Lazar v. Hertz Corp.

Decision Date17 February 1999
Docket NumberNos. A080439,A080767,s. A080439
Citation69 Cal.App.4th 1494,82 Cal.Rptr.2d 368
CourtCalifornia Court of Appeals Court of Appeals
Parties, 99 Cal. Daily Op. Serv. 1270, 1999 Daily Journal D.A.R. 1567 Adam LAZAR, Plaintiff and Appellant, v. HERTZ CORPORATION et al., Defendants and Respondents.

Milberg Weiss Bershad Hynes & Lerach LLP, William S. Lerach, Alan M. Mansfield, William S. Dato, Frank J. Janecek, Jr., San Diego, Sheri Pym, Bushnell, Caplan & Fielding LLP, Alan M. Caplan, for appellant.

Downey, Brand, Seymour & Rohwer LLP, Steven P. Saxton, Teresa L. Zuber, Janlynn R. Fleener, Sacramento, Tracy K. Hunckler,for respondents Hertz Corporation and Budget Rent a Car Corporation.

Heller Ehrman, White & McAuliffe, Robert E. Borton, Thomas E. McKeever, San Francisco, for respondents National Car Rental System, Inc. and Alamo Rent-A-Car, Inc.

REARDON, J.

Adam Lazar filed a class action complaint for damages and injunctive relief against four rental car companies alleging that they refused to rent automobiles to persons under age 25 or unreasonably restricted such rentals. After all of the alleged causes of action were adjudicated against Lazar, the trial court entered judgment in favor of Hertz. In these consolidated appeals, Lazar argues, inter alia, that the trial court erred (1) in finding that a refusal to rent to drivers under age 25 is permitted by section 1936 of the Civil Code 1 and (2) by finding the imposition of age-based surcharges on drivers under age 25 was not unreasonably high or unlawfully discriminatory as a matter of law. We affirm the judgment.

I. FACTS

In May 1995, appellant Adam Lazar filed a class action complaint seeking damages and injunctive relief against the Hertz Corporation, Budget Rent a Car Corporation, National Car Rental Systems, Inc. and Alamo Rent-A-Car, Inc. 2 On his own behalf and on behalf of other persons ages 16 through 25, Lazar pled causes of action for age discrimination in violation of the Unruh Civil Rights Act (Unruh Act); unlawful, fraudulent and unfair business practices; and unfair and fraudulent advertising. (See Bus. & Prof.Code, §§ 17200- 17208, 17500-17509; § 51.) He sought damages and an injunction prohibiting the car rental agencies from refusing to rent automobiles to licensed drivers under age 25. In May 1996, Lazar added a cause of action for false and misleading advertising.

In October 1996, the trial court sustained Hertz's demurrer to four of the seven causes of action without leave to amend. It overruled the demurrer on the other three causes of action--allegations of unfair business practices by Budget and Alamo against the general public and against Lazar and those drivers ages 16 to 25 who were charged a surcharge because of their age, as well as a cause of action for false and misleading advertising by all four companies.

In August 1997, Lazar moved for and obtained a dismissal without prejudice of two causes of action, leaving only the allegation of unfair business practices by Budget and Alamo against Lazar and those younger drivers who were charged a surcharge because of their age. The trial court granted the motion for summary adjudication filed by Budget and Alamo on the last cause of action.

II. REFUSAL TO RENT
A. Standard of Review--Demurrer

First, Lazar contends that the trial court erred in finding that Hertz's refusal to rent to drivers under age 25 is permitted by section 1936. This constitutes a challenge to the trial court's decision to sustain Hertz's demurrer to his first three causes of action without leave to amend. The parties disagree about the standard of review to be applied in this matter. In every appeal, the threshold matter to be determined is the proper standard of review--the prism through which we view the issues presented to us. (See Clothesrigger, Inc. v. GTE Corp. (1987) 191 Cal.App.3d 605, 611, 236 Cal.Rptr. 605.)

"A demurrer tests the legal sufficiency of the complaint...." (Hernandez v. City of Pomona (1996) 49 Cal.App.4th 1492, 1497, 57 Cal.Rptr.2d 406; Sargoy v. Resolution Trust Corp. (1992) 8 Cal.App.4th 1039, 1041, 10 Cal.Rptr.2d 889.) On appeal from a dismissal after an order sustaining a demurrer, we review the order de novo, exercising our independent judgment about whether the complaint states a cause of action as a matter of law. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125, 271 Cal.Rptr. 146, 793 P.2d 479, cert. den. 499 U.S. 936, 111 S.Ct. 1388, 113 L.Ed.2d 444; Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 1115, 55 Cal.Rptr.2d 276.) We give the complaint a reasonable interpretation, reading it as a whole and viewing its parts in context. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58; see Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967, 9 Cal.Rptr.2d 92, 831 P.2d 317.) We deem to be true all material facts properly pled. (Serrano v. Priest (1971) 5 Cal.3d 584, 591, 96 Cal.Rptr. 601, 487 P.2d 1241, cert. den. 432 U.S. 907, 97 S.Ct. 2951, 53 L.Ed.2d 1079.) We must also accept as true those facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403, 44 Cal.Rptr.2d 339.) If no liability exists as a matter of law, we must affirm that part of the judgment sustaining the demurrer. (See Baughman v. State of California (1995) 38 Cal.App.4th 182, 187, 45 Cal.Rptr.2d 82.)

