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Sandra Mckinnon and Kristen Tool, Individually and On Behalf of All Others Similarly Situated v. Dollar Thrifty Automotive Group

March 4, 2013

SANDRA MCKINNON AND KRISTEN TOOL, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
PLAINTIFFS,
v.
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. D/B/A DOLLAR RENT A CAR; DOLLAR RENT A CAR, INC.; DTG OPERATIONS, INC. D/B/A DOLLAR RENT A CAR; AND DOES 1-10, INCLUSIVE,
DEFENDANTS.



ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS AND DENYING DEFENDANTS' MOTION TO STRIKE

United States District Court District of California For the Northern

I. INTRODUCTION

Plaintiffs Sandra McKinnon ("Ms. McKinnon") and Kristen Tool 23 ("Ms. Tool") (collectively "Plaintiffs") bring this putative class 24 action against Dollar Thrifty Automotive Group, Inc., a Delaware 25 corporation headquartered in Oklahoma, and its subsidiaries Dollar 26 Rent A Car, Inc. and DTG Operations, Inc. (collectively 27 "Defendants"), both Oklahoma corporations. Plaintiffs, customers 28 of Defendants, allege that Defendants defrauded Plaintiffs and other customers in California and Oklahoma, and potentially 2 elsewhere as well. ECF No. 26 ("FAC"). Defendants now move to 3 dismiss Plaintiffs' FAC and strike Plaintiffs' class allegations. 4

ECF No. 33 ("MTS"); ECF No. 34 ("MTD"). The motions are fully 5 briefed,*fn1 and are suitable for determination without oral argument, 6 Civ. L.R. 7-1(b). For the reasons explained below, Defendants' 7 motion to dismiss is GRANTED in part and DENIED in part, and 8 Defendants' motion to strike is DENIED. 9 10

II. BACKGROUND

Defendants are car rental companies. FAC ¶¶ 5-7. Named 12 Plaintiffs were customers of Defendants who rented cars in 13 California (Ms. Tool) and Oklahoma (Ms. McKinnon). Id. ¶¶ 3-4. 14

Plaintiffs allege that Defendants organized a scheme to defraud 15 consumers either by fraudulently signing customers up for collision 16 damage waivers, car insurance, and other added services, or by 17 misleading customers into signing up for such services. Id. ¶ 1. 18

Plaintiffs claim that Defendants' conduct amounted to a systematic, 19 nationwide program through which Defendants' employees and agents 20 would dupe customers into buying services that those customers had 21 specifically declined or attempted to decline. Id. ¶ 12. 22

Ms. McKinnon, a California resident, alleges that she made an 23 online reservation through Defendants' reservation system and 24 specifically declined all available optional add-ons at that time. 25

Id. ¶ 13. However, Plaintiffs aver that when Ms. McKinnon picked 26 up her car from Defendants' facility in the Tulsa airport, 27 Defendants' agent tried to offer her a variety of additional 2 services, all of which she orally declined. Id. When Ms. McKinnon 3 was asked to sign an electronic signature pad to complete her 4 transaction, Defendants' agent told her to initial certain areas in 5 order to decline the add-ons. Id. She did so and was handed a 6 folded-up copy of her rental contract, though the agent allegedly 7 did not discuss the total amount charged. Id. When Ms. McKinnon 8 returned the car to Defendants, she was allegedly charged an 9 additional $359.65, almost the total cost of the rental car. Id. 10

Defendants' manager at the Tulsa airport would not discuss the charges with her, and Defendants' other employees allegedly said in 12 reference to Defendants, "They never give the money back. You are 13 not going to get your money back." Id. ¶ 14. Ms. McKinnon tried 14 contacting Defendants after that, including by sending them a 15 written demand for the return of her money, but to no avail. Id. 16

Ms. Tool's experience was substantially similar, though she (unlike 17 Ms. McKinnon) allegedly disputed her charges with her credit 18 company. See id. ¶ 15. Plaintiffs' FAC includes a litany of other 19 consumers' reviews of Defendants' services, all reporting 20 experiences similar to Ms. McKinnon's and Ms. Tool's. See id. ¶¶ 21

17-20.

In both Ms. Tool and Ms. McKinnon's cases, Defendants' records 23 allegedly show that Plaintiffs' electronic signatures and checked 24 boxes from the touchpads they were offered when picking up their 25 cars indicate that Plaintiffs accepted Defendants' additional 26 services instead of declining them, as Defendants' agents allegedly 27 led Plaintiffs to believe. See id. Defendants therefore told 28

Plaintiffs that, since their records indicate that Plaintiffs opted into all charges, Plaintiffs have no recourse against Defendants.

