Bacon v. Avis Budget Grp., Inc.

• Decision Date: 09 June 2017
• Docket Number: Civ. No. 16-5939 (KM) (JBC)
• Parties: ABIGAIL BACON, et al., Plaintiffs, v. AVIS BUDGET GROUP, INC., and PAYLESS CAR RENTAL, INC., Defendants.
• Court: U.S. District Court — District of New Jersey

ABIGAIL BACON, et al., Plaintiffs, v. AVIS BUDGET GROUP, INC., andPAYLESS CAR RENTAL, INC., Defendants.

Civ. No. 16-5939 (KM) (JBC)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

June 9, 2017

MEMORANDUM OPINION

MCNULTY, U.S.D.J.:

The plaintiffs have filed a putative class action against car rental companies Avis Budget Group, Inc. ("Avis") and an Avis subsidiary, Payless Auto Rental, Inc. ("Payless"). Essentially the complaint alleges that the defendant rent-a-car companies routinely charge customers' credit and debit cards for ancillary products and services that the customers have not authorized, and in some cases, have specifically declined. The plaintiffs assert claims under New Jersey, Florida, and Nevada consumer protection and unfair trade practices statutes, for injunctive relief, for unjust enrichment, and for conversion. (See Compl.)¹ Plaintiffs propose to certify a class action comprising five subclasses.

Presently before the court are two motions to compel arbitration: one submitted by Payless (joined by Avis) (ECF No. 16), and another submitted jointly by Avis and Payless (ECF no. 17). (See Def. Br. 7.) The first, Payless motion deals with plaintiff Arcadia Lee, who rented a car for use in Costa Rica; the second, joint motion deals with the remaining plaintiffs, whose rentals occurred in New Jersey, Nevada, or Florida (the "U.S. Plaintiffs").² Both motions seek an order compelling the plaintiffs to arbitrate their claims on an individual basis, as well as dismissal of the Complaint or stay of this action pending arbitration. Because the defendants' motions present issues of fact, I will deny them as presented and order discovery.

I. BACKGROUND

A. The U.S. Plaintiffs' Rental Agreements and Rental Jackets

The six U.S. Plaintiffs signed one-page rental agreements (the "U.S. Agreements") for Payless cars. Each plaintiff's signature appears immediately below the final paragraph of the U.S. Agreement which states, in part, "I have received&agree to all notices&terms here and in the rental jacket." (Spacing sic in original). The Defendants attach copies of the U.S. Agreements as exhibits to certifications submitted with their opening briefs. Also attached are copies ofthe "rental jackets" mentioned in the Agreements (the "U.S. Rental Jackets"). (Payless Cert. Exs. A-F)³

Each U.S. Agreement is essentially a one-page receipt. It itemizes charges and fees, lists basic identification information about the customer and the rented vehicle, and identifies pickup details for the rented vehicle. (Id.)

The U.S. Agreements' Rental Jackets, so called, are not actually titled as such, but bear the title "Rental Terms and Conditions." Each includes some 31 paragraphs of terms and conditions in small but legible print. The terms and conditions are substantially the same across all six U.S. Rental Jackets. Each includes an arbitration provision, which states, in relevant part:

28. Arbitration.

. . . .

Dispute Resolution: Except as otherwise provided below, in the event of a dispute that cannot be resolved informally through the pre-dispute resolution procedure, all disputes between you and Payless arising out of, relating to or in connection with your rental of a vehicle from Payless and these rental terms and conditions shall be exclusively settled through binding arbitration through the American Arbitration Association ("AAA") pursuant to the AAA's then-current rules for commercial arbitration. There is no judge or jury in arbitration. Arbitration procedures are simpler and more limited than rules applicable in court and review by a court is limited. YOU AND PAYLESS AGREE THAT ANY SUCH ARBITRATION SHALL BE CONDUCTED ON AN INDIVIDUAL BASISAND NOT IN A CLASS, CONSOLIDATED OR REPRESENTATIVE ACTION. Notwithstanding any provision in these terms to the contrary, if the class action wavier in the prior sentence is deemed invalid or unenforceable, however, neither you nor we are entitled to arbitration. . . .

(Id. ¶ 28).

Most of the U.S. Plaintiffs allege that they received the U.S. Rental Jackets only after they had signed the U.S. Rental Agreements.⁴

B. Lee's Costa Rica Rental Agreement and Rental Jacket

Lee rented a car in Costa Rica from Payless's licensee, Las Cuatro Vias, S.A. ("LCV"). (Compl. ¶ 139) Lee also signed a one-page, receipt-like agreement (the "Costa Rica Agreement"), which bears a Payless logo and LCV's title and address at the top of the page. The Costa Rica Agreement states: "By signing below, you agree to the terms and conditions of this Agreement, and you acknowledge that you have been given an opportunity to read this Agreement before being asked to sign." (Def. Cert. Ex. G, p.2) Just underneath that sentence, Lee's signature appears.

