Lee v. Enterprise Leasing Company-West, LLC

Filing 44

ORDER denying 21 , 27 Motion to Dismiss. Signed by Judge Larry R. Hicks on 9/10/12. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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LYDIA LEE and CAROLYN BISSONETTE,
individually and on behalf of others similarly
situated,

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Plaintiffs,

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v.

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ENTERPRISE LEASING COMPANYWEST, a Delaware LLC; and VANGUARD
CAR RENTAL USA, LLC, a Delaware LLC,

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Defendants.

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3:10-CV-00326-LRH-WGC
ORDER

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Before the court is Defendants’ corrected Motion to Dismiss (#271 ). Plaintiffs filed an

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opposition (#32), and Defendants replied (#35).

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I.

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Facts and Procedural History
Although involving different parties, this putative class action involves substantially the

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same claims and issues that are presented in a separate case currently pending before this court,

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Sobel v. Hertz Corporation, No. 3:06-cv-545-LRH-RAM. Like the Sobel parties, the plaintiffs

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here, Lydia Lee and Carolyn Bissonette, rented cars at Nevada airports; and the defendants,

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Enterprise Leasing Company-West, LLC and Vanguard Car Rental USA, LLC, are national rental

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car companies that have operations at Nevada airports. Lee rented from Enterprise, and Bissonette

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Refers to the court’s docket entry number.

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rented from Vanguard, operating as Alamo Rent-A-Car. Vanguard also operates at Nevada airports

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as National Car Rental. Both rented at the McCarran International Airport.

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In order to operate at the Reno-Tahoe International Airport and the McCarran International

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Airport, rental car companies are required by the airports to pay concession fees of ten percent of

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their gross revenues received there. Although the airports impose these fees on the rental car

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companies rather than their customers, Defendants pass along the expense to their customers by

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imposing ten percent surcharges to their base rental rates as so-called “concession recovery fees.”

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Beginning prior to the relevant class periods, Defendants have “unbundled” the surcharge from

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their base rental rates. In other words, the base rental rate advertised and quoted to customers does

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not include the separate airport concession recovery fee that Defendants charge their customers.

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As in Sobel, the dispute in this case revolves around whether section 482.31575 of the Nevada

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Revised Statutes, as it existed prior to its amendment on October 1, 2009, permitted Defendants to

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charge customers a separate airport concession recovery fee that was not included in the price

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advertised and quoted to customers.2

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Although once conditionally consolidated with Sobel for purposes of a proposed class

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settlement, following the court’s disapproval of that proposed settlement, this case has proceeded

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as a separate action. The operative pleading is the Second Amended Class Action Complaint

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(#11), filed on August 16, 2011. Plaintiffs allege two claims for relief. First, they seek damages

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and equitable relief for violations of section 482.31575 based on Defendants’ actions in quoting

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and charging unbundled airport concession recovery fees on top of the base rate. Second, they seek

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restitution under a claim of unjust enrichment. Plaintiffs also seek to represent a class of all

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persons who rented a car from Enterprise or Vanguard, operating as Alamo or National, at a

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Nevada airport and were charged a base car rental rate as well as a separate concession recovery fee

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As amended, the statute now expressly permits this practice.
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or comparable fee during the period of June 3, 2004 thru September 20, 2009 as to Enterprise, and

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during the period of June 3, 2007 thru September 30, 2009 as to Vanguard.

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Defendants now move to dismiss the Second Amended Complaint or for other relief.

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Defendants principally move to dismiss Plaintiffs’ claims regarding Vanguard’s National Car

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Rental division under Fed. R. Civ. P. 12(b)(1) for lack of standing, and they move to dismiss the

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entire complaint under Rule 12(b)(3) for failure to state a claim. In the alternative, Defendants

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move for an order certifying the question of the interpretation of NRS § 482.31575 to the Nevada

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Supreme Court. Finally, Defendants also move to strike certain allegations in the complaint under

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Rule 12(f) as immaterial and prejudicial.

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II.

Standing as to National
A motion to dismiss for lack of subject-matter jurisdiction under Rule 12(b)(1) may be

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raised at any time and may present either a facial or factual attack. See Fed. R. Civ. P. 12(h)(3);

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Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). “In a facial attack, the

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challenger asserts that the allegations contained in a complaint are insufficient on their face to

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invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the

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allegations that, by themselves, would otherwise invoke federal jurisdiction.” Id. Accordingly,

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because Defendants only challenge the sufficiency of Plaintiffs’ allegations to establish standing,

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the court treats the challenge as a facial attack and accepts the Plaintiffs’ factual allegations as true.

