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Michael L. Weiner (Pro hac vice) 1 SKADDEN ARPS SLATE MEAGHER & FLOM LLP 2 Four Times Square New York, New York 10036-6522 3 Telephone: (212) 735-3000 4 Douglas B. Adler (Cal. Bar No. 130749) SKADDEN ARPS SLATE MEAGHER & 5 FLOM LLP 300 South Grand Avenue, Suite 3400 6 Los Angeles, California 90071-3144 Telephone: (213) 687-5000 7 Sara L. Bensley (Pro hac vice) 8 SKADDEN ARPS SLATE MEAGHER & FLOM LLP 9 1440 New York Avenue, N.W. Washington, D.C. 20005-2111 10 Telephone: (202) 371-7000 11 Attorneys for Defendant AVIS BUDGET GROUP, INC. 12 [Additional Counsel Listed on Signature Page] 13 UNITED STATES DISTRICT COURT 14 SOUTHERN DISTRICT OF CALIFORNIA 15 MICHAEL SHAMES; GARY 16 GRAMKOW, on behalf of themselves and on behalf of all persons similarly situated, 17 Case No. 07 CV 2174 H BLM Plaintiffs, 18 [Class Action] v. 19 THE HERTZ CORPORATION, a 20 Delaware corporation; DOLLAR THRIFTY AUTOMOTIVE GROUP, INC., 21 a Delaware corporation; AVIS BUDGET REPLY MEMORANDUM IN SUPPORT GROUP, INC., a Delaware corporation; OF THE RENTAL CAR DEFENDANTS' 22 VANGUARD CAR RENTAL USA, INC., MOTION TO DISMISS THE FIRST an Oklahoma corporation; ENTERPRISE AMENDED COMPLAINT 23 RENT-A-CAR COMPANY, a Missouri corporation; FOX RENT A CAR, INC., a Date: July 14, 2008 24 California corporation; COAST LEASING Time: 10:30 a.m. CORP., a Texas corporation; and THE Place: Courtroom 13 25 CALIFORNIA TRAVEL AND TOURISM Honorable Marilyn L. Huff COMMISSION 26 Defendants. 27 28

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1 2 I. 3 II. 4 5 6 7 8 9 III. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. B. 3. 4. C.

TABLE OF CONTENTS INTRODUCTION ......................................................................................................... 1 PLAINTIFFS FAIL TO BASE THEIR SECTION 1 CLAIM ON A PLAUSIBLE AGREEMENT ............................................................................................................... 2 A. B. Plaintiffs Fail To Plead Sufficient Factual Allegations To Make Their Claimed Conspiracies Plausible........................................................................... 2 Plaintiffs Offer Nothing New With Respect To The Alleged Agreement To Unbundle And To State Separately The Airport Concession Fee. ........................ 4 Plaintf Ca O A Agreement To Pass-On The Tourism Assessment is lm f n f' i Is Not Plausible. .................................................................................................. 6

T EC U TS O L D S S P A N IF ' L I B O G TU D R H O R H U D IMIS L I TF S C A MS R U H N E CALIFORNIA LAW. ..................................................................................................... 7 A. Plaintiffs Fail To State A Claim Under Either The UCL Or The FAL.................. 7 1. 2. Plaintiffs Cannot Dispute That The Government Code Expressly I m n e T e et C r e nat Al e C nut m ui s h R n l a D f dn ' lgd odc ...................... 7 z a e s e . Plaintiffs Do Not Have Standing To Assert A UCL Claim Against Rental Car Defendants From Which They Did Not Rent.......................... 8 Plaintiffs Do Not And Cannot Allege Facts Sufficient To Show That Defendants Acted Unlawfully Or Unfairly............................................... 8 Plaintiffs Do Not Allege Facts Sufficient To Show That The Rental Car Defendants Engaged In Any Fraudulent Business Practice. ............... 9

Plaintiffs Fail To State A Claim Under The CLRA.............................................. 10

CONCLUSION .............................................................................................................. 10

