Valli v. Avis Budget Rental Car Group, Llc et al

BRIEF in Opposition

D.N.J.September 19, 2016

KAPLAN FOX & KILSHEIMER LLP WILLIAM J. PINILIS 160 Morris Street Morristown, NJ 07960 Telephone: (973) 656-0222 Facsimile: (973) 401-1114 WITES & KAPETAN, P.A. MARC A. WITES 4400 North Federal Highway Lighthouse Point, FL 33064 Telephone: (954) 570-8989 Facsimile: (954) 354-0205 KAPLAN FOX & KILSHEIMER LLP LAURENCE D. KING LINDA M. FONG 350 Sansome Street, Suite 400 San Francisco, CA 94104 Telephone: (415) 772-4700 Facsimile: (415) 772-4707 Attorneys for Plaintiff UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY DAWN VALLI, on Behalf of Herself and All Others Similarly Situated, Plaintiff, vs. AVIS BUDGET GROUP, INC., a Delaware corporation, AVIS RENT A CAR SYSTEM, LLC, and ATS PROCESSING SERVICES, LLC, Defendants. No. 2:14-cv-06072 (CCC)(JBC) PLAINTIFF’S OPPOSITION TO DEFENDANTS’ AVIS BUDGET GROUP, INC. AND AVIS RENT A CAR SYSTEM, LLC’S RENEWED MOTION TO DISMISS PURSUANT TO RULE 12(b)(6) WITH PREJUDICE Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 1 of 47 PageID: 767 TABLE OF CONTENTS Page - i - I. INTRODUCTION ........................................................................................... 1 II. RELEVANT FACTS ....................................................................................... 4 III. ARGUMENT ................................................................................................... 9 A. The Rental Agreements Do Not Authorize Direct Billing of Administrative Fees to Class Members’ Credit Cards ........................ 10 B. Plaintiff States A Claim For Violations Of The New Jersey Consumer Fraud Act ........................................................................... 12 1. The Consumer Fraud Act Is To Be Liberally Construed In Favor of the Consumer ......................................................... 12 2. The CFA Claim Alleges Avis Budget Made Affirmative Misrepresentations and Engaged In An Affirmative and Deceptive Course of Conduct ................................................... 14 3. Even If the Court Finds the CFA Claim Is Based On Omissions, Defendants’ Acts Demonstrate An Intent To Actively Conceal Information ................................................... 19 4. Even If the Court Finds the CFA Claim Is Based On Omissions, In Light of the Circumstances, Defendants Had A Duty to Disclose ............................................................ 22 5. The FAC Sufficiently Alleges Unconscionable Business Practices .................................................................................... 24 6. Plaintiff Adequately Alleges She Suffered An Ascertainable Loss As A Result Of Avis Budget’s Unlawful Practices .................................................................... 29 7. The “Nearly Identical” California Class Case Is Inapposite .................................................................................. 32 C. Plaintiff Sufficiently Alleges A Claim For Breach Of The Covenant Of Good Faith And Fair Dealing ........................................ 33 Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 2 of 47 PageID: 768 TABLE OF CONTENTS Page - ii - D. Plaintiff’s Claim For Unjust Enrichment Is Properly Pled ................. 35 E. At This Pleading Stage, The FAC Sufficiently Alleges A Claim For Unconscionability ......................................................................... 37 IV. CONCLUSION .............................................................................................. 40 Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 3 of 47 PageID: 769 TABLE OF AUTHORITIES Page - iii - CASES Alvin v. Suzuki, 227 F.3d 107 (3d Cir. 2000) ................................................................................... 4 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ........................................................................................ 9, 10 Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 964 A.2d 741 (2009) ...................................................................... 31 Cox v. Sears Roebuck & Co., 138 N.J. 2, 647 A.2d 454 (1994) ................................................................... 27, 28 D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 501 A.2d 990 (App. Div. 1985) ..................................... 27, 37 Discenza v. England, No. 05-2660 (FLW), 2007 WL 150477 (D.N.J. Jan. 17, 2007) ............................. 2 Doherty v. The Hertz Corp., No. 1:10-CV-00359 (NLH)(KMW), 2010 WL 4883487 (D.N.J. Nov. 24, 2010) ...................................................................................................... 31 Duffy v. Charles Schwab & Co., Inc., 123 F. Supp. 2d 802 (D.N.J. 2000) ....................................................................... 35 Francis E. Parker Memorial Home, Inc. v. Georgia-Pacific LLC, 945 F. Supp. 2d 543 (D.N.J. 2013) ................................................................ 14, 29 Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 25 A.3d 1103 (2011) ...................................................................... 12 In re AZEK Bldg. Prods., Inc., Mktg. & Sales Practices Litig., No. 12-6627, 2015 WL 410564 (D.N.J. Jan. 30, 2015) ................................ 37, 39 In re K-Dur, 338 F.Supp.2d 517 (D. N.J. 2004) ........................................................................ 36 In re O’Brien, 423 B.R. 477 (D.N.J. 2010) aff’d sub nom. Cleveland v. O’Brien, No. 10-3169 (GEB), 2010 WL 4703781 (D.N.J. Nov. 12, 2010) .................................................................................. 25, 26 Jefferson Loan Co. v. Session, 397 N.J. Super. 520, 938 A.2d 169 (App. Div. 2008) .......................................... 14 Judge v. Blackfin Yacht Corp., 357 N.J. Super. 418, 815 A.2d 537 (App. Div. 2003) .......................................... 23 Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 4 of 47 PageID: 770 TABLE OF AUTHORITIES Page - iv - Katz v. Live Nation, Inc., No. 09-3740 (MLC), 2010 WL 2539686 (D.N.J. June 17, 2010) ................. 27, 28 Kent v. Avis Rent A Car Sys. LLC, No. G044884, 2012 WL 831561 (Cal. Ct. App. Mar. 13, 2012) .................. 32, 33 Klein v. Budget Rent a Car Sys., Inc., No. 12-7300 (JLL), 2013 WL 1760557 (D.N.J. Apr. 24, 2013) .......................... 20 Kugler v. Romain, 58 N.J. 522, 279 A.2d 640 (1971) ........................................................................ 26 Laughlin v. Bank of Am., N.A., No. CIV.A. 13-4414, 2014 WL 2602260 (D.N.J. June 11, 2014) ....................... 14 Leon v. Rite Aid Corp., 340 N.J. Super. 462, 774 A.2d 674 (App. Div. 2001) .......................................... 28 Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993) .................................................................................. 22 Mango v. Pierce-Coombs, 370 N.J. Super. 239, 851 A.2d 62 (App. Div. 2004) ............................................ 28 Maniscalco v. Brother Int'l Corp. (USA), 627 F. Supp. 2d 494 (D.N.J. 2009) ....................................................................... 36 Martinez-Santiago v. Public Storage, 38 F. Supp. 3d 500 (D.N.J. 2014) ......................................................................... 15 Mendez v. Avis Budget Grp., Inc., No. 11-6537(JLL), 2012 WL 1224708 (D.N.J. Apr. 10, 2012) ................... passim Mickens v. Ford Motor Co., 900 F. Supp. 2d 427 (D.N.J. 2012) .......................................................... 13, 14, 19 Moser v. Milner Hotels, 6 N.J. 278, 78 A.2d 393 (1951) ............................................................................ 35 Network Commodities, LLC v. Golondrinas Trading Co., LTD., No. 11-3119 (NLH/KMW), 2013 WL 1352234 (D.N.J. Apr. 1, 2013) ........ 35, 36 Phillips v. Cnty. of Allegheny, 515 F.3d 224 (3d Cir. 2008) ................................................................................. 10 Robert J. v. Liberty Mut. Ins., No. CIV. 14-06308 WHW, 2015 WL 4138990 (D.N.J. July 8, 2015) ................ 15 Rodriguez v. Raymours Furniture Co., Inc., 436 N.J. Super. 305, 93 A.3d 760 (App. Div. 2014) ............................................ 38 Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 5 of 47 PageID: 771 TABLE OF AUTHORITIES Page - v - Sitogum Holdings, Inc. v. Ropes, 352 N.J. Super. 555, 800 A.2d 915 (Ch. Div. 2002) ............................... 25, 26, 38 VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 641 A.2d 519 (1994) ...................................................................... 36 STATUTES D.C. Stat. § 50-2209.02(a). ..................................................................................................... 7 N.J. Stat. Ann. § 56:8, et sq. (N.J. Consumer Fraud Act) ................................ passim RULES Federal Rules of Civil Procedure Rule 8(a) ............................................................................................................... 36 Rule 12(b)(6) ......................................................................................................1, 9 Rule 15 .................................................................................................................... 