Bayol v. Zipcar, Inc.

Filing 41

ORDER by Judge Thelton E. Henderson denying 33 Motion to Dismiss. (tehlc1, COURT STAFF) (Filed on 1/29/2015)

1

UNITED STATES DISTRICT COURT

2

NORTHERN DISTRICT OF CALIFORNIA

3
4

GABRIELA BAYOL,

5

Plaintiff,

6
7
8

v.
ZIPCAR, INC.,

Case No. 14-cv-02483-TEH
ORDER DENYING DEFENDANT’S
MOTION TO DISMISS

Defendant.

9
10

This matter came before the Court on January 26, 2015, on Zipcar’s motion to

United States District Court
Northern District of California

11

dismiss the complaint. The Court has carefully considered the parties’ arguments, and

12

now DENIES Zipcar’s motion, for the reasons set forth below.

13
14
15

BACKGROUND
Plaintiff Gabriela Bayol is a resident of Daly City, California and a member of

16

Zipcar, a short-term car rental service. In order to use Zipcar, Bayol entered into a

17

standardized Membership Agreement setting out the terms of her rentals. Under the

18

Agreement, members must pay a fee of $50 per hour, up to $150, for returning a car late,

19

in addition to the normal rental rate. Membership Agreement, Ex. A to Mot., at Schedule

20

2, § 1. Bayol alleges that she has returned a Zipcar late, and has accordingly paid the late

21

fees set out in the Membership Agreement.

22

Bayol brought this putative class action to challenge Zipcar’s late fees under various

23

California consumer protection statutes, including Civil Code section 1671(d), the

24

Consumer Legal Remedies Act (“CLRA”), and the Unfair Competition Law (“UCL”).

25

Bayol argues that Zipcar’s late fee provision is presumptively illegal under section 1671(d)

26

because it sets liquidated damages in a consumer contract. She alleges that it would not be

27

impracticable to calculate Zipcar’s actual damages when a car is returned late, that Zipcar

28

did not conduct a reasonable endeavor to estimate its actual damages, and that the late fees

1

imposed bear no reasonable relation to Zipcar’s actual damages. She also alleges that such

2

fees are unconscionable and unfair, because they are included in a contract of adhesion and

3

are unreasonably favorable to Zipcar. Invoking these statutes, Bayol seeks a permanent

4

injunction against Zipcar’s late fee policy, restitution and damages.

5

Zipcar brought this motion to dismiss the complaint in its entirety. Zipcar argues

6

that its late fees are not liquidated damages, because they vary based on how late a car is

7

returned. Zipcar also argues that Bayol’s factual claims are so conclusory that they must

8

be rejected, even at the pleadings stage. Zipcar argues that no amendment could cure these

9

defects, so the complaint should be dismissed with prejudice.

10

United States District Court
Northern District of California

11
12

LEGAL STANDARD
Rule 12(b)(6) requires dismissal when a plaintiff’s allegations fail “to state a claim

13

upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To survive a motion to

14

dismiss under Rule 12(b)(6), a plaintiff must plead “enough facts to state a claim to relief

15

that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).

16

Plausibility does not equate to probability, but it requires “more than a sheer possibility

17

that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

18

(citation omitted). “A claim has facial plausibility when the plaintiff pleads factual content

19

that allows the court to draw the reasonable inference that the defendant is liable for the

20

misconduct alleged.” Id.

21

In ruling on a motion to dismiss, a court must “accept all material allegations of fact

22

as true and construe the complaint in a light most favorable to the non-moving party.”

23

Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir. 2007). Courts are not,

24

however, “bound to accept as true a legal conclusion couched as a factual allegation.”

25

Iqbal, 556 U.S. at 678.

26
27
28

2

1

DISCUSSION
Zipcar makes two primary arguments as to why the complaint should be dismissed.

2
3

First, it argues that its late fees are not “liquidated damages” under California law, so

4

Plaintiff does not have a statutory basis for her claims. Second, Zipcar argues that

5

Plaintiff’s factual allegations are insufficient under the plausibility standard that is required

6

at the pleadings stage.