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Defendants instead contend that Plaintiffs lack standing to assert claims that relate to car

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rentals from Vanguard’s National Car Rental division, as Plaintiffs contend that Bissonette rented

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only from Vanguard’s Alamo Rent-A-Car division. Defendants argue that, as to National,

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Plaintiffs have therefore failed to allege that they suffered an injury that is “fairly traceable” to

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defendants’ conduct and redressable by a favorable decision. Defendants also argue that Plaintiffs

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are not exempt from these standing requirements even though they have filed a putative class

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action, because in class actions at least one named plaintiff must have standing for each claim

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alleged in the complaint, citing Hawkins v. Comparet-Cassani, 251 F.3d 1230, 1238 (9th Cir.

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2001) (“A named plaintiff cannot represent a class alleging constitutional claims that the named

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plaintiff does not have standing to raise.”).

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Significantly, Defendants make no contention that either of the two named plaintiffs, either

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of their two claims for relief, or either of the two named defendants should be dismissed on the

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basis of the Plaintiffs’ lack of standing. Indeed, it is quite clear that the factual allegations of the

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Second Amended Complaint are sufficient to establish the “irreducible constitutional minimum” of

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Article III standing – injury in fact, causation, and redressability – as to each named plaintiff,

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claim, and named defendant. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). It is

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alleged that Lee and Bissonette rented cars at Nevada airports from Enterprise and Vanguard,

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respectively, that each company charged their respective customers an unbundled concession

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recovery fee on top of the base rental rate in violation of former section 482.31575, and that

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Enterprise and Vanguard were unjustly enriched by this practice at Plaintiffs’ expense.

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While Plaintiffs must allege an injury that is fairly traceable to a the conduct of a

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“defendant,” the court rejects Defendants’ argument that this excludes National, as if National were

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a distinct entity capable of independent conduct. Defendants make no contention that National or

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Alamo are distinct legal entities from Vanguard. Cf. Easter v. Am. W. Fin., 381 F.3d 948, 962-63

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(9th Cir. 2004). Rather, they are mere “brands” of Vanguard. (Motion (#27), p. 4.) Although

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doing business under the “National” brand, Vanguard is the entity that charged unbundled airport

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concession recovery fees and is subject to suit. There is no contention that any entity is missing

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from this action, nor that any party should be dismissed on account of Plaintiffs’ lack of standing.

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The court also rejects Defendants’ argument that distinct “claims” are asserted as to

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National, such that Plaintiffs lack standing to assert those claims on behalf of a class that includes

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customers of Vanguard’s National brand. Plaintiffs’ two claims for relief are actually asserted

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against named-defendant Vanguard based on its uniform billing practices across brands. The

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Hawkins decision cited by Defendants is inapposite. The principle relied upon there, that a named

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plaintiff cannot represent a class alleging claims that the named plaintiff does not have standing to

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raise, refers to types of claims. See Hawkins, 251 F.3d at 1238 (holding that the named plaintiff, as

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a convicted prisoner, had standing to raise Eight Amendment claims but not Fourth Amendment

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claims). Here, there is no question that Bissonette has standing to raise both types of claims

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asserted—violation of section 482.31575 and unjust enrichment against Vanguard.

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Defendants also argue that Plaintiffs lack standing to bring claims as to Vanguard’s

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National brand because National is a distinct “product or service” that neither Plaintiff purchased.

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But while there are surely other contexts in which this principle would apply, it does not apply to

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these facts and claims. Plaintiffs claim that Vanguard, regardless of brand, charged unbundled

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airport concession recovery fees in conjunction with car rentals. Thus, they target a specific

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business practice uniformly engaged in by the same company as to the same product or service.

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Plaintiffs’ claims do not materially distinguish between Vanguard’s brands, and Defendants do not

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point to any distinguishing aspects of Vanguard’s business practices under its National brand that

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are material to Plaintiffs’ claims. The court also finds that given the particular facts and claims

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presented in this case, Defendants’ argument is unsupportable. If Vanguard’s d/b/a is sufficient to

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render its car rentals a materially distinct product or service for purposes of Plaintiffs’ standing,

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why not the make, model, year, color or size of the cars rented? Because these aspects of

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Vanguard’s car rentals are immaterial to the claims alleged, the court finds that Bissonette’s

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standing to sue Vanguard is not limited to the brand under which Vanguard was operating at the

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time.