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TABLE OF AUTHORITIES CASES

3 Bell Atl. Corp. v. Twombly, __ U.S. __, 127 S. Ct. 1955 (2007).............................................. passim 4 Belton v. Comcast Cable Holdings, LLC, 151 Cal. App. 4th 1224 (2007) .......................................9 5 Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d 939 (S.D. Cal. 2007) .......................................... 10 6 Cel-Tech Commc' Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163 (1999) .....................................7 ns, 7 City of Moundridge v. Exxon Mobil Corp., __ F. Supp. 2d __, Civil Action No. 04-940, 2008 WL 1735856 (D.D.C. Apr. 16, 2008) ..........................................................................5 8 Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir. 1994) ......................................................5 9 Decker v. Massey-Ferguson, Ltd., 681 F.2d 111 (2d Cir. 1982) .......................................................6 10 In re Citric Acid Litig., 191 F.3d 1090 (9th Cir. 1999).....................................................................5 11 In re Graphics Processing Units Antitrust Litig., 540 F. Supp. 2d 1085 (N.D. Cal. 2007) ...............4 12 In re Late Fee and Over-Limit Fee Litig., 528 F. Supp. 2d 953 (N.D. Cal. 2007) .................... 3, 4, 5 13 In re Se. Milk Antitrust Litig., __ F. Supp. 2d __, MDL No. 1899, 2008 WL 2117159 (E.D. 14 Tenn. May 20, 2008) ............................................................................................................4 15 Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) ......................................................... 1, 4 16 Laster v. T-Mobile USA, Inc., 407 F. Supp. 2d 1181 (S.D. Cal. 2005), a ', 252 Fed. Appx. fd f 777 (9th Cir. 2007), cert. denied, 128 S. Ct. 2500 (2008) ............................................... 9, 10 17 Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496 (2003) .......................................................9 18 Le . m N t IsC . e vA . a ln. o 260 F.3d 997 (9th Cir. 2001) ..................................................................8 ' , 19 Medina v. Safe-Guard Prods. It,n. n l c ___ Cal. App. 4th ___, 2008 Cal. App. LEXIS 933 'I , 20 (Cal. Ct. App. June 19, 2008) ......................................................................................... 9, 10 21 O Bi vC mssa u . Mfg., Inc., 161 Cal. App. 4th 388 (2008) .......................................... 10 'r n . a i c A t e a o 22 Shames v. Hertz Corp., No. 07-CV-2174 (S.D. Cal. Apr. 8, 2008) ......................................... passim 23 Sprewell v. Golden State Warriors, 266 F.3d 979 (9th Cir. 2001) ...................................................5 24 Van Buskirk v. Cable News Network, Inc., 284 F.3d 977 (9th Cir. 2002) ........................................7 25 STATUTES

26 Cal. Bus. & Prof. Code § 17203 (West Supp. 2008) ........................................................................8 27 Cal. Bus. & Prof. Code § 17204 (West Supp. 2008) .................................................................... 8, 9 28
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Cal. Civil Code § 1936.01 (West Supp. 2008) ........................................................................... 9, 10 C l o'C d § 39. (West Supp. 2008) .......................................................................... 3, 7 a G v oe 195 5 . t 6 C l o'C d § 39. (West 2005)........................................................................................7 a G v oe 195 0 . t 9 OTHER 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1358 (3d ed. 2004) ....................................................................................................................................6

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I.

INTRODUCTION

Try as they might, Plaintiffs cannot avoid t S pe e ors h ur C ut recent decision in Bell e m '

3 Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007). Twombly requires dismissal of the Amended 4 Complaint unless the context of the alleged conduct plausibly suggests a conspiracy. Shames v. 5 Hertz Corp., No. 07-CV-2174, slip op. at 8-9 (S.D. Cal. Apr. 8, 2008) (" 8th Order" (See Apr. ). 6 also Me . f . A iS p.f et C r e ' t Dismiss the First Am. Compl. at 1-3, 6m o P & .n upo R n l a D f Mo to a s . 7 13 (" pn g r ).) In other words,[ lgt n o f tt tolj ts ai sget O ei B. n " " ]eaos fa sh cu u a esy ugs al i c a d s l 8 rational, legal business behavior by the defendants as they could suggest an illegal conspiracy are 9 insufficient to plead a violation of the antitrusl s Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, t w. a " 10 1049 (9th Cir. 2008) (citing Twombly, 127 S. Ct. at 1964-66 & n.5). Here, Plaintiffs allege that the 11 Rental Car Defendants lobbied for AB 2592, and that the Rental Car Defendants then acted exactly 12 as the new legislation allows. Because these allegations (even when read in the light most 13 favorable to Plaintiffs) are just as suggestive of rational business behavior as they are of any 14 conspiracy, Twombly dooms their Amended Complaint. See id. 15 Plaintiffs claim that they have satisfied Twombly because they a ahd ei ne t t t ce "v ec"o h t d e

16 Amended Complaint. But the question is: What does that evidence plausibly suggest? Under 17 Twombly, a claim based on alleged parallel conduct is not plausible where " complaint itself the 18 g e r sn t blv t th [e nat w u sehibsi e s " engaging in the i se oso eeeh t df dn ] ol e t r etn r t in v a i a e e s d e te s 19 parallel conduct. Twombly, 127 S. Ct. at 1972-73. P i is"v ec" ln f 'ei ne here simply confirms the a tf d 20 implausibility of their own theory: It confirms why the Rental Car Defendants ­ each acting in its 21 unilateral best interest ­ would want to pass through to consumers two fees that legislation 22 specifically authorized them to pass through. Plaintiffs still have pleaded no more than parallel 23 conduct and an opportunity to conspire, which the Supreme Court instructs is insufficient to state a 24 Section 1 claim. Twombly, 127 S. Ct. at 1971 & n.12. 25 Plaintiffs offer no factual allegations of an alleged agreement either to unbundle and pass

