Free Response in Opposition to Motion - District Court of California - California

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CENTER FOR PUBLIC INTEREST LAW UNIVERSITY OF SAN DIEGO SCHOOL OF LAW ROBERT C. FELLMETH, SBN 49897 [email protected] ED HOWARD, SBN 151936 JULIANNE D'ANGELO FELLMETH, SBN: 109288 5998 Alcala Park San Diego, CA 92110 Telephone: (619) 260-4806 Facsimile: (619) 260-4753 SULLIVAN HILL LEWIN REZ & ENGEL A Professional Law Corporation DONALD G. REZ, SBN 82615 [email protected] 550 West "C" Street, Suite 1500 San Diego, CA 92101 Telephone: (619) 233-4100 Facsimile: (619) 231-4372 Attorneys for Plaintiffs IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA MICHAEL SHAMES; GARY GRAMKOW, on behalf of themselves and on behalf of all persons similarly situated, Plaintiffs, v. THE HERTZ CORPORATION, et al., Defendants. Case No. 07CV2174H(BLM) CLASS ACTION OPPOSITION TO THE RENTAL CAR DEFENDANTS' MOTION TO DISMISS THE FIRST AMENDED COMPLAINT DATE: TIME: JUDGE: CTRM: July 14, 2008 10:30 a.m. Honorable Marilyn L. Huff 13 HULETT HARPER STEWART LLP DENNIS STEWART, SBN: 99152 [email protected] JENNIFER A. KAGAN, SBN: 234554 [email protected] 550 West C Street, Suite 1600 San Diego, CA 92101 Telephone: (619) 338-1133 Facsimile: (619) 338-1139

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TABLE OF CONTENTS INTRODUCTION ...............................................................................................................1 FACTUAL BACKGROUND ..............................................................................................6 A. B. The Tourism Assessment and the Agreement to Pass the Entirety of that Assessment to Renters..............................................................................................6 The Agreement to Raise Base Rates in Conjunction with the Unbundling of the Airport Concession Fee....................................................................................11

ARGUMENT .....................................................................................................................11 A. The Allegations in Plaintiffs' First Amended Complaint Are More Than Sufficient to Meet the Twombly Pleading Standard...............................................11 1. 2. Plaintiffs Have Alleged Substantial Direct Evidence of a Conspiracy with Respect to the Tourism Assessment ...............................13 Clear Evidence of Conspiratorial Behavior Among Defendants, Combined with Specific Allegations Relating to the 9% Charge, Renders a Conspiracy Plausible .................................................................14

The FAC States Claims Under the UCL and CLRA .............................................18 1. 2. 3. 4. The Government Code Provides No Defense for the Price-Fixing Conspiracy Alleged in the FAC .................................................................18 Defendants Violated UCL's Unlawful Prong ............................................19 Plaintiffs Have Standing ............................................................................19 Defendants Violated the UCL by Engaging in a Fraudulent Business Practice........................................................................................20 a. b. Plaintiffs Allege Practices Which Have a Tendency or Likelihood to Mislead ....................................................................20 Plaintiffs Have Alleged Injury and Causation ...............................21

Plaintiffs Have Stated a Claim Under the Unfair Prong of the UCL .........23 Plaintiffs Have Alleged a Claim for Violation of the CLRA.....................24

CONCLUSION ..................................................................................................................25

