SCHWARTZ v. AVIS RENT A CAR SYSTEM, LLC
Filing
151
OPINION. Signed by Judge Jose L. Linares on 8/6/14. (gmd, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
EDWARD SCHWARTZ, on behalf of himself
and all others similarly situated,
Civil Action No 11-4052 (JLL)
Plaintiff,
OPINION
V.
‘AVIS RENT A CAR SYSTEM, LLC and
AVIS BUDGET GROUP, INC.,
Defendants
LINARES, District Judge.
This matter comes before the Court by way of Defendants Avis Rent a Car System, LLC
and Avis Budget Group, Inc. (“Avis” or “Defendants”)’ motion for summary judgment as to
Edward Schwartz (“Plaintiff’)’s claims of (1) violation of the New Jersey Consumer Fraud Act,
(2) breach of contract, and (3) breach of the implied covenant of good faith and fair dealing
under New Jersey common law. [CMJECF No. 120.] The Court has considered the submissions
made in support of and in opposition to Defendant’s motion, and heard oral arguments on the
matter. For the reasons set forth below, Defendants’ motion for summary judgment is denied.
I.
BACKGROUND
As the Court writes only for the parties, it will set forth only those facts it deems relevant
to deciding Defendant’s motion.
Plaintiff brings this action on behalf of himself and a putative class of Avis customers
who were charged a $0.75 surcharge for earning frequent-flyer miles and other rewards through
their participation in Avis’s Travel Partner Program (the “Program”).
1
The Program allows participating customers who rent a car from Avis to earn frequentflyer miles or other rewards with certain airlines, hotels, and other companies (Avis’s “Travel
Partners”). Avis pays its Travel Partners for the points and miles earned by customers who
participate in the Program, and also pays federal taxes on these points and miles. To offset part
of its costs, Avis charges participating customers $0.75 per rental day.
On May 15, 2011, Plaintiff made an online reservation on Avis’s website for a rental
vehicle between May 15-16, 2011. Plaintiff was to pick up, and return his vehicle at ManchesterBoston Regional Airport. According to Plaintiff, Avis’s website prompted him to enter his
Continental Airlines frequent-flyer number so that he could earn miles through the Program.
Upon completing his online reservation, Plaintiff received an email confirmation containing an
itemized list of estimated rental costs, which did not include any charge for earning frequentflyer miles or rewards through the Program. The email read:
Base Rate and Charges
Base Rate
Energy Recovery Fee
Vehicle License Fee
Customer Facility Fee
Concession Recovery Fee
Tax (9.0%)
$94.99/day
$0.50/day
$3.00/day
$2.25/day
10%
$9.92
Rental Options
GPS Navigation
$13.95
Additional Fees
Optional equipment and coverages may be subject to taxes and fees that
are not included in the estimated total.
Where2 GPS Navigation
—
Taxes not included.
2
Gas Service Option
Fees for the Gas Service Option are not included
in the Estimated Total.
—
Plaintiff paid for the car rental with his company’s American Express Business Platinum
credit card. Though Plaintiff contracted directly with Defendant and was the named cardholder
and primary obligor of the credit card used, the charges associated with the car rental were paid
by ORG Holdings, Limited and ORG Portfolio Management (“ORG”).
As a participant in Avis’s Preferred Service Program, Plaintiff was able to bypass the
service counter and proceed directly to his rental vehicle on the date of his arrival at
Mancherster-Boston Regional Airport. Plaintiff claims that Avis placed a document confirming
the terms of the rental (the “Rental Document”) inside his rental car. The Rental Document
included a list of the same itemized charges that had appeared in the email confirmation that
Plaintiff received, as well as a $0.75 daily surcharge described as an “FTP SUR” charge. When
Plaintiff returned the car, Avis issued him a receipt (the “Return Document”) that again listed all
the charges for the rental, and a $0.75 charge described as “FTP-SR.”
Plaintiffs Second Amended Complaint asserts (1) a claim for violation of the New Jersey
Consumer Fraud Act (“NJCFA”), N.J.S.A.
§ 56:8-1 et seq.; (2) a claim for breach of contract; (3)
a claim for breach of the covenant of good faith and fair dealing; (4) a claim for injunctive relief
under New Jersey law; and (5) a claim for declaratory relief pursuant to the Declar
atory
Judgment Act, 28 U.S.C.