26 through airport concession fees or to pass through the tourism assessment. As to the airport 27 concession fee, the Amended Complaint does not contain a single new factual allegation. Given 28
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1 t s ors e r i t n hth original complaint failed to state a claim, (Apr. 8th Order at h C ut dt mn i t t i ' e ao a e 2 8:16­ 9:9), Pa tf arguments as to the airport concession fee amount to nothing more than a ln f ' i is 3 baseless request that the Court reconsider its previous Order. P i isad i aaeaos to ln f 'di nllgt n as a tf t o l i 4 the tourism assessment do not render plausible the existence of a joint agreement to pass on the 5 assessment: Plaintiffs allege that the Rental Car Defendants lobbied for AB 2592, which permits 6 them to pass on any tourism assessment to consumers. Their individual decisions to do so are 7 therefore consistent with rational business strategy. 8 Plaintiffs already have received hundreds of pages of documents from the Business,

9 Transportation and Housing Agency and, as a consequence, have more information at the pleading 10 stage than Twombly contemplates. Plaintiffs are not entitled to more discovery in order to advance 11 their conspiracy theory, because this would flip Twombly on its head: They are required to plead a 12 plausible conspiracy before being entitled to discovery. Thus, their inability to plead a plausible 13 conspiracy, even after receiving documents from the Business, Transportation and Housing 14 Agency, just further highlights why this action should be dismissed with prejudice. 15 Plaintiffs' failure to state any antitrust claim requires dismissal of their state law claims

16 since they are based on the same alleged conduct. Pa tf prot s tl c i s l f l lnis upr d tea lm a o a i f' e a w a s i 17 because of a grant of immunity provided under California law, because Plaintiffs lack standing to 18 pursue claims against all the Rental Car Defendants, and because Plaintiffs fail to allege either any 19 actionable representation or any reliance upon such a representation. 20 21 22 23 A. II. PLAINTIFFS FAIL TO BASE THEIR SECTION 1 CLAIM ON A PLAUSIBLE AGREEMENT

Plaintiffs Fail To Plead Sufficient Factual Allegations To Make Their Claimed Conspiracies Plausible.

Plausibility is the touchstone of the Twombly standard: Thr ia ne at p ai e s "ed th l d g e e e n

24 stage for allegations plausibly suggesting (not merely consistent with) agreement."Twombly, 127 25 S. Ct. at 1966. Cosi c c i s must be placed in a context that raises a suggestion of a np ay lm " r a 26 peei ar m n nt e lprllodct tolj ts e b i eedn at n r d g ge et o m r y a l cnuth cu u a w l en pnetco. c n e , e ae a d s l d i "Id. 27 Indeed, in Twombly, the Supreme Court affirmed t d tccut dismissal where " e h ir tors e si ' t h 28
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1 complaint itself gives reasons to believe"hth df dn w u hv eggd n h aee t t e nat ol ae nae it lgd a e e s d e l 2 parallel conduct without any conspiracy. Id. at 1972-73. 3 Plaintiffs do not and cannot dispute that there is a non-conspiratorial explanation for their

4 Section 1 allegations: The Rental Car Defendants engaged in the challenged pricing behaviors 5 permitted by new legislation at the exact time that the new legislation went into effect. See Cal. 6 G vt oe 195 5f(West Supp. 2008). (See also First Am. Compl. for Inj., Money o'C d § 39. ( 6 ) 7 Damages & Declaratory Relief at ¶¶ 5, 43 ( m C m l) Plaintiffs even allege that the Rental " . o p" A . .) 8 Car Defendants lobbied for the right to separately state and pass on the charges at issue provided 9 by the legislation. (Am. Compl. ¶¶ 36-37; Req. for Judicial N ten p. D f Mo. to oi iO pt e ' t c o s 10 Dismiss First Am. Compl. (June 23, 2008) (Docket No. 99-2) at E . . Ide, lniscusl xA) nedPa tf one i f' 11 opposed this legislation, stating that it (and not a separate, extra-legislative agreement among rental 12 cr o pn sw u cueh " dsy i pi h e t t ln f nwaee a ocr d a cm ai ) ol as t i ut -wd r e i "h Pa tf o lg hs cur . e d en r e c k a i is l e 13 (Req. for Judicial Notice in Support of D f Mo t Ds i ( n2,08 ( okt o3) e ' t o i s J .520)D ceN .6 at s . m sa 14 Ex. A.)1 15 Plaintiffs attempt to distinguish In re Late Fee and Over-Limit Fee Litigation, 528 F. Supp.

16 2d 953 (N.D. Cal. 2007), on the grounds that the alleged conduct there was not completely parallel 17 ad hths p i isae t p v e e i o t " hnw e , r y hmt a n t t e ln f f l o r i dtl n h ` e, hr o b w o h l a o a tf id o d as e w e e leged 18 ar m n w sece. (l O pn o h R n l a D f Mo. Ds i t Fr Am. ge et a r hd " Ps p' t t et C r e ' t o i s h it e a ' ' e a s t m s e s 19 Compl. at 1:19­: ( p'" at 17:26-27 (quoting Late Fee, 528 F. Supp. 2d at 962).) Yet 2 " pn) 3 O 20 Plaintiffs fail to address Late Fee'controlling logic: A change in regulations provided a nons 21 conspiratorial explanation for the alleged parallel conduct. See Late Fee, 528 F. Supp. 2d at 963 22 n.8, 965. Here, a change in law ­ which is evident on the face of the Amended Complaint ­ 23 provides the same non-conspiratorial explanation. 24 25 26 27 28
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See A r8 O drt 0 2 t i j iante f rf sr em t se e . p.t re a1: ( k g u c loi o Poe o Fl e 'lt ) h 1 an di c s l h tr 3