7

Both of these arguments fail. Zipcar’s late fees are liquidated damages, because

8

they can readily be determined from the contract at the time of breach. And Plaintiff’s

9

complaint, though somewhat conclusory, nonetheless makes sufficient factual allegations

10

at the pleadings stage.

United States District Court
Northern District of California

11
12
13

I.

Zipcar’s Late Fees are Liquidated Damages
California law places significant restrictions on a party’s ability to use a consumer

14

contract to set what damages it will be entitled to in the event of a breach. California

15

statute provides that, for a contract for the rental of personal goods or services for personal,

16

family, or household purposes, “a provision in a contract liquidating damages for the

17

breach of the contract is void except [when] it would be impracticable or extremely

18

difficult to fix the actual damage.” Cal. Civil Code § 1671(d). Although the validity of a

19

liquidated damages provision is a fact-based inquiry not appropriately determined on a

20

motion to dismiss, whether a provision is a liquidated damages provision is a question of

21

law for the court to decide. Ruwe v. Cellco P’ship, 613 F. Supp. 2d 1191, 1196 (N.D. Cal.

22

2009); see also Berkeley Unified Sch. Dist. of Alameda Cnty. v. James I Barnes Constr.

23

Co., 112 F. Supp. 396, 400-01 (N.D. Cal. 1953).

24

“California courts have defined [liquidated damages] as ‘an amount of

25

compensation to be paid in the event of a breach of contract, the sum of which is fixed and

26

certain by agreement . . . .’” Chodos v. West Publ’g Co., 292 F.3d 992, 1002 (9th Cir.

27

2002) (quoting Kelly v. McDonald, 98 Cal. App. 121, 125 (1929)). To be sufficiently

28

fixed and certain to qualify as “liquidated damages,” a provision must either set the exact
3

1

amount (i.e., a single number), or provide some formula by which the amount is “certain or

2

readily ascertainable.” See Chodos, 292 F.3d at 1002.

3

In Chodos, the Ninth Circuit held that an author’s entitlement to 15% of revenues
from the sales of a book that was never published was not a “liquidated debt,” because “the

5

revenues to which that percentage figure is to be applied cannot be calculated with

6

reasonable certainty.” Id. Since the book was never published, there were no revenue

7

figures on which to base the calculation, and the damages could not be ascertained. Id.

8

A court in this district, applying Chodos, has held that a cable company’s

9

termination fees were not liquidated damages, where customers “‘may be subject [to] a

10

termination fee of up to $700,’ but that the ‘exact amount ... is a function of when your

11
United States District Court
Northern District of California

4

account is terminated and the type of Service Plan you are on.’” Walter v. Hughes

12

Commc’ns, Inc., 682 F. Supp. 2d 1031, 1046 (N.D. Cal. 2010) (quoting the Subscriber

13

Agreement). The plaintiffs in that case also alleged that the cable company routinely

14

imposed a fee of $400, but the complaint actually included only one example, and it was

15

for a fee of $300. Id. This uncertainty in the amount of the fee, from $300 to $400 to

16

some other number up to $700, led the court to conclude that the plaintiffs “failed to allege

17

that the Subscriber Agreement included a fixed fee that constituted impermissible

18

liquidated damages under § 1671.” Id.

19

However, courts will find fees that are not a single, fixed number to be liquidated

20

damages provisions where they can easily be determined from the contract at the time of

21

breach. For example, a court in the Southern District of California found that membership

22

fees of $59 per month for prepaid massage services were liquidated damages, even though

23

the amount of fees that each member paid varied based on how many months he or she had

24

been a member, because the total amount was readily discernible at the time of breach, i.e.,

25

cancellation of the contract. Hahn v. Massage Envy Franchising, LLC, No. 12-cv-153

26

DMS, 2014 WL 5100220, at *12 (S.D. Cal. Sept. 25, 2014). The court held that “[w]hen a

27

contract provides a formula to calculate liquidated damages based on profits, and damages

