Moretti v. The Hertz Corporation et al

Filing 80

MEMORANDUM OPINION re 71 motion to dismiss. Signed by Judge Leonard P. Stark on 3/23/15. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ENRICO MORETTI, individually and on
behalf of Class Members,
Plaintiffs,
Civ. No. 14-469-LPS

v.
THE HERTZ CORPORATION; DOLLAR
THRIFTY AUTOMOTNE GROUP, INC.;
and HOTWIRE, INC.,
Defendants.

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Brian E. Farnan and Michael J. Farnan, FARNAN LLP, Wilmington, DE.
Adam J. Gutride, Seth A. Safier, and Marie A. McCrary, GUTRIDE SAFIER LLP, San
Francisco, CA.
Attorneys for Plaintiff Enrico Moretti.

Raymond J. DiCamillo and Susan M. Hannigan, RICHARDS, LAYTON & FINGER, P.A.,
Wilmington, DE.
Ross B. Bricker, John F. Ward, Jr., and Jeffrey A. Koppy, JENNER & BLOCK LLP, Chicago,

IL.
Attorneys for Defendants The Hertz Corporation and Dollar Thrifty Automotive Group,
Inc.

MEMORANDUM OPINION

March 23, 2015
Wilmington, Delaware

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I.

INTRODUCTION
Plaintiff Enrico Moretti ("Plaintiff'), individually and on behalf of putative class

members, filed this action against defendants The Hertz Corporation ("Hertz Corporation"),
Hertz Global Holdings, Inc. ("Hertz Global"), Dollar Thrifty Automotive Group, Inc. ("DTAG"),
Hotwire, Inc. ("Hotwire"), and Does 1 Through 25 ("Unnamed Defendants") on May 24, 2013 in
the Superior Court of California, alleging violations of the California Business and Professions
Code §§ 17200, et seq. & 17500, et seq.; and the Consumers Legal Remedies Act, § 1750, et
seq.; as well as fraud, deceit, and/or misrepresentations under common and statutory law. (D.I. 1

at 12, 32-40) On June 27, 2013, the action was removed to the Northern District of California,
based on diversity jurisdiction under the Class Action Fairness Act ("CAP A"), 28 U.S.C. §
1332(d)(2) & d(5). On April 15, 2014, the action was transferred to the District of Delaware.
(D.I. 55) Motions to dismiss were filed on May 15, 2014 by Hotwire (D.I. 63) and by Hertz
Corporation, Hertz Global, and DTAG (D.I. 65). In response, on June 2, 2014, Plaintiff mooted
the motions by filing a First Amended Complaint ("Complaint"), now listing only Hertz
Corporation, DTAG, and Hotwire as defendants. (D.I. 69)
On June 19, 2014, Hertz Corporation and DTAG (collectively, "Defendants") filed the
pending Motion to Dismiss for Lack of Jurisdiction over the Subject Matter Plaintiff's First
Amended Complaint as Against the Hertz Corporation and DTAG Pursuant to Federal Rule of
Civil Procedure 12(b)(l), or in the Alternative, Motion for More Definite Statement Pursuant to
Federal Rule of Civil Procedure 12(e). (D.I. 71) In addition to opposing Defendants' motion,
Plaintiff has requested the opportunity to conduct jurisdictional discovery or to file a Second

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Amended Complaint. (See D.I. 74 at 8-9 nn.1-2) Briefing on the pending motion was completed
on July 17, 2014 (D.I. 72, 74, 75) and the Court heard oral argument on March 18, 2015 (see
Transcript ("Tr.")).
For the reasons that follow, the Court will permit Plaintiff to file a Second Amended
Complaint, deny without prejudice to renew Defendants' motion to dismiss, grant Defendants'

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alternative motion for a more definite statement, and deny Plaintiffs request for jurisdictional
discovery.

II.