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1

Reverting to the old saw that they a " i oth bnf o d cvr," Plaintiffs ignore r wt ut ee t f i oe 2 e h e i s y

2 that their failure to plead a cause of action defeats any right to discovery. Twombly, 127 S. Ct. at 3 1967; see also Kendall, 513 F.3d at 1047 ( D]iscovery in antitrust cases frequently causes " [ 4 substantial expenditures and gives the plaintiff the opportunity to extort large settlements even 5 w e h de nt ae uh f cs. ; see also In re Se. Milk Antitrust Litig., __ F. Supp. 2d __, hr e os o hv m c o a ae ) e " 6 MDL No. 1899, 2008 WL 2117159, at *5 (E.D. Tenn. May 20, 2008) (same). Because Plaintiffs 7 have had two bites at this apple and still fail to state a claim, their Amended Complaint should be 8 dismissed with prejudice. 9 10 11 B. Plaintiffs Offer Nothing New With Respect To The Alleged Agreement To Unbundle And To State Separately The Airport Concession Fee.

Plaintiffs added no new material allegations in the Amended Complaint regarding the

12 airport concession fee. By devoting only one paragraph of their Opoi ns psi 'six-page Fc a t o "at l u 13 B cgon"o fee, Plaintiffs acknowledge that they have not given this Court any reason to akrud tthis 14 cag i pi rlg ( p' at 6-11.) Plaintiffs' hnet r run. O pn s o i allegation remains that the rental rates at 15 California airports rose in January 2007, while they declined on average in the United States. 16 (Compare Compl. ¶ 36, with Am. Compl. ¶ 43.) Rather than pleading any additional material facts, 17 Plaintiffs added only a pricing chart from USA Today that adds nothing new to the allegations that 18 this Court already found to be deficient. (See Apr. 8th Order at 8-9.) Plaintiffs' allegations as to 19 the airport concession fee therefore continue to fail to state a claim. 20 Plaintiffs rely heavily on In re Graphics Processing Units Antitrust Litigation, 540 F. Supp.

21 2d 1085 (N.D. Cal. 2007), for the proposition that "br n pricing behavior establishes a priceae at r " 22 fixing conspiracy. However, Graphics Processing Units did not involve any change in the law, as 23 occurred here (or change in regulations, as in Late Fee). As the Northern District found in Late 24 Fee, such a change provides a non-conspiratorial explanation for the alleged pricing changes that 25 26 O pn t : -15 & n.13, 13:22; see also O pn o tb C T t Ds i Fr A . p' a5 3 1 p' t Mo y T C o i s it m . m s s C m l Jn 2,08 ( okt o9)t 0 of i t "ru ett t lnisi b i t o p ( e 320)D ceN .9 a2 (f r g h a m n h P i f 'n it o .u en e g " a a tf a ly 27 plead a conspiracy as to the airport concession fee demonstrates the existence of a conspiracy). 28
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1 ngt ay lmo "br ne ea s n c i fae ac. e a r "Plaintiffs' concession that the alleged parallel pricing behavior 2 is " coincident with t e et e a " AB 2592, ( p' a1:5; Am. Compl. ¶ 43:14-15), h f cv dt of e f i e O pn t 1 3 therefore renders Graphics Processing Units inapplicable. 3 4 Plaintiffs' allegations of an " opportunity to conspire," p' at 16:24), also are (O pn

5 insufficient. See Twombly, 127 S. Ct. at 1971 & n.12; In re Late Fee, 528 F. Supp. 2d at 963-64; 6 see also In re Citric Acid Litig., 191 F.3d 1090, 1098 (9th Cir. 1999) (holding that evidence of 7 participation in trade association is insufficient evidence of conspiracy at summary judgment stage). 8 Similarly, Plaintiffs' recitation of other "l " p s factors repeats arguments that this Court rejected in u 9 dismissing their original complaint. ( p' a16:18­ O pn t 17:11.) Pa tf sget n a r i ] ln f 'ugso of " g [ i is i id 10 refus[al] to make any sales by lowering prices by even de minimis amounts," O pn t 6 ( p' a1:20-21 11 (internal quotation marks and citation omitted)), is belied by their concession that there is and has 12 always been ongoing competition on prices. (Am. Compl. ¶ 43.) And Plaintiffs's ro of as t n ei 13 contemporaneous action is negated by their concession that the alleged parallel pricing behavior 14 was coincident with a change in the law that permits such behavior. (Id. ¶¶ 5, 43.) 15 Plaintiffs' argument as to the airport concession fee therefore reduces to the following: The