28

can be calculated after breach when the profits had been earned, the provision is for
4

1

liquidated damages, even if the actual amount cannot be calculated at the time of contract

2

formation.” Id. (citing Higgins v. Desert Braemar, Inc., 219 Cal. App. 2d 744, 752 (1963)

3

(“The obligation to pay the amount agreed upon for the services rendered becomes a

4

liquidated debt . . . when that amount has been ascertained or is ascertainable by reference

5

to a formula prescribed by the agreement.”)). As a result, “[t]he membership agreement

6

[was] sufficiently certain to support liquidated damages.” Hahn, 2014 WL 5100220, at

7

*12.

8

In many cases, the parties do not dispute whether a damages provision based on a
formula falls within the liquidated damages statute. See, e.g., Ubaldi v. SLM Corp., 852 F.

10

Supp. 2d 1190, 1192, 1203 (N.D. Cal. 2012) ($5 fee or 5% of unpaid loan amount); Gellis

11
United States District Court
Northern District of California

9

v. Verizon Commc’ns, Inc., No. 07-cv-3679 JSW, 2007 WL 7044762, at *1 (N.D. Cal.

12

Nov. 5, 2007) ($5 fee or 1.5% of unpaid balance each month); Ridgley v. Topa Thrift &

13

Loan Ass’n, 17 Cal. 4th 970, 974 (1998) (prepayment charge of six month’s interest at the

14

rate in effect at the time of prepayment); Garrett v. Coast & S. Fed. Sav. & Loan Ass’n, 9

15

Cal. 3d 731, 740 (1973) (2% of unpaid loan balance); Hitz v. First Interstate Bank, 38 Cal.

16

App. 4th 274, 279 (1995) (late fee of 5% of amount due, between $3 and $5). Although

17

these cases do not hold that formula-based fees are liquidated damages, because the parties

18

did not dispute the issue, they nonetheless show that such fees are routinely treated as

19

liquidated damages by parties and courts in such cases.

20

Of course, in some cases, the liquidated damages provision will be for an exact

21

amount, rather than a formula. In Ruwe, a court in this district held that a $15 cell phone

22

reconnection fee that Verizon charged to customers whose service was suspended was a

23

liquidated damages provision. 613 F. Supp. 2d at 1198. The contract in that case did not

24

specify an exact amount or formula, but Verizon imposed the same $15 fee to all such

25

customers. Id. The court found that this was sufficient to render the fee “fixed and

26

certain,” despite the ambiguity in the contract itself. Id. The court did not hold that a fee

27

must always be in the same amount in order to be liquidated damages; rather, the court

28

5

1

held that fees always applied in the same amount can be liquidated damages, even where

2

the contract itself does not specify the amount. See id.

3

Here, Zipcar’s late fees are clearly liquidated damages. The provision imposes late

4

fees of $50 for each hour (or portion of an hour) that a car is kept beyond the end of a

5

reservation, up to a maximum of $150. Membership Agreement, Ex. A to Mot., at

6

Schedule 2, § 1. These fees are “fixed and certain” by the Membership Agreement, as the

7

amount is immediately determined at the time the car is returned.

8
9

Zipcar argues that its late fees are not liquidated damages because the amount is not
the exact same in each case – it will vary from $50-$150 depending on how late a car is
returned. However, as the cases above demonstrate, fees do not need to be applied in the

11
United States District Court
Northern District of California

10

exact same amount in order to be liquidated damages.

12

Zipcar also misconstrues Chodos as imposing a strong requirement that fees be the

13

same in all cases. As discussed above, the issue in that case was that there were no

14

revenues on which to base the author’s 15% royalty calculation, not that the fee provision

15

varied based on a formula. 292 F.3d at 1002. Zipcar ignores Chodos’s requirement that

16

liquidated damages be “certain or readily ascertainable.” Id. (emphasis added).

