California Court Holds that Class Action Complaint Adequately Alleged Violations of California’s Consumers Legal Remedies Act (CLRA) and Unfair Competition Law (UCL) Based on Truck Rental Company’s Refueling Practices
Plaintiff filed a putative class action against U-Haul for violations of California’s Consumers Legal Remedies Act (CLRA) and Unfair Competition Law (UCL) arising out of U-Haul’s refueling charges and practices. Aron v. U-Haul Co. of California, ___ Cal.App.4th ___, 2006 WL 2808074 (Cal.App. October 3, 2006) [Slip Opn., at 2]. Defense attorneys moved for judgment on the pleadings, and the trial court granted the motion. The Court of Appeal reversed. Id. The facts of the case are simple, and are concisely summarized by the appellate court at page 2 as follows:
U-Haul Company of California and U-Haul International, Inc. (“U-Haul”) rent trucks to customers. Rather than supplying those customers with fully fueled trucks, U-Haul rents its trucks partially fueled, presenting them to each succeeding customer with the fuel remaining when the previous customer returned the vehicle. The level of the fuel gauge is the exclusive means of measurement relied on. If on return, the fuel gauge is lower than at rental, U-Haul charges the customer a $20 fueling fee as well as $2 per gallon for fuel estimated to have been used, but not replaced, by the customer. U-Haul does not reimburse customers for additional fuel if a truck is returned with more fuel than initially provided.
The rental contract sets out these two options explicitly: “I confirm equipment is clean and agree to pay for all fuel used and return the truck with the same fuel gauge reading as indicated on this rental contract and will pay $20 fueling fee plus $2 per gallon for estimated fuel used. U-Haul does not reimburse for excess fuel purchased by the customer.”
Plaintiff rented a truck from U-Haul and returned the truck with more gas than it had when rented it. U-Haul refused to credit or reimburse him for the excess fuel. Plaintiff filed a class action on behalf of customers who “paid a $20 fueling fee; paid for fuel based on the amount of fuel measured by the rented truck’s fuel gauge; or returned the rented truck to U-Haul with more fuel in the tank than at the initiation of the rental.” Aron, at 3.
In considering whether plaintiff has standing, the appellate court accepted the argument “that he suffered economic loss by being required to purchase excess fuel, because there was no accurate measuring device to determine the actual amount required to return the truck at its rental fuel level” and accordingly “the only way to avoid the imposition of U-Haul’s charge was to overfill the fuel tank.” Aron, at 4. The appellate court held that plaintiff had standing to prosecute the UCL and CLRA claims. Id., at 4-5.
The central core of plaintiff’s unfair business practice claim is founded on U-Haul’s failure to provide every customer with a full tank of gas and simply requiring that the tank be returned full under penalty of a service charge and gas fee for failing to do so. By instead requiring customers to use the imprecise fuel gauge, “customers must pay a charge one way or the other” because U-Haul’s practice “force[s] customers to either provide excess fuel in order to avoid fueling fees or be charged such fees, despite the fact that U-Haul incurs no refueling costs.” Id., at 8. The appellate court found that this adequately alleged an unfair business practice claim. Id.
With respect to plaintiff’s fraudulent business practice claim and CLRA claim, plaintiff focused on the alleged fact that U-Haul charged a $20 “fueling fee” and a gas charge even though U-Haul in fact did not replace the fuel. The appellate court agreed that U-Haul’s disclosures were likely to mislead or deceive its customers, thereby supporting plaintiff’s fraudulent business practice and CLRA § 1770(a)(5) claim. Aron, at 9-10.
Plaintiff further alleged that the fuel gauge was an inaccurate measurement device under California law, which requires that measurements be accurate and reliable. Id., at 4-5, 7. The Court of Appeal held that plaintiff’s allegation that the fuel gauge in the rental trucks fail to satisfy the statutory requirements because “it is not capable of measuring in the units required” was sufficient to allege an unlawful act within the meaning of the UCL. Id., at 7-8.
The Court of Appeal affirmed the balance of the judgment. Specifically, the appellate court held that plaintiff’s CLRA § 1770(a)(4) claim failed because that statute, by its terms, is limited to “claims of deceptive representations or designations of geographic origin,” which did not apply to this case. Aron, at 10. The Court further held that plaintiff’s unconscionability claims failed because plaintiff demonstrated neither procedural nor substantive unconscionability. Id., at 11-13.
NOTE: The Court of Appeal rejected U-Haul’s claim that it was protected by the “safe harbor” provision of California Civil Code section 1936(n)(2) because that section applies only to passenger vehicles, not to trucks. Aron, at 5-7.