NJ Judge Allows Avis Reward Program Fee Class Action Lawsuit to Stand

Earlier this week, a federal court rejected Avis Budget Group Inc.’s motion to dismiss a program fee class action lawsuit alleging that the popular car rental chain placed hidden charges on their travel rewards program.

In their motion to dismiss this class action lawsuit, Avis argued that the lead plaintiff did not have standing to pursue the lawsuit because the credit card on which the bill and fees were allegedly charged were paid for by the plaintiff’s employer.

However, U.S. District Judge Jose L. Linares rejected Avis’ arguments and will let the class action lawsuit stand, stating:

“Plaintiff was led to believe that he would be able to accrue frequent flyer miles for free. Instead, Defendant included a hidden fee in Plaintiff’s total rental cost, charging Plaintiff for his ability to accrue those frequent flyer miles. This is sufficient to show that he has standing to sue for claims arising out of this contractual dispute[.]”

The Avis reward program fee class action lawsuit was filed in federal court back in 2011 by New Jersey resident Edward Schwartz. Schwartz alleged that the hidden surcharge applied by Avis on the Travel Partner’s program violates New Jersey Consumer Fraud Act, should be considered a breach in contract, breach of covenant of good faith and fair dealing, and seeks injunctive relief under New Jersey law and declaratory relief under the Declaratory Judgment Act.

Although Schwartz was not required to prove an economic hardship under NJCFA, Schwartz did demonstrate that he was forced to pay for the Avis’ Travel Partners Program out of pocket.

According to the Avis class action lawsuit: “The $0.75 surcharge, though not a personal car rental cost, is not a valid business travel expense. Thus, assuming that the [fee] is contrary to New Jersey law, [Schwartz’s employer] deserves to be reimbursed for that expense[.]”

This is not the first time Schwartz and his counsel have survived a motion to dismiss this reward program fee class action lawsuit. Back in 2012, Avis argued that Schwartz had not met all the criteria to adequately plead claims under NJCFA, but Avis’ arguments were dismissed.

Whether or not the Avis reward program fee class action lawsuit will receive class certification is still unknown. Last month, Avis raised arguments against class certification because of the remote possibility that consumers may have known about the surcharge and chosen to rent an Avis vehicle regardless.

The court has yet to come to a decision as to the question of class certification for the Avis reward program fee class action lawsuit.

Schwartz is represented by Bruce D. Greenberg, Jeffrey Shooman and Susana Cruz Hodge of Lite DePalma Greenberg LLC, Daniel R. Karon and Laura K. Mummert of Goldman Scarlato Karon & Penny PC and Jay R. Faeges of Miller Goler Faeges Lapine LLP.

The Avis Reward Program Fee Class Action Lawsuit is Schwartz v. Avis Rent A Car System LLC, Case No. 2:11-cv-04052, in the U.S. District Court for the District of New Jersey.