Id. ¶¶ 16-17. Plaintiffs aver that they never intended to accept 3 any of these charges and that Defendants' agents instructed them 4 that signing and checking the electronic forms they were offered 5 would decline the add-ons. See id. ¶¶ 15-20. Plaintiffs further 6 allege that Defendants never reviewed the final contract or final 7 charges with them, suggesting that Defendants rely on the hustle 8 and rush of airports to send their customers away without having 9 reviewed their rental charges. Id. ¶¶ 19-20. According to 10 Plaintiffs, Defendants' business model is built on incentivizing this sort of fraud, because Defendants' employees are paid minimum 12 wage but make commissions of up to 12 percent on the sales of add-13 ons, while employees who fail to obtain "an average 30 per day up-14 sales of additional options for three months" may be terminated 15 without eligibility for unemployment. Id. ¶ 18. 16

Plaintiffs therefore brought this action on behalf of 17 themselves and other similarly situated customers of Defendants, 18 asserting the following causes of action: (1) violations of 19 California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code 20 §§ 17200 et seq., for unlawful, unfair, and fraudulent business 21 acts and practices; (2) violations of California's Consumers Legal 22 Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750 et seq.; (3) 23 violation of the Oklahoma Consumer Protection Act ("OCPA"), Okla. 24 Stat. tit. 15, § 751 et seq.; (4) breach of contract; (5) breach of 25 the covenant of good faith and fair dealing; (6) unconscionability; 26 and (7) common counts, assumpsit, unjust enrichment, and 27 restitution. Id. ¶¶ 29-78. Defendants now move to dismiss 28

Plaintiffs' FAC and strike Plaintiffs' class allegations.

III. LEGAL STANDARD

A. Motions to Dismiss

A motion to dismiss under Federal Rule of Civil Procedure 4 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. 5

Block, 250 F.3d 729, 732 (9th Cir. 2001). "Dismissal can be based 6 on the lack of a cognizable legal theory or the absence of 7 sufficient facts alleged under a cognizable legal theory." 8

Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 9 1988). "When there are well-pleaded factual allegations, a court 10 should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. 12 Iqbal, 556 U.S. 662, 664 (2009). However, "the tenet that a court 13 must accept as true all of the allegations contained in a complaint 14 is inapplicable to legal conclusions. Threadbare recitals of the 15 elements of a cause of action, supported by mere conclusory 16 statements, do not suffice." Id. at 663 (citing Bell Atl. Corp. v. 17

Twombly, 550 U.S. 544, 555 (2007)). The allegations made in a 18 complaint must be both "sufficiently detailed to give fair notice 19 to the opposing party of the nature of the claim so that the party 20 may effectively defend against it" and "sufficiently plausible" 21 such that "it is not unfair to require the opposing party to be 22 subjected to the expense of discovery." Starr v. Baca, 633 F.3d 23 1191, 1204 (9th Cir. 2011). A court's review of a motion to 24 dismiss is generally "limited to the complaint, materials 25 incorporated into the complaint by reference, and matters of which 26 the court may take judicial notice." See Kourtis v. Cameron, 419 27 F.3d 989, 994 n.2 (9th Cir. 2005). 28

B. Motions to Strike

Federal Rule of Civil Procedure 12(f) provides that a court 3 may, on its own or on a motion, "strike from a pleading an 4 insufficient defense or any redundant, immaterial, impertinent, or 5 scandalous matter." Motions to strike "are generally disfavored 6 . . . [and] are generally not granted unless it is clear that the 7 matter sought to be stricken could have no possible bearing on the 8 subject matter of the litigation." Rosales v. Citibank, 133 F. 9 Supp. 2d 1177, 1180 (N.D. Cal. 2001). 10

IV. DISCUSSION

A. Defendants' Motion to Dismiss

Defendants argue that all of Plaintiffs' claims, except Ms. 14 Tool's UCL claims, should be dismissed because (1) the presumption 15 against extraterritorial application of statutes means that 16 Plaintiffs' UCL, CLRA, and OCPA claims all fail where Plaintiffs' 17 allegations would cause these statutes to operate 18 extraterritorially; (2) Plaintiffs' OCPA claims are barred by the 19 voluntary payment doctrine, a defense that a payment knowingly made 20 may not be recovered; and (3) Plaintiffs' common law claims fail 21 because Plaintiffs fail to plead essential elements of those 22 claims. Plaintiffs' opposition brief includes extensive argument 23 about whether Plaintiffs have sufficiently pled elements of the 24 UCL, CLRA, and OCPA, but since Defendants' arguments concern 25 whether Plaintiffs' claims are barred for threshold reasons, the 26 Court does not address the substance of Plaintiffs' claims at this 27 point. 28

a. OCPA and the Voluntary Payment Doctrine

OCPA prohibits, among other things, knowingly making false or 3 misleading statements or trade practices concerning consumer 4 transactions. Okla. Stat. ...


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