16 Rental Car Defendants met and discussed the tourism assessment. Therefore, (Plaintiffs speculate) 17 the Rental Car Defendants also must have talked about the airport concession fee, and they also 18 must have reached an agreement about the airport concession fee because they unbundled and 19 passed the fees through when the new legislation went into effect. It is unreasonable to infer from 20 these allegations the existence of a price-fixing conspiracy. See Sprewell v. Golden State Warriers, 21 266 F.3d 979, 988 (9th Cir. 2001) ( o it cuteu e t acp a t e lgt n t tr " rsh orr id o cetsr aeaosh a N e qr u l i a e 22 m rlcnl oyuw r n d eut n o f to ur snb i e ne. ; Clegg v. Cult e y oc sr,n a at ddcos fa ,r ne oal n r cs ) e u r e i c a e fe " 23 Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994) ( Th cut is not required to accept " ]e or [ 24 legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be 25 26 City of Moundridge v. Exxon Mobil Corp., __ F. Supp. 2d __, Civil Action No. 04-940, 2008 WL 1735856 (D.D.C. Apr. 16, 2008), is distinguishable for the same reason: There was no 27 change in law coincident with the alleged change in pricing behavior. 28
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1 drawn from the facts alleged." Gvn lniscm leaueo o t t ic i a t t ) i Pa tf o p tf l t ble h r lm so h . e i f' e ir sr e a e 2 airport concession fees, it must be dismissed again. See 5C Charles Alan Wright & Arthur R. 3 Miller, Federal Practice and Procedure § 1358 (3d ed. 20)" R l1() ) oi a om y e 04 ( u 2b( m t n l a b A e 6 o s 4 used to challenge the sufficiency of part of a pleading, such as a single count or claim for r i. ; ee" lf) 5 Decker v. Massey-Ferguson, Ltd., 681 F.2d 111, 115 (2d Cir. 1982) (dismissing portions of a single 6 count). 7 8 9 C. Plaintiffs' l m O A Agreement To Pass-On The Tourism Assessment Is Ca i fn Not Plausible.

It also would be unreasonable, in the context of this case, to infer any agreement among the

10 Rental Car Defendants to pass on the tourism assessment. The context p v e b Pa tf r i d y lnis od i f' 11 allegations includes (i) a change in legislation (Am. Compl. ¶ 2); (ii) that the Rental Car 12 Defendants lobbied for (id. ¶ 36); (iii) which permitted the Rental Car Defendants to pass through 13 the tourism assessment (id. ¶ 2). Having pled this context, Plaintiffs now implore the Court to 14 ignore it and to unreasonably conclude that it is plausible that the alleged parallel pass-throughs 15 resulted from conspiracy, not independent decisions. Yet, Plaintiffs offer no reasonable allegations 16 of an agreement it cn xo t l iav dvl m n cn at Pa tf c is n h ot t fh e s t e ee p et et l ln f ' lm . e e e g li o s r o i is a 17 As explained in t R n l a D f dn ' p h et C r e nat oening memorandum, the factual allegations e a e s

18 that Plaintiffs add in their Amended Complaint pertain to the arrangements by which the California 19 Travel and Tourism Commission (the " TTC" would collect the tourism assessment from the C ) 20 rental car companies, not any agreement to pass on the assessment to renters. (Opening Br. at 21 2:19­ 11:5­ 3:9, 13:9.). Exhibit D to the Amended Complaint, for example, concerns only the 22 arrangements by which the CTTC will collect the assessment from the rental car companies, as 23 indicated by Section 1936.01 of the California Civil Code, and does not support the existence of 24 any agreement to pass through the tourism assessment to customers. This context is apparent when 25 the e-mail exchange is considered in full, including the attachment to the first e-mail (attached 26 27 28
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1 hereto as Exhibit 1).4 2 As with the airport concession fee, Plaintiffs fail to provide this Court with any reason to

3 depart from its previous order as to the tourism assessment. This Court should again find that 4 Plaintiffs have failed to state an antitrust claim, and dismiss that claim with prejudice. 5 6 7 III. T EC U TS O L D S S P A N IF ' L I H O R H U D IMIS L I T F S C A MS BROUGHT UNDER CALIFORNIA LAW.

Since the Amended Complaint fails to state a lmudr afri s na C m et n c i ne C lon 'U fr o pti a i a i io

8 Law (the " C " C nu e L gl e ei A tt " L A )o Fl A vrs g a ( e U L ) osm r eaR m d s c( e C R " r a e de in L w t , e h , s ti h 9 "A " t Court should dismiss each of these purported claims. F L ) his , 10 11 12 13 A. Plaintiffs Fail To State A Claim Under Either The UCL Or The FAL. 1. Plaintiffs Cannot Dispute That The Government Code Expressly I mmu i s h R naC r e n a t Al e C n ut nz T e etl a D f d ns lgd o d c e e ' e .