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TABLE OF AUTHORITIES Page(s) Aron v. U-Haul Co., 143 Cal. App. 4th 796 (2006)...........................................................................................22, 24, 25 Bell Atlantic Corp. v. Twombly, ___U.S. ___, 127 S. Ct. 1955 (2007) ............................................................................... passim Belton v. Comcast Cable Holdings, LLC, 151 Cal. App. 4th 1224 (2007)..................................................................................................... 24 Bristow v. Lycoming Engines, No. Civ. 5-06-1947, 2007 U.S. Dist. LEXIS 31350 (E.D. Cal. Apr. 10, 2007) ..................... 25 Buckland v. Threshold Enters., Ltd., 155 Cal. App. 4th 798 (2007)....................................................................................................... 20 C-O-Two Fire Equip. Co. v. United States, 197 F.2d 489 (9th Cir. 1952)................................................................................................... 16 Californians for Disability Rights v. Mervyn's, LLC, 39 Cal. 4th 223 (2006) ............................................................................................................ 21 Cel-Tech Commc'n, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163 (1999) ......................................................................................................... 19, 23, 24 Chavez v. Whirlpool Corp., 93 Cal. App. 4th 363 (2001) ................................................................................................... 19 City of Moundridge v. Exxon Mobil Corp., Civil Action No. 04-940 (RWR), 2008 U.S. Dist. LEXIS 31236 (D.D.C. Apr. 16, 2008)........................................................................................................... 13, 16 Colgan v. Leatherman Tool Group, Inc., 135 Cal. App. 4th 663 (2006)....................................................................................................... 25 Corrections USA v. Dawe, 504 F. Supp. 2d 924 (E.D. Cal. 2007)............................................................................................. 11 Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163 (2000) ............................................................................................................ 21 EEOC v. Concentra Health Servs., 496 F.3d 773 (7th Cir. 2007) ........................................................................................................... 13 First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253 (1968)...................................................................................................................... 17 ii 07CV2174H(BLM)

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FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992)........................................................................................................................... 4 Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542 (9th Cir. 1989)................................................................................................. 15 Hall v. Time Inc., 158 Cal. App. 4th 847 (2008)................................................................................................. 21, 22 In re Dual-Dec Video Cassette Recorder Antitrust Litig., Nos. MDL-765, CIV 87-987, 1990 U.S. Dist. LEXIS 19207 (D. Ariz. July 26, 1990)............. 12 In re Firearm Cases, 126 Cal. App. 4th 959 (2005)....................................................................................................... 22 In re Graphics Processing Units Antitrust Litig., 540 F. Supp. 2d 1085 (N.D. Cal. 2007) ................................................................................. 13, 15 In re Late Fee & Over-Limit Fee Litig., 528 F. Supp. 2d 953 (N.D. Cal. 2007) .................................................................................... 17 In re Petroleum Prods. Antitrust Litig., 906 F.2d 432 (9th Cir. 1990)................................................................................................... 16 In re Southeastern Milk Antitrust Litig., MDL No. 1899 (E.D. Tenn. May 20, 2008) ................................................................................ 12 In re Static Random Access Memory (SRAM) Antitrust Litig., MDL No. 1819, 2008 U.S. Dist. LEXIS 15826 (N.D. Cal. Feb. 14, 2008)............................ 16 In re Tableware Antitrust Litig., 484 F. Supp. 2d 1059 (N.D. Cal. 1007) ....................................................................................... 17 In re Uranium Indus. Antitrust Litig., 466 F. Supp. 958 (J.P.M.L. 1979) ................................................................................................ 17 Interstate Circuit, Inc. v. United States, 306 U.S. 208 (1939) ................................................................................................................ 16 Kasky v. Nike, Inc., 27 Cal. 4th 939 (2002) ............................................................................................................ 20 Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008)......................................................................................... 2, 5, 17 King v. St. Vincent's Hosp., 502 U.S. 215 (1991)........................................................................................................................ 7 Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979 (9th Cir. 2000)................................................................................................... 23 iii 07CV2174H(BLM)