4 Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 6 of 47 PageID: 772 1 I. INTRODUCTION Plaintiff Dawn Valli (“Plaintiff”) respectfully submits this memorandum of law in opposition to Defendants Avis Budget Group, Inc. and Avis Rent A Car System, LLC’s (collectively “Avis Budget” or “Avis Defendants”) Renewed1 Motion to Dismiss With Prejudice (Dkt. 49), pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6), the First Amended Complaint (“FAC”) filed on January 22, 2015 (Dkt. 23). Avis Budget enters contracts for the lease of vehicles to consumers known as rental agreements (the “Rental Agreements”) with the members of the Class. While the Rental Agreements state that the renter will pay “all fines … for parking, traffic, toll and other violations” (collectively the “Fines”), Avis Budget routinely pays the Fines without making any effort to first determine whether a violation actually occurred, and without giving any timely notice to the vehicle renter. Avis Budget’s payment of the Fines triggers an automatic admission of guilt by, and the imposition of an administrative fee charged to, the Class Member. In addition, in 1 On December 7, 2015, the Court heard oral argument on the motions to dismiss filed by Defendants on March 9, 2015 (Dkt. 26 & 27). Citations to the Hearing Transcript of December 7, 2015 (Dkt. 49-4) are hereafter referred to as “Tr.” On April 12, 2016, the Court administratively terminated Defendants’ motions to dismiss to permit jurisdictional discovery concerning former Defendant ATS, and provided for the re-filing of motions to dismiss after the jurisdictional discovery closed (Dkt. 42). Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 7 of 47 PageID: 773 2 some jurisdictions where liability of Fines is the non-transferable responsibility of the owner (Avis Budget), Avis Budget and former co-Defendant ATS Processing Services, LLC (“ATS”),2 direct-bill Class members’ credit cards for those Fines without authorization. After Avis Budget and ATS pay the Fines, they then send notices to Class members telling them “[p]er your rental contract with Avis, you are responsible for all fines, penalties and processing fees related to any and all violations.”3 (Emphasis added.) Despite the clear language of the Rental Agreement specifically limiting administrative fees to “any violation of this agreement,” Avis Budget charges its customers unauthorized “processing fees” related to alleged traffic violations. By the time Class members receive notice of the Fine and associated administrative fee, they have lost their right to contest the alleged infraction. 2 Former co-Defendant ATS, dismissed without prejudice on August 19, 2016 (Dkt. 50), administers and processes the collection from the Class of the Fines paid by Avis Budget and/or ATS on behalf of the members of the Class, and in concert with Avis Budget, imposes an administrative/handling fee on the Class. FAC, ¶11. 3 Attached hereto as Exhibit D is a true and correct copy of the “Avis Rental Car Vehicle Violation Notice” issued to Plaintiff Valli on July 3, 2014, and relied upon in the FAC at ¶21 (“Per your rental contract with Avis, you are responsible for all fines, penalties and processing fees related to any and all violations.”). See Discenza v. England, No. 05-2660 (FLW), 2007 WL 150477, at *2 (D.N.J. Jan. 17, 2007) (a court may consider documents that are integral to or explicitly relied upon in the complaint without converting a motion to dismiss into a motion for summary judgment). Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 8 of 47 PageID: 774 3 Needless to say, when Avis Budget charges these fees, and pays the Fines, there has only been an allegation of a traffic violation. In fact, the Rental Agreement says only that “You’ll pay all fines, penalties, and court costs for parking, traffic, toll and other violations, including storage liens and charges.”4 Thus, the Rental Agreement speaks only of actual violations, and not of accusations and/or allegations of violations. Importantly, the Rental Agreement also does not say that Class Members authorize Avis Budget to pay Fines whenever someone accuses the Class members of having violated a traffic law. Whether viewed as affirmative acts, omissions and/or unconscionable commercial practices, the allegations of the FAC present numerous examples of Avis Budget’s “unlawful conduct,” which has resulted in ascertainable loss to members of the Class, including inappropriate administrative fees and the amount of the Fines. These losses are sufficient to support a claim for violation of the New Jersey Consumer Fraud Act (“CFA”). The same core facts also support Plaintiff’s companion claims for breach of the covenant of good faith and fair dealing, unjust 4 During the December 2015 hearing, the Court asked, “How would you characterize […]the second sentence here which says, "you will also pay a reasonable administrative fee with respect to any violation of this agreement, such as repossessing or recovering the car for any reason"? Would you say that driving at an excessive speed is, in fact, violating the agreement pursuant to this clause?” See Tr. at 10:20-11:4; 12:2-10. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 9 of 47 PageID: 775 4 enrichment and unconscionability. Avis Budget’s motion to dismiss should be denied in its entirety.5 II. RELEVANT FACTS Defendant Avis Budget Group, Inc. is a leading global provider of vehicle rental services, and has more than 10,000 rental locations in approximately 175 countries around the world, and through its Zipcar brand. FAC, ¶2. Avis Budget enters contracts known as Rental Agreements with the members of the Class.6 The Rental Agreements provide in part as follows: Fines, Expenses, Costs and Administrative Fees. 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 repossessing or recovering the car for any reason. 5 If Avis Budget’s renewed motion is granted in whole or in part, Plaintiff respectfully requests leave to amend. See Rule 15; Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000) (“Leave to amend ‘shall be freely given when justice so requires.’”). 6 The Class is defined as: All persons who, during the limitations period applicable to this action, (a) rented a motor vehicle from Defendant Avis Budget which was issued a fine, penalty, and/or court costs for parking, traffic, toll or other violation; and (b) on whose behalf Defendants (i) paid the Fines prior to giving the Class member notice of the alleged Fine or (ii) collected from the Class member an administrative and/or handling fee. Excluded from the Class are persons that received parking tickets or any other ticket at the time they were issued. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 10 of 47 PageID: 776 5 See FAC, ¶14 (emphasis added); see also Rental Agreement, attached hereto as Exhibit A, ¶15.7 There is nothing in the Rental Agreement stating that it is a violation of the agreement to have been accused of violating a traffic law. ATS contracts with Avis Budget “to ensure [that] vehicle owners [such as Avis Budget] are not held financially responsible for violations committed by drivers such as parking tickets or other traffic-related citations mailed to the vehicle owner.” See FAC, ¶11. Together, Avis Budget and ATS, pay traffic infraction Fines allegedly incurred while Class members are driving vehicles rented from Avis Budget, without prior notice to the Class, and even though the Rental Agreement only authorizes payment of a Fine upon a violation, and not upon an alleged violation. Id. ¶¶7, 14. When Avis Budget unilaterally (and without authorization) chooses to pay such Fines on behalf of Class members to the authority that issued the alleged violation, without providing notice to the Class member, Avis Budget has no knowledge as to whether the Class member actually committed the purported infraction, id. ¶6, and it should not go without saying that there is a presumption of 7 The FAC references Exhibit A (the Rental Agreement between the Avis Defendants and its customers), Exhibit B (Rental Receipt) and Exhibit C (Notice of Infraction). These exhibits were inadvertently omitted from the filing of the FAC (though they are attached to the original complaint (Dkt. 1)). For the Court’s convenience, true and correct copies of each of these Exhibits are attached hereto as originally filed with the initial complaint. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 11 of 47 PageID: 777 6 innocence with regard to such claims. Indeed, in a September 2014 Report, the District of Columbia’s Inspector General found that DC’s police speed cameras issue tickets “without conclusive identification” of the vehicles. Id. ¶31. Payment of the Fine without notice effectively eliminates the rights of rental vehicle customers to contest the purported violation, and conveniently triggers the imposition by Avis Budget of an administrative and/or handling fee. Id. ¶45. Defendants falsely represent to members of the Class that they are responsible for an administrative fee “per your rental agreement.”8 The Rental Agreement, however, does not authorize the imposition of such fees except where the vehicle renter commits “any violation of this [Rental] agreement, such as repossessing or recovering the car for any reason.”9 Id. ¶14. Having been accused of a traffic infraction is not a violation of the Rental Agreement, and no honest reading of the Rental Agreement could possibly lead to any other conclusion. Adding insult to injury, the collection of unreasonable and excessive administrative fees serves as a profit center for the Avis Defendants and ATS.10 Id. ¶7. 