VALLI v. AVIS BUDGET RENTAL CAR GROUP, LLC et al

Filing 65

OPINION. Signed by Judge Claire C. Cecchi on 5/10/17. (cm, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

DAWN VALLI, individually and on behalf of
others similarly situated,

Civil Action No.: 14-6072 (CCC)

Plaintiffs,

OPINION

v.
AVIS BUDGET GROUP, 1NC., et al.,
Defendants.
CECCHI, District Judge.
I.

INTRODUCTION
This matter comes before the Court on the renewed motion of Defendants Avis Budget

Group, Inc. and Avis Rent-A-Car System, LLC (collectively, “Defendants”)1 to dismiss the first
Amended Class Action Complaint of Plaintiff Dawn Valli (“Plaintiff’) pursuant to federal Rule
of Civil Procedure 12(b)(6). ECF No. 49. Plaintiff opposes the motion. ECF No. 55. On
December 7, 2015, the Court heard oral argument on Avis’s initial motion to dismiss. See ECF
No. 27. for the reasons set forth below, Defendants’ motion is denied.
II.

BACKGROUND
The following facts are accepted as true for purposes of the instant motion. Plaintiff, a

resident of florida, brings this action on behalf of a nationwide class of persons that rented vehicles
from Defendants and, during the rental term, incurred a fine for a toll violation, speed violation,

‘Defendant ATS Processing Services, LLC was voluntarily dismissed from this action without
prejudice by stipulation of the parties pursuant to federal Rule of Civil Procedure 4l(a)(l)(A)(ii).
ECF No. 48.

and/or other traffic infraction. First Amended Class Action Complaint (“Compl.”), ECF No. 23

¶ 5.

Defendants are headquartered in Parsippany, New Jersey and provide vehicle rental services

throughout the country. Id.
rental customers. Id.

¶

¶

10. Defendants enter contracts (“Rental Agreements”) with their car

14. Section 15 of the Terms and Conditions, entitled “Fines, Expenses,

Costs, and Administrative Fees,” provides: “You’ll pay all fines, penalties and court costs for
parking, traffic, toll and other violations, including storage liens and charges. You will also pay a
reasonable administrative fee with respect to any violation of this agreement, such as for
repossessing or recovering the car for any reason.” Id.

¶

15.

Plaintiff reserved an Avis Budget rental vehicle from June 11, 2014 to June 16, 2014 with
her credit card. See Compl.

¶ 3$,

Ex. B. Plaintiff picked up the rental vehicle at the Baltimore-

Washington International Airport Avis Budget location in Hanover, Maryland, and returned it to
the JFK International Airport Avis Budget location in Jamaica, New York. Id. On June 11, 2014,
using a camera equipped with a radar control unit, the District of Columbia Metropolitan Police
Department (the “D.C. Police Department”) determined that someone driving the car rented by
Plaintiff drove 52 miles-per-hour (“mph”) in a 35 mph zone. Id.

¶ 39-40; see also Compl., Ex.

C,

“Notice of Infraction.” Thereafter, on June 1$, 2014, the D.C. Police Department mailed a “Notice
of Infraction” to the vehicle owner—PV Holding Corp., a subsidiary of Defendants. Compl.

¶ 41;

see also Notice of Infraction.
The Notice of Infraction included “DIRECTIONS FOR ANSWERiNG,” which provided:
“YOU HAVE 60 CALENDAR DAYS FROM THE MAIL DATE OF THE TICKET TO PAY OR
CONTEST THE TICKET. IF YOU DO NOT PAY OR CONTEST THE TICKET WITHIN 30
CALENDAR DAYS OF THE MAIL DATE OF THE TICKET YOUR FINE WILL DOUBLE.”
Id. The directions provided three ways of answering: “1) Admit Pay the full amount due; 2)
2

Admit with an Explanation Request in writing that the fine associated with the violation
be
reduced; or 3) Deny Appear for an in-person hearing.

.

.

.“

Id. Further, the Notice of Infraction

stated “[i]f you want to contest the ticket fine, penalty or both, do not pay the ticket until
you
receive your decision.” Id.

¶ 42; see also Notice of Infraction at 2.

On July 3, 2014, Defendants sent Plaintiff an “AVIS RENT A CAR VEHICLE
VIOLATION NOTICE” (the “Violation Notice”). Id. ¶ 44. The Violation Notice advised Plaintiff
that Defendants had paid the fine in the amount of $150.00 and demanded Plaintiff pay that
amount, along with a $30.00 administrative fee. Id.