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Lazar v. Hertz Corp., 143 Cal. App. 3d 128 (1983)................................................................................................... 24 Lee v. Am. Nat'l Ins. Co., 260 F.3d 997 (9th Cir. 2001)................................................................................................... 20 Linear Tech. Corp. v. Applied Materials, Inc., 152 Cal. App. 4th 115 (2007) ................................................................................................. 20 Mass. Mut. Life Ins. Co. v. Superior Court, 97 Cal. App. 4th 1282 (2002)................................................................................................. 22, 25 McKell v. Wash. Mut., Inc., 142 Cal. App. 4th 1457 (2006) ............................................................................................... 20 NCAA v. Board of Regents, 468 U.S. 85 (1984)........................................................................................................................ 24 People v. Dollar Rent-A-Car Sys., Inc., 211 Cal. App. 3d 119 (1989)................................................................................................... 21 Prata v. Superior Court, 91 Cal. App. 4th 1128 (2001) ................................................................................................. 21 Progressive W. Ins. Co. v. Superior Court, 135 Cal. App. 4th 263 (2005) ................................................................................................. 23 Roskind v. Morgan Stanley Dean Witter & Co., 80 Cal. App. 4th 345 (2000) ................................................................................................... 19 Roth v. Rhodes, 25 Cal. App. 4th 530 (1994) ................................................................................................... 20 Scott v. Kuhlmann, 746 F.2d 1377 (9th Cir. 1984)...................................................................................................... 18 Scripps Clinic v. Superior Court, 108 Cal. App. 4th 917 (2003) ................................................................................................. 23 Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal. App. 4th 700 (2001) ................................................................................................... 23 Ting v. AT&T, 319 F.3d 1126 (9th Cir. 2003)................................................................................................. 24 TRW Inc. v. Andrews, 534 U.S. 19 (2001).................................................................................................................... 7, 24 Vinci v. Waste Mgmt., 80 F.3d 1372 (9th Cir. 1996) .................................................................................................. 12, 13 iv 07CV2174H(BLM)

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Weber v. Dep't of Veterans Affairs, 512 F.3d 1178 (9th Cir. 2008)................................................................................................. 12 William Inglis & Sons Baking Co. v. ITT Cont'l Baking Co., 668 F.2d 1014 (9th Cir. 1982)........................................................................................... 14, 20 Williams v. Gerber Prods. Co., 523 F.3d 934 (9th Cir. 2008)............................................................................................ passim STATUTES, RULES & REGULATIONS Federal Rule of Civil Procedure Rule 8 ............................................................................................................................................... 13 Rule 9 ...................................................................................................................................... 12 Rule 12(b)(6).............................................................................................................................. 11, 12 California Business & Professions Code § 17200.................................................................................................................................... 19 § 17500.............................................................................................................................. 20, 23 California Civil Code § 1770(a) ................................................................................................................................. 24 § 1770(a)(14)........................................................................................................................... 24 § 1936.01......................................................................................................................................... 7 § 1936.01(a)(3) ........................................................................................................................... 6, 7 § 1936.01(b)(2) ............................................................................................................................... 7 § 1936.01(b)(3) ............................................................................................................................... 7 California Government Code § 11120.................................................................................................................................... 16 § 13995.20.......................................................................................................................................... 6 § 13995.20(b)..................................................................................................................................... 6 § 13995.60(d) ............................................................................................................................ 6 § 13995.65...................................................................................................................................... 6, 7 § 13995.65(f)..........................................................................................................................passim § 13995.90.................................................................................................................................... 1, 18 SECONDARY AUTHORITIES Blechman, Conscious Parallelism, Signaling and Facilitating Devices: The Problems of Tacit Collusion Under the Antitrust Laws, 24 N.Y.L. Sch. L. Rev. 881 (1979)..................... 16

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I.