Plaintiffs concede that if an act is done in compliance with the California Tourism

14 Ma en A t" T " sc cm lnes df s t a "nt sU Lat n pr ato r t g c( MA ) uh o pi c ia e neo n atr t C co" us nt ki C , a e iu / i u 15 Section 13995.90 of the California Government Code. (Op' a1:21.) Yet Plaintiffs do not ­ pn t 8 16 and cannot ­ dispute that the CTMA expressly allows the Rental Car Defendants to separately state 17 and pass on the tourism assessment to customers, as the Amended Complaint alleges they did. See 18 C l o'C d § 39. ( (West Supp. 2008). (Am. Compl. ¶¶ 4, 38.) Having alleged a G v oe 195 5f . t 6 ) 19 compliance with the CTMA, Plaintiffs cannot avoid the Section 13995.90 immunity b " csn y r at g e i 20 the cause of action as one for unfair competit n Cel-Tech Comm. v. L.A. Cellular Tel. Co., 20 i. o" 21 Cal. 4th 163, 182 (1999). 22 23 24 25 26 This Court may take notice of the full contents of the e-mail referenced in the Amended Complaint and attached as an exhibit thereto. See Twombly, 127 S. Ct. at 1973 n.13; Van Buskirk v. 27 Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002). 28
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2.

Plaintiffs Do Not Have Standing To Assert A UCL Claim Against Rental Car Defendants From Which They Did Not Rent.

Plaintiffs incorrectly argue that they somehow have standing to assert a UCL claim against

3 all of the Rental Car Defendants, even though they did not rent from Defendants Hertz, Avis 4 Budget, Dollar Thrifty, Fox or Coast at a California situs airport after January 1, 2007. (O pn p' at 5 20.) Pa tf a u ets i o merit because neither of the named Plaintiffs can establish a ln f 'r m n iwt ut i is g h 6 cgi b " j y ar ualt these Defendants. on al i u " ti t eo z e n r tb b 7 At Pooi n 4a lni m y r g U Lc i olih o se hsuf e f r rpsi 6, p i f a bi a C lm n f e rh "a sf r e t o a tf n a y ed

8 injury in fact and has lost money or property as r u o sc uf r o pti . C l u. a e l fuh na cm et n a B s& st i io " . 9 Prof. Code § 17204 (West Supp. 2008). Plaintiffs' tm t pursue a class action does not change ae p to t 10 the standing requirements. Id. at § 17203 (West Supp. 2008) ( n pr n a pr e " y e o m y us A s u 11 representative claims or relief on behalf of others only if the claimant meets the standing 12 r u e eto Sco 124 ... cod gyPa tfl k t d g o use U L e i m n f et n 70 .. ) A cri l ln f a s ni t pr a C qr s i " n , i is c a n u 13 claim against those Rental Car Defendants from which they did not rent and did not suffer any 14 injury. Se e vA . a ln. o 260 F.3d 997, 1002 (9th Cir. 2001) (finding no standing e Le . m N t IsC . ' , 15 w e p i i "i ntu ay o c f mA T Xad o intuf ayn r deo hr ln f d o by n p ly r e a tf d i o N E n s d o sf r n i uy u t d e j 16 A T X s odc ) N E 'cnut . "5 17 18 19 3. Plaintiffs Do Not And Cannot Allege Facts Sufficient To Show That Defendants Acted Unlawfully Or Unfairly.

Pa tf O psi m ks l rhth ol"n w u o "na " eai aee i ln f ' poi n ae c a t t n ul fl rufr bhv r lgds i is t o e a e y a " i o l

20 D f dn ' lgd i ao o t S e a A tn prot " ier et i s allegedly in e nat aee v li fh hr n cad upr d ms pe n t n" e s l o tn e m e r s ao 21 violation of the CLRA. (O pn t 923-24.)6 Pa tf S em n cc i f lfrh r sn p' a1, lnis hr a A tlm aso t e os i f' a i e a 22 d cs d bv; ln f ' ms peet i " i us aoePa tf " ier n t n claims fail for the reasons discussed below. Thus, s e i is r s ao 23 24 Rather than attempt to support their argument with UCL case law, Plaintiffs rely on i poi atrss ni pi i e. O pn t 0 n pse n t tt d g r c l ( p' a2. a t iu a n n p s ) 25 Plaintiffs do not dispute that they cannot state a UCL claim based on their vague and conclusory allegation (made on infom t n n blft t[h C T f m n s o et r ao ad ee h " ]e T C e oi clc d i i) a t e e l e ece t a on cn i t tt C T bdeb t R n l a D f dn . (Am. Compl. xed h m ut otb e o h T C ugt yh et C r e nat" e s ru d e e a e s 27 ¶ 56.B.; Opening Br. at 15:18­ 16:2.) 28 26
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1 Pa tfd ntn cno s ta lmo "n w u es o "na ns udrh U L See ln f o o ad antt e c i ful fl s rufres ne t C . i is a a a n " i " e 2 Belton v. Comcast Cable Holdings, LLC, 151 Cal. App. 4th 1224, 1240 (2007) (an inability to 3 p a a hr a A tlmpel e ay i i t th cnuts ufr udrh U L. l d S e n cc i r u s n f d g h t odci"na " ne t C ) e m a cd nn a e i e 4 5 6 4. Plaintiffs Do Not Allege Facts Sufficient To Show That The Rental Car Defendants Engaged In Any Fraudulent Business Practice.