Defendants advised Plaintiff she could

voluntarily pay the amount demanded by August 2, 2014 or Defendants would charge it to her
credit card. Id.

¶ 47.

Thereafter, Plaintiff contacted the agency who issued the fine but was advised

she could not contest the fine because it was already paid. Id.

¶ 4$.

Plaintiff maintains that “[bJy paying the Fine without notice to [Plaintiff], Avis Budget
wrongfully forced upon [Plaintiff] an admission of guilt without an opportunity to be heard.” Id.

¶ 45.

Further, Plaintiff argues under D.C. law, Defendants were solely responsible for paying the

fine because D.C. Code

§

50-2209.02(a) (1997) states that the owner of a vehicle issued a notice

of infraction is liable for payment of the fine assessed for the infraction. Id.

¶ 64.

In the alternative,

Plaintiff argues that if Defendants had the right to transfer liability for the fine, Defendants “failed
to disclose in the Rental Agreements that Avis Budget and/or ATS would pay the fine without
notice, effectively eliminating the rights of rental vehicle customers to contest, and triggering the
imposition of an administrative and/or handling fee.” Id.

¶ 45.

Plaintiff filed a Class Action Complaint with this Court on September 30, 2014. ECF No.
1. Plaintiff filed her First Amended Complaint on January 22, 2015, bringing claims against all
Defendants for breach of the implied covenant of good faith and fair dealing, unjust enrichment,
3

unconscionability, and violations of the New Jersey Consumer Fraud Act. Compl., ECF. No. 23.
Defendants filed motions to dismiss on March 9, 2015. See ECF Nos. 26, 27. The Court held oral
argument on the pending motions on December 7, 2015. See ECF No. 37. Thereafter, the Court
permitted the parties to submit supplemental briefing and to conduct jurisdictional discovery. See
ECF No. 42.

Defendant ATS was voluntarily dismissed on August 17, 2016 pursuant to a

stipulation by the parties. See ECF No. 4$. Defendants renewed their motion to dismiss on August
18, 2016. See ECF No. 49. Plaintiff filed an opposition on September 19, 2016 and Defendants
filed a reply on September 26, 2016. See ECF Nos. 55, 56.
III.

LEGAL STANDARD
For a complaint to survive dismissal pursuant to F ederal Rule of Civil Procedure 1 2(b)(6),

it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible
on its face.” Ashcroft v. Iqbat, 556 U.S. 662, 67$ (2009) (quoting Bell AtL Corp.

V.

Twombly,

550 U.S. 544, 570 (2007)). In evaluating the sufficiency of a complaint, the Court must accept all
well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in favor
of the non-moving party. See Phillips v. Cnly. ofAllegheny, 515 F.3d 224, 234 (3d Cir. 2008).
However, “the tenet that a court must accept as true all of the allegations contained in a complaint
is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. “Factual
allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550
U.S. at 555. “A pleading that offers labels and conclusions will not do. Nor does a complaint
suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Iqbal, 556 U.S. at
678 (internal citations omitted).

4

IV.

DISCUSSION
Defendants move to dismiss all claims pursuant to Federal Rule of Civil Procedure 12(b)(6)

on the ground that Plaintiff has failed to state a cause of action. Specifically, Defendants argue
that Plaintiffs claims under a theory of breach of the implied covenant of good faith and fair
dealing “are fatally defective as a matter of law” because the implied covenant does not apply to
contract formation and Plaintiff has not shown that Defendants acted in bad faith or proof of
damages. Defendants’ Motion to Dismiss (“Def. Mot.”) ECF No. 49 at 27-29. Further, Defendants
argue Plaintiffs unjust enrichment claim should be dismissed “because it is precluded by the
express contract between” the parties. Id. at 29. Defendants argue the Rental Agreement cannot
be found unconscionable because Plaintiff was not under economic pressure to rent a vehicle from
Defendants, Plaintiff is a sophisticated consumer, and the Rental Agreement does not violate
public policy. Id. at 32. Lastly, Defendants argue Plaintiff has failed to state a claim under the
NJCFA because Defendants had no duty to disclose that it would pay fines without giving Plaintiff
prior notice, the Rental Agreement was neither achieved through sharp dealing nor contains
provisions that would shock the conscience of the Court, and Plaintiff never had a right to appear
in D.C. court to contest the fine absent an assignment. Id. at 14-26.
In response, Plaintiff argues the Complaint satisfies the applicable pleading requirements.
Specifically, Plaintiff argues Defendant Avis Budget acted in bad faith when it failed to disclose
that Defendants would pay fines imposed on car renters prior to giving them notice, triggering an
administrative charge and automatically cutting off the renter’s opportunity to contest such fines.
Plaintiffs Opposition (“P1. Opp.”) ECF No. 55 at 34. Plaintiff alleges Defendants also acted in
bad faith and were unjustly enriched by the imposition of previously unspecified administration
fees and the unauthorized reimbursement of fines, for which, according to Plaintiff, D.C. law holds
5

