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Lee v. Enterprise Leasing Company-West, LLC

United States District Court, D. Nevada

June 24, 2014

LYDIA LEE and CAROLYN BISSONETTE, individually and on behalf of others similarly situated, Plaintiffs,

Decided June 23, 2014

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[Copyrighted Material Omitted]

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For Lydia Lee individually and on behalf of all other similarly situated, Carolyn Bissonette, Plaintiffs: Shoshana T. Savett, LEAD ATTORNEY, Berger & Montague PC, Philadelphia, PA; Arthur Stock, PRO HAC VICE, Berger & Montague, P.C., Philadelphia, PA; G. David Robertson, Richard D. Williamson, Robertson, Johnson, Miller & Williamson, Reno, NV.

For Enterprise Leasing Company-West, LLC, an Idaho Limited Liability Company, Vanguard Car Rental Group, Inc., [4] Amended Complaint doing business as Alamo Rent-A-Car, Inc., doing business as National Car Rental, Defendants: Dan C. Bowen, Bowen Hall Ohlson & Osborne, Reno, NV; Gregory D Call, J. Daniel Sharp, Janine L. Scancarelli, Crowell & Moring LLP, San Francisco, CA.

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Before the Court is Defendants Enterprise Leasing Company-West, LLC (" Enterprise" ) and Vanguard Car Rental USA, LLC's (" Vanguard" ) (collectively " Defendants" ) Motion for Summary Judgment on Liability. Doc. #63.[1] Plaintiffs Lydia Lee (" Lee" ) and Carolyn Bissonette (" Bissonette" ) (collectively " Plaintiffs" ) filed a Response (Doc. #90), to which Defendants replied (Doc. #93). Defendants also filed a Motion for Summary Judgment on Damages and Restitution. Doc. #64. Plaintiffs filed a Response (Doc. #88), to which Defendants replied (Doc. #95).

Also before the Court is Plaintiffs' Motion for Summary Judgment. Doc. #73. Defendants filed a Response (Doc. #81), to which Plaintiffs replied (Doc. #101).

I. Factual Background

This is a putative class action filed on behalf of persons who rented cars from Enterprise and Vanguard in the State of Nevada. Although involving different parties, the action involves substantially the same claims and issues that are presented in a separate case currently pending before this Court, Sobel v. Hertz Corp., No. 3:06-cv-545-LRH-RAM. As in Sobel, the dispute in this case centers on whether Nevada Revised Statute (" NRS" ) 482.31575, prior to amendment on October 1, 2009, allowed Defendants to charge customers a separate airport concession recovery fee that was not included in the base rental rate as advertised and quoted to customers.[2]

The material facts at issue herein are largely undisputed. In order to operate " on-airport," McCarran International Airport (" McCarran" ) in Las Vegas, Nevada, and Reno-Tahoe International Airport (" RTI" ) in Reno, Nevada, require rental car companies, including Defendants, to pay a " concession fee" of ten percent of their gross revenue received there.[3] Doc. #74, ¶ ¶ 6, 11; Doc. #85, ¶ ¶ 6, 11. These fees are set by contractual agreements

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called " Concession Agreements." Doc. #65 (Walker Decl.), ¶ 9; Doc. #66 (Best Decl.), ¶ ¶ 11, 16, 17, Ex. A, Ex. B, Ex. C, Ex. D. Individual lessees are not party to those agreements. Doc. #74, ¶ ¶ 6, 11; Doc. #85, ¶ ¶ 6, 11. Although the airports impose this fee on rental car companies, as opposed to their customers (i.e., the short-term lessees), Defendants pass along the expense to their customers by imposing a ten-percent surcharge on the base rental rate as a so-called " airport concession recovery fee" (" ACRF" ).[4] Doc. #74, ¶ ¶ 9, 14; Doc. #85; ¶ 9, 14. At all relevant times, Defendants " unbundled" the ACRF from their base rental rates. Doc. #74, ¶ 16; Doc. #85, ¶ 16. In essence, Defendants advertised and quoted to customers a base rental rate that did not include the separate ACRF that Defendants ultimately charged their customers. Id.

II. Legal Standard

Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, affidavits or declarations, stipulations, admissions, and other materials in the record show that " there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001).