BACKGROUND
Hertz Corporation is a leading car rental business that operates through the brand names

"Hertz," "Dollar Rent-A-Car," "Thrifty Car Rental," and "Firefly." (D.I. 69 at ii 18) Dollar
Thrifty ("DTAG") is a car rental business that was acquired by and became a wholly-owned
subsidiary of Hertz on November 19, 2012. (Id. at if 6) Plaintiff alleges that "[a]t all times
alleged in this Class Action Complaint, ... each of the Defendants was an agent, servant,
representative, officer, director, partner or employee of the other Defendants," and that "each of
them, were members of, and engaged in, a joint venture, partnership and common enterprise."

(Id. at iMf 9-10)
Hertz Corporation's 2013 Annual Report stated: "Each of our brands generally maintains
separate airport counters, reservations and reservation systems, marketing and all other customer
contact activities, however a single management team manages all/our brands." (Id. at if 19)
(emphasis added) Accordingly, Plaintiff alleges:
Hertz Corporation has integrated the Hertz, Dollar and Thrifty
brands though combined marketing, promotion, reservation, fleet
management, insurance, information technology functions, back

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office processing and procurement. All domestic and international
reservation[ s] for all Hertz brands are processed in a Hertz facility
in Oklahoma City, Oklahoma. Thus, although Dollar Thrifty is a
subsidiary of Hertz Corporation, the actual operations pertinent to
the Dollar and Thrifty brands are managed and performed by Hertz
Corporation.
(Id. at ii 20 (further stating that "[f]or the remainder of this complaint, Hertz Corporation and

Dollar Thrifty are referred to collectively herein as "Hertz")) At the hearing, Plaintiff clarified
that he alleges Hertz Corporation is responsible for setting the relevant policies, and DTAG and
the other Hertz Corporation brands are responsible for implementing and enforcing these
policies. (See Tr. at 20:15-23, 21:14-25,23:16-25:1, 25:17-21, 27:1-28:1, 30:9-31 :2, 31 :18-32:5,
33:12-34:5, 35:2-13, 37:6-17, 38:2-8)
Hertz Corporation conducts some of its operations through franchisees which are
managed by Hertz Corporation and share a percentage of revenues with Hertz Corporation. (See
id. at ii 21) Hertz Corporation also owns and operates several websites ("the Hertz Websites"),

through which it accepts rental reservations and provides information about daily rental rates,
fees and taxes, and rental policies. (See id. at iii! 22-23) Additionally, Hertz Corporation accepts
reservations through third party websites (''the Travel Websites") which link directly to Hertz
Websites to provide consumers with additional information contained therein. (See id. at ii 24)
Hotwire owns and operates one of the Travel Websites, www.hotwire.com (''the Hotwire
Website"), which provides information obtained from Hertz Corporation about daily rental rates,
fees and taxes, and rental policies, as well as Hotwire Website rules, regulations, disclaimers, and
disclosures. (Id. at ii 25) Plaintiff alleges that through its "agency" business model, Hotwire
provides users with information about Hertz Corporation's rental rates and terms, takes the

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customer's reservation, provides the reservation information to Hertz Corporation, and then is
provided a percentage of revenue actually collected by Hertz Corporation as well as an
accounting of services actually provided. (See id. at iMf 26-28) According to Plaintiff, "Hertz
monitors the information that Hotwire provides to customers regarding Hertz car rentals to
ensure that Hotwire is accurately presenting the information that Hertz provided, and
accordingly, has knowledge of all the representations that Hotwire makes to customers regarding
the Hertz rentals." (Id. at if 28)
On December 15, 2012, Plaintiff used the Hotwire Website to reserve a Thrifty-branded
car which was advertised at a rate of $29.91 per day, for a total estimated cost of $365.23. (D.I.
69 at if 44) Plaintiff alleges that at this time, "Defendants represented to Plaintiff that the
purchase of insurance was optional." (Id.) Plaintiff received two confirmation emails that did
not disclose anything about additional charges. (Id. at if 46) However, when Plaintiff went to
pick up his rental car at his chosen Thrifty location in Mexico and attempted to decline purchase
of personal liability insurance - explaining that he had his own - the counter agent told Plaintiff
that purchase of personal liability insurance for $12 per day was required in order to rent the car.
(Id. at if 48) Additionally, unbeknownst to Plaintiff, the daily rate he was charged was converted

