Greenley v. Avis Budget Grp. Inc., Case No.: 19-cv-00421-GPC-AHG

CourtUnited States District Courts. 9th Circuit. United States District Court (Southern District of California)
Writing for the CourtHon. Gonzalo P. Curiel United States District Judge
Decision Date26 March 2020
PartiesDAVID KENT GREENLEY, individually and on behalf of all others similar situated, Plaintiff, v. AVIS BUDGET GROUP INC., a Delaware and New Jersey corporation Defendant.
Docket NumberCase No.: 19-cv-00421-GPC-AHG

DAVID KENT GREENLEY, individually and on behalf of all others similar situated, Plaintiff,
AVIS BUDGET GROUP INC., a Delaware and New Jersey corporation Defendant.

Case No.: 19-cv-00421-GPC-AHG


March 26, 2020


(ECF No. 43.)

In the instant case, Plaintiff David Kent Greeley ("Plaintiff"), and the proposed Class, sue Defendant Avis Budget Group, Inc., ("Defendant") over the gathering and retention of Plaintiff's private cellphone information by Defendant's rental vehicle. (ECF No. 38.) Defendant has filed a motion to have Plaintiff's claims heard in arbitration. (ECF No. 43.) Defendant's motion raises four issues bearing on the arbitrability of Plaintiff's claims: (1) was the Rental Jacket, (ECF No. 43-3, Ex. 2), properly incorporated into the Rental Agreement, (ECF No. 43-3, Ex. 1); (2) does the Rental Agreement preclude Plaintiff from seeking public injunctive relief in any forum such that

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it would be void against California public policy; (3) is the contract unconscionable for limiting Plaintiff's access to Court pursuant to the California Rental Passenger Vehicle Transactions Law; and, lastly, (4) does the Rental Agreement exempt Plaintiff's claims from arbitration as "personal injury" claims.

The Court finds that the Plaintiff agreed to enter a contract which incorporates the Rental Jacket, permits claims for public injunctive relief in arbitration, and is not unconscionable. However, the Court concludes that the Rental Agreement exempts Plaintiff's claims from arbitration as claims for "personal injury." Consequently, the Court DENIES Defendant's motion and will not compel arbitration.

I. Factual Background.

A. The Parties & Claims.

Plaintiff brings this proposed class action against Defendant, a car rental company, for failing to "promulgate or maintain adequate policies and procedures to safeguard" the private data of consumers who pair their mobile devices with Defendant's rental vehicles and their "Infotainment" systems.1 (ECF No. 38 at ¶ 1.) Plaintiff initially filed this matter in the Superior Court of California, County of San Diego. (ECF No. 1-3.) Defendant then filed a notice of removal on March 4, 2019. (ECF No. 1-2.) Plaintiff has since amended the complaint three times, filing the Third Amended Complaint ("TAC") on September 17, 2019. (ECF No. 38.)

In the TAC, Plaintiff raises three distinct causes of action. In the first cause of action, Plaintiff alleges that "Defendant has committed a serious invasion of the Class members' privacy interests," which are protected under Article I, section 1, of the

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California Constitution, by gathering Class members' confidential information and failing to delete it after a rental vehicle is returned. (Id. at ¶¶ 64-66.) In the second cause of action, Plaintiff alleges that Defendant used "electronic surveillance technology" (i.e., the vehicles' "GPS technology and/or automotive infotainment systems") to obtain Class members' private data in violation of California's Rental Passenger Vehicle Transactions Law, Cal. Civ. Code § 1939.01 et seq. (ECF No. 38 at ¶¶ 1, 73-80.) Lastly, with respect to the third cause of action, Plaintiff alleges that that Defendant violates California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq., ("UCL") by committing unfair business acts, including operating a rental car company without "responsible policies and procedures" and "engaging in conduct that is immoral, unethical, oppressive, unscrupulous, or substantially injurious to Plaintiff and the members of the Class." (ECF No. 38 at ¶¶ 83-98.)