8 See Exhibit D. 9 At oral argument, the Court also questioned whether the language of Paragraph 14 provides “sufficient notice to any renter of one of these vehicles that there would be an administrative fee charged here?” See Tr. at 10:9-11:4;12:2-10. 10 According to Avis, Plaintiff is not contesting the administrative fee, citing Tr. at 53:9-10. See Memorandum of Law in Support of Defendants Avis Budget Group, Inc. and Avis Rent A Car System, LLC’s Renewed Motion to Dismiss Pursuant to Rule 12(b)(6) (“Br.”) (Dkt. 49-1) at 20, fn 6. That is inaccurate. See, e.g., FAC at Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 12 of 47 PageID: 778 7 It is only after the Avis Defendants and ATS have paid the respective traffic violation that they notify the Class of the violation and its amount, and collect (by way of unauthorized charges to the customer’s credit card) from the Class an unauthorized, and unreasonable and excessive handling or administrative fee. Id. ¶¶3, 7, 17, 20, 27, 34. By the time the Notice has been issued, the Class member’s opportunity to contest the Fine has been lost regardless of whether the Class Member actually committed the infraction alleged. Id. ¶29. Moreover, renters of vehicles in certain jurisdictions, such as the District of Columbia, are not liable for certain Fines associated with violations detected by an automated traffic enforcement (“ATE”) device. See D.C. Stat. § 50-2209.02(a). Even so, the Avis Defendants and ATS purport to transfer liability for the amount of those Fines to members of the Class. For example, under the law of the District of Columbia, Avis as the registered owner, is liable for payment of Fines for violations recorded using an ATE system. Id. ¶4; see also D.C. Stat. § 50-2209.02(a). Notwithstanding that liability for the Fines is non-transferable as a matter of law, the Avis Defendants ¶¶3, 7-8, 14-17, 20, 27. Further, Plaintiff’s counsel stated at the hearing that at this juncture, before discovery commences, Plaintiff cannot say whether the administrative fee is unreasonable or unconscionable but Plaintiff takes issue with Avis making charges to consumers’ credit cards for alleged traffic violations and the associated administrative fees without Class members’ authorization. Tr. at 41:1-42:1. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 13 of 47 PageID: 779 8 and ATS send Credit Card Charge or similar Notices to renters deceptively representing to customers that they are responsible for the Fines, and requiring direct billing of the customers’ credit card for such transactions, which include administrative fees which are simply not authorized by the Rental Agreements that Class members are required to sign. FAC, ¶¶10, 36-37. On June 18, 2014, the District of Columbia mailed the Notice of Infraction purportedly associated with Plaintiff’s rental to the vehicle owner, PV Holding Corp, a subsidiary of Avis Budget. Id. ¶41. Without any notice to Plaintiff, Defendants paid the ticket. Id. ¶44. After paying the ticket, ATS sent to Plaintiff on July 3, 2014, a Notice of Vehicle Violation to Plaintiff advising that a Speed Violation was issued against the vehicle she rented from Avis Budget and requesting payment of the violation amount of $150 and an administrative fee of $30. The Notice also says: “The associated violation was paid on your behalf to protect Avis from incurring late fees, penalties and potential vehicle seizure.” Id. ¶21 (emphasis added). On its website under the section titled “Making Violations More Convenient for You,” ATS admits that “[i]f ATS or the rental car company merely paid the ticket, the renter likely would be unable to contest the ticket because the violation has already been settled at the Issuer level.” Id. ¶30. Avis Budget’s Rental Agreements do not inform Plaintiff and members of the Class that they have no right to contest any accusation of traffic infractions, and Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 14 of 47 PageID: 780 9 that Defendants will pay any Fines asserted against the rental car during the rental period without any judicial determination that there has been an infraction, and/or notice to customers, that might have allowed customers to contest the alleged violation.11 Id. ¶¶3, 18. III. ARGUMENT A motion to dismiss should be denied if the complaint “state[s] a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). On a motion to dismiss pursuant to Rule 12(b)(6), courts are required to “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to 11 At oral argument, the Court asked whether the Rental Agreement is clear “to someone who is renting the car, that there may be some instances where they are issued unfounded tickets, but nonetheless, they will be responsible for an administrative fee?” Tr. at 15:2-6; 15:21-16:5; see also Tr. at 19:25-20:10 (The Court: “…should there have been some sort of language which indicated, regardless of whether the ticket was substantiated or could be proven or not proven, nonetheless, once you get the ticket, you are responsible for this administrative fee and the fee is $30.”); Tr. at 33:13-14 (The Court: “… this paragraph says Violation of this agreement as opposed to violation of the District of Columbia’s law, unless I’m not reading it in the same way.”). Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 15 of 47 PageID: 781 10 relief. Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n. 7 (3d Cir. 2002)). The court’s analysis is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679 (citation omitted). A. The Rental Agreements Do Not Authorize Direct Billing of Administrative Fees to Class Members’ Credit Cards During oral argument, Avis’s counsel suggested that under Paragraph 23 of the Rental Agreements (“Para. 23”), Avis is permitted to make unauthorized charges to Class members’ credit cards for administrative fees associated with alleged traffic violations. Tr. at 80-81; see also Br. at 11; 15 fn 5. Para. 23 provides in relevant part: Collections. If you do not pay all amounts due under this agreement upon demand, including all charges, fees and expenses, including, without limitation, payment for loss of or damage to the car, rental charges, parking and traffic fines and penalties, toll charges, towing, storage and impoundment fines, you agree to pay a late charge of 1 ½% per month on the past due balance or the highest rate permitted by applicable law, whichever is less (collectively, “Charges”). If you use e-Toll, you will be charged a $3.95 convenience fee for each day of the rental including any days on which e-Toll is not used [ …], plus incurred tolls at the maximum prevailing rate posted by the toll authority, regardless of the method of payment used. You agree to also pay for any costs that we incur in seeking to collect such Charges, including without limitation, court costs and attorney fees and collection fees (collectively, “Costs”). […] You also agree that we or our collection agent(s) may access the personal information that you provided to us in any effort to collect any Charges or Costs under this section […] In the event that you Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 16 of 47 PageID: 782 11 presented a credit or debit card for payment, you understand that we may report such delinquency to an appropriate credit reporting agency and you also authorize us to share that credit and debit card information with third party collections and further authorize us or our collection agents to charge any amounts due to us, including, but not limited to, the Charges and Costs referenced above, to that credit or debit card. Id. (bold in original, italics added). The language of Para. 23 is clear. It does not permit Avis or any third parties acting on its behalf to unilaterally charge customer credit cards for administrative fees associated with alleged traffic violations. Para. 23 narrowly limits the scope of what automatic credit card charges may be made to “Charges” (i.e., costs for loss of or damage to the car, rental charges, parking and traffic fines and penalties, toll charges, towing, storage and impoundment fines and associated late charges) and “Costs” (i.e., costs associated with e-Toll usage, including court costs, and attorney and collection fees), specially defined in that section. And although credit card charges are authorized for “any amounts due to [Avis],” Para. 23 does not permit direct credit card billing for any amounts that are allegedly due upon unproven accusations of traffic infractions. Finally, the fact that Avis Budget even suggests that its rental car customers should interpret its one-sided, adhesion contract any differently than what it actually states, reflects significantly on its unconscionable practices, and clear intent to deceive consumers. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 17 of 47 PageID: 783 12 B. Plaintiff States A Claim For Violations Of The New Jersey Consumer Fraud Act Avis Budget requests dismissal of Count I for violations of the Consumer Fraud Act, arguing that the FAC fails to sufficiently allege “unlawful conduct,” and “any causal connection between the supposed NJCFA violations and any ascertainable loss.” See Br. at 14-17. As discussed below, Plaintiff has adequately alleged the required elements under the CFA, whether Avis Budget’s acts are viewed as omissions or affirmative acts. 1. The Consumer Fraud Act Is To Be Liberally Construed In Favor of the Consumer The Consumer Fraud Act “is intended to be applied broadly in order to accomplish its remedial purpose, namely, to root out consumer fraud, and therefore to be liberally construed in favor of the consumer.” Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 576, 25 A.3d 1103, 1115 (2011) (internal quotations and citations omitted). “Because the fertility of the human mind to invent new schemes of fraud is so great, the CFA does not attempt to enumerate every prohibited practice, for to do so would severely retard its broad remedial power to root out fraud in its myriad, nefarious manifestations.” Id. (internal citations omitted). “Thus, to counteract newly devised stratagems undermining the integrity of the marketplace, the history of the CFA has been one of constant expansion of consumer protection.” Id. (internal quotations and citation omitted). Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 18 of 47 PageID: 784 13 To state a prima facie case under the CFA, a plaintiff must demonstrate three elements: (1) unlawful conduct by the defendant; (2) an ascertainable loss by the plaintiff; and (3) a causal connection between the defendant’s unlawful conduct and the plaintiff’s ascertainable loss. Mickens v. Ford Motor Co., 900 F. Supp. 2d 427, 436 (D.N.J. 2012) (citations omitted). Element one, “unlawful conduct,” is a term of art. Id. The CFA defines it as [t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission, in connection with the sale or advertisement of any merchandise.... N.J. Stat. Ann. §56:8-2; see Mickens, 900 F. Supp. 2d at 436. “These acts are listed in the disjunctive; proof of any one of those acts or omissions or of a violation of a regulation will be sufficient to establish unlawful conduct under the Act.” Mickens, 900 F. Supp. 2d at 436 (internal quotation and citation omitted). “From this definition, courts have derived three broad categories of unlawful conduct: affirmative acts, knowing omissions, and regulatory violations.” Id. (citation omitted). “The prime ingredient underlying all types of unlawful conduct is the capacity to mislead.” Id. (internal quotations and citations omitted). “The definition of unlawful affirmative act or omission is intentionally open-ended, in order to capture the myriad schemes that human ingenuity may engender.” Id. (citations omitted). Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 19 of 47 PageID: 785 14 Finally, because a court adjudicating a CFA claim must approach dismissal of said claim with hesitation, the Court should deny Avis Budget’s motion to dismiss the CFA claim. See Francis E. Parker Memorial Home, Inc. v. Georgia- Pacific LLC, 945 F. Supp. 2d 543, 561 (D.N.J. 2013) (citing Parker v. Howmedica Osteonics Corp., No 07-02400 (JLL), 2008 WL 141628, at *2 (D.N.J. Jan. 14, 2008)). 2. The CFA Claim Alleges Avis Budget Made Affirmative Misrepresentations and Engaged In An Affirmative and Deceptive Course of Conduct Avis Budget argues that the FAC fails to allege facts regarding any knowing omission of any material fact with intent that others rely upon it. See Br. at 14-17. That contention ignores that the underlying allegations of the CFA claim are grounded in affirmative conduct. For an affirmative act, intent is not an essential element of the CFA, and the plaintiff need not prove that the defendant intended to act unlawfully. Mickens, 900 F. Supp. 2d at 436. Moreover, the Legislature amended the CFA, N.J. Stat. Ann §56:8-2, “in 1967 to apply not just to the acts or omissions of an individual in the ‘sale or advertisement’ of merchandise or real estate, but also ‘with the subsequent performance of such person aforesaid.’” Jefferson Loan Co. v. Session, 397 N.J. Super. 520, 534, 938 A.2d 169, 178 (App. Div. 2008) (citation omitted); see also Laughlin v. Bank of Am., N.A., No. CIV.A. 13-4414, 2014 WL 2602260, at *6 (D.N.J. June 11, 2014) (loan servicer's Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 20 of 47 PageID: 786 15 subsequent business practices on the original mortgage covered by CFA); Robert J. v. Liberty Mut. Ins., No. CIV. 14-06308 WHW, 2015 WL 4138990, at *3 (D.N.J. July 8, 2015) (predicting New Jersey Supreme Court would apply CFA to Defendant's subsequent performance of obligations under insurance contract). In Mendez v. Avis Budget Group., Inc., No. 11-6537(JLL), 2012 WL 1224708, at *13 (D.N.J. Apr. 10, 2012), a case similar to this one, the court found the plaintiff sufficiently alleged the requisite intent and knowledge to establish a knowing omission. There, the rental agreement was presented to and signed by Mendez; the “Rental Charges” section of the Agreement stated that Mendez would be charged for tolls but did not state that a per diem fee would be triggered by a single use of the e-Tolling device; and a Budget agent clearly stated that Mendez was not obligated to pay any additional charges once he returned the rental vehicle. Id. The Mendez court reasoned that under the CFA, the defendants’ misrepresentations regarding e-Toll and per diem administrative fees were considered an affirmative act, and found that the plaintiff’s complaint had sufficiently alleged facts supporting a theory of either affirmative acts or omissions. Id.; see also Martinez-Santiago v. Public Storage, 38 F. Supp. 3d 500, 517 (D.N.J. 2014) (provision in a standard form contract plausibly had capacity to mislead the average consumer where the average consumer may believe that Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 21 of 47 PageID: 787 16 provision making consumer responsible for money defendant owed to a third party is enforceable). Here, similar to the facts alleged in Mendez, Plaintiff has pled sufficient facts to show that Avis Budget affirmatively misrepresented the Class members’ responsibility for all traffic violation Fines and administrative fees. First, Avis Budget represents to its customers that: “[y]ou’ll pay all fines, penalties, and court costs for parking, traffic, toll and other violations. . . .” FAC, ¶14. Pointing to that clause, Avis Budget attempts to justify its practice of paying all fines for an alleged traffic violation, without an adjudication of guilt, and subsequently charging those fines (with an administrative fee) back to the consumer. Of course, the fact that a traffic violation has been alleged, does not mean that one has in fact occurred. Accordingly, when Avis Budget pays customer fines upon allegations that there has been a violation of a traffic law by the consumer, Avis Budget has no idea whether there has really been a traffic infraction. All Avis Budget knows, and all Avis Budget could know, is that there has been an allegation of a violation. Without an adjudication of the charges, Avis Budget does not know, and could not know, whether there has been a violation. In fact, at the time Avis Budget pays the fines (and assesses the administrative fee to the consumer) there is Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 22 of 47 PageID: 788 17 a legal presumption that the customer is innocent of the charge, and that there has been no violation of any law by the customer. Thus, when Avis Budget affirmatively represents in its contract that “[y]ou’ll pay all fines, penalties, and court costs for parking, traffic, toll and other violations,” it is making an affirmative misrepresentation. This is because Avis pays the fine without ever knowing whether there has been a violation, as Avis Budget pays the fine prior to any adjudication of the underlying alleged violation. If the Avis Rental Agreement said that it would pay fines upon the allegation of a violation, that would be an accurate representation. However, the contract states that the fines will be paid upon a violation. That representation is patently false. Second, the Rental Agreement provided to Plaintiff states that the imposition of administrative fees would be for “any violations of this agreement,” not for traffic violations. Yet ATS, on behalf of Avis Budget, charged administrative fees for processing traffic violations “per your rental agreement,” using Plaintiff’s and the Class members’ credit cards without their authorization. Similarly, while the Rental Agreement states the customer will pay all fines for parking, traffic and other violations, that representation is rendered false because at the time ATS and Avis Budget pay the Fine, they have no knowledge whether the Class member