17

Zipcar makes the same mistake with the Walter case. There, the issue was that the

18

cable contract allowed the company to charge a variable fee up to $700, without specifying

19

exactly how the fee was calculated, and the plaintiffs inconsistently pled that fees were

20

always in the amount of $400 and that one plaintiff had been charged $300. 682 F. Supp.

21

2d at 1046. It was the lack of certainty in the contract and the pleadings, not the mere fact

22

that the amount could vary, that doomed the plaintiffs’ claim in that case. See id.

23

Zipcar also misconstrues Ruwe as imposing this “same amount” requirement. As

24

noted above, Ruwe actually held that it was sufficient for fees to be applied in the same

25

amount to count as liquidated damages. 613 F. Supp. 2d at 1198. The court never said

26

that it was necessary for the amount to be the same. See id.

27

Zipcar attempts to distinguish the Hahn case, where massage fees that accrued

28

monthly were found to be liquidated damages, because the breach in that case was the
6

1

cancellation of the contract, at which time all fees had accrued and were known, whereas

2

breach here allegedly occurs at the instant that the car is not returned on time, but the

3

amount of the fee is not known until the car is ultimately returned. Zipcar provides no

4

support for its argument that breach must be viewed as a single instant. Rather, it is

5

reasonable to consider a late customer to be in breach until the car is returned. Given the

6

very high degree of certainty provided in the Subscriber Agreement, the Court is not

7

persuaded by the argument that the amount must be determinable at the very instant that

8

the car first becomes late in order for the fee to be treated as liquidated damages.
Plaintiff Bayol has shown that Zipcar’s Membership Agreement imposed liquidated

10

damages for returning cars late, triggering the application of section 1671(d). Zipcar’s first

11
United States District Court
Northern District of California

9

argument in its motion to dismiss therefore fails.

12
13
14

II.

Plaintiff’s Factual Allegations are Sufficient
Zipcar also argues that Plaintiff’s factual allegations are so bare-bones that the

15

complaint must be dismissed. As noted above, to survive a motion to dismiss under Rule

16

12(b)(6), a plaintiff must plead “enough facts to state a claim to relief that is plausible on

17

its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial

18

plausibility when the plaintiff pleads factual content that allows the court to draw the

19

reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.

20

Iqbal, 556 U.S. 662, 678 (2009). Courts are not “bound to accept as true a legal

21

conclusion couched as a factual allegation.” Id. “Determining whether a complaint states

22

a plausible claim for relief [is] a context-specific task that requires the reviewing court to

23

draw on its judicial experience and common sense.” Id. at 679.

24

In deciding whether a claim is “plausible,” courts must consider the elements and

25

standard of proof for the type of claim at issue. See OSU Student Alliance v. Ray, 699 F.3d

26

1053, 1071 (9th Cir. 2012) (allegations of free speech violations were more plausible than

27

the invidious discrimination claims at issue in Iqbal because specific intent was not

28

required). In burden-shifting cases, courts consider the effect of the burden-shifting
7

1

provision in evaluating the plausibility of the claim. See Sheppard v. David Evans &

2

Assoc., 694 F.3d 1045, 1049-50 (9th Cir. 2012) (in an age discrimination case, complaint

3

was sufficient where it pled a prima facie case, because facts as alleged gave rise to an

4

inference of discrimination).

5

The elements and allegations for each of Plaintiff’s claims are discussed in turn.

6
7
8

A. Plaintiff plausibly alleges a claim under section 1671(d)
Under California Civil Code section 1671(d), liquidated damages provisions in
consumer contracts are “presumed void,” and the proponent of the clause has the burden of

10

rebutting that presumption at trial. In re Cellphone Termination Fee Cases, 193 Cal. App.

11
United States District Court
Northern District of California

9

4th 298, 322 (2011); see also In re DirecTV Early Cancellation Litig., 738 F. Supp. 2d

12

1062, 1087-88 (C.D. Cal. 2010) (“[T]he policy embedded in California Civil Code

13

§ 1671(d), including the policy of shifting the burden of proof to the proponent of the

14

liquidated damages clause, is fundamental California policy.”). A party seeking

15

enforcement must satisfy this burden by showing that “(1) fixing the amount of actual

16

damages [is] impracticable or extremely difficult, and (2) the amount selected . . .