to Mexican currency at a rate of 13.99 Mexican pesos per U.S. dollar, about 12% above the
official exchange rate of 12.76 Mexican pesos per U.S. dollar at the time. (Id. at iMf 47, 49)
When Plaintiff returned the car at the end of the ten-day rental period, his credit card was charged
a total of9,563,43 Mexican pesos -including "other fees charged by Defendants" -which
ultimately appeared on his credit card as a charge of $683.59 (after being converted back to
dollars at the official exchange rate). (Id. at if 49 & n.5)

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Plaintiff alleges that he later employed an investigator, who had a similar experience.
That is, the investigator: (1) was required to purchase personal liability insurance despite
providing written proof of personal liability insurance, applicable in Mexico and covering the
type of car being rented; and (2) was subjected to the additional exchange rate and insurance
charges despite paying for the reservation in advance. (See id. at mf 60-68) Other consumers
have publicly reported similar experiences. (See id. at ilil 52-59) Accordingly, the First
Amended Complaint alleges that Defendants systematically operate an exchange rate scam and
an insurance rate scam that results in customers having to pay more than expected for their car
rentals. (See id. at ilil 35-43)

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III.

LEGAL STANDARDS

A.

Rule 12(b)(l)

"Federal Rule of Civil Procedure 12(b)( 1) authorizes dismissal of a complaint for lack of
jurisdiction over the subject matter, or if the plaintiff lacks standing to bring his claim."
Samsung Elec. Co., Ltd. v. ON Semiconductor Corp., 541F.Supp.2d645, 648 (D. Del. 2008). A
Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction may present either a facial
attack or a factual attack. See CNA v. United States, 535 F.3d 132, 139 (3d Cir. 2008); Fed. R.
Civ. P. 12(b)(l). A facial attack concerns an alleged pleading deficiency, while a factual attack
concerns the failure of a plaintiff's claim to comport factually with the jurisdictional
prerequisites. See CNA, 535 F.3d at 139.
Where, as here, the motion presents a facial challenge to the Court's jurisdiction, or one
based purely on the allegations in the complaint, the Court must accept well-pled factual
allegations as true and may consider only the complaint and any documents upon which it is
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based. See Petruska v. Gannon Univ., 462 F.3d 294, 302 n.3 (3d Cir. 2006). A motion to
dismiss for lack of standing falls into this category. See In re Schering Plough Corp.

Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012) ("In evaluating
whether a complaint adequately pleads the elements of standing, courts apply the standard of
reviewing a complaint pursuant to a Rule 12(b)(6) motion to dismiss for failure to state a claim:
Court[ s] must accept as true all material allegations set forth in the complaint, and must construe
those facts in favor of the nonmoving party.") (internal quotation marks and citation omitted).
Where subject matter jurisdiction is challenged based upon the sufficiency of jurisdictional facts,
the Court is not required to attach any presumptive truthfulness to the allegations in the
complaint and may consider matters outside the pleadings to satisfy itself that it has jurisdiction.

See id.; see also Carpet Group Int'/ v. Oriental Rug Importers Ass 'n, Inc., 227 F.3d 62, 69 (3d
Cir. 2000). In either case, the plaintiff bears the burden of persuasion. See Kehr Packages, Inc.

v. Fide/car, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991).

B.