has committed a traffic infraction. FAC, ¶¶6, 7. The average consumer may believe that provision making consumers responsible for Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 23 of 47 PageID: 789 18 Fines means they are only responsible for violations they make during the rental period. However, even for those who may be incorrectly accused of a violation, the reality is that Class members are not permitted to contest their alleged violations because Avis Budget and ATS routinely pay for such Fines without notice, automatically cutting off the Class’s right to contest the violation and triggering an admission of guilt. Third, the Rental Agreement does not authorize ATS or any other third party to charge or collect from the class members any processing fee associated with alleged Fines. FAC, ¶¶3-4, 7, 14; Rental Agreement, ¶15. According to that agreement, the only instance where the renter agrees to pay a reasonable administrative fee is when “any violation of this agreement, such as repossessing or recovering the car for any reason[,]” has occurred. FAC, ¶14; Rental Agreement, ¶15; see also FAC, ¶17 (Rental Agreements do not authorize any third party to pay any Fine on behalf of the Class, collect the amount paid for a Fine from the Class, or charge the Class any administrative, handling or any other, fee). When Avis charged Ms. Valli’s credit card for an alleged traffic violation, not a violation of the Rental Agreement, it did so without authorization. FAC, ¶¶4, 9, 34, 37, 47-48. Avis’s conduct - making unauthorized charges to its consumers’ credit cards for alleged violations - constitutes affirmative illegal acts in violation of the CFA. FAC, ¶¶3, 6-7, 9, 14-15, 17. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 24 of 47 PageID: 790 19 In Plaintiff’s case, Avis Budget had a month to advise her of the Notice issued by the District of Columbia, but instead of providing Plaintiff with a chance to contest the infraction, Avis Budget unilaterally paid the Fine and then charged Plaintiff the violation amount plus an administrative fee in a jurisdiction where the Fine is non-transferable. FAC, ¶¶4, 41-44. Plaintiff attempted to contest the ticket, but she was advised that payment (made by Avis Budget) was considered an admission of guilt, which did not permit her an opportunity to dispute the infraction. Id. ¶48. Avis Budget’s deceptive course of affirmative conduct and affirmative misrepresentations adequately support a claim for violations of the CFA, and accordingly, the motion to dismiss Count I for violations of the CFA should be denied. See Mickens, 900 F. Supp. 2d at 436 (holding that the count alleging a deceptive course of conduct may proceed as a “deception” under the CFA, as one item in the “disjunctive” list of prohibited practices in the CFA). 3. Even If the Court Finds the CFA Claim Is Based On Omissions, Defendants’ Acts Demonstrate An Intent To Actively Conceal Information Avis Budget argues that Plaintiff “has not factually alleged that it intentionally concealed information with the intention that anyone rely on the concealment.” Br. at 16 (“Plaintiff … cannot allege that Avis intended her to get a ticket” and Avis did not actively conceal “its policies, Administrative Fees or DC Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 25 of 47 PageID: 791 20 traffic laws”). Even assuming for argument’s sake that the CFA claim is grounded in omissions, the FAC contains sufficient facts that the Avis Defendants acted with intent. In Mendez, 2012 WL 1224708, at *13, the court held that plaintiff alleged both affirmative acts (described above) and omissions. For omissions, the court stated that the defendants’ conduct was unlawful because the defendants charged the plaintiff for undisclosed administrative fees and misrepresented the applicability of those fees, an affirmative act. Id. The court found that the complaint sufficiently alleged the requisite intent and knowledge to also establish a knowing omission since when the plaintiff executed the rental agreement, the defendants did not disclose to him that his rental vehicle was pre-enrolled and pre- activated with the e-Tolling device, and did not inform him of any administrative per diem fees associated with e-Toll or that an administrative fee would incur on days he did not utilize e-Toll within the terms of the “Rental Charges” portion of the Agreement. Id. On these allegations the court reasoned, “[t]his lack of clear and comprehensive disclosure of a per diem administrative fee, when Defendants were aware that such a charge would occur, for example, may demonstrate Defendants’ intent or knowledge to conceal or omit a material fact by hiding it in a separate section of the Agreement.” Id.; see also Klein v. Budget Rent a Car Sys., Inc., No. 12-7300 (JLL), 2013 WL 1760557, at *5 (D.N.J. Apr. 24, 2013). Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 26 of 47 PageID: 792 21 Similarly, here, the lack of any disclosure that Avis Budget and ATS would pay any alleged Fines imposed upon the Class prior to giving them notice of the alleged Fines and that the Class would be denied the right to contest the traffic citation, when Avis Budget and ATS were fully aware that they pay alleged violations without any finding that there has been an actual violation, “to protect Avis from incurring late fees, penalties and potential vehicle seizure,” FAC, ¶21, and that if Avis Budget and ATS pay the ticket, the renter likely would be unable to contest the ticket, id., ¶30, may demonstrate Avis Budget’s intent or knowledge to conceal a material fact by omitting that information in the Rental Agreements provided to members of the Class. Plaintiff further alleges that Avis routinely direct bills its customers’ credit cards to pay for administrative fees for alleged traffic violations without customer authorization. See FAC, ¶¶3, 17 (Rental Agreement does not authorize ATS or any other third party to charge or collect any administrative, handling or any other, fees); see also FAC, ¶¶27, 34, 37. That the Rental Agreement does not disclose that consumers may be responsible for an administrative fee for an alleged violation also demonstrates Defendants’ intent or knowledge to conceal a material fact by omitting that information in the Rental Agreements provided to members of the Class. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 27 of 47 PageID: 793 22 4. Even If the Court Finds the CFA Claim Is Based On Omissions, In Light of the Circumstances, Defendants Had A Duty to Disclose Although the CFA count is not based on omissions as Avis Budget contends, Plaintiff addresses the companion argument made by Avis Budget that Plaintiff must first set forth factual allegations making plausible that Avis Budget had a duty to disclose more than it did. See Br. at 15-17. Relying upon an analysis set forth in Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1185 (3d Cir. 1993), which articulated a duty to disclose in three types of relationships,12 Avis Budget claims it had no duty to make more comprehensive disclosures. See Br. at 16 (“Plaintiff does not allege that Avis, by renting her a car, entered into any relationship with her but that of an arm’s length retailer and customer.”). Notably Lightning Lube does not involve any claims under the CFA.13 12 The duty to disclose arises in the following three types of relationships: “(1) fiduciary relationships, such as principal and agent, client and attorney, or beneficiary and trustee; (2) relationships where one party expressly reposits trust in another party, or else from the circumstances, such trust necessarily is implied; and (3) relationships involving transactions so intrinsically fiduciary that a degree of trust and confidence is required to protect the parties.” Id. at 1185 (citation omitted). 13 Lightning Lube asserted six claims against Witco, but at the end of the trial, only four remained in the case: (1) breach of contract; (2) fraud and misrepresentation; (3) intentional interference with contracts and prospective contractual advantage; and (4) punitive damages. Id. at 1161. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 28 of 47 PageID: 794 23 Whether a duty exists must be determined in light of the factual circumstances. Judge v. Blackfin Yacht Corp., 357 N.J. Super. 