17

represent[s] a reasonable endeavor to estimate fair compensation for the loss sustained.”

18

In re Cellphone Termination Fee Cases, 193 Cal. App. 4th at 322.

19
20
21
22
23
24
25
26
27

A court in the Central District of California held that a complaint under section
1671(d) was sufficient where:
Plaintiffs specifically allege: (1) a Cancellation Fee was
charged to Plaintiffs when they, and other consumers like
them, cancelled their service (SAC ¶¶ 11–36, 44); (2) it “is
neither impractical nor extremely difficult for DirecTV to
determine the actual amount of damages occasioned by” the
cancellation (SAC ¶ 138); (3) the Cancellation Fee “bear[s] no
reasonable relationship to the actual costs incurred by DirecTV
when customers cancel their service” (SAC ¶ 139); and (4)
“the Cancellation Fee is intended as a penalty to dissuade Class
members from cancelling DirecTV’s services” (SAC ¶ 139).
In re DirecTV, 738 F. Supp. 2d at 1090.

28

8

1

Plaintiff has pled a plausible section 1671(d) violation in this case. First, despite

2

Zipcar’s argument to the contrary, Plaintiff has adequately alleged that this is the type of

3

consumer contract covered by section 1671(d). As indicated above, section 1671(d)

4

applies to contracts “for the retail purchase, or rental, by such party of personal property or

5

services, primarily for the party’s personal, family, or household purposes.” Cal. Civ.

6

Code § 1671(c)(1). Here, Plaintiff alleges that “The Membership Agreement is a contract

7

for the purchase of services primarily for personal, family or household use of Bayol and

8

the members of the class.” Compl. at ¶ 37. It is entirely plausible that Zipcar members

9

would use their rentals for personal, family or household purposes; Plaintiff does not need

10

United States District Court
Northern District of California

11

to allege facts more specific than these.
Next, Zipcar argues that Plaintiff needed to specifically allege the amount of the late

12

fees that she has paid. However, this level of specificity is not required. Plaintiff alleges

13

that “Bayol is a Zipcar member, . . . and has incurred and paid Late Fees imposed by

14

Zipcar . . . .” Compl. at ¶ 9. She also alleges, “Zipcar has in fact imposed such Late Fees

15

on, and collected them from, Bayol and other members of the proposed class.” Compl. at

16

¶ 23. The Court finds these allegations plausible.

17

Regarding the section 1671(d) claim itself, Plaintiff alleges that, “it is neither

18

impracticable nor extremely difficult to fix the actual damage” that Zipcar suffers when a

19

car is returned late. Compl. at ¶ 25. “Furthermore . . . the Late Fees are not a reasonable

20

measure of or approximation of such damages and do not provide fair average

21

compensation therefor.” Id. “On information and belief, Zipcar did not conduct a

22

reasonable endeavor to fix fair average compensation for [its] losses, if any . . . .” Id.

23

Although these allegations are fairly conclusory, they are nonetheless sufficient for

24

this type of claim. As discussed in Section I, above, Plaintiff has shown that the late fees

25

were liquidated damages. The provision is therefore presumed void, unless Zipcar shows

26

that it was difficult to set the actual damages, and that the fees reflect a reasonable effort to

27

estimate fair compensation. Plaintiff alleges that neither element is satisfied.

28

9

1

Plaintiff’s claims are plausible. A company could reasonably consider several

2

factors in setting a late fee besides estimating their actual damage, such as the likelihood of

3

deterring late returns, or the opportunity to generate income from customers’ tardiness.

4

Moreover, a company that is headquartered in Massachusetts and does business across the

5

country (and internationally) might not have prioritized the requirements of California law

6

when it set its late fee. For both of these reasons, it is plausible that Zipcar’s late fees do

7

not represent a reasonable endeavor to estimate the fair value of the loss that Zipcar

8

actually suffers.