B. The Rental Car Process and Arbitration Agreement.

Plaintiff is a customer of Defendant's subsidiaries. During the applicable period, Plaintiff first rented from Avis Rent A Car System, LLC ("ARACS"), one of Defendant's subsidiaries, on January 23-26, 2016 in Burbank, California. (ECF No. 43-3 at ¶¶ 10-12.) Plaintiff then initially rented from Budget Rent A Car System, LLC ("BRACS"), another of Defendant's subsidiaries, on March 26-27, 2018 in Burbank, California. (ECF No. 43-3 at ¶¶ 15-16.) At both initial rentals, and during subsequent rentals from the two subsidiaries, Plaintiff signed Defendant's Rental Agreements and obtained the accompanying Rental Jackets.2

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During a car rental process, Avis requires customers to "review and sign a rental agreement assenting to certain terms and conditions" of the rental "before permitting that customer to depart with the car." (Id. at ¶ 6.) Above the signature line, the Rental Agreement provides: "I agree the charges listed above are estimates and that I have reviewed&agreed [sic] to all notices&terms [sic] here and in the rental jacket." (ECF No. 43-3, Ex. 1.) The Rental Jacket is a separate, one-page document which lists "all of the rental terms and conditions" in thirty-two (32) paragraphs in small font on the front and back. (See ECF No. 43-3 at ¶ 8; ECF No. 43-3, Ex. 2.)

Among the paragraphs of the Rental Jacket can be found the Arbitration Provision. (ECF No. 43-3, Ex. 1 at ¶ 29). In relevant part, the provision states:

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 Avis arising out of, relating to or in connection with your rental of a vehicle from Avis and these Rental Terms and Conditions shall be exclusively settled through binding arbitration through the American Arbitration Association ("AM") pursuant to the AM'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 AVIS AGREE THAT ANY SUCH ARBITRATION SHALL BE CONDUCTED ON AN INDIVIDUAL BASIS AND NOT IN A CLASS, CONSOLIDATED OR REPRESENTATIVE ACTION.

(Id.) (emphasis in original.) In the very next sentence, the Arbitration Provision includes a severance clause: "[n]otwithstanding any provision in these terms to the contrary, if the class-action waiver in the prior sentence is deemed invalid or unenforceable, however, neither you nor we are entitled to arbitration." (Id.) The Arbitration Provision also includes an express caveat exempting certain claims from arbitration: "Disputes and claims that are within the scope of a small claims court's authority, as well as disputes and claims regarding personal injury and/or damage to or loss of a vehicle related to your Avis rental, are exempt from the foregoing dispute resolution provision." (Id.)

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C. Procedural Background.

On October 17, 2019, Defendant filed a motion to compel arbitration and to dismiss, or in the alternative, stay the proceedings. (ECF No. 43-1.) On November 21, 2019, Plaintiff filed a response. (ECF No. 47.) On December 20, 2019, Defendant filed a reply. (ECF No. 48.)

On January 10, 2020, the Court heard Defendant's motion. (ECF No. 50.) On January 22, 2020, Defendant filed a supplemental brief. (ECF No. 51.) On January 23, 2020, Plaintiff then filed an opposition to the supplemental brief. (ECF No. 52.) The Court now addresses the arguments raised by the Parties.

II. Legal Standard for Motion to Compel Arbitration.

The Federal Arbitration Act ("FAA") governs the enforcement of arbitration agreements involving interstate commerce. See 9 U.S.C. § 2. Because the Rental Agreement is "a contract evidencing a transaction involving commerce," it is subject to the FAA. Id. Pursuant to § 2 of the FAA, an arbitration agreement is "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." Id. The FAA permits "[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration [to] petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in [the] agreement." Id. at § 4.

By its terms, the Act "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985). The Court's role under the Act is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. See 9 U.S.C. § 4; Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719-20 (9th Cir. 1999). If the response is affirmative on both counts, then the Act requires the Court to enforce the arbitration

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agreement in accordance with its terms. Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000).

While generally applicable defenses to contract, such as fraud, duress, or unconscionability, may invalidate arbitration agreements, the FAA preempts state law defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). There is generally a strong policy favoring arbitration, which requires any doubts to be resolved in favor of the party moving to compel arbitration. Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). However, where a party challenges the existence of an arbitration agreement, "the presumption in favor of arbitrability does not apply." Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733, 742 (9th Cir. 2014).

III. The Parties Entered in a Valid, Binding Agreement to Arbitrate.

The Court first addresses the three arguments bearing upon the existence of a valid contract: (A) whether the Rental Jacket was incorporated by reference, (B) whether the Arbitration Provision violates...

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