418, 427, 815 A.2d 537, 542 (App. Div. 2003). In Blackfin, a case upon which Avis Budget relies, defendant argued that as a retailer it had no duty to disclose the financial status of a manufacturer/supplier to a customer. Id. at 426. The court noted that under the circumstances where defendant required a non-refundable deposit for the boat ordered to plaintiff’s specifications, if defendant knew that Blackfin’s bankruptcy would affect its ability to produce the boat, defendant clearly had a duty to disclose. Id. at 427. However, the plaintiff presented no evidence that Blackfin did not continue to do business as usual, or that defendant had any reason to believe on the date the contract was signed, that Blackfin would not deliver the boat to plaintiff’s specifications. Accordingly, the Court found defendant had no duty to disclose the manufacturer’s financial status. Id. at 427. Here, the circumstances differ significantly. Unlike in Blackfin, Avis Budget knows that if it pays the Fines associated with Class members’ rental vehicles without notice to the Class, that conduct automatically triggers an unreasonable administrative fee directly payable to Avis and ATS and not authorized by the Rental Agreement as Defendants falsely contend, and that the Class members would lose their right to contest the traffic infraction. See, e.g., FAC, ¶¶3, 6-7, 29- 31, 45, 63-66. Avis Budget also knows that it routinely direct bills customer credit Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 29 of 47 PageID: 795 24 cards for administrative fees associated with alleged traffic and parking infractions, even though the Rental Agreement restricts the charging of administrative fees to “a violation of this agreement.” See, e.g., id. ¶14. And finally, Avis Budget knows that according to the law of the District of Columbia, the registered owner of a vehicle is liable for payment of the fine for violations recorded using an ATE system. See Exhibit C (Notice of Infraction). Under these circumstances, Avis Budget had a duty to disclose that (1) Defendants would pay any alleged Fines imposed upon the members of the Class prior to giving them notice of the alleged Fines and the opportunity to seek an assignment from Defendants to contest such Fines, (2) it would direct bill Class members’ credit cards for an administrative fee without prior authorization for an alleged violation, (3) a “violation of this agreement” includes e.g., a traffic or parking violation, and (4) members of the Class would be denied the right to contest any traffic citations issued against their rental cars during the term of the rental. It also had a duty to advise the Class that in the District of Columbia and other jurisdictions, certain traffic infractions are the non-transferable responsibility of Avis Budget, the registered owner. See, e.g., FAC, ¶¶63-65. 5. The FAC Sufficiently Alleges Unconscionable Business Practices Avis Budget also argues that the CFA claim must be dismissed because it fails to allege sufficient facts to constitute unconscionable commercial practices. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 30 of 47 PageID: 796 25 Focusing on two sentences in Count One, i.e. that defendant engaged in unlawful practices by “charging members of the Class the amount of the Fines in jurisdictions where liability for such traffic infractions is the non-transferable responsibility of the registered owner,” and by “charging the Class unreasonable and undisclosed administrative and/or handling fees for the processing and collection of such Fines paid by Defendants on behalf of the Class,” Avis Budget concludes such allegations must be “unconscionable commercial practices” since those allegations do not fall under the category of knowing omissions. Br. at 17. Avis Budget devotes several pages to explain why the conduct here does not qualify as an unconscionable commercial practice. See Br. at 17-25. The “word ‘unconscionable’ must be interpreted liberally so as to effectuate the public purpose of the CFA.” In re O’Brien, 423 B.R. 477, 488 (D.N.J. 2010) aff’d sub nom. Cleveland v. O’Brien, No. 10-3169 (GEB), 2010 WL 4703781 (D.N.J. Nov. 12, 2010) (citing Assoc. Home Equity Serv., Inc. v. Troup, 343 N.J. Super. 254, 778 A.2d 529, 543 (App. Div. 2001)). “The standard of conduct contemplated by the unconscionability clause is good faith, honesty in fact and observance of fair dealing.” O’Brien, 423 B.R. at 488 (citing Kugler v. Romain, 58 N.J. 522, 279 A.2d 640, 652 (1971)). Notwithstanding the foregoing, Avis Budget focuses on a test for unconscionability articulated in Sitogum Holdings, Inc. v. Ropes, 352 N.J. Super. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 31 of 47 PageID: 797 26 555, 800 A.2d 915 (Ch. Div. 2002). It argues that Plaintiff has not alleged any facts to make plausible any “procedural unconscionability” or “substantive unconscionability.” Br. at 19-20. However, Sitogum does not involve any claims under the CFA. In that case, an Optionee sued the vendor for specific performance to transfer property pursuant to the option. Sitogum, 352 N.J. Super. at 558. The vendor moved for summary judgment on grounds that the option contract was unconscionable, and the Monmouth County Superior Court, Chancery Division, held that the contract was procedurally unconscionable, and was substantively unconscionable. Id. at 573. Because the analysis in Sitogum does not address a claim under the CFA, its reasoning should not be applied in this case. Indeed, Avis Budget argues under Sitogum that Plaintiff does not allege that Avis took advantage of her lack of sophistication, Br. at 19-20, a factor that is irrelevant under the CFA. “There is no statutory exception for sophisticated consumers.” O’Brien, 423 B.R. at 488. “Even the most sophisticated consumers are entitled to the protections of the CFA.” Id. Avis Budget also relies upon Kugler, Br. at 18-19, a decision made by the New Jersey Supreme Court in 1971 when the word “unconscionable” had not yet been added to the CFA. Kugler, 58 N.J. at 544. Plaintiff agrees that the facts of Kugler involving fraudulent sales tactics used by merchandise sellers targeted at low income consumers were unconscionable. Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 32 of 47 PageID: 798 27 However, as the Supreme Court of New Jersey observed in 1994, “[a]lthough initially designed to combat ‘sharp practices and dealings’ that victimized consumers by luring them into purchases through fraudulent or deceptive means, D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 23, 501 A.2d 990 (App. Div. 1985), the [CFA] is no longer aimed solely at ‘shifty, fast-talking and deceptive merchant[s]’ but reaches ‘nonsoliciting artisans’ as well.” Cox v. Sears Roebuck & Co., 138 N.J. 2, 16, 647 A.2d 454, 461 (1994). Thus, the Act is designed to protect the public even when a merchant acts in good faith. Id. New Jersey CFA claims for unconscionable commercial practices need not allege an affirmative fraudulent statement, representation, or omission by the defendant. Katz v. Live Nation, Inc., No. 09-3740 (MLC), 2010 WL 2539686, at *5 (D.N.J. June 17, 2010) (citing Dewey v. Volkswagen AG, 558 F. Supp. 2d 505, 525 (D.N.J. 2008); Cox, 138 N.J. 2, 647 A.2d at 462 (noting that NJCFA “specifies the conduct that will amount to an unlawful practice in the disjunctive” in determining that the question of “whether an unconscionable commercial practice occurred ... does not adequately address a consumer-fraud claim.”)). Avis Budget also argues that Plaintiff does not allege that Avis confused or misled her. Br. at 20. Again, that contention is irrelevant. “Because unconscionable commercial practices are categorized as ‘affirmative acts,’ as opposed to knowing Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 33 of 47 PageID: 799 28 omissions,” New Jersey CFA claims “alleging an unconscionable commercial practice as the unlawful activity do not require a showing of ‘intent to deceive’ or ‘knowledge of the falsity of the representation.’” Live Nation, 2010 WL 2539686, at *5 (citing Busse v. Homebank LLC, No. 07-3495 (WJM)(MF), 2009 WL 424278, at *9 (D.N.J. Feb.18, 2009) (quoting Gennari v. Weichert Co. Realtors, 148 N.J. 582, 691 A.2d 350, 365 (1997)); see also Cox, 138 N.J. at 17, 647 A.2d at 462 (noting that a practice can be unlawful even if no person was in fact misled or deceived thereby); Leon v. Rite Aid Corp., 340 N.J. Super. 462, 774 A.2d 674, 677 (App. Div. 2001) (“When the alleged violation is an affirmative act, plaintiff need not prove defendant’s intent nor even necessarily actual deceit or fraud. Any unconscionable commercial practice is prohibited.”). The phrase unconscionable commercial practice, “defined as a violation of the standard of conduct contemplating good faith, honesty in fact and observance of fair dealing,” is fact-specific and applied on a case-by-case basis. Mango v. Pierce-Coombs, 370 N.J. Super. 