Avis Subsidiary Accused Of Charging Illegal Tax In San Diego

By Joshua Rosenberg

Law360 (January 27, 2020, 8:07 PM EST) -- A putative class action filed in California federal court accuses a subsidiary of Avis and other car rental companies of unlawfully charging customers fees under the guise of collecting money for a tax found illegal by a San Diego judge.

Payless Car Rental Inc. customer Jeffrey Garvin, a New Mexico resident, claims the Avis subsidiary illegally charged him a $3.50 fee each time he rented from its San Diego airport location, according to his Friday complaint. A local judge later deemed the fee unlawful, and Garvin is seeking compensation from the company for himself and others who have paid the fee, the complaint said.

Garvin, "a frequent visitor to San Diego, noticed he was being charged an extra $3.50 fee on his car rentals from the San Diego airport rental center, and after investigation we realized that the fee was improper and illegal," Helen Zeldes, partner at Schonbrun Seplow Harris Hoffman & Zeldes LLP, who is representing Garvin, told Law360. "Mr. Garvin brings this case to stop this practice and to seek a refund on behalf of renters who already paid this fee."

The San Diego Board of Port Commissioners in April 2018 adopted the $3.50 user fee on each car rental transaction that takes place at the city’s airport to finance the construction of a parking garage, the complaint said. The user fee is really an illegal tax because it was not approved by California voters, which is required for any special taxes under the state constitution, Garvin said.

The fee also violates the dormant commerce clause , which prevents states from unduly burdening interstate commerce and grants the federal government jurisdiction over related matters, the complaint said. The special tax is especially egregious, given that Garvin and other renters from out-of-state would be burdened to pay for the construction of a parking garage from which they’d likely derive negligible benefit, Garvin said.

In October, San Diego County Superior Court Judge Katherine Bacal ruled that the special tax was illegal after Enterprise Rent-A-Car Co. of Los Angeles LLC and the Hertz Corp. sued the San Diego Port to challenge it.

But Payless, along with Advantage Rent A Car and Fox Rent A Car Inc., still knowingly applied the tax to Garvin and others, he said in his suit. Payless deceivingly labeled the charge as a port convention garage fee, and did not detail why renters are paying for it, Garvin said.

Garvin could not yet estimate how many others may have been hit with the fee and might be included in the proposed class, he said in his suit.

The car rental companies did not immediately respond to requests for comment.

Garvin is represented by Helen Zeldes, Ben Travis, Paul Hoffman and John Washington of Schonbrun Seplow Harris & Hoffman LLP.

Contact information for the legal representatives for Payless and the other entities could not immediately be determined.

The case is Jeffrey Garvin v. Payless Car Rental Inc. et al, case number 3:20-cv-00172-AJB-WVG, in the U.S. District Court for the Southern District of California.

--Editing by Neil Cohen.