INTRODUCTION This case involves an agreement among the Rental Car Defendants, who operate at California

airports, and a facilitating organization, the California Travel and Tourism Commission ("CTTC"), which participated in, and was financially benefited by, the agreement to fix and raise prices for rental cars. ¶¶ 1, 2, 6.1 The conspiracy alleged has two contemporaneous elements: 1) an agreement to unlawfully pass-on to renters the entirety of a tourism commission assessment which the Rental Car Defendants had agreed to pay to fund the CTTC ("tourism assessment") and 2) an agreement to take perverse advantage of legislation unbundling an airport concession fee ("ACF") to impose an unprecedented and uncharacteristic uniform increase in rental car base rates in roughly the amount of the previously bundled fee. ¶¶ 2-5. The First Amended Complaint ("FAC") alleges, and there can be no dispute from the statutes at issue, that the Defendants were neither required to pass-on all or any of the tourism assessment or the ACF, nor were they authorized to agree to do so. ¶¶ 2, 4, 5, 37, 38, 43, 44. Defendants do not contest, nor could they reasonably do so, that agreeing to pass-on the tourism assessment and/or agreeing to raise base rates by the amount of the ACF is price-fixing.2 Because the legislation at issue, AB 2592, neither condoned nor directed price-fixing, the safe harbor provision of that statute (Cal. Gov't Code § 13995.90) is not in the least implicated.3 Responding to the Court's April 8, 2008 dismissal of the antitrust claim pursuant to Bell Atlantic Corp. v. Twombly, ___U.S. ___, 127 S. Ct. 1955 (2007) ("Twombly"), Plaintiffs have now filed a factually detailed FAC with ten exhibits. The FAC pleads, with accompanying explicit documentary evidence, the "who," "what," "where," and "when" of meetings and communications in furtherance of, and evidencing, the alleged conspiracy. ¶¶ 1-7, 12-28, 35-55; Exs. A-J.4 While the CTTC in particular attempts to distance itself from the case, the "who" includes personnel All references to "Complaint" and to "¶ __" are, unless indicated otherwise, to the "First Amended Complaint for Injunction, Money Damages and Declaratory Relief" filed May 1, 2008. 2 As discussed in Plaintiffs' accompanying Memorandum in Opposition to the CTTC's related Motion, price-fixing is a core concern of the antitrust laws. 3 In addition, the purported "safe harbor" provision pertains only to the general state, Cartwright Act and unfair competition law. Such general immunity declarations within any state law do not provide "state action" protection from federal antitrust liability. See detailed discussion in accompanying "Opposition to Motion by CTTC to Dismiss First Amended Complaint." 4 All references to "Ex. __" are to the Exhibits filed with the FAC, unless otherwise stated. 1 07CV2174H(BLM)
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from both the Rental Car Defendants and the CTTC, and the "where" and "when" are largely CTTC-related communications and meetings, including admissions of price-fixing emanating from the CTTC itself. ¶¶ 1-6, 23, 29-34, 36-55; Exs. A-J. Defendants do not argue, again because they could not reasonably do so, that the FAC fails to put them on ample notice of precisely the conduct which is the subject of the Complaint. See Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1047 (9th Cir. 2008) (complaint must be specific enough "to give defendant seeking to respond to allegations of . . . conspiracy an idea of where to begin"). Instead, Defendants5 attempt to assert that the FAC still fails to plead facts sufficient to raise a "plausible" suggestion of agreement. Twombly, 127 S. Ct. at 1965. They are wrong. In light of the detailed (indeed evidentiary) allegations of the FAC, Defendants' continued reliance on Twombly's minimal "plausibility" pleading standard is surprising to say the least. The Court correctly summarized the Twombly standard in its prior Order as requiring the pleading of enough factual matter to "plausibly suggest" an agreement was made, one that goes beyond mere labels and conclusions and a mere allegation of parallel pricing conduct.6 It also stated the basic standards which continue to govern this pleading motion (and which are pointedly ignored by the Defendants in their motions), i.e., that the Court must construe the FAC in the light most favorable to the Plaintiffs, accept all well-pleaded factual allegations as true, and must give the Plaintiffs the benefit of every reasonable inference to be drawn from the well-pleaded allegations of the complaint.7 On a motion to dismiss, a moving defendant can not carry its burden by disputing the reasonable inferences raised by the Complaint, read and interpreted in the light most favorable to the pleader, nor by inviting the Court to weigh or find alternative inferences. That, however, is precisely what the Defendants improperly attempt to do using terms such as "this suggests at

