Zipcar Late Fee Class Action Lawsuit Moves Forward

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A Zipcar late fee class action lawsuit will continue after a California federal judge said that he will not grant Zipcar’s request to dismiss the class action because the company needs to demonstrate that the charges on late vehicle returns are justified.

Plaintiff Gabriela Bayol’s allegations that the late fees charged by Zipcar, which range from $50 per hour to $150 per hour, were sufficiently pled to qualify for illegal liquidated damages according to California law, which “places significant restrictions on a party’s ability to use a consumer contract to set what damages it will be entitled to in the event of a breach,” U.S. District Judge Thelton Henderson said about the Zipcar class action lawsuit.

“‘California courts have defined [liquidated damages] as ‘an amount of compensation to be paid in the event of a breach of contract, the sums of which is fixed and certain by agreement,'” Judge Henderson explained about a decision by the ninth circuit court of appeals.

In addition, Bayol’s claims in her Zipcar late fee class action lawsuit under California’s Consumer Legal Remedies Act and the Unfair Competition Law are also plausible “because Zipcar imposes fees on customers who return cars late even when there are no follow-on reservations affected, it is plausible that consumers are substantially injured by these fees, that such injury outweighs the benefits of the fees, and that such fees cannot be easily avoided,” such as if a Zipcar customer gets delayed by traffic or some other unforeseeable event.

“Such questions are better resolved after additional factual development,” the California federal judge added.

The Zipcar late fee class action lawsuit was filed in May 2014, in which Bayol alleged that Zipcar charges “unconscionable” late fees.

The California woman claimed in her Zipcar class action lawsuit that Zipcar customers could be charged $50 if they are just one minute late, and the late fees accrued could reach $150 for a late return. In addition, these late fees are non-negotiable, she added.

Bayol wants to represent a class of California customers who are Zipcar customers and have been subject to late fees.

In September, Judge Henderson rejected Bayol’s attempt to transfer the class action lawsuit to a Massachusetts federal court, where a similar lawsuit against Zipcar had been brought, only to be overtures by the ninth circuit.

Judge Henderson said that if the Zipcar late fee class action lawsuit was moved to that court, Bayol and other class members would not be able to seek protection under California’s laws, “which protects consumers against liquid damages clauses.”

Zipcar had argued in its motion to dismiss the late fee class action lawsuit on the grounds that the late fees are not liquidated damages because they are different depending on how late the vehicle is returned. In addition, the car rental company said that the class action lawsuit was in need of factual evidence to support Bayol’s claims.

However, Judge Henderson rejected these arguments, saying that the “fees do not need to be applied in the exact same amount in order to be liquidated damages.” In addition, the California federal judge said that allegations are plausible and are not in need of addition evidence.

Bayol is represented by Scott A. Bursor, L. Timothy Fisher, Annick M. Persinger and Yeremey Krivoshey of Bursor & Fisher PA.

Zipcar is represented by Matthew David Caplan, William P. Donovan Jr. and Joseph Bernard Woodring of Cooley LLP.

The Zipcar Late Fee Class Action Lawsuit is Bayol v. Zipcar Inc., Case No. 3:14-cv-02483, in the U.S. District Court for the Northern District of California.