While the decision to sustain or overrule a demurrer is a legal ruling subject to de novo review on appeal, the granting of leave to amend involves an exercise of the trial court's discretion. (Hernandez v. City of Pomona, supra, 49 Cal.App.4th at p. 1497, 57 Cal.Rptr.2d 406; see Moore v. Regents of University of California, supra, 51 Cal.3d at p. 125, 271 Cal.Rptr. 146, 793 P.2d 479; Desai v. Farmers Ins. Exchange, supra, 47 Cal.App.4th at p. 1115, 55 Cal.Rptr.2d 276.) When the trial court sustains a demurrer without leave to amend, we must also consider whether the complaint might state a cause of action if a defect could reasonably be cured by amendment. 3 If the defect can be cured, then the judgment of dismissal must be reversed to allow the plaintiff an opportunity to do so. The plaintiff bears the burden of demonstrating a reasonable possibility to cure any defect by amendment. (Hendy v. Losse (1991) 54 Cal.3d 723, 742, 1 Cal.Rptr.2d 543, 819 P.2d 1; Blank v. Kirwan, supra, 39 Cal.3d at p. 318, 216 Cal.Rptr. 718, 703 P.2d 58; Baughman v. State of California, supra, 38 Cal.App.4th at p. 187, 45 Cal.Rptr.2d 82.) A trial court abuses its discretion if it sustains a demurrer without leave to amend when the plaintiff shows a reasonable possibility to cure any defect by amendment. (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at p. 967, 9 Cal.Rptr.2d 92, 831 P.2d 317; see Code Civ. Proc., § 472c.) If the plaintiff cannot show an abuse of discretion, the trial court's order sustaining the demurrer without leave to amend must be affirmed. (Hernandez v. City of Pomona, supra, at p. 1498, 57 Cal.Rptr.2d 406.)

B. Unruh Act

The trial court sustained without leave to amend Hertz's demurrer to Lazar's refusal to rent cause of action alleging a violation of the Unruh Act. (See § 51.) It concluded that section 1936 permitted vehicle rental companies to refuse to rent to drivers under age 25. On appeal, Lazar challenges this finding. We independently construe statutory law, as its interpretation is a question of law on which we are not bound by the trial court's analysis. (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 699, 170 Cal.Rptr. 817, 621 P.2d 856; see Baughman v. State of California, supra, 38 Cal.App.4th at p. 187, 45 Cal.Rptr.2d 82.)

The Unruh Act prohibits arbitrary discrimination by businesses on the basis of specified classifications such as age. (§ 51; see Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1155, 278 Cal.Rptr. 614, 805 P.2d 873.) The Unruh Act must be liberally construed to accomplish this purpose. (Koire v. Metro Car Wash (1985) 40 Cal.3d 24, 28, 219 Cal.Rptr. 133, 707 P.2d 195; Winchell v. English (1976) 62 Cal.App.3d 125, 128, 133 Cal.Rptr. 20.) Despite this liberal construction, the California Supreme Court has determined that certain types of discrimination are reasonable and thus not arbitrary under the Unruh Act. (See Koire v. Metro Car Wash, supra, at p. 30, 219 Cal.Rptr. 133, 707 P.2d 195.) Businesses retain the right under the Unruh Act to establish reasonable regulations that are rationally related to the services performed and facilities provided. (Harris v. Capital Growth Investors XIV, supra, at pp. 1148, 1153, 278 Cal.Rptr. 614, 805 P.2d 873; Marina Point, Ltd. v. Wolfson (1982) 30 Cal.3d 721, 737, 180 Cal.Rptr. 496, 640 P.2d 115, cert. den. 459 U.S. 858, 103 S.Ct. 129, 74 L.Ed.2d 111; In re Cox (1970) 3 Cal.3d 205, 212, 217, 90 Cal.Rptr. 24, 474 P.2d 992; see Roth v. Rhodes (1994) 25 Cal.App.4th 530, 539, 30 Cal.Rptr.2d 706.) For example, a landowner may require prospective tenants to meet certain income criteria as long as the policy is applied alike to all persons. (See, e.g., Harris v. Capital Growth Investors XIV, supra, p. 1155, 278 Cal.Rptr. 614, 805 P.2d 873.) Such business practices are not arbitrary, but constitute prudent business practice. The restriction is thus reasonably related to the operation of that business. (See Wynn v. Monterey Club (1980) 111 Cal.App.3d 789, 797, 168 Cal.Rptr. 878.)

The Unruh Act does not permit courts "to engage in complex economic regulation under the guise of judicial decisionmaking." (Harris v. Capital Growth Investors XIV, supra, 52 Cal.3d at p. 1168, 278 Cal.Rptr. 614, 805 P.2d 873; Wolfe v. State Farm Fire & Casualty Ins. Co. (1996) 46 Cal.App.4th 554, 562-563, 53 Cal.Rptr.2d 878.) Appellate courts lack the power and the duty to determine the wisdom of economic policy. That is a matter for the Legislature alone....

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