The moving party bears the initial burden of informing the court of the basis for its motion, along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On those issues for which it bears the burden of proof, the moving party must make a showing that is " sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986); see also Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1141 (C.D. Cal. 2001). On an issue as to which the non-moving party has the burden of proof, however, the moving party can prevail merely by demonstrating that there is an absence of evidence to support an essential element of the non-moving party's case. Celotex, 477 U.S. at 323.

To successfully rebut a motion for summary judgment, the non-moving party must point to facts supported by the record which demonstrate a genuine issue of material fact. Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736 (9th Cir. 2000). A " material fact" is a fact " that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983). A dispute regarding a material

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fact is considered genuine " if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Liberty Lobby, 477 U.S. at 248. The mere existence of a scintilla of evidence in support of the party's position is insufficient to establish a genuine dispute; there must be evidence on which a jury could reasonably find for the party. See id. at 252. Finally, whereas here, both sides have moved for summary judgment, the court must consider evidence submitted in support of both motions before ruling on either motion. See Fair Housing Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001).

III. Discussion

A. Defendants' Motion for Summary Judgment on Liability

1. Interpretation of NRS 482.31575

Defendants seek summary judgment on the ground that their business practice of unbundling the ACRFs did not violate NRS 482.31575. As Defendants are admittedly aware, in Sobel, this Court held " as a matter of law" that, prior to its amendment in 2009, " section 482.31575 required [on-airport] rental car companies to include the [ACRF] in the base rate that they advertised, quoted, and charged to short-term lessees," such that it was unlawful to charge an unbundled ACRF on top of the advertised and quoted base rental rate. Sobel v. Hertz Corp., 698 F.Supp.2d 1218, 1232 (D. Nev. Mar. 17, 2010) (No. 3:06-cv-545-LRH-RAM, Doc. #111) (order on summary judgment) (" Sobel II " ); accord Sobel v. Hertz Corp., 2007 WL 2710725, *4 (D. Nev. Sept. 13, 2007) (No. 3:06-cv-545-LRH-RAM, Doc. #22) (order on motion to dismiss) (" Sobel I " ). Nevertheless, Defendants urge the Court " to rule on the issue once again, because the record here is different than in Sobel." Doc. #63, p. 19. Specifically, Defendants argue that the Court did not have the benefit of testimony from airport officials regarding the nature and purpose of airport fees or the manner in which the statute was interpreted and applied by Nevada officials for the past 25 years. Id. ; Doc. #93, p. 13.

As a preliminary matter, the Court notes its agreement with Plaintiffs as to the precedential effect of the Court's rulings in Sobel. Indeed, " judicial precedent attaches a specific legal consequence to a detailed set of facts in an adjudged case or judicial decision, which is then considered as furnishing the rule for the determination of a subsequent case involving identical or similar material facts and arising in the same court or a lower court in the judicial hierarchy." United States v. Osborne (In re Osborne), 76 F.3d 306, 309 (9th Cir. 1996) (emphasis added). Insofar as Sobel announced a decision on a point of law, the Court owes obedience to that decision and, thus, shall not disturb its ruling in that regard. Moreover, to the extent that the material facts of this case are nearly identical to those of Sobel, the Court is not inclined to revisit prior determinations as to the application of NRS 482.31575. Nevertheless, as Defendants aver, the result in this case is not pre-ordained by Sobel. As such, the Court shall address each of Defendants' arguments as they relate to the unique facts of this case.

Evidentiary Record

First, Defendants contend that the evidentiary record in the present case supports a different interpretation of NRS 482.31575 than was announced in Sobel. Specifically, Defendants argue, the phrase " any fees paid to airports" means any fees that a rental car company collects from customers and pays to the airport. See Doc. #63, pp. 19-20. The Court disagrees.

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In addressing Defendants' argument to this effect in its September 10, 2012 Order, the Court found that:

[a] critical part of the [C]ourt's reasoning [in Sobel ] was that the statute's reference to " any fees paid to airports" that a short-term lessee " must pay" refers only to charges that the airports require to be paid by the rental car customer and " over which the leasing company would have no control." . . . Contrary to Defendants' argument, this unequivocally does not include airport concession fees that the car rental companies pass along to their customers at their own option.

