Berry v. Budget Rent a Car Systems, Inc.

• Decision Date: 17 July 2007
• Docket Number: No. 06-61815-CIV.,06-61815-CIV.
• Citation: 497 F.Supp.2d 1361
• Parties: Ray BERRY and Robert John, individually and on behalf of all others similarly situated, Plaintiffs, v. BUDGET RENT A CAR SYSTEMS, INC., a Delaware corporation, Defendant.
• Court: U.S. District Court — Southern District of Florida

497 F.Supp.2d 1361

Ray BERRY and Robert John, individually and on behalf of all others similarly situated, Plaintiffs, v. BUDGET RENT A CAR SYSTEMS, INC., a Delaware corporation, Defendant.

No. 06-61815-CIV.

United States District Court, S.D. Florida.

July 17, 2007.

COPYRIGHT MATERIAL OMITTED

Paul M. Weiss, William M. Sweetnam, Freed & Weiss, Chicago, IL, Steven R. Jaffe, Tod N. Aro novitz, Christopher Lang Marlowe, Aronovitz Trial Lawyers, Miami, FL, Stephen A. Dunn, Emanuel & Dunn PLLC, Raleigh, NC, for Plaintiffs.

Lawrence Dean Silverman, Scott Brian Cosgrove, Akerman Senterfitt, Miami, FL, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS COMPLAINT

COHN, District Judge.

THIS CAUSE is before the Court upon Defendant Budget Rent a Car Systems, Inc.'s Motion to Dismiss Complaint and Incorporated Memorandum of Law [DE 16]. The Court has considered Defendant's Motion, Plaintiffs Memorandum of Law in Opposition [DE 22], Defendant's Reply Memorandum [DE 28], and the supplemental materials filed under seal [DE 41], and is otherwise duly advised in the premises.

I. INTRODUCTION

Plaintiffs Ray Berry and Robert John bring this class action Complaint against Defendant Budget Rent a Car Systems, Inc. ("Budget"), alleging that Budget's practice of adding an additional cost recovery fee ("CRF") to the daily rental rate charged to customers violates the New Jersey Consumer Fraud Act, the Florida Deceptive and Unfair Trade Practices Act, the North Carolina Unfair and Deceptive Trade Practices Act, and substantially similar consumer fraud laws in certain other states. Plaintiffs also assert counts for unjust enrichment and money had and received.

According to the allegations in Plaintiffs' Complaint, Budget automatically assesses a CRF in the amount of $3.00 per day in addition to the daily rental charge. Plaintiffs claim that this CRF is a "hidden profit center" for Budget, rather than a legitimate means of recouping the cost of licensing and registering its fleet of rental vehicles, because the amount of the fee grossly exceeds the actual cost of vehicle registration and licensing and those costs are already included in the daily rental rates.

Plaintiff Ray Berry executed a rental contract with Budget in Hallandale Beach, Florida on September 6, 2006. Plaintiff Robert John executed a rental contract with Budget in Havelock, North Carolina on September 22, 2006. Both contracts were for rental of a van, and both contracts disclosed the imposition of the CRF. Budget is a Delaware corporation with its principal place of business in Parsippany, New Jersey.

II. LEGAL STANDARD FOR MOTION TO DISMISS

Until the recent Supreme Court decision in Bell Atlantic Corp. v. Twombly, 550 U.S. ___, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), courts routinely followed the rule that, "a complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff could prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Marsh v. Butler County, 268 F.3d 1014, 1022 (11th Cir.2001). However, pursuant to Twombly, to survive a motion to dismiss, a complaint must now contain factual allegations which are "enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true." 127 S.Ct. at 1965.¹ "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the `grounds' of his `entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 1964-65. Taking the facts as true, a court may grant a motion to dismiss when, "on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action." Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993).

III. APPLICABLE LAW

As a threshold matter, the Court must determine what law applies to Plaintiffs' claims before it can evaluate whether Plaintiffs' Complaint states a valid cause of action. Plaintiffs argue that the choice of law issue is premature at this stage in the litigation, and that the Court should defer ruling on this matter until the class certification hearing. However, the choice of law issue presented at this time is simply whether the Court should apply the law of the state in which Budget is headquartered to all members of the class, or apply the law of each state in which the class members rented the vehicles at individual Budget rental facilities.² No additional evidence is necessary to answer this choice of law question, so additional discovery will not be of assistance to the parties. Furthermore, the resolution of the instant Motion to Dismiss depends upon the Court first determining this fundamental choice of law question. Therefore, the Court addresses it at this time.