9

The terms of the late fee provision also suggest a plausible mismatch with the
damage Zipcar actually suffers. The minimum late fee is $50; this fee applies even where

11
United States District Court
Northern District of California

10

the car is returned an instant late, and no other reservations or operations are affected. On

12

the other hand, the maximum fee is $150, even for a person who keeps a car out for 24

13

hours or more. It is plausible to conclude that Zipcar’s actual damage in the former case is

14

zero, and actual damage in the latter case is greater than the damage it suffers from a car

15

being returned three hours late, which also incurs a late fee of $150. It may be that Zipcar

16

arrived at these fees as a way to average out its damage over all late returners, but this

17

mismatch at least makes Plaintiff’s allegations plausible.

18

Zipcar argues that Plaintiff must “specifically allege” the facts supporting her claim,

19

pointing to the language of In re DirecTV in which the court stated that “Plaintiffs

20

specifically allege” certain facts. Zipcar misrepresents this language, in two ways. First,

21

Zipcar emphasizes the words “specifically allege” as if the court had applied a heightened

22

pleading standard. Rather, when viewed in the context of the sentence immediately

23

preceding, it is best read as a linguistic segue, not a legal requirement: “The facts pled in

24

the SAC are sufficient to state a claim for unlawful liquidated damages. Plaintiffs

25

specifically allege: (1) a Cancellation Fee was charged to Plaintiffs when they, and other

26

consumers like them, cancelled their service (SAC ¶¶ 11–36, 44) . . . .” In re DirecTV, 738

27

F. Supp. 2d at 1090. The rest of the quoted portions of the SAC shown above, which were

28

found sufficient in that case, closely track the allegations of Plaintiff Bayol in this case.
10

1

Second, Zipcar argues that the SAC in In re DirecTV must have been more specific

2

because the court in that case was summarizing 29 different paragraphs in the quote

3

discussed above. However, this is only true because the court cited paragraphs 11-36 and

4

44 of the SAC for the allegations that multiple plaintiffs were charged a cancellation fee –

5

an issue that Zipcar does not dispute here. The remainder of the quoted portions of the

6

SAC do not appear to be summaries of more specific allegations, yet these are the portions

7

that are most similar to Plaintiff’s allegations in this case. Because this level of specificity

8

is sufficient, Zipcar’s argument fails.

9
10

Plaintiff has alleged a plausible violation of section 1671(d). Zipcar’s motion to
dismiss this claim therefore fails.

United States District Court
Northern District of California

11
12
13

B. Plaintiff plausibly alleges her remaining claims
Plaintiff also alleges three other claims that are, to some extent, derivative of her

14

section 1671(d) claim. Plaintiff alleges that, because the late fees are illegal liquidated

15

damages under section 1671(d), she is entitled to relief under California’s Consumer Legal

16

Remedies Act (“CLRA”) and Unfair Competition Law (“UCL”). She also separately

17

alleges that the fees are “unfair” under the UCL.

18

The CLRA provides relief where a person in a transaction represents that the

19

transaction involves remedies that the person does not have or which are prohibited by

20

law, or “[i]nsert[s] an unconscionable provision in the contract.” Cal. Civil Code

21

§ 1770(a)(14) (“prohibited remedies violation”); id. at § 1770(a)(19) (“unconscionable

22

violation”). A violation of section 1671(d) can serve as a predicate offense for liability

23

under the prohibited remedies prong of the CLRA, because such liquidated damages are

24

remedies prohibited by law. See, e.g., In re Cellphone Termination Fee Cases, 193 Cal.

25

App. 4th at 308.

26

Under the alternate, “unconscionable” prong of the CLRA, unconscionability has

27

both procedural and substantive elements. Morris v. Redwood Empire Bancorp, 128 Cal.

28

App. 4th 1305, 1318 (2005). A contract is procedurally unconscionable if it is a contract
11

1

of adhesion for which there are no reasonable market alternatives, if there is a significant

2

imbalance in the bargaining strength of the parties, or if the terms were hidden, such that a

3

party was surprised by them. Id. at 1319-20. “A provision is substantively unconscionable

4

if it involves contract terms that are so one-sided as to shock the conscience, or that impose

5

harsh or oppressive terms.” Id. at 1322 (quotation omitted).