Doc. #44, p. 7 (citing Sobel I, 2007 WL 2710725, *2-3). As a consequence of the Court's interpretation in this regard, the statute affords different treatment to off-airport rental car fees (i.e., " access fees" ) than to on-airport rental car fees (i.e., concession fees).[5] While both types of fees are payable to the airport, the former are imposed on short-term lessees,[6] whereas the latter are imposed on rental car companies.

Defendants' attempt to equate the off-airport access fee with the on-airport concession fee is unavailing and unsupported by the evidence. Specifically, Defendants argue that Clark County Ordinance 20.09.010 imposes an access fee on the rental car companies as opposed to their customers. However, a plain reading of the ordinance indicates that off-airport rental car companies have a legal obligation to " collect and pay" the access fee. See Doc. #65 (Walker Decl.), Ex. C (Clark County Ordinance 20.09.010(c)(6)(B)) (" [s]uch operators will collect and pay an airport access fee . . . " ). As such, the short-term lessee bears the ultimate legal obligation to pay the access fee that is collected by the off-airport rental car company and paid to the airport. In contrast, no such legal obligation to pay the concession fee is born by short-term lessees who rent cars from on-airport rental car companies. Instead, the legal obligation to pay the concession fee rests solely with the on-airport rental car companies. Nothing requires those on-airport rental car companies, including Defendants, to pass that fee along to their customers in the form of an ACRF. Accordingly, the access fee that short-term lessees who rent cars from off-airport rental car companies must pay to the airport is distinct from the concession fee that on-airport rental car companies must pay to the airport. See Doc. #44, p. 7. The Concession Agreements which governed Defendants' relationship with the airports at the time of Plaintiffs' rentals explicitly recognize this distinction in section 3.5--" none of those payments, [referring to the ACRFs] reflects a fee that is imposed by the County upon customers renting vehicles from Concessionaire." Doc. #66, Ex. A, Ex. B.

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Defendants go to great lengths to argue that the Court's construction requires a re-writing of the statute such that only those " fees imposed by a local government agency paid directly to airports by the customer and not by the short term-lessor" [sic] are exempt. See Doc. #93, pp. 14-15. Defendants miss the point. The statute does not distinguish between access fees and concession fees. Instead, the statute distinguishes between " fees paid to airports" and other fees not paid to airports. That access fees and concession fees (and, by extension, ACRFs) are treated differently under the statute does not change its mandate. Nor does it require the Court to engage in " judicial legislation and rewrite the statute," as Defendants suggest. The simple fact remains: the ACRF is not a fee paid to airports, it is a fee paid to Defendants. That Defendants opted to pass along the concession fee to their customers does not render the ACRF a " fee paid to airports." In the Court's view, it is Defendants who are attempting to re-write the statute by insinuating that the exceptions thereunder apply only when a customer pays a fee " directly" to the airport--i.e., without using the rental car company as a conduit. See Doc. #81, pp. 8-9. However, the statute simply does not require that the fee be paid by the customer to the airport in this manner. As such, the Court concludes that the access fee that off-airport rental car companies charge to their customers on behalf of the airport--as with any other state or county tax--falls within the statute's exceptions.

Nevertheless, whether the access fees applicable to off-airport lessees are exempt under the statute is immaterial at this juncture, as Defendants were operating on-airport at all relevant times. Moreover, even if the access fees are not exempt, it does not render the phrase " any fees paid to airports" nugatory as Defendants suggest. Indeed, it is certainly conceivable that the Nevada Legislature anticipated a situation in which rental car customers would be subject to a fee payable to the airport rather than the rental car companies themselves. And because the undisputed purpose of NRS 482.31575 was to protect rental car customers from the rental car companies' misleading advertising practices, the only logical inference is that the legislature would have exempted those mandatory fees over which the rental car companies have no control.

The Court is similarly unpersuaded by Defendants' argument that the concession fee charged by the airports is not " an ordinary operating expense voluntarily assumed by the rental car company" that is merely " the rental car company's cost of doing business." In Sobel, the Court determined that the concession fee does indeed " represent[] the rental car company's cost of doing business for the advantage of operating on the airport." Sobel I, 2007 ...

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