the owner of the car solely liable. Id. at 34-35. Further, Plaintiff alleges the Rental Agreement—
a contract of adhesion—is unconscionable because it contains excessively disproportionate terms.
Id. at 37-39. Finally, Plaintiff argues that Defendants’ violated the NJCFA because Defendants
knowingly omitted notice and affirmatively misrepresented its practice of paying all fines for an
alleged traffic violation without an adjudication of guilt, and subsequently charging those fines
and an administrative fee back to the consumer. Id. at 16-21.
The Court agrees with Plaintiff and finds they have satisfied their pleading burden. As
previously noted, to withstand a motion to dismiss pursuant to Rule 12(b)(6), a complaint “must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.” Iqbal, 556 U.S. at 67$ (quoting Twombty, 550 U.S. at 570). To determine the sufficiency
of a complaint under Twombly and Jqbal, the Court must take the following steps:
first, the court must tak[e] note of the elements a plaintiff must plead to state a
claim. Second, the court should identify allegations that, because they are no
more than conclusions, are not entitled to the assumption of truth. finally, where
there are well-pleaded factual allegations, a court should assume their veracity
and then determine whether they plausibly give rise to an entitlement for relief
Burtch

V.

Milberg factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011).

Plaintiff asserts the following claims against Defendants: breach of the implied covenant
of good faith and fair dealing, unjust enrichment, unconscionability, and violations of the New
Jersey Consumer Fraud Act. See Compl.
“A covenant of good faith and fair dealing is implied in every contract in New Jersey.” See
Wilson v. Amerada Hess Corp., 158 N.J. 236, 244 (2001) (citing Sons of Thunder, Inc. v. Borden,
Inc., 14$ N.J. 396, 420 (1997)); see also Restatement (Second) of Contracts,

§

205 (1981). The

covenant requires that neither party to a contract “shall do anything [that] will have the effect of
destroying or injuring the right of the other party to receive the fruits of the contract.” Seidenberg
6

v. Summit Bank, 348 N.J. Super. 243, 254 (N.J. App. Div. 2002). further, proof of a party’s “bad
motive” or “intention” must support a claim of breach of contract grounded on an alleged breach
of the implied covenant of good faith and fair dealing. See Mendez v. Avis Budget Grp., Inc., No.
1 1—6537-JLL, 2012 WL 1224708, at *6 (D.N.J. Apr. 10, 2012) (citation omitted). “A good faith
performance doctrine may be said to permit the exercise of discretion for any purpose—including
ordinary business purposes—reasonably within the contemplation of the parties...

.“

Id. (quoting

Amerada Hess, 168 N.J. at 246). A contract “would be breached by a failure to perform in good
faith if a party uses its discretion for a reason outside the contemplated range—a reason beyond
the risks assumed by the party claiming the breach.” Id.
To state a claim for unjust enrichment, a plaintiff must show “defendant[s] received a
benefit and that retention of that benefit without payment would be unjust.” Goldsmith v. Camden
Cnty. Surrogate’s Office, 408 N.J. Super. 376, 382 (N.J. App. Div. 2009) (citation and internal
quotation marks omitted).
For a claim of contract unconsionability under New Jersey law, the Court must “determine
whether the contract is so oppressive, or inconsistent with the vindication of public policy, that it
would be unconscionable to permit its enforcement.” Rodriguez v. Raymours Furniture Co., 225
N.J. 343, 367 (2016). To determine whether an adhesion contract is unconscionable, courts will
look at “the subject matter of the contract, the parties’ relative bargaining positions, the degree of
economic compulsion motivating the ‘adhering’ party, and the public interests affected by the
contract.” Rudbart v. N. Jersey Dist. Water Supply Comm ‘n, 127 N.J. 344, 356 (1992).
Lastly, the NJCFA imposes liability on any person “who uses:

‘any unconscionable

commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the
knowing, concealment, suppression, or omission of any material fact with intent that others rely
7

upon such concealment.” Int’l Union of Operating Eng ‘rs Local No. 68 Welfare Fund v. Merck
& Co., 192 N.J. 372, 389 (2007) (quoting N.J.S.A.

§

5 6:8-2). 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. Id. Unlawful conduct may arise from a knowing omission or an affirmative
act.