Pa tfnwa u t th R n l a D f dn ' eci i s fh tourism assessment ln f o r eh t et C r e nat dsr t n o t i is g a e a e s po e

7 a sm hwms ai bcuehym lt tsm t i o g r o eo ied g eas t i p h "o ea n r overnment authority is e l n e y a xg 8 i ps g h ca e nh cnu e "(O pn t1 m oi t hr o t osm r n e g e . p' a2:18.) However, Plaintiffs cannot dispute that 9 C lon l epes df e " afri a xr l e ns ` i a w sy i [t]ourism commission assessment'as " charge collected by " the 10 a rental company from a renter that has been established by the [CTTC] . . . . C l i C d § " a Cv oe . . 11 1936.01(a)(3) (West Supp. 2008). h R n l a D f dn ' lgd eci i s fh ca e T e et C r e nat aee dsr t n o t hr a e s l po e g 12 at issue are consistent with this statutory definition.7 Indeed, Plaintiffs themselves describe the 13 ca e sh " T Cass et (Am. Compl. ¶ 62), and thus cannot complain about the Rental hr a t C T s s n " g e em , 14 C r e nat aee dsr t n See Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, a D f dn ' lgd ec p os. e s l ii 15 58 20)" 0 (03 ( Likely to deceive' ` implies more than a mere possibility that the advertisement might 16 conceivably be misunderstood by some few consumers viewing it in an unreasonable manner." ) . 17 Moreover, Plaintiffs do not and cannot allege that they were injured in fact, or that they

18 " sm ny r rpr a a eu o,t R n l a D f dn ' lgd eci i s fh l t oe o poe y s r l f h et C r e nat aee dsr t n o t o t st " e a e s l po e 19 tourism assessment­ that but for such descriptions, they would not have entered into the i.e., 20 contracts.8 Cal. Bus. & Prof. Code § 17204; see also Medina v. Safe-Guard Prods. It,n. n l c ___ 'I , 21 F rxm l Pa tf hm scn at i Aa o i p s t " AC MMISO o ea p , ln fS a e'ot cwt l s l t e C O e ii r h m m y as S IN A S S ME T@ 2 %. Sm l l Pa tf rm o 'cn at i E A -SF states SE S N . " i ir , lni G a kw s ot cwt R C 5 ay i f r h T U IM E . " e. Jd i oi iS p. f et C r e .Mo. Ds s 5 o cl c a s t m s 23 " O RS F E2 %. (R qfruiaN ten upo R n l a D f' t o i i (Jan. 25, 2008) (Docket No. 36) at Exs. E & F.) The Court previously took judicial notice of these 24 documents. (Apr. 8th Order at 10:4-15.) 22 P i ism r aeao t thy pi m r frhicretshn hy t r i ln f ' e lgt n h t "a oeo t r a r a t t oh ws a tf e l i a e d e nl a e e e w u hv"snuf i to s bs ehrn r o r i c. O pn t 2 -8.) Instead, ol ae ii fc nt e alh i e iuy rea e ( p' a2: d s ie t i t j ln 7 Plaintiffs must ­ do not ­ lg t th R n l a D f dn ' ec pi o t f atay but aeeh t et C r e nat dsr t n fh e c l l a e a e s io e e ul 26 induced them to pay the higher rates. See Laster v. T-Mobile USA, Inc., 407 F. Supp. 2d 1181, r none of the named Plaintiffs allege that they e 27 1194 (S.D. Cal. 2005) (finding no standing whe " saw, read, or in any way relied on the advertisements; nor do they allege that they entered into the (cont'd) 28 25
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1 Cal. App. 4th ___, 2008 Cal. App. LEXIS 933, at *18-19 (Cal. Ct. App. June 19, 2008) (" h p i T e on t 2 of the Proposition 64 amendment was to impose additional requirements on plaintiffs . . .' a e , nm l y 3 having lost money or property as a result of the act or practice.(emphasis in original)). " 4 5 B. Plaintiffs Fail To State A Claim Under The CLRA.

Because Pa tf prot C R c i ibsd n h same conduct alleged to be ln f ' upr d L A lm s ae o t i is e a e

6 deceptive under the UCL, (O pn t 4 -8), it fails for the same reasons as their UCL claim. First, p' a2: 5 7 the Rental Car Defendants have made no actionable representations as a matter of law, because 8 their aee dsr t n o t " lgd ec pi s fh t l io e ourism commission assessment" r ete cniet i t a nr y os t wt h e il sn h e 9 statutory definition. See Cal. Civ. Code § 1936.01(a)(3). 10 Moreover, even if Plaintiffs had alleged a misrepresentation (which they have not), the

11 CLRA claim fails because Plaintiffs have not alleged reliance on a material misrepresentation. 12 Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d 939, 946 (S.D. Cal. 2007). Plaintiffs do not allege 13 that they would have behaved any differently if the tourism assessment was not described as it was 14 on their rental agreements. And Plaintiffs do not allege or argue that Plaintiff Shames, whom they 15 identify as a professional consumer advocate, relied on the description in his rental agreement or 16 was unaware of the law. Thus, they fail to state a CLRA claim. See O Bi vC mssa u . 'r n . a i c A t e a o 17 Mfg., Inc., 161 Cal. App. 4th 388, 405 (2008) ( o t sm r sn [lni] cannot demonstrate " rh a e e osp i f F e a a tf 18 standing under the FAL and the UCL, he cannot demonstrate he suffered damage as the result of 19 ay i aos fh C R .(emphasis in original)).9 n v li o t L A" o tn e 20 21 IV. CONCLUSION