6

The UCL prohibits “unfair competition,” which it defines to include “any unlawful,

7

unfair or fraudulent business act or practice . . . .” Cal. Bus. Prof. Code § 17200. “The

8

UCL borrows violations of other laws and treats them as unlawful practices that the unfair

9

competition law makes independently actionable.” Wilson v. Hewlett-Packard Co., 668

10

United States District Court
Northern District of California

11

F.3d 1136, 1140 (9th Cir. 2012) (quotation omitted).
“Under the UCL, an act or practice is unfair if the consumer injury is substantial, is

12

not outweighed by any countervailing benefits to consumers or to competition, and is not

13

an injury the consumers themselves could reasonably have avoided.” Berryman v. Merit

14

Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1555 (2007) (quotation omitted).

15

Here, it is clear that Plaintiff plausibly alleges “prohibited remedies” CLRA and

16

“unlawful” UCL violations. Plaintiff sufficiently alleges a 1671(d) violation, as discussed

17

above, which can serve as a predicate violation for her “prohibited remedies” CLRA and

18

“unlawful” UCL claims, precluding their dismissal.

19

Because Plaintiff plausibly alleges a “prohibited remedies” violation of the CLRA,

20

the Court will not now consider whether she also alleges an “unconscionable” CLRA

21

violation.

22
23
24
25
26
27
28

Plaintiff also plausibly alleges an “unfair” UCL violation. Plaintiff alleges:
[T]he utility of the Late Fees is significantly outweighed by the
gravity of the harm that they impose on consumers. The Late
Fees have limited or no utility as compared with alternatives
that would more fairly measure the harm (if any) incurred by
Zipcar when a member makes a late return. The gravity of the
harm that the Late Fees impose on consumers is substantial in
that they exceed the actual amount of harm (if any) incurred by
Zipcar when a member makes a late [return]. Through their
imposition and collection of the Late Fees from the members
of the Class, Zipcar has been massively and unjustly enriched.
12

1

Id. at ¶ 62. Plaintiff also alleges that “consumers could not have reasonably avoided the

2

harm.” Id. at ¶ 63. While these allegations are somewhat conclusory, they are sufficient to

3

make Plaintiff’s claims plausible. Because Zipcar imposes fees on customers who return

4

cars late even when there are no follow-on reservations affected, it is plausible that

5

consumers are substantially injured by these fees, that such injury outweighs the benefits

6

of the fees, and that such fees cannot be easily avoided (e.g., because customers may

7

unexpectedly be stuck in traffic). Such questions are better resolved after additional

8

factual development. These allegations are sufficiently plausible at the pleadings stage.

9

Because Plaintiff has adequately alleged a 1671(d) violation, her follow-on CLRA
and UCL claims are adequately alleged, as well. Also, her “unfair” UCL claim is plausible

11
United States District Court
Northern District of California

10

enough to survive a motion to dismiss.

12
13
14

CONCLUSION
Plaintiff has shown that Zipcar’s late fees are liquidated damages under California

15

law. It will be Zipcar’s burden, going forward, to demonstrate the validity of these fees.

16

Plaintiff has plausibly alleged that Zipcar cannot do so, because of the mismatch between

17

the late fees and the actual harm that Zipcar likely suffers from late returns. Based on this

18

claim, Plaintiff has also plausibly alleged that the late fees are unlawful under the CLRA

19

and UCL. Finally, Plaintiff has plausibly alleged that the late fees are also unfair under the

20

UCL. Although some of Plaintiff’s allegations are somewhat conclusory, her claims are

21

plausible enough to proceed to discovery. The motion to dismiss is DENIED.

22
23
24

IT IS SO ORDERED.

25
26
27

Dated: 01/29/15

_____________________________________
THELTON E. HENDERSON
United States District Judge

28

13