Cox v. Sears Roebuck & Co., 13$ N.J. 2, 17 (1994).

An affirmative act includes

unconscionable commercial practices, deception, fraud, and misrepresentation. Miller v. Am.
Family Publishers, 284 N.J. Super. 67, 74 (N.J. Super. Ch. Div. 1995). For affirmative acts, intent
is not a requisite element. Id. To prove a knowing omission, however, “intent is an essential
element. There must be proof that the defendant acted knowingly, with intent that another rely on
such concealment.

.

.

or omission.” Id. To establish ascertainable loss, a plaintiff “must suffer a

definite, certain and measurable loss, rather than one that is merely theoretical.” Bosland v.
Warnock Dodge, Inc., 197 N.J. 543, 557 (2009). Finally, 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.” Id. at 555-56 (citations omitted).
The Court finds the Complaint pleads sufficient factual allegations which plausibly give
rise to a claim for relief under each cause of action. The Complaint details the Rental Agreement
entered into by Defendants with their customers. See Compl.

¶

14, Ex. A. The Complaint further

provides specific allegations detailing the Notice of Infraction received by Defendants regarding
Plaintiff’s rental vehicle, that Defendants paid the fine for the alleged infraction prior to notifying
Plaintiff, and subsequently charged Plaintiffs credit card for the fine and administration fee
without an opportunity for Plaintiff to be heard and without authorization. Id.

¶J 3 8-48.

The Complaint sufficiently alleges the Rental Agreement is a contract of adhesion,
8

providing that the “Rental Agreements

.

.

.

are standardized forms, imposed and drafted by

[Defendants], a party of vastly superior bargaining strength, that provide the consumer only with
the ‘opportunity’ to adhere to the one-sided terms or reject the agreement in its entirety.” Id.

¶

80(e). The Complaint alleges the contract was unconscionable, Plaintiffs right to receive the fruits
of the contract was injured, Defendants acted in bad faith, and Defendants were unjustly enriched.2
Plaintiff supports these claims by alleging Defendants assessed unauthorized and previously
unspecified charges against Plaintiffs credit card and failed to disclose material facts to the
Defendants’ customers concerning traffic infractions assessed against a rental vehicle during the
rental period and fines associated with such infractions. See generally Compl. Specifically, the
Complaint alleges the Rental Agreement failed to disclose that Defendants would charge car
renters for any alleged traffic infraction without the opportunity to contest fines assessed against
their rental vehicles during the rental period, and the amount of the administrative fee that ATS
would charge. Id.
This lack of clear and comprehensive disclosure of Plaintiffs liability for fines accrued
against the vehicle absent prior notice and the opportunity to contest such fines, is sufficient to
allege Defendants’ intent or knowledge to conceal or omit a material fact. The Complaint also
alleges affirmative misrepresentations regarding the lack of opportunity to contest alleged fines.
The Complaint alleges that although section 15 of the Rental Agreement stated that Plaintiff would

2

Since unjust enrichment is “not an independent theory of liability, but is the basis for a claim of
quasi-contractual liability,” a plaintiff may not recover on both a breach of contract claim and an
unjust enrichment claim. Id. at 384. A plaintiff, however, may plead alternative and inconsistent
legal causes of action arising out of the same facts. See Fed. R. Civ. P. 8(d)(2) (“A party may set
If a party makes alternative
out 2 or more statements of a claim or defense alternatively.
statements, the pleading is sufficient if any one of them is sufficient.”); Fed. R. Civ. P. $(d)(3) (“A
party may state as many separate claims or defenses as it has, regardless of consistency.”). Thus,
at this stage of the pleadings, Plaintiff may plead alternative legal theories.
.

9

.

.

be charged for all violations accrued against the rental vehicle during the rental period, that section
did not state that Plaintiff would not have the opportunity to contest any such fines, and that
Defendants would pay the fine prior to any adjudication of the underlying violation. These facts
may constitute an affirmative act of misrepresentation. Lastly, the Complaint sufficiently alleges
a causal connection between the Defendants’ unlawful conduct and the Plaintiffs ascertainable
loss when she states she was charged a fine and administrative fee by Defendants for an alleged
traffic violation, without the opportunity to contest such violation, through the pretext of her Rental
Agreement with Defendants.
Accordingly, Defendants’ motion to dismiss pursuant to Rule 12(b)(6) is denied.
V.

CONCLUSION

Based on the reasons set forth above, the motion to dismiss is denied. An appropriate order
accompanies this Opinion.
Dated:

fr\c_,

,2017

CLAIRE C. dccli, U.S.D.J.

10