For the foregoing reasons, and for the reasons discussed in the Rental Car e nat D f dn ' e s

22 opening memorandum, lnisFirst Amended Complaint should be dismissed with prejudice. Pa tf i f' 23 ________________________ 24 (cont'd from previous page) transaction as a result o t s avrsm n " a ', 252 Fed. Appx. 777 (9th Cir. 2007), cert. fh e de i et ), fd o te s f denied, 128 S. Ct. 2500 (2008). 25 Furthermore, Plaintiffs lack standing to pursue a CLRA claim against Defendants Hertz, Avis Budget, Dollar Thrifty, Fox and Coast. See Cattie, 504 F. Supp. 2d at 944 (finding that buyer hr h "ee aeuty lgd .t ts ] ogt e e l h h 27 lacked standing to pursue CLRA claim w e se nvr dqa laee .. a[ e buh bed linens from Wal-Mart Stores, or had any business relationship at all with Wal-Ma Soe" r t s) t r . 28 26
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1 Dated: July 7, 2008 2 3 FOLGER LEVIN & KAHN LLP 4 5 By: 6 7 8 9 10 11 12 13 s/Gregory D. Call Gregory D. Call (Cal. Bar No. 120483) Beatrice B. Nguyen (Cal. Bar No. 172961) Embarcadero Center West 275 Battery Street, 23rd Floor San Francisco, California 94111 Tel.: (415) 986-2800 Jennifer S. Romano (Cal. Bar No. 195953) 1900 Avenue of the Stars 28th Floor Los Angeles, California 90067 Tel.: (310) 556-3700

Respectfully submitted,

SKADDEN ARPS SLATE MEAGHER & FLOM, LLP

By:

s/Michael L. Weiner Michael L. Weiner (Pro hac vice) Email: [email protected] Four Times Square New York, New York 10036 Tel.: (212) 735-2632 Douglas B. Adler (Cal. Bar No. 130749) 300 South Grand Avenue Suite 3400 Los Angeles, California 90071 Tel.: (213) 687-5120 Sara L. Bensley (Pro hac vice) 1440 New York Avenue, N.W. Washington, D.C. 20005-2111 Tel.: (202) 371-7000

14 Counsel for Defendants ENTERPRISE RENT-A-CAR COMPANY 15 and VANGUARD CAR RENTAL USA, INC. 16 17 18 19 20 21 22 23 24 By: s/Jeffrey A. LeVee Jeffrey A. LeVee (Cal. Bar No. 125863) 555 South Flower Street Fiftieth Floor Los Angeles, California 90071 Tel.: (213) 489-3939 JONES DAY

Counsel for Defendant AVIS BUDGET GROUP, INC.

LONG, WILLIAMSON AND DELIS

By:

s/T. Patrick Long T. Patrick Long (Cal. Bar No. 182394) 400 N. Tustin Ave. Suite 370 Santa Ana, California 92705 Tel: (714) 668-1400

Counsel for Defendant 25 DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. 26 27 28

Counsel for Defendant COAST LEASING CORP. dba ADVANTAGE RENT A CAR, erroneously sued and served herein as Coast Leasing Corp., a Texas corporation

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1 O' MELVENY & MYERS LLP 2 3 By: 4 5 6 7 8 9 10 11 12 13 14 15 s/Richard G. Parker Richard G. Parker (Cal. Bar No. 62356) 1625 Eye Street, NW Washington, D.C. 20006 Tel.: (202) 383-5300 Michael F. Tubach (Cal. Bar No. 145955) Thomas P. Brown (Cal. Bar No. 182916) Embarcadero Center West 275 Battery Street Suite 2600 San Francisco, California 94111 Tel.: (415) 984-8700 Gerald A. Stein (Pro hac vice) Times Square Tower Seven Times Square New York, New York 10036 Tel.: (212) 326-2000

WERTZ McDADE WALLACE MOOT & BROWER By: s/John H. Stephens John H. Stephens (Cal. Bar No. 82971) 945 Fourth Avenue San Diego, California 92101 Tel: (619) 233-1888 Counsel for Defendant FOX RENT A CAR D/B/A PAYLESS RENTA-CAR

Counsel for Defendant 16 THE HERTZ CORPORATION 17 18 19 20 21 22 23 24 25 26 27 28
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1 2

ATTESTATION I e b a e t t hv at rao fr n s nt e i i t b a cnom d hr y t s h I ae u oi t n o ay i a r n c e y "ofr e" e tt a h zi g u s dad

i a e" " i it s fe ou et g u s ) h i id . 3 s ntr( / wt n h e l dcm n 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
07cv2174 H BLM

s/Michael L. Weiner Michael L. Weiner (Pro hac vice) Attorney for Defendant Avis Budget Group, Inc. Email: [email protected]

13