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As Plaintiffs submit, these same issues may be relevant to the court’s consideration of class

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definition and representation. But such class-certification questions have not been presented by the

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parties and are not logically antecedent to Article III standing. Cf. Jepson v. Ticor Title Ins. Co.,

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2007 WL 2060856, *1 (W.D. Wash. 2007) (plaintiff lacked standing to assert claims under the

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laws of other states in the absence of class certification). Because the named plaintiffs have

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standing to assert all claims alleged in the complaint against the named defendants, Defendants’

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partial motion to dismiss under Rule 12(b)(1) shall be denied.

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III.

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Failure to State a Claim
Defendants next move to dismiss the Second Amended Complaint under Rule 12(b)(6) on

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the basis that Defendants have failed to allege that Defendants’ conduct violated former NRS

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§ 482.31575. Defendants contend that their activities were not unlawful even under this court’s

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reading of the statute in Sobel because the airports permitted rental car companies to impose airport

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concession recovery fees on their customers. In Defendants’ reading, the court interpreted the

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statute to mean that “an airport fee may be separately stated if the airport permits the fee to be

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imposed on the customer.” (Motion (#27), p. 2 (emphasis added).) The argument misreads the

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court’s decision.

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In Sobel, this court held “as a matter of law” that, prior to its amendment in 2009, “section

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482.31575 required rental car companies to include the airport concession recovery fee in the base

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rate that they advertised, quoted, and charged to short-term lessees,” such that it was unlawful to

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charge an unbundled airport concession recovery fee on top of the advertised and quoted base

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rental rate. Sobel v. Hertz Corp., 698 F. Supp. 2d 1218, 1232 (D. Nev. Mar. 17, 2010) (No. 3:06-

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cv-545-LRH-RAM, #111, pp. 19-20) (order on summary judgment); accord Sobel v. Hertz Corp.,

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2007 WL 2710725, *4 (D. Nev. Sept. 13, 2007) (No. 3:06-cv-545-LRH-RAM, #22, p. 6) (order on

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motion to dismiss). The court specifically distinguished between the permissible practice of

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charging customers an airport concession recovery fee and the prohibited practice of charging such

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a fee while advertising and quoting a base rental rate that does not include that surcharge. See

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id. at *4 (#22, p. 7) (“The issue . . . is not whether airport concession fees may be charged to

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customers, the issue is whether such charges must be reflected within the rate advertised and

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quoted to customers.”).

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A critical part of the court’s reasoning was that the statute’s reference to “any fees paid to

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airports” that a short-term lessee “must pay” refers only to charges that the airports require to be

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paid by the rental car customer and “over which the leasing company would have no control.” See

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Sobel, 2007 WL 2710725, *2-3 (#22, p. 4-5). Contrary to Defendants’ argument, this

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unequivocally does not include airport concession fees that the car rental companies pass along to

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their customers at their own option. That the airport authorities permitted such practices is

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immaterial; only charges to customers made mandatory by the airport are within the statutory

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exception.

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Defendants next dispute this court’s interpretation of the statute’s legislative history in

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Sobel. In that case, the court addressed both the legislative history of the pre-2009 version of the

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statute, see Sobel, 2007 WL 2710725, *2-3 (#22, pp. 4-5) (motion to dismiss), and the effect of the

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2009 amendment, see Sobel, 698 F. Supp. 2d at 1224-26 (#111, pp. 7-11). Having already

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considered and decided the issue, the court declines to reconsider its prior ruling.

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Defendants next contend that the practice of unbundling airport concession recovery fees

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was not unlawful because the airport authorities authorized the practice. Defendants argue that

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Nevada statutes specifically vest airport authorities with the power to impose and collect airport

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fees, and that an agency’s construction of a state statute is entitled to deference. See Roberts v.

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Nevada, 752 P.2d 221, 225 (Nev. 1988). But there are at least two problems with this argument.

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First, that the airport authorities had the power to impose and collect fees is beside the point.

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Under the court’s construction of the statutory language, the material fact is that in imposing

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concession fees, the airport authorities imposed the fee on the car rental companies, not customers.

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Second, the court has before it no reasoned decision interpreting the statutory language to which it

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might give deference.

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Defendants finally contend that they should not be subjected to liability based on a

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reasonable interpretation of an ambiguous statute. (See Motion (#27), p. 2.) In their reply brief,

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Defendants deny that they are presenting merely a “good faith” defense and contend that applying

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the statute against them would be in violation of their constitutional rights to due process. (Reply

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(#35), p. 14.) The court declines to consider such an argument fully presented for the first time in a

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reply brief. The singular and passing reference to “due process” in their motion is insufficient to

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properly present an issue for consideration to this court.
For these reasons, the motion to dismiss under Rule 12(b)(6) shall be denied.