The CTTC's and the Rental Car Defendants' largely repetitive Twombly arguments are addressed together. 6 See Order Granting Defendants' Motions to Dismiss and Denying without Prejudice Motion for Preliminary Injunction entered April 8, 2008 ("4/8/08 Order") at 6-8. 7 Id. at 5 (citing Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990), and Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996)). 2 07CV2174H(BLM)

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most," "the logical inference to be drawn," "this is consistent with," etc.8 Perhaps the clearest example of Defendants' procedurally erroneous approach is their discussion of Exhibits I and B and the related allegations. RCD Mem. at 12-13; CTTC Mem. at 18. Exhibit I is the McNulty/Toohey email exchange in mid-January 2007 in which Defendant National is complaining to the CTTC that "our competitor Avis is not charging the tourism fee." In response, the CTTC promised to "discuss the issue with the Executive Director [of the CTTC]" and to put it on an agenda of a meeting planned with the industry the following week. ¶ 41; Ex. I. National's complaint then appears as an agenda item on the January 25, 2007 CTTC committee meeting as "Airport locations not charging the fee ­ unfair pricing advantage." ¶ 41; Ex. B. Inventing a fact that appears nowhere in the FAC nor the attached Exhibits, the Rental Car Defendants assert: "[T]his email reflects Ms. McNulty's individual concern that each rental car company . . . should charge and pay the tourism assessment to the CTTC." RCD Mem. at 12. The CTTC's equally weak pass at these documents is to focus on a different part of the email, ignore the following agenda entry referring to "unfair pricing advantage," and suggest that the upshot of the document is the CTTC's concern that the other rental car companies may not have been informed of the assessment. CTTC Mem. at 18. Even if these extra-Complaint assertions were exculpatory (which they are not)9 or rose to the level of a fair reading of the documents (which they do not),10 Defendants here are doing nothing less than a) inventing facts which are not pled in the FAC, and/or b) proffering alternative inferences that are contrary to those pled in the FAC, inferences that are (or so they argue) more favorable to them than to the pleader. Compare ¶¶ 3941 with CTTC Mem. at 18. This is plainly both improper and unavailing on a motion to dismiss. See Williams v. Gerber Prods. Co., 523 F.3d 934, 937 (9th Cir. 2008) ("All allegations of material

See Memorandum of Points and Authorities in Support of the Rental Car Defendants' Motion to Dismiss the First Amended Complaint ("RCD Mem.") at 11, 12; Memorandum of Points and Authorities of Defendant California Travel and Tourism Commission in Support of Motion to Dismiss Plaintiffs' First Amended Complaint ("CTTC Mem.") at 18. 9 Even the Rental Car Defendants' reading of the document admits Ms. McNulty (who was obviously acting within the scope of her duties) was concerned "that each rental company . . . should charge" the tourism assessment. RCD Mem. at 12. 10 The documents refer to "pricing" and "pricing advantage" and not a concern over someone not paying the tourism assessment to the CTTC as Defendants would read them. 3 07CV2174H(BLM)

