraud than in contract.

22

Plaintiffs allege the same facts about the rental contracts in

23

their SAC, and to the extent those facts are bases for Plaintiffs'

24

breach of contract claims, the claims are DISMISSED as to those

25

contracts.

26

See Order I at 15.

The

See id.

Plaintiffs allege new facts in their second amended complaint.

27

They claim that the Confirmation and other online rental

28

confirmations, provided after Plaintiffs completed the online

16

1

reservation process, are initial rental agreements that Defendants

2

breached by charging at their rental desk more than Plaintiffs

3

originally agreed to pay.

4

the online reservations are valid contracts; (2) Plaintiffs

5

fulfilled the contracts by (among other things) picking up,

6

returning, and refueling their rental cars; (3) Defendants breached

7

the contracts by not providing Plaintiffs with the benefit of

8

paying the amount they originally agreed to pay; and (4) Plaintiffs

9

sustained damage by being overcharged.

United States District Court

For the Northern District of California

10

See SAC ¶ 74.

Plaintiffs state that (1)

See Opp'n at 11-13.

The parties dispute whether Defendants breached any contract.

11

Defendants claim that Plaintiffs do not identify any provision of

12

any agreement that was breached, and that in any event, Defendants

13

lawfully offered Plaintiffs add-ons after Plaintiffs received the

14

Confirmation.

15

breached the Confirmation by charging more than the total charges

16

and taxes listed on the Confirmation, for example.

17

(Plaintiffs do not append any of Ms. Tool's agreements, but they

18

appear to plead that hers would have substantially resembled Ms.

19

McKinnon's Confirmation.)

20

point in their second argument about the add-ons having been

21

properly confirmed at the rental desk, since any additional

22

products offered to Plaintiffs at the rental desk were either not

23

properly accepted or were added to Plaintiffs' bills by mistake or

24

fraud.

25

MTD at 6.

Plaintiffs respond that Defendants

Opp'n at 13.

Plaintiffs add that Defendants miss the

Id.

Plaintiffs offer three bases for Defendants' alleged breach:

26

(1) Defendants charged Plaintiffs more than they claim to have

27

agreed to pay in the Confirmation, (2) Defendants tricked

28

Plaintiffs into signing ups for add-ons, or (3) Defendants did not

17

1

provide disclosures in accord with California law.

2

17, 74; Opp'n at 12-13.

3

See SAC ¶¶ 15,

The third option is not a ground for breach, as discussed in

4

Section IV.A.a.i, supra: Section 1936 does not require the

5

disclosures that Plaintiffs envision.

6

appropriate ground for breach, since as the Court discussed in

7

Order I, Plaintiffs neither pled nor referenced any contract that

8

could be breached by Defendants' agents' conduct, which resembles

9

the basis of a fraud claim more than a contract action.

Nor is the second option an

United States District Court

For the Northern District of California

10

Only the first option -- whether Defendants breached the

11

Confirmation by allegedly tricking Plaintiffs into paying more for

12

add-ons at the rental counter -- could be the basis of a breach of

13

contract claim.

14

finds Plaintiffs' breach of contract claim sufficient as to the

15

Confirmation.

16

to pay what they thought was a fair price -- after all, if they

17

knew that Defendants would defraud them and make them pay more

18

money, they would have rented cars from a more honest dealer.

19

Defendants' refusal to honor the Confirmation price in any way, and

20

in fact to convince Plaintiffs of the price's validity and then to

21

alter it secretly, was a breach.

22

DENIED as to this claim.

23
24

C.

Based on Plaintiffs' new pleadings, the Court

Plaintiffs agreed, through a contract of adhesion,

Defendants' motion is therefore

Breach of the Implied Covenant of Good Faith and Fair
Dealing

25

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

26

in every contract, exists merely to prevent one contracting party

27

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

28

benefits of the agreement actually made."

18

Guz v. Bechtel Nat'l

1

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

2

a contracting party from taking an action that, although

3

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

4

benefit of the contract.

5

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

6

substantive duties or limits on the contracting parties beyond

7

those incorporated in the specific terms of their agreement."

8

24 Cal. 4th at 349-50.

9

covenant of good faith and fair dealing are:

United States District Court

For the Northern District of California

10
11
12
13
14
15
16

The covenant thus prevents

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

17

Woods v. Google, Inc., 889 F. Supp. 2d 1182, 1194 (N.D. Cal. 2012)

18

(citing Judicial Counsel of California Civil Jury Instructions §

19

325 (2011)).

20

In their first complaint, Plaintiffs alleged that Defendants

21

breached the covenant of good faith and fair dealing by

22

implementing systemic policies and practices meant to trick or

23

mislead customers into buying unwanted services, despite having

24

been placed on notice that those practices were taking place

25

nationwide.

26

of the contract that serves as the premise for their claim.

27

Court dismissed Plaintiffs' breach of the implied covenant claim

28

with leave to amend.

Plaintiffs did not, however, point to a specific part

19

The

Now Plaintiffs allege, as they did in their breach of contract

1
2

claim, that their initial reservation agreements were contracts

3

that obliged Defendants to rent cars to Plaintiffs at particular

4

prices.

5

similar to those discussed in the breach of contract section above,

6

the Court finds Plaintiffs' new pleadings sufficient to state a

7

claim for breach of the implied covenant.

8

under the Confirmation was the agreement to rent a car at something

9

roughly equivalent to the price Plaintiffs expected, Defendants

See SAC ¶¶ 13-17, 72-77; Confirmation at 1-2.

For reasons

Even if the benefit

United States District Court

For the Northern District of California

10

breached their duty of good faith and fair dealing by hiding their

11

plan to overcharge Plaintiffs until it was too late.

12

motion is therefore DENIED as to this claim.

Defendants'

13
14
15

V.

CONCLUSION
As explained above, the Court GRANTS Defendants' motion to

16

dismiss Plaintiffs' UCL unlawfulness claim.

17

DENIES Defendants Dollar Thrifty Automotive Group, Inc., Dollar

18

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

19

Plaintiffs' other claims.

20

However, the Court

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

21

this Order to file an amended complaint addressing the deficiency

22

described above.

23

prejudice.

If they do not, that claim may be dismissed with

24
25

IT IS SO ORDERED.

26
27
28

Dated: July 3, 2013
UNITED STATES DISTRICT JUDGE

20