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IV.

Certification

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Short of dismissal, Defendants move for an order certifying the question of the

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interpretation of NRS § 482.31575 to the Nevada Supreme Court. Nevada Rule of Appellate

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Procedure 5(a) permits the Nevada Supreme Court to answer questions of law certified to it by

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federal district courts that may be determinative of the action and as to which there is no

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controlling Nevada Supreme Court precedent.

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Whether to grant or deny a motion to certify a question to a state supreme court is within the

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federal court’s discretion. See Schwarzer, Tashima & Wagstaffe, Cal. Prac. Guide: Fed. Civ. Pro.

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Before Trial ¶ 1:103 (The Rutter Group 2011). Relevant factors include whether the issue is one of

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first impression, is likely to recur, or has generated conflicting decisions elsewhere. Id. ¶ 1:104.

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Here, the court finds that the circumstances of this case do not warrant certification.

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Although the statutory interpretation of NRS § 482.31575 was once an issue of first impression,

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this court has already resolved that question in a prior case after giving the question considerable

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thought and attention. Indeed, this court passed upon the issue twice—once on a motion to dismiss

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and again on a motion for summary judgment to consider the effect of the statute’s amendment in

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2009. Furthermore, given the Nevada Legislature’s amendment of the statute in 2009, the issue of

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the construction of former version of the statute is highly unlikely to recur beyond this case and

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Sobel. The motion for certification shall therefore be denied.

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Motion to Strike
Defendants finally move to strike paragraphs 16, 17, 18, 19 and 21 of the Second Amended

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Complaint as irrelevant and prejudicial. These paragraphs pertain to a task force formed in 1988

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by the National Association of Attorneys General (“NAAG”) to study car rental advertising and

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related practices, allegedly in response to an announcement by Hertz that it intended to begin

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unbundling concession recovery fees from its advertised and quoted rental car rates. The

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paragraphs further describe the Task Force’s issuance of report and guidelines in 1988 and 1989,

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the NAAG’s approval of those guidelines in 1999, the practice of airports imposing “access fees”

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on off-airport rental car companies that picked up customers at the airport (in contrast to

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concession fees imposed by airports on rental car companies with on-airport locations), and the

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adoption of NRS § 482.31575 in 1989 around the time that the NAAG Task Force issued its report

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and other states enacted statutes regulating rental car advertising and charges. In moving to strike

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these allegations, Defendants contend that Hertz’ practices in 1988 and the NAAG’s concerns

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about those practices are irrelevant to Defendants’ practices in this case and the issue of whether

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they violated § 482.31575 during the class period.

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Rule 12(f) authorizes the court to strike from a pleading “any redundant, immaterial,

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impertinent, or scandalous matter.” The purpose of a Rule 12(f) motion is to avoid expending time

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and money litigating spurious issues. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir.

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1993), rev’d on other grounds, 510 U.S. 517 (1994). Matter is “immaterial” within the meaning of

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the rule if it has no essential or important relationship to the claim for relief pleaded. Id. Matter is

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“impertinent” if it does not pertain, and is not necessary, to the issues in question. Id. Rule 12(f)

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motions are disfavored and “should not be granted unless it is clear that the matter to be stricken

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could have no possible bearing on the subject matter of the litigation.” Colaprico v. Sun

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Microsystems, Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991). “[A]llegations supplying

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background or historical material or other matter of an evidentiary nature will not be stricken

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unless unduly prejudicial to defendant.” LeDuc v. Kentucky Cent. Life Ins. Co., 814 F. Supp. 820,

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830 (N.D. Cal. 1992).
Applying these standards to the present case, the court finds that the subject allegations,

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even if unnecessary to the proof of Plaintiffs’ claims for damages and equitable relief against

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Defendants, have some bearing as historical background to the Nevada Legislature’s adoption of

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NRS § 482.31575. See Sobel, 2007 WL 2710725, *3 (Doc. #22, pp. 5-6) (discussing the NAAG

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Task Force report in considering Hertz’s motion to dismiss). Furthermore, that Plaintiffs’

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allegations might “insinuate” that Defendants have engaged in conduct they dispute does not

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constitute undue prejudice. The motion to strike shall therefore be denied.

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VI.

Conclusion
For the foregoing reasons, the court denies Defendants’ consolidated motions to dismiss

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under Rule 12(b)(1) and (6), to certify to the Nevada Supreme Court, and to strike under Rule

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12(f).

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IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss (#27) is DENIED.

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IT IS SO ORDERED.

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DATED this 10th day of September, 2012.

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LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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