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Sigall v. Zipcar, Inc.

United States District Court, S.D. New York

February 24, 2014

MICHAEL SIGALL and JESSICA SIGALL, on behalf of plaintiffs and the class members described herein, Plaintiffs,


J. PAUL OETKEN, District Judge.

Plaintiffs Michael Sigall and Jessica Sigall ("Plaintiffs") bring this putative class action against Zipcar, Inc. and Zipcar New York, Inc. (collectively, "Zipcar") challenging Zipcar's practice of charging customers for vehicular damage without following certain procedures set forth in New York General Business Law ("GBL") § 396-z. Plaintiffs have moved to certify a class pursuant to Federal Rule of Civil Procedure 23, and Zipcar has moved to dismiss for failure to state a claim pursuant to Rule 12(b)(6). For the reasons that follow, Zipcar's motion to dismiss is granted and Plaintiffs' motion for class certification is denied.

I. Background

A. Factual Background

The following facts are taken from the allegations in the Complaint and are assumed true for purposes of the instant motions. (Dkt. No. 1 ("Compl.").)

1. The Parties

Plaintiffs are a father and daughter who reside in New York. Zipcar, Inc. and Zipcar New York, Inc. are Delaware corporations with their principal places of business located in Massachusetts. Zipcar operates the world's largest car sharing service and markets itself as an alternative to "traditional rental car companies." (Compl. at 3 (quoting 2012 SEC Form 10-K ("10-K") at 8).) Rather than hosting vehicles at centralized locations, it "provide[s]... selfserviced vehicles in conveniently located reserved parking spaces" throughout major metropolitan areas and college campuses. ( Id. at 2 (quoting 10-K at 4).) Rental car company Avis-Budget is in the process of acquiring Zipcar.

2. Zipcar Membership

A person becomes a Zipcar member, or "Zipster, " by filling out an application on Zipcar's website. To be eligible, he or she must be of a specified age, hold a valid driver's license for the relevant jurisdiction, have a satisfactory driving record, and accurately and honestly complete the application. "Satisfying the foregoing criteria does not automatically give an applicant the right to become a Zipcar Member, " however, and acceptance is "subject to approval by Zipcar in its sole discretion and... may be denied based upon additional criteria established from time to time by Zipcar and/or its insurance providers." (Compl., Ex. A ("Agreement") § 3.2.)

Once approved, members may reserve Zipcar vehicles, or "Zipcars, " at particular locations by the hour or the day. The rental price includes the costs of gas and insurance. When the member arrives at the vehicle, the Zipcar recognizes the member's Zipcard and unlocks the doors. At the end of the reservation period, the member must return the Zipcar to its designated parking space and use the Zipcard to lock the doors.

Pursuant to the membership Agreement, members must keep a valid credit or debit card on file with Zipcar and "are billed for amounts due via credit or debit card." ( Id. § 4.2.) Members are "responsible for any and all damage that occurs to a Zipcar vehicle while in the Member's possession or control." ( Id. § 5.1.) As long as the member complies with the terms and conditions of the Agreement, liability will generally be limited to a predetermined damage fee, which is calculated based upon the member's driving plan and the type of vehicle used. For an additional charge, eligible members can purchase a damage fee waiver that will reduce or eliminate the damage fee. The Agreement is expressly governed by Massachusetts law, and provides that "[a]ll disputes hereunder shall be resolved solely in the applicable state or federal courts of Massachusetts, " and "the parties hereby consent to the exclusive jurisdiction of such courts... and waive any jurisdictional or venue defenses otherwise available." ( Id. § 9.5.)

3. The Disputed Charge

In October 2012, Zipster Jessica Sigall rented a Zipcar using a credit card issued by Citibank to her father, Michael Sigall. The Zipcar's mirror was damaged by an unknown person, and Zipcar debited Mr. Sigall's credit card for a damage fee of $486.34. Plaintiffs had not agreed to the charge after the damage occurred, and no court had determined that they were liable. Plaintiffs subsequently made a claim with their insurer, which requested documentation regarding the damage from Zipcar. Zipcar did not provide these materials, and the insurer therefore has not ...

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