§ 2201 et seq. [CM/ECF No. 96.] Defendant filed a motion for
summary judgment on March 14, 2014. [CMIECF No. 120.] Oral argument was held on July
9,
2014. [CM/ECF No. 143.]
IL
LEGAL STANDARD
A court “shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R.
3
Civ. P. 56(a). The moving party must first demonstrate that there is no genuin
e issue of material
fact. Celotex v. Catrett, 477 U.S. 317 (1986). Courts construe facts and inferen
ces in the light
most favorable to the non-movant in order to determine whether there is a genuin
e issue for trial.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.
202 (1986). An
issue is “genuine” if the evidence is such that a reasonable jury could find
for the non-moving
party. Id. at 248. “[T]here is no issue for trial unless there is sufficient eviden
ce favoring the
nonmoving party for a jury to return a verdict for that party. If the evidence is
merely colorable,
or is not significantly probative, summary judgment may be granted.” Id.
at 249—50 (citations
omitted). “Thus, if a reasonable fact finder could find in the nonmovanCs favor,
then summary
judgment may not be granted.” Norfolk Southern Ry. Co. v. Basell USA Inc., 512
F.3d 86, 91 (3d
Cir. 2008).
III.
DISCUSSION
Defendants have moved for summary judgment arguing that Plaintiff
does not have
Article III standing and that, even if this Court finds that Plaintiff has standin
g, Plaintiff’s claims
should be dismissed on the merits. For the reasons explained below,
this Court denies
Defendants’ motion.
A. Article III Standing
In order to have Article III standing, a plaintiff must allege: (1) an injuryin-fact; (2)
causation between the conduct complained of and the alleged injury; and
(3) that the court can
redress the injury. “[S]tanding is a ‘threshold question in every federal
case.” Wheeler v.
Travelers Ins. Co., 22 F.3d 534, 537 (3d Cir. 1994) (quoting Warth v. Seldin
, 422 U.S. 490, 498
(1975)). “[The Article III standing] requirements ensure that plaintiffs have
a ‘personal stake’ or
‘interest’ in the outcome of the proceedings ‘sufficient to warrant
4
.
.
.
[their] invocation of
federal-court jurisdiction and to justify exercise of the court’s remedial powers on
.
.
.
[their]
behalfi.]” Id. at 537-38 (quoting Simon v. Eastern Ky. Welfare Rights Org., 441 U.S. 26, 38-39
(1976); Warth, 422 U.S. at 498-99).
“While it is difficult to reduce injury-in-fact to a simple formula, economic injury is one
of its paradigmatic forms.” Danvers Motor Co., Inc. v. Ford Motor Co., 432 F.3d 286, 291
(3d
Cir, 2005). The size of the plaintiff’s injury is irrelevant as long as it is identifiable. US.
v.
Students C’hallenging Regulatory Agency Procedures (‘SCRAP,, 412 U.S. 669, n. 14 (1973)
.
Moreover, “[t]he contours of the injury-in-fact requirement, while not precisely defined, are very
generous.” See Bowman v. Wilson, 672 F.2d 1145, 1151 (3d Cir. 1982).
Defendants argue that Plaintiff does not have Article III standing because he did not
suffer an out-of-pocket economic loss. (Oral Argument, 8: 5-9; Def. Br. 7.) They reason that
because Plaintiff’s employer, ORG, paid Plaintiff’s credit card bill, Plaintiff did not suffer
an
injury-in-fact. For this same reason, Defendants also argue that this Court cannot redress
Plaintiffs alleged injury. This Court disagrees.
1. Injury-in-fact
The injury-in-fact element of Article III standing does not require a showing of a direct
economic hanm To establish an injury-in-fact, a plaintiff only has to show an invasio
n of a
legally protected interest which is (a) concrete and particularized and (b) actual or immin
ent, not
conjectural or hypothetical. Lz4an v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)
.
Here, Plaintiff has a legally protected interest in his contractual agreement with
Defendant. Not only did Plaintiff contract directly with Defendant, but he was
also the named
cardholder on the credit card used to pay for the rental cost and the primary obligo
r. The alleged
invasion of this legally protected interest was concrete, particularized,
and real. When
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contracting with Defendant to rent a car, Plaintiff was led to believe that he would be able to
accrue frequent flyer miles for free. Instead, Defendant included a hidden fee in Plaintiff’s total
rental cost, charging Plaintiff for his ability to accrue those frequent flyer miles. This is suffici
ent
to show that he has standing to sue for claims arising out of this contractual dispute.
