Bayol v. Zipcar, Inc.

78 F. Supp. 3d 1252, 2015 U.S. Dist. LEXIS 10596, 2015 WL 394515
CourtDistrict Court, N.D. California
DecidedJanuary 29, 2015
DocketCase No. 14-cv-02483-TEH
StatusPublished
Cited by3 cases

This text of 78 F. Supp. 3d 1252 (Bayol v. Zipcar, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bayol v. Zipcar, Inc., 78 F. Supp. 3d 1252, 2015 U.S. Dist. LEXIS 10596, 2015 WL 394515 (N.D. Cal. 2015).

Opinion

ORDER DENYING DEFENDANT’S MOTION TO DISMISS

THELTON E. HENDERSON, District Judge

This matter came before the Court on January 26, 2015, on Zipcar’s motion to dismiss the complaint. The' Court has carefully considered the parties’ arguments, and now DENIES Zipcar’s motion, for the reasons set forth below.

BACKGROUND

Plaintiff Gabriela Bayol is a resident of Daly City, California and a member of Zipcar, a short-term car rental service. In order to use Zipcar, Bayol entered into a standardized Membership Agreement setting out the terms of her rentals. Under the Agreement, members must pay a fee of $50 per hour, up to $150, for returning a car late, in addition to the normal rental rate. Membership Agreement, Ex. A to Mot., at Schedule 2, § 1. Bayol alleges that she has returned a Zipcar late, and has accordingly paid the late fees set out in the Membership Agreement.

Bayol brought this putative class action to challenge Zipcar’s late fees under various California consumer protection statutes, including Civil Code section 1671(d), the Consumer Legal Remedies Act (“CLRA”), and the Unfair Competition Law (“UCL”). Bayol argues that Zipcar’s late fee provision is presumptively illegal under section 1671(d) because it sets liquidated damages in a consumer contract. She alleges that it would not be impracticable to calculate Zipcar’s actual damages when a car is returned late, that Zipcar did not conduct a reasonable endeavor to estimate its actual damages, and that the late fees imposed bear no reasonable relation to Zipcar’s actual damages. She also al[1255]*1255leges that such fees are unconscionable and unfair, because they are included in a contract of adhesion and are unreasonably favorable to Zipcar. Invoking these statutes, Bayol seeks a permanent injunction against Zipcar’s late fee policy, restitution and damages.

Zipcar brought this motion to dismiss the complaint in its entirety. Zipcar argues that its late fees are not liquidated damages, because they vary based on how late a car is returned. Zipcar also argues that Bayol’s factual claims are so concluso-ry that they must be rejected, even at the pleadings stage. Zipcar argues that no amendment could cure these defects, so the complaint should be dismissed with prejudice.

LEGAL STANDARD

Rule 12(b)(6) requires dismissal when a plaintiffs allegations fail “to state a claim upon which relief can be granted.” Fed. R.Civ.P. 12(b)(6). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Plausibility does not equate to probability, but it requires “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). “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.

In ruling on a motion to dismiss, a court must “accept all material allegations of fact as true and construe the complaint in a light most favorable to the non-moving party.” Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir.2007). Courts are not, however, “bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

DISCUSSION

Zipcar makes two primary arguments as to why the complaint should be dismissed. First, it argues that its late fees are not “liquidated damages” under California law, so Plaintiff does not have a statutory basis for her claims. Second, Zipcar argues that Plaintiffs factual allegations are insufficient under the plausibility standard that is required at the pleadings stage.

Both of these arguments fail. Zipcar’s late fees are liquidated damages, because they can readily be determined from the contract at the time of breach. And Plaintiffs complaint, though somewhat eonclu-sory, nonetheless makes sufficient factual allegations at the pleadings stage.

I. Zipcar’s Late Fees are Liquidated Damages

California law places significant restrictions on a party’s ability to use a consumer contract to set what damages it will be entitled to in the event of a breach. California statute provides that, for a contract for the rental of personal goods or services for personal, family, or household purposes, “a provision in a contract liquidating damages for the breach of the contract is void except [when] it would be impracticable or extremely difficult to fix the actual damage.” Cal. Civil Code § 1671(d). Although the validity of a liquidated damages provision is a fact-based inquiry not appropriately determined on a motion to dismiss, whether a provision is a liquidated damages provision is a question of law for the court to decide. Ruwe v. Cellco P’ship, 613 F.Supp.2d 1191, 1196 (N.D.Cal.2009); see also Berkeley Unified Sch. Dist. of Alameda Cnty. v. James I Barnes Constr. Co., 112 F.Supp. 396, 400-01 (N.D.Cal.1953).

[1256]*1256“California courts have defined [liquidated damages] as ‘an amount of compensation to be paid in the event of a breach of contract, the sum of which is fixed and certain by agreement....’” Chodos v. West Publ’g Co., 292 F.3d 992, 1002 (9th Cir.2002) (quoting Kelly v. McDonald, 98 Cal.App. 121, 125, 276 P. 404 (1929)). To be sufficiently fixed and certain to qualify as “liquidated damages,” a provision must either set the exact amount (i.e., a single number), or provide some formula by which the amount is “certain or readily ascertainable.” See Chodos, 292 F.3d at 1002.

In Chodos, the Ninth Circuit held that an author’s entitlement to 15% of revenues from the sales of a book that was never published was not a “liquidated debt,” because “the revenues to which that percentage figure is to be applied cannot be calculated with- reasonable certainty.” Id. Since the book was never published, there were no revenue figures on which to base the calculation, and the damages could not be ascertained. Id.

A court in this district, applying Chodos, has held that a cable company’s termination fees were not liquidated damages, where customers “ ‘may be subject [to] a termination fee of up to $700,’ but that the ‘exact amount ... is a function of when your account is terminated and the type of Service Plan you are on.’ ” Walter v. Hughes Commc’ns, Inc., 682 F.Supp.2d 1031, 1046 (N.D.Cal.2010) (quoting the Subscriber Agreement). The plaintiffs in that case also alleged that the cable company routinely imposed a fee of $400, but the complaint actually included only one example, and it was for a fee of $300. Id.

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Cite This Page — Counsel Stack

Bluebook (online)
78 F. Supp. 3d 1252, 2015 U.S. Dist. LEXIS 10596, 2015 WL 394515, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bayol-v-zipcar-inc-cand-2015.