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fact in the complaint are taken as true and construed in the light most favorable to the plaintiff.") (quoting Stoner v. Santa Clara County Office of Educ., 502 F.3d 1116, 1120 (9th Cir. 2007)). In light of the extensive factual matter now pled and the obvious compliance with the Twombly standard, Defendants - even though paying lip-service to (and occasionally misstating) the Twombly standard - can no longer reasonably couch their arguments within the bounds of the controlling principles, i.e., that the allegations of the FAC, taken as a whole and construed in the Plaintiffs' favor, need only support a "plausible" inference of conspiracy. Twombly, 127 S. Ct. at 1965. Instead, Defendants are reduced to mischaracterizing the FAC and making jury arguments, proffering their own explanations to the collusive inferences fairly drawn from a series of inculpatory facts and documents. At the end of the day, the Defendants cannot bring themselves to even attempt to explain away all of the facts pled in the FAC which indicate a "plausible case" of collusion. Exhibit D, an October 17, 2006 email from the CTTC's counsel to a Hertz representative memorializing the fact that "everyone agreed to continue the funding as long as the pass-through was in place," goes completely ignored.11 "Agreeing" with horizontal competitors as to pricing is, after all, the most basic and pernicious practice proscribed by the antitrust laws. FTC v. Ticor Title Ins. Co., 504 U.S. 621, 639 (1992) ("No antitrust offense is more pernicious than price fixing.") At the end of the day, these would be difficult facts and documents to explain away at a trial; suggesting that these facts do not suffice to raise a reasonable inference of conspiracy at the pleading stage for Twombly purposes is beyond the pale. With respect to the ACF, Plaintiffs have pled that the price increase wasn't just contemporaneous (i.e., parallel), it was "aberrant." ¶ 5. The increase defied prior pricing patterns among the Defendants, defied the usual seasonal pricing movement, was counter to the trend in pricing in other non-conspiratorial geographical markets and defied a rational response to reduced demand. ¶¶ 5, 43-44. Nor can Defendants dissect the two fees as if they were discussed and imposed in isolation. They were not. They arise in the context of the same activity (airport car rentals), the same statute (AB 2592), at the same time, and among the same players. ¶¶ 2-6, 35-44.

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All emphasis is added unless otherwise indicated. 4 07CV2174H(BLM)

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The uniform price increase in base rates related to the ACF also took place in a demonstrated atmosphere of collusive conversations and industry meetings about passing on the contemporaneously imposed tourism assessment. ¶¶ 2-6, 35-44. Defendants' assertion that no additional facts have been pled with respect to the ACF, no matter how many times it is repeated in their briefs, is simply inaccurate. In addition to the additional allegations relating to their contemporaneous communications about the tourism assessment (¶¶ 3, 39-41), Paragraph 43 of the FAC adds factual detail concerning the aberrant and historically unprecedented character of their pricing in January 2007. Whether Defendants can rationally argue that all seven companies' simultaneous base rate price increase may have been non-conspiratorial just is not the issue under Twombly.12 The issue under Twombly is whether, giving the pleader the benefit of every

reasonable inference, sufficient factual context has been alleged to render a conspiratorial inference "plausible." Twombly, 127 S. Ct. at 1965-66. Plaintiffs have, even without the benefit of discovery,13 gone beyond "alleg[ing] sufficient facts to make the existence of a conspiracy plausible." 4/8/08 Order at 9. They have pled evidentiary detail from which it can be inferred that collusion likely occurred. ¶¶ 2-6, 35-44. Defendants would have this Court become the first to dismiss under Twombly a horizontal pricefixing complaint which details (and in many cases attaches evidence of) the who, what, where and when of meetings and collusive communications, including admissions, which attended the imposition of identical price increases that ran counter to historical pricing baselines. This Court should decline that invitation and deny the motions to dismiss the Sherman Act claim. Defendants' agreement to charge uniform prices and their misleading characterization of those charges also state claims under the UCL and the Consumer Legal Remedies Act. Because neither price-fixing nor deception is either contemplated or required by the CTMA, there is no

Defendants simply misapprehend the law when they argue that the law requires the Plaintiff at the pleading stage "to account for" a possible non-conspiratorial explanation in the Complaint. RCD Mem. at 1. This is a motion to dismiss. Plaintiffs need not counter non-conspiratorial possibilities, they need only raise the conspiratorial possibility to the level of plausibility. 13 Compare Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) (dismissing complaint with prejudice under Twombly after five attempts to plead and only after Plaintiffs had been given the opportunity to conduct discovery). 5 07CV2174H(BLM)