Rule 12(e)

Federal Rule of Civil Procedure 12(e) allows a party to move for a more definite
statement when a pleading is "so vague or ambiguous that the party cannot reasonably be
required to frame a responsive pleading." Schaedler v. Reading Eagle Pub/ 'n, Inc., 370 F .2d
795, 798 (3d Cir. 1967). "The decision whether to grant or deny a defendant's motion for a more
definite statement rests within the sound discretion of the court." Holmes v. Colonial Sch. Dist.,
2010 WL 4918721, at *1 (D. Del. Nov. 24, 2010). Motions for a more definite statement are
generally viewed with disfavor, particularly "where the information sought by the motion could

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easily be obtained by discovery." CFMT, Inc. v. Yield Up Intern. Corp., 1996 WL 33140642, at
*1 (D. Del. Apr. 5, 1996).
IV.

DISCUSSION

A.

Motion to Dismiss

Defendants move for dismissal of the Complaint for lack of Article III standing. Article
III standing requires a showing of: (1) injury in fact, (2) fair traceability of the injury to the
defendant's conduct, and (3) redressability of the injury. See, e.g., Ballentine, 486 F.3d at 814.
In the majority of his Complaint, Plaintiff refers to Defendants collectively as "Hertz," apparently

based on his allegations of integrated operations or centralized management. (See D.I. 69 at

ii 20)

Plaintiff argues that his allegations are sufficient to establish that he has standing against

Defendants based on either a theory of direct liability or an agency theory, the latter of which
requires "attribut[ion] [of] specific acts to the parent because of the parent's authorization of
those acts." C.R. Bard, Inc. v. Guidant Corp., 997 F. Supp. 556, 560 (D. Del. 1998); see also Tr.
at 33:2-7.
Defendants contest standing on two separate bases, both of which relate to Plaintiffs
obligation to identify an injury fairly traceable to Defendants. First, Defendants argue that
Plaintiff has no standing to sue Hertz Corporation because Plaintiff has not made any allegations
that are actually traceable to Hertz Corporation, but rather improperly relies solely on the parentsubsidiary relationship between Hertz Corporation and DTAG. Second, Defendants argue that
Plaintiff has no standing to sue either Hertz Corporation or DTAG because Plaintiff, by referring
to Defendants collectively as "Hertz," fails to identify which injuries are specifically traceable to
each party. The Court addresses both of these grounds for each Defendant below.

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1.

Hertz Corporation

Plaintiff alleges that Hertz Corporation is responsible for the policies and upper-level
management of operations related to the exchange rate and insurance rate scams he was subjected
to when he rented a Thrifty-branded car. (See Tr. at 20:15-23, 21:14-25,23:16-25:1, 25:17-21,
27:1-28:1, 30:9-31:2, 31:18-32:5, 33:12-34:5, 35:2-13, 37:6-17, 38:2-8) Plaintiff finds support
for this allegation in Hertz Corporation's 2013 Annual Report's statement that "a single
management team manages all four brands." (See D.I. 69atii19; see also Tr. at 24:10-15, 30:914, 34:1-5) Defendants point out that this report was published more than a year after Plaintiffs
rental transaction (see D.I. 69 at ii 18) and argue, therefore, it cannot support Plaintiffs standing.
However, at this stage of the proceedings the Court must construe all facts in favor of Plaintiff.
Doing so, the Court does not find it implausible to infer that a single management team was
imposing the pertinent policies on DTAG at the time of Plaintiffs transaction, in December
2012. Hertz's acquisition ofDTAG had occurred a month earlier, in November 2012 (see id. at
ii 6; see also Tr. at 25:14-21), and the fact (alleged and taken as true) that by sometime in 2013 "a
single management team manage[ d] all four brands" makes it permissible to infer this was also
the fact in December 2012.
Moreover, the Court is required to take the following allegations as true:
Hertz Corporation has integrated the Hertz, Dollar and Thrifty
brands though combined marketing, promotion, reservation, fleet
management, insurance, information technology functions, back
office processing and procurement. All domestic and international
reservation[ s] for all Hertz brands are processed in a Hertz facility
in Oklahoma City, Oklahoma. Thus, although Dollar Thrifty is a
subsidiary of Hertz Corporation, the actual operations pertinent to
the Dollar and Thrifty brands are managed and performed by Hertz
Corporation.