A federal court sitting in diversity must look to the choice of law rules of the forum state when determining which law should apply to a claim. Trumpet Vine Investments v. Union Capital Partners, 92 F.3d 1110, 1115 (11th Cir.1996) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S Ct. 1020, 85 L.Ed. 1477 (1941)). Florida applies the "most significant relationship" test in determining choice of law, as articulated in the Restatement (Second) of Conflict of Laws. Trumpet Vine Investments, 92 F.3d at 1115-16. The general choice of law principle under the Restatement For torts provides that the Court take into account the following contacts: "(a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered." Restatement (Second) of Conflict of Laws § 145 (1971).

The Restatement also provides specific choice of law principles for fraud and misrepresentation claims, which the Eleventh Circuit held in Trumpet Vine would also be applied in Florida courts, in addition to the Section 145 contacts. Restatement Section 148 provides as follows:

(2) When the plaintiffs action in reliance took place in whole or in part in a state other than that where the false representations were made, the forum will consider such of the following contacts, among others, as may be present in the particular case in determining the state which, with respect to the particular issue, has the most significant relationship to the occurrence and the parties:

(a) the place, or places, where the plaintiff acted in reliance upon the defendant's representations,

(b) the place where the plaintiff received the representations,

(c) the place where the defendant made the representations,

(d) the domicile, residence, nationality, place of incorporation and place of business of the parties,

(e) the place where a tangible thing which is the subject of the transaction between the parties was situated at the time, and

(f) the place where the plaintiff is to render performance under a contract which he has been induced to enter by the false representations of the defendant.

Restatement (Second) of Conflict of Laws § 148 (1971) (cited in Trumpet Vine, 92 F.3d at 1118.) Accordingly, the Court considers Sections 145 and 148 contacts together, as they overlap substantially. See Topp, Inc. v. Uniden America Corp., 483 F.Supp.2d 1187, 1191 (S.D.Fla.2007).

A consideration of the Sections 145 and 148 contacts persuades this Court that it should apply the law of the state in which each Plaintiff rented a vehicle, rather than the law of New Jersey, the state in which Budget is headquartered. The Defendant made, and Plaintiffs received, the alleged misrepresentations at each individual Budget rental center when Plaintiffs rented the vehicles. Plaintiffs acted in reliance upon the alleged misrepresentations in those states, and Plaintiffs are domiciled in those states. The place where the tangible thing which is the subject of the transaction — the rental vehicle — is located, for each rental, is the state in which it was rented. Finally, Plaintiffs were each to render performance under the rental contract in the states in which they rented the vehicles. Although Defendant Budget is headquartered in New Jersey this one factor alone cannot overcome the weight of the other factors.³ Plaintiffs point to several cases from the New Jersey courts in support of their argument that the Court should apply New Jersey law because the alleged fraudulent scheme emanated from New Jersey, where Budget is headquartered. While it may be that New Jersey intended its consumer fraud statute to apply to fraudulent schemes affecting consumers in other jurisdictions, and a federal district court in New Jersey would decide this choice of law issue differently, this Court is obligated to follow the choice of law standards of the state in which it sits. Florida choice of law standards dictate that the Court not apply the law of New Jersey, regardless of what New Jersey law may hold. Accordingly, Plaintiffs claim under New Jersey law will be dismissed for failure to state a claim upon which relief can be granted. However, because this dismissal is solely predicated upon Florida choice of law standards, and thus does not bear upon the substantive sufficiency of the claims under New Jersey law, this dismissal is without prejudice.

IV. FLORIDA CLAIM (COUNT II)

In Count II of the Complaint, Plaintiffs allege a violation of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), based on allegations regarding Plaintiff Berry's rental of a vehicle at a Budget location in Florida. The Act declares unlawful "unfair methods of competition, unconscionable acts or practices, and unfair...