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immunity for the conduct alleged in the FAC. The Court should deny the motion to dismiss those claims as well. II. FACTUAL BACKGROUND A. The Tourism Assessment and the Agreement to Pass the Entirety of that Assessment to Renters

It is beyond dispute that the Legislature, in passing AB 2592, neither required that the tourism assessment of the rental car industry be passed in whole to consumers nor sanctioned an industry-wide agreement to do so. ¶¶ 2, 4, 5, 37, 38, 43, 44. To the contrary, AB 2592 makes clear that it is in the discretion of each individual Rental Car Defendant as to whether it passes on all or any portion of the tourism assessment to consumers and whether, if it does pass it on, it will separately list the fee on a customer's bill. First, section 13995.20 of the Government Code defines "assessed business" as "a person required to pay an assessment pursuant to this chapter, and until the first assessment is levied, any person authorized to vote for the initial referendum." Cal. Gov't Code § 13995.20(b); see also id. § 13995.20(h) (defining "person" as "an individual, public entity, firm, corporation, association, or any other business unit, whether operating on a for-profit or nonprofit basis"). This and the rest of the chapter go on to make clear that "assessed business" refers to each of the Rental Car Defendants.14 Civil Code § 1936.01(a)(3) defines "tourism commission assessment" as "the charge collected by a rental company from a renter that has been established by the California Travel and Tourism Commission pursuant to Section 13995.65 of the Government Code." Cal. Civ. Code § 1936.01(a)(3). The provision is purely definitional and speaks not at all to whether an assessed business must, or even should, pass-on all or any part of the assessment it must pay to consumers. Other provisions make clear that any decision to pass-on "some or all" of the tourism assessment lies within the unilateral discretion of each company. The statute neither compels, counsels, nor

encourages pass-on; it merely permits it. Most directly, section 13995.65(f) of the Government Code states: "Notwithstanding any other provision of law, an assessed business may pass-on some or all of the assessment to customers. An assessed business that is passing on the assessment may, but

14

For example, section 13995.60(d) states, "When the secretary calls a referendum, all assessed businesses shall be sent a ballot for the referendum." Cal. Gov't Code § 13995.60(d). Clearly the Rental Car Defendants are sent ballots, not individual consumers. 6 07CV2174H(BLM)

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shall not be required to, separately identify or itemize the assessment on any document provided to a customer." Cal. Gov't Code § 13995.65(f). This provision makes clear that each Rental Car Defendant individually has the discretion ("may") to pass-on "some or all" of the assessment, and, if it chooses to pass it on, it also has the discretion to separately itemize it.15 In addition, Civil Code § 1936.01(b)(2)-(3), the section in which the definition of "tourism commission assessment" is found, goes on to refer, in multiple provisions, to the "tourism commission assessment, if any." Cal. Civ. Code § 1936.01(b)(2)-(3). While Defendants would like to have the Court look only at the definitional section, § 1936.01, and argue that AB 2592 conclusively assumed a pass-on of the assessment for which they assertedly lobbied,16 the statutory scheme must be read as a whole. See, e.g., King v. St. Vincent's Hosp., 502 U.S. 215, 221 (1991) (noting "the cardinal rule that a statute is to be read as a whole"); see also TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) (stating that a statute should be read so that "no clause, sentence, or word shall be superfluous, void, or insignificant"). Section 1936.01(a)(3) can only be understood, consistent with the other provisions of AB 2592, as defining the charge so it could be referred to in the rest of the statute, which at several places makes clear that passing on "some or all" of the tourism commission assessment to consumers was supposed to be a matter of each Rental Car Defendant's individual discretion. Beyond all dispute is the fact that nowhere does the statute permit what the FAC alleges occurred here: an agreement by the industry to pass-on the assessment to renters. Defendants, as pled in the FAC, for obvious anticompetitive reasons, determined to avoid competitive disadvantage17 by making an industry-wide agreement, explicitly evidenced in the documents referred to in the FAC, to agree with each other to pass the entirety of the assessment to