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(D.I. 69 at 'if 20)
Hence, at this time, the Court has no basis to dismiss Hertz Corporation. 1

2.

Dollar Thrifty Automotive Group

Plaintiff alleges that DTAG implements and enforces the policies made by Hertz
Corporation. (See Tr. at 20:15-23, 21:14-25, 31:18-21, 33:15-17, 35:2-13, 37:6-17) This, along
with the more specific factual allegations as to how Plaintiff rented a Thrifty-branded car from a
Thrifty location in Mexico (see D.I. 69 at 'il'il 44-45, 47-48), and was allegedly overcharged,
supports a reasonable inference that his injury can be fairly traced to DTAG. Accordingly, at this
time the Court has no basis to dismiss DTAG.

B.

More Definite Statement

As an alternative to dismissal, Defendants move for a more definite statement pursuant to
Rule 12(e), contending that Plaintiff has failed to meet the heightened pleading requirements for
fraud under Federal Rule of Civil Procedure 9(b). Relief maybe granted under Rule 12(e) where
"the pleading has failed to satisfy the heightened pleading requirements of Rule 9(b)." Martek

Biosciences Corp. v. Nutrinova Inc., 2004 WL 2297870, at *2-3 (D. Del. Oct. 8, 2004).
"Plaintiff's California consumer protection claims sound in fraud and must meet the heightened
pleading requirements of Rule 9(b)." Montich v. Miele USA, Inc., 849 F. Supp. 2d 439, 451
(D.N.J. 2012) (citing Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). To meet
these heightened pleading requirements, "the complaint must plead with particularity by

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At the hearing, Defendants argued that Hertz Corporation is in this case because Plaintiff
intends to pursue unwarranted and unduly burdensome discovery from it. (See, e.g., Tr. at 41 :417) Defendants' concern is not a reason to dismiss the case. The Court will address any
discovery disputes through its standard discovery matters procedures.
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specifying the allegations of fraud applying to each defendant." Everwine v. A.I Dupont Hosp.
for Children ofNemours Found., 2005 WL 3150275, at *2 (E.D. Pa. Nov. 22, 2005).
Plaintiffs use of "Hertz" to refer collectively to both Hertz Corporation and DTAG fails
to clearly articulate his theory that Hertz Corporation alone is responsible for the relevant
policies and that DTAG (among others) implements and enforces those policies. (See Tr. at
41 :21-25) Plaintiff made his theory clear at the recent hearing, but Defendants are entitled to a
pleading that makes the allegations sufficiently clear that they can frame a responsive pleading.
It is not clear from the Complaint that Plaintiff is not alleging that DTAG is responsible for

setting the policies on which the alleged scams are based. 2 This pleading deficiency cannot be
addressed by discovery. Instead, Plaintiff must provide a more definite statement.
Accordingly, the Court will grant Defendants' motion for a more definite statement. The
Court will also grant Plaintiffs request for leave to file a Second Amended Complaint.
C.

Jurisdictional Discovery

Given the Court's conclusions, there is neither need nor basis for Plaintiff to take
jurisdictional discovery.

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While Plaintiffs clarified theory may be inconsistent with the alternative theory that
Hertz Corporation is an agent ofDTAG (see Tr. at 31 :3-32:23), such an inconsistency is not
argued to be a basis for dismissal at this time.
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V.

CONCLUSION
For the above reasons, the Court will grant Plaintiff leave to file a Second Amended

Complaint, deny Defendants' motion to dismiss without prejudice to renew after Plaintiff has
filed a Second Amended Complaint, grant Defendants' alternative motion for a more definite
statement, and deny Plaintiffs request for jurisdictional discovery. An appropriate Order will be
entered.

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