Though the injury-in-fact element of Article III standing does not require an economic
harm, Plaintiff has shown that he has suffered one. Assuming that the daily $0.75 surcha
rge for
participating in the Program is contrary to New Jersey law, ORG is entitled to be reimbu
rsed for
that expense. Further, pursuant to the business practice between Plaintiff and ORG, ORG only
pays for Plaintiff’s business car rental expenses. [CMIECF No. 121-1, 4.] If Plaintiff charge
s a
personal car rental on his business credit card, he must reimburse ORG for that expense. (Id.)
The $0.75 surcharge, though not a personal car rental cost, is not a valid business travel expens
e.
Thus, Plaintiff “has this obligation to ORG, which itself is a detriment to him that should
be
compensated.” (Oral Argument, 3 2:9-1 1.)
Defendants argue that Plaintiff did not suffer an economic harm because his credit card
bill was paid by ORG, relying on Wheeler to support this argument. (See Id. at 7:14-23, 8:5-10
)
(“I think the precedential case that establishes there’s no injury-in-fact is the Third Circui
t
decision in Wheeler
.
.
.
[it] stands for the proposition that a plaintiff, who has either been
reimbursed or has not incurred any out-of-pocket loss doesn’t have standin
g, and that is
relatively the same situation as we have here[.]”) Wheeler, however, is distinguishab
le from the
matter at hand.
In Wheeler, the plaintiff-appellee was hit by a car and suffered injuries that
caused
substantial medical expenses. 22 F.3d at 536. At that time, she was insured
through both
Medicare and a policy from Travelers Insurance Company. Id. Medicare paid
most of the
6
medical bills directly to her healthcare provider. Id. Travelers then paid the difference directl
y to
her. Id. The plaintiff-appellee then sued Travelers to recover the expenses paid by Medic
are. Id.
The Wheeler Court concluded that the plaintiff-appelle did not have standing becaus she
e
failed to “establish that she suffered any actual or threatened injury from Traveler’s denial
of her
claim for no-fault benefits” since Medicare paid for the expenses she was trying to recove
r. Id. at
538. The Court explained that the plaintiff-appellee “never [had] anything to gain
from [her]
lawsuit,” id., and that “there is no real controversy between Travelers and [the
plaintiff
appellee].” Id. at 539. It concluded that the “dispute realistically [was] between
Medicare and
Travelers[.]”
The Third Circuit, however, distinguished the facts in Wheeler from other “actions which
may benefit third parties.” Id. The Court gave as an example a workers’ compensation
case in
which the injured plaintiff “brings a third-party action against an alleged tortfeasor.”
Id. The
Circuit Court explained:
In that situation the worker’s compensation insurance carrier may be able
to assert a lien on the proceeds of a recovery in the third-party action. But
such cases are distinguishable from this case. In the third-party action the
focus of the case is on the dispute between the employee and the alleged
tortfeasor. The claim of the insurer asserting the lien is tangential to the
matters at issue in the third-party action, e.g., negligence of the defendant
and damages suffered by the plaintiff.
Id. at 539. This distinction applies to the matter at hand. ORG’s claim to recove
r the amount it
wrongly paid on Plaintiff’s credit card bill is analogous to the worker’s compe
nsation insurance
carrier’s lien in the above example. Though ORG paid Plaintiffs credit card
bill and is entitled
to be reimbursed for the amount in question, its claim on this payment is
“tangential to the
matters at issue” in this action. Instead, the focus here is on Defendants’
fraudulent behavior
aimed at Plaintiff and Defendants’ breach of the contract entered into with Plainti
ff. As such, the
7
dispute here is clearly between Plaintiff and Defendants. Unlike the plaintiff-appe
llee in
Wheeler. the Plaintiff here does have something to gain from his lawsuit: the
amount he owes
ORG for the hidden fees charged by Defendant.
2. Causation
The second element of Article III standing is “a causal connection between
the injury and
the conduct complained of....” Lufan, 504 U.S. at 560-61 (citing Simon v. Eastern
Ky. Wefare
Rights Organization, 426 U.S. 26, 41—42 (1976)). Defendants do not argue
that Plaintiff lacks
standing because there is no causation. In fact, none of the parties discussed this
element in their
arguments. Still, it is clear to this Court that there is a causal connection betwee
n the injury and
Defendants’ alleged conduct. Defendants omitted material facts regarding the
$0.75 charges for
participating in the Program. Their omissions and misrepresentations induce
d Plaintiff to enter
into a contract with them, which was subsequently breached and caused an econom
ic harm.