The Costa Rica Agreement does not refer to a rental jacket or to any other "rental agreement." (The Defendants append a copy of the Costa Rica Agreement as Exhibit G to the certification submitted with their brief. (Id.)) Within that Exhibit G, on the page following the Costa Rica Agreement, is a document that bears the title "Rental Agreement." This document comprises 21 paragraphs in English and 21 paragraphs in Spanish on a single page. (I will call it the "Costa Rica Rental Jacket".)⁵ The writing is so small that it is nearlyillegible, at least in the Court's copy. The first English paragraph, titled "Parties," explains that only Lee and LCV are parties to the Costa Rica Agreement. (See id. ¶ 1)

The Costa Rica Rental Jacket includes a "Dispute resolution" clause, which purports to commit disputes to arbitration in Costa Rica:

Every controversy or dispute that may be related to this agreement or its performance, liquidation or interpretation shall be resolved in accordance with the following procedure: 1) The parties shall resort to conciliation mechanisms in accordance with the Conciliation Regulations of the Center for Conciliation and Arbitration of the Chamber of Commerce of Costa Rica. If the Parties have not reached a conciliation agreement within fifteen business day following the conciliation request, the controversy or dispute shall be resolved by means of 2) Arbitration proceedings, in accordance with the Arbitration regulation of said center, to which rules the parties subject themselves unconditionally. The Arbitration Panel shall be composed of one member and resolve pursuant to law.

(Def. Cert. Ex. G, p.2, ¶ 19)

The plaintiffs allege that Lee did not receive a copy of the Costa Rica Rental Jacket until after she had signed the Costa Rica Agreement. (Compl. ¶ 150) The plaintiffs also allege that the version of the Costa Rica Rental Jacket furnished to Lee was a non-English copy (i.e., a version different from the bilingual one the defendants include in Exhibit G to their certification). (Id.)

C. Avis's Role

Avis is a New Jersey-headquartered company that operates Payless rental locations throughout the United States. (Id. ¶ 13) The Complaint alleges that Avis acquired Payless as a wholly owned subsidiary in 2013. (Compl. ¶ 11, 24) By that time, the plaintiffs say, Payless customers had lodged "thousands of on-line complaints" against Payless for its deceptive practices. (Id. ¶¶ 11, 13)

The plaintiffs do not allege that they ever dealt directly with Avis. Rather, citing a number of Avis's and Payless's public statements, they allege that Avis and Payless "combined operations, and [that] at all times material to this litigation, Avis directed and controlled the daily activities of Payless and totally dominated it, to the extent that Payless manifested no separate corporate interest of its own and functioned solely to achieve the purposes of Avis." (Id. ¶ 26, 27) The plaintiffs therefore contend that Avis and Payless, through their agents or personnel, together carried out the alleged deceptive practices, "act[ing] in concert with [] each other" and as "seamlessly integrated" companies. (Id. ¶¶ 29-31)

II. LEGAL STANDARD

This Circuit's case law has meandered somewhat in defining the proper standard of review of a motion to compel arbitration. The upshot, however, is fairly clear. Where the issue can be decided without evidence, it will be, based on an application of the familiar Rule 12(b)(6) standard to the face of the pleadings. Failing that, however, the Court will permit discovery and decide the issue on a summary judgment standard, pursuant to Rule 56. If there is a genuine issue of fact, summary judgment will be denied and the issues will be tried.

Because arbitration is a "matter of contract" between two parties, "a judicial mandate to arbitrate must be predicated upon the parties' consent." Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 771 (3d Cir. 2013) (quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 (3d Cir. 1980)). Pursuant to the Federal Arbitration Act ("FAA"), a court may enforce a contract to arbitrate, but only if the court is satisfied that the "making of the agreement" to arbitrate is not "in issue." Id.

In Guidotti v. Legal Helpers Debt Resolution, the Third Circuit stated the approach a court must take on a motion to compel arbitration. The judiciary must balance the competing goals of the FAA: the speedy and efficient resolution of disputes, and the enforcement of private agreements. Id. at 773. Reconciling sometimes murky precedent in light of those competing interests,the Guidotti court reasoned that where "the affirmative defense of arbitrability of claims is apparent on the face of a complaint (or . . . documents relied upon in the complaint), . . . the FAA would favor resolving a motion to compel arbitration under a motion to dismiss standard without the inherent delay of discovery." Id. at 773-74. Such an approach "appropriately fosters the FAA's interest in speedy dispute resolution. In those circumstances, '[t]he question to be answered . . . becomes whether the assertions of the complaint, given the required broad sweep, would permit adduction of proofs that would...