239, 250, 851 A.2d 62, 69 (App. Div. 2004) (internal quotations and citations omitted). Plaintiff alleges that Avis Budget and ATS charge customers the amount of the Fines in jurisdictions where liability for such traffic infractions is the non-transferable responsibility of the registered owner, and that they charge unreasonable and undisclosed administrative and/or handling fees for the processing and collection of such Fines paid by Defendants Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 34 of 47 PageID: 800 29 on behalf of the Class. FAC, ¶¶63-65. The payment of those Fines is made prior to notification to the Class, conduct which automatically triggers the collection and direct billing of class members’ credit cards without authorization for the payment of administrative/ handling fees, id., ¶¶3, 6, 7, 17, 34, 37, “per your rental contract,” even though the Rental Agreements do not authorize the imposition of such fees except where the renter commits “any violation of this [Rental] agreement.” Id. ¶14. That deceptive course of conduct violates a standard of conduct contemplating good faith, honesty in fact and observance of fair dealing. In addition, even if the Court finds that the FAC lacks sufficient facts to constitute unconscionable conduct, unconscionable commercial practice is only one of the forbidden types of acts listed under the CFA, in addition to fraud, deception, or misrepresentation. See, e.g., Francis E. Parker, 945 F. Supp. 2d at 560. Proof of any one of the acts or omissions forbidden by the CFA is sufficient to establish unlawful conduct. Id. The FAC, having sufficiently alleged Avis Budget’s affirmative acts, as analyzed above, states a claim for violation of the CFA. 6. Plaintiff Adequately Alleges She Suffered An Ascertainable Loss As A Result Of Avis Budget’s Unlawful Practices Avis Budget argues that Plaintiff never had a right to appear in D.C. court, and the administrative fee charged to her was caused by either Plaintiff herself or the D.C. police, not Avis Budget. Therefore, Defendant reasons Plaintiff’s CFA Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 35 of 47 PageID: 801 30 claim must fail because she has not alleged an ascertainable loss as a result of defendant’s unlawful conduct. See Br. at 25-26. Indeed, Avis Budget says that it “saved Plaintiff from a late fee five times bigger than the Administrative Fee imposed[,]” id. at 26-27, even though Avis Budget, not Plaintiff, is responsible for the violation as the registered owner of the vehicle. Avis Budget made a similar argument in Mendez, 2012 WL 1224708, at *12, arguing that since Plaintiff entered a toll highway and would have had significant penalties had his rental car not been e-Toll equipped, he did not experience an ascertainable loss by being charged the relevant fees. The ascertainable loss requirement has been interpreted by the New Jersey Supreme Court in terms that make it equivalent to any lost benefit of the bargain. Id. at *13. In interpreting the New Jersey CFA, 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. The Mendez Court found “Defendants’ contentions that Plaintiff may have suffered more pecuniary losses had his car not been equipped with the e-Tolling device both theoretical and misguided.” Id. at *14. It reasoned that, “[e]ven if Plaintiff were to suffer a pecuniary loss at the hands of a third party, that would not exonerate Defendants from pecuniary harms they allegedly cost Plaintiff based on the facts as alleged.” Id. Accordingly, the Mendez Court found that the “facts Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 36 of 47 PageID: 802 31 alleged and the fees charged may have the effect of injuring Plaintiff’s right to receive the ‘fruits’ of the Agreement.” Id. As in Mendez, Plaintiff has asserted facts that show a causal connection between the unlawful conduct and the ascertainable loss when she states that she was charged for non-disclosed and misrepresented fees and Fines and illegally charged a Fine paid by Defendants assessed for violations of traffic regulations under which liability is nontransferable to members of the Class.14 FAC, ¶¶63-67. See e.g., Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 559, 964 A.2d 741, 750 (2009) (vehicle purchaser charged registration fee that included undisclosed documentary service fee in the form of overcharge was readily quantified and thus ascertainable within the meaning of the CFA); Doherty v. The Hertz Corp., No. 1:10-CV-00359 (NLH)(KMW), 2010 WL 4883487, at *7 (D.N.J. Nov. 24, 2010) (fees and charges allegedly undisclosed or misrepresented and charged to customer account sufficiently alleges ascertainable loss under CFA, and allegations that Plaintiff was charged for non-disclosed and misrepresented fees and charges 14 See also FAC, ¶¶6, 7, 45 (Avis Budget unilaterally pays Fines to the issuing authority, without notice to members of the Class. Defendants’ conduct automatically cuts off the Class’s right to contest the violation and immediately triggers an administrative fee to be paid to Defendants. Defendants pay the Fines without knowing whether the Class member actually committed the purported infraction.) Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 37 of 47 PageID: 803 32 through the pretext of her rental agreement with Hertz sufficient to show causal connection). Plaintiff has sufficiently alleged she suffered ascertainable loss as a result of Avis Budget’s unlawful practices. For all of the reasons discussed above, the Court should deny the Renewed Motion to Dismiss Plaintiff’s CFA claim. 7. The “Nearly Identical” California Class Case Is Inapposite Finally, Avis Budget touts a decision issued by the California Court of Appeal, Kent v. Avis Rent A Car Sys. LLC, No. G044884, 2012 WL 831561 (Cal. Ct. App. Mar. 13, 2012), as a “nearly-identical” prior class action it “has defeated” against one of its customers who rented a vehicle in the District of Columbia. To the contrary, Kent involves facts nearly the complete opposite of the facts alleged in Plaintiff Valli’s FAC. In Kent, the plaintiff collected his parking tickets from his rental car (and therefore had notice of the parking violations); and according to what was written on the tickets, he was informed that he had a 60-day window within which to contest them. Id. at *6. Plaintiff Kent alleged no facts from which it could be concluded that Avis tried to conceal the existence of the tickets or of this time period from him. Id. Indeed, Avis did not learn about the parking violations until they were a month and half old and until only two weeks remained to pay them. Id. After having received the Notice, and with so little time left before the deadline, Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 38 of 47 PageID: 804 33 the Court found that “Avis was entitled to assume Kent was not going to take care of them.” Id. Unlike Kent, who had over a month to contest his parking tickets before Avis even knew of their existence, id. at *8, Plaintiff Valli was unaware of the Fine issued against the vehicle she rented until after Avis Budget paid the Fine, effectively cutting off her right to contest and automatically creating an admission of guilt. FAC, ¶¶44-45, 48. The Kent decision has no relevance here. C. Plaintiff Sufficiently Alleges A Claim For Breach Of The Covenant Of Good Faith And Fair Dealing Avis Budget seeks to dismiss Count II for breach of the covenant of good faith and fair dealing because the allegations are “vague,” Avis Budget did not act “arbitrarily, unreasonably or capriciously, much less with bad faith,” and Plaintiff does not allege any damages. Br. at 27-29. In New Jersey, every party to a contract is bound by a duty of good faith and fair dealing in both the performance and enforcement of the contract. Mendez, 2012 WL 1224708, at *6 (citation omitted). The covenant requires that neither party to a contract shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. Id. 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. Id. (citation omitted). A contract would be breached by a failure to Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 39 of 47 PageID: 805 34 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. Plaintiff alleges Avis Budget acted in bad faith by failing to disclose that Defendants would pay Fines imposed upon the Class prior to giving them notice, triggering both an authorized credit card charge for administrative fees, and automatically cutting off the Class member’s opportunity to contest such Fines. FAC, ¶71. Avis Budget also acted in bad faith (and engaged in an unconscionable practice) when it charged customer credit cards without authority from the customers. Avis Budget’s conduct is arbitrary, unreasonable and in bad faith because it routinely pays the Fines even though it has no knowledge whether the Class member actually committed the purported infraction or not. Id. ¶6. A report issued by the D.C. Inspector General in September 2014 found that D.C.’s police speed cameras issue tickets “without conclusive identification” of the vehicles. Id. ¶31. In addition, Avis Budget charges the Class the amount of the Fines in those jurisdictions where the registered owner has sole, non-transferable liability for such Fines. Id. ¶71. Moreover, as demonstrated in Plaintiff’s case, Avis Budget had time to mail the Notice of Infraction to her before payment of the Fine. FAC, ¶¶41-45. Instead, once Avis Budget received the Notice of Infraction mailed by the District of Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 40 of 47 PageID: 806 35 Columbia on June 18, 2014, ATS, on behalf of Avis Budget, chose to pay the Fine, without notice, triggering an admission of guilt, and then waited approximately fifteen days to send the Notification of the purported infraction to Plaintiff demanding she pay $150, the fine amount, and a $30 “handling fee.” Id. ¶¶41, 43, 44, 46. The FAC contains sufficient allegations that Plaintiff’s right to receive the fruits of the contract was injured. D. Plaintiff’s Claim For Unjust Enrichment Is Properly Pled Avis Budget contends that when an express contract exists, the parties will be unable to allege an unjust enrichment claim. In support, it cites Moser v. Milner Hotels, 6 N.J. 278, 