3. Redressability
The final element of Article III standing, redressability, means that a plainti
ff’s requested
remedy would “likely” cure the alleged harm. Lujan, 504 U.S. at 561. Defend
ants argue that this
Court cannot redress Plaintiff’s alleged harm because “Plaintiff has suffere
d no such harm.”
(Def. Br. 7.) They reason that any monetary award to Plaintiff would constit
ute a windfall to him
because Plaintiff’s company, and not Plaintiff himself, paid the freque
nt flyer surcharge.
Defendants further argue that this Court cannot award damages to ORG becaus
e that entity is not
a party to this action and has asserted no claims against Defendant.
This Court may properly redress Plaintiff for his injury. Defendants’
arguments ignore
the fact that Plaintiff must reimburse ORG for the Travel Partne
r Program surcharge if that
charge is illegal. As explained above, Plaintiff owes that money to
ORG. Thus, any award for
8
damages granted to Plaintiff would not constitute a windfall to him. As
such, it is possible to
redress Plaintiffs injury.
B. Merits of Plaintiff’s Claims
Defendants move for summary judgment on Plaintiffs claims for (1) violati
on of the
NJCFA, (2) breach of contract, and (3) breach of the implied covenant
of good faith and fair
dealing. (DeL Br. 7.) Defendants’ sole argument for summary dismissal
of these claims is that
Plaintiff cannot show that he suffered any damages as required for establi
shing valid claims
under these causes of action. (Id. at 7-8.) This Court disagrees.
To establish a prima facie case under the NJCFA, a plaintiff must show:
(1) unlawful
conduct by the defendant; (2) an ascertainable loss by the plaintiff; and
(3) a causal relationship
between the unlawful conduct and the ascertainable loss.
mt ‘1
Union of Operating Eng ‘rs Local
No. 68 Welfare Fund v. Merk & Co., Inc., 192 N.J. 372, 389 (2007). An
ascertainable loss is “a
definite, certain and measurable loss, rather than one that is merely
theoretical.” Bosland v.
Warnock Dodge, Inc., 197 N.J. 543, 557 (2009); see also Thiedman
v. Mercedes-Benz-USA,
LLC, 183 N.J. 232, 248 (2005) (evidence of ascertainable loss “must
be presented with some
certainty demonstrating that it is capable of calculation, although it need
not be demonstrated in
all its particularity to avoid summary judgment”). In interpreting the
NJCFA, courts have been
instructed to “be faithful to the Act’s broad remedial purposes.
.
.
[and] construe the [Act]
broadly, not in a crabbed fashion.” Bosland. 197 N.J. at 556-57 (citatio
ns omitted). Similarly, to
state a claim for breach of contract, a plaintiff must allege (1) a contrac
t between the parties; (2)
a breach of that contract; (3) damages flowing there from; and (4) that
the party stating the claim
performed its own contractual obligations. Frederico v. Home
Depot. 507 F.3d 188, 203 (3d
Cir.2007). Finally, “[d]amage is an element of the [breach of the implie
d covenant of good faith
9
and fair dealing] claim which Plaintiff must allege to survive Defend
ant’s motion to dismiss.”
DeHart v. U.S. Bank, J’LA., 811 F. Supp. 2d 1038, 1048-49 (D.N.J. 2011)
(citing Wade v. Kessler
Instit., 343 NJ. Super. 338 (App. Div. 2001)).
Defendants have failed to show that there is no genuine issue of
material fact as to
Plaintiff’s damages. As explained above, ORG only pays for Plainti
ff’s business car rental
expenses. [CM/ECF No. 12 1-1, 4.] If Plaintiff charges a personal car rental
on his business credit
card, he must reimburse ORG for that expense. (Id.) The $0.75 surcha
rge, though not a personal
car rental cost, is not a valid business travel expense. Thus, assum
ing that the daily $0.75
surcharge for participating in Avis’s Travel Partners Program is contrar
y to New Jersey law,
ORG deserves to be reimbursed for that expense. This sufficiently
satisfies the elements of
“ascertainable loss” and “damages” of Plaintiff’s claims.
IV.
CONCLUSION
For the reasons set forth above, Defendant’s motion for summary judgm
ent [CMJECF No.
120.] is denied.
An appropriate Order accompanies this Opinion.
Jse,L.
/Unfed States District Judge
Dated: August , 2014
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