78 A.2d 393 (1951), a decision involving the trial court’s judgment rendered in favor of the plaintiff, and Duffy v. Charles Schwab & Co., Inc., 123 F. Supp. 2d 802 (D.N.J. 2000), focusing on defendant’s motion for partial summary judgment. Neither case applies here. At this pleading stage of the case, Plaintiff is entitled to plead alternative theories of recovery. While a plaintiff may ultimately be precluded from recovering on both a breach of contract claim and on an unjust enrichment claim, a plaintiff is not precluded from pleading both claims as alternative theories of recovery at the motion to dismiss stage. Network Commodities, LLC v. Golondrinas Trading Co., LTD., No. 11-3119 (NLH/KMW), 2013 WL 1352234, at *11 (D.N.J. Apr. 1, 2013). “In this District, multiple courts have allowed a plaintiff Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 41 of 47 PageID: 807 36 to plead claims under both theories of recovery in the alternative and have declined to dismiss unjust enrichment claims at the motion to dismiss stage finding such a dismissal premature.” Id. (citations omitted). An unjust enrichment claim need not be pled with the same specificity as a claim sounding in fraud. Rather, the more liberal notice pleading standard of Fed. R. Civ. P. 8(a) applies. Maniscalco v. Brother Int'l Corp. (USA), 627 F. Supp. 2d 494, 505 (D.N.J. 2009). An unjust enrichment claim requires plaintiff to allege “(1) at plaintiff's expense (2) defendant received benefit (3) under circumstances that would make it unjust for defendant to retain benefit without paying for it.” In re K-Dur, 338 F. Supp. 2d 517, 544 (D.N.J. 2004) (quoting RESTATEMENT OF RESTITUTION 1 (1937)). Further, “[t]he unjust enrichment doctrine requires that plaintiff show that it expected remuneration from the defendant at the time it performed or conferred a benefit on defendant and that the failure of remuneration enriched defendant beyond its contractual rights.” VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554, 641 A.2d 519 (1994). Plaintiff Valli alleges Avis Budget and ATS accepted a benefit which enriched them beyond their contractual right through their use of unfair, unlawful, misleading and deceptive means. FAC, ¶¶74-77. Those facts alleged include the imposition of “administrative” and “handling” fees, and where unauthorized, reimbursement of Fines, which Plaintiff and the Class did not agree to pay in the Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 42 of 47 PageID: 808 37 amounts charged by the Avis Defendants and ATS. Plaintiff does not seek to recover on a breach of contract claim. But even if she did, she is permitted to allege alternative theories of recovery at this stage of the case. Accordingly, the renewed motion to dismiss the unjust enrichment claim must be denied. E. At This Pleading Stage, The FAC Sufficiently Alleges A Claim For Unconscionability Avis Budget contends that the Rental Agreement cannot be found to be unconscionable because Plaintiff: (a) was not under any economic pressure to rent a vehicle and therefore there was no unequal bargaining power; (b) never sought to alter the terms of the agreement; (c) is a sophisticated consumer; and (d) the Rental Agreement does not violate public policy. See Br. at 31-33. It further argues that to hold Avis or PV Holdings responsible for the violation assessed against Plaintiff’s rental vehicle is contrary to public policy and the goals and intent of the applicable DC statute. Id. at 33. The question of unconscionability is one of law for the court. In re AZEK Bldg. Prods., Inc., Mktg. & Sales Practices Litig., No. 12-6627, 2015 WL 410564, at *6 (D.N.J. Jan. 30, 2015) (citing N.J. Stat. Ann. §12A:2-302(1)). “Unconscionability is determined on a case-by-case basis considering procedural and substantive unconscionability-unfairness in the contract’s formation and excessively disproportionate terms, respectively.” Id. (citing Sitogum, 352 N.J. Super. at 564). “Evidence of the knowledge of a stronger party that the weaker Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 43 of 47 PageID: 809 38 party will be unable to receive substantial benefits from the contract-or any related showing that the transaction involved elements of deception-should in most cases contribute to a finding of unconscionability in the bargaining process. Id. (quoting Duffy v. Samsung Electronics Am., Inc., No. 065259, 2007 WL 703197, at *5 (D.N.J. Mar.2, 2007) (citing RESTATEMENT (SECOND) OF CONTRACTS § 208 comment d (1981))). “Generally, a ‘sliding scale’ analysis is utilized in tandem, considering the respective degrees of procedural and substantive unconscionability found to exist.” Rodriguez v. Raymours Furniture Co., Inc., 436 N.J. Super. 305, 317, 93 A.3d 760, 767 (App. Div. 2014) (citations omitted). “Under this approach, overall unconscionability may be found if there is a gross level in one category but only a lesser level in the other.” Id. (citing Sitogum, 352 N.J. Super. at 565-66). The FAC alleges unfairness in the contract formation and excessively disproportionate terms. The Rental Agreements and related documents are contracts of adhesion in that they are standardized forms, imposed and drafted by Avis Budget, a leading global provider of vehicle rental services and a party of vastly superior bargaining strength, that provide the customer only with the “opportunity” to adhere to the one-sided terms or reject the agreement in its entirety. FAC, ¶80(e). The Rental Agreements contain excessively disproportionate terms including, e.g., the customers’ responsibility for vague and deceptive Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 44 of 47 PageID: 810 39 administrative fees automatically triggered by Defendants’ conduct before Class members are given notice of the infraction as discussed above, and contrary to the terms of those agreements, and the Class’s responsibility for “fines” when the Avis Defendants and ATS have knowledge they will enforce those provisions against members of the Class who are non-owners, not legally liable for those Fines in certain jurisdictions, including in D.C. The Rental Agreements also say members of the Class are responsible for the Fines, even though Defendants have knowledge they will not provide notice of the Fine assessed against the rental car until after Defendants pay the Fine, conduct which unilaterally eliminates Class members’ rights to contest the violation, triggers an admission of guilt and the imposition of an unauthorized, directly billed “administrative fee” to Class members’ credit cards. Id. ¶¶80(a)-(g). As discussed herein, the FAC alleges facts which demonstrate Avis Budget’s knowledge, as the stronger party, that members of the Class, the weaker parties, will be unable to receive substantial benefits from the contract and they demonstrate that these consumer transactions involve elements of deception. See AZEK Bldg. Prods., 2015 WL 410564, at *6. Without the benefit of full discovery to provide insight into the general commercial background and the commercial needs of the particular trade, and to determine the scope of procedural and substantive unconscionability,” the Court Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 45 of 47 PageID: 811 Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 46 of 47 PageID: 812 41 WITES & KAPETAN, P.A. Marc A. Wites mwites@wklawyers.com 4400 North Federal Highway Lighthouse Point, FL 33064 Telephone: (954) 570-8989 Facsimile: (954) 354-0205 Attorneys for Plaintiff Case 2:14-cv-06072-CCC-JBC Document 55 Filed 09/19/16 Page 47 of 47 PageID: 813 EXHIBIT A Case 2:14-cv-06072-CCC-JBC Document 55-1 Filed 09/19/16 Page 1 of 12 PageID: 814 Case 2:14-cv-06072-CCC-JBC Document 1 Filed 09/30/14 Page 24 of 32 PageID: 24Case 2:14-cv-06072-C -JBC Document 55-1 Filed 09/19/16 Page 2 f 1 I : 815 Case 2:14-cv-06072-CCC-JBC Document 1 Filed 09/30/14 Page 25 of 32 PageID: 25Case 2:14-cv-06072-C -JBC Document 55-1 Filed 09/19/16 Page 3 f 1 I : 816 Case 2:14-cv-06072-CCC-JBC Document 1 Filed 09/30/14 Page 26 of 32 PageID: 26Case 2:14-cv-06072-C -JBC Document 55-1 Filed 09/19/16 Page 4 f 1 I : 817 Case 2:14-cv-06072-CCC-JBC Document 1 Filed 09/30/14 Page 27 of 32 PageID: 27Case 2:14-cv-06072-C -JBC Document 55-1 Filed 09/19/16 Page 5 f 1 I : 818 EXHIBIT B Case 2:14-cv-06072-CCC-JBC Document 55-1 Filed 09/19/16 Page 6 of 12 PageID: 819 Case 2:14-cv-06072-CCC-JBC Document 1 Filed 09/30/14 Page 29 of 32 PageID: 29Case 2:14-cv-06072-C -JBC Document 55-1 Filed 09/19/16 Page 7 f 1 I : 820 EXHIBIT C Case 2:14-cv-06072-CCC-JBC Document 55-1 Filed 09/19/16 Page 8 of 12 PageID: 821 Case 2:14-cv-06072-CCC-JBC Document 1 Filed 09/30/14 Page 31 of 32 PageID: 31Case 2:14-cv-06072-C -JBC Document 55-1 Filed 09/19/16 Page 9 f 1 I : 822 Case 2:14-cv-06072-CCC-JBC Document 1 Filed 09/30/14 Page 32 of 32 PageID: 32Case 2:14-cv-06 72-CCC-JBC Document 55-1 Filed 09/19/16 Page 10 of 12 PageID: 823 EXHIBIT D Case 2:14-cv-06072-CCC-JBC Document 55-1 Filed 09/19/16 Page 11 of 12 PageID: 824 Case 2:14-cv-06072-CCC-JBC Document 55-1 Filed 09/19/16 Page 12 of 12 PageID: 825 Case 2:14-cv-06072-CCC-JBC Document 55-2 Filed 09/19/16 Page 1 of 1 PageID: 826