It bears noting that this provision is part of the very section (§ 13995.65) cross-referenced in the definition which the Defendants selective parse relies upon. 16 Defendants at several points argue that they had lobbied for pass-on. This is not pled in the FAC. In any event, if they lobbied for a statutory mandatory pass-on, they didn't get it. 17 See, for example, ¶ 41 and Ex. B (agenda item for CTTC meeting "Airport locations not charging the fee ­ unfair pricing advantage"). 7 07CV2174H(BLM)

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renters. ¶¶ 2-6, 35-44.18 After AB 2592 passed in 2006, the CTTC hosted meetings and provided a forum for communication among the Rental Car Defendants to discuss what they described as the "partnership" with the Rental Car Defendants and the CTTC in securing the CTTC's funding. ¶¶ 39, 51-53. It is with respect to these meetings and related communications that the agreement to pass-on the fees is evidenced. ¶¶ 39-44. The minutes of the October 3, 2006 CTTC Executive Committee Meeting give the first indication of an explicit and agreed premise of the industry that by agreement among them any assessment would, rather than be the subject of competition, be passed in its entirety to renters. ¶ 40. Thus, already at this meeting, it was "reported the CTTC has acquired a partnership with the rental car industry to secure a long-term funding solution for the CTTC" (Ex. F), and, as the agenda to that meeting reflects, there would be further discussion of the "rental car pass through fees." ¶ 40; Ex. G. The dates and participants of other conspiratorial meetings are pled in the Complaint. Meetings with and among the Rental Car Defendants commenced in the fall of 2006. ¶¶ 39, 40, 50. Specifically, they occurred, inter alia, on or before October 17, 2006 and on October 23 and/or 25, 2006. ¶ 39. Participants included the representatives of the CTTC and the Rental Car Defendants who are specifically identified in the FAC. ¶ 39. During these meetings, and

accompanying phone conversations and email exchanges, the Rental Car Defendants not only agreed to assess themselves 2.5% of their income from airport rentals to fund the CTTC, but they agreed that they would do so only if each of them agreed to surcharge each consumer the 2.5% assessment. ¶ 39. An email dated October 17, 2006 from the CTTC's counsel to Defendant Hertz, with others copied, states rather plainly, "My recollection from the meeting is that everyone agreed to continue the funding as long as the pass-through was in place." ¶ 39; Ex. D. In other words, the CTTC would be funded as long as the industry, contrary to the clear legislative direction that each firm act unilaterally in deciding on whether to pass-on "all or some" of the assessment (§ 13995.65(f)), instead, specifically agreed to do so.
18

Assessment of fees for the support of special fund agencies upon those subject to agency jurisdiction is common. Specifying the amount those professions, trades or businesses are to add to client or consumer bills is not. It never occurs unless specifically so authorized and specified. See Opposition to Motion by CTTC to Dismiss First Amended Complaint for further discussion of this point. 8 07CV2174H(BLM)

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Counsel for the CTTC drafted a Memorandum of Agreement ("MOA"), which described the assessment, and circulated it among all Defendants. ¶ 39; Ex. A. The MOA was fully executed. ¶ 40. In accordance with the MOA, the CTTC then sent around a ballot (see Ex. E) in November 2006 which reflected the understanding that the "pass-through [be] in place." ¶ 40. While the MOA had stated that the Rental Car Defendants would pay the assessment to the CTTC as contemplated by AB 2592, the ballot called for a referendum to confirm the Rental Car Defendants' previously reached agreement that "a percentage of revenue [would] be collected BY each passenger car rental company." ¶ 40; Ex. E. The Rental Car Defendants were, of course, authorized to vote on the assessment level which they would pay the CTTC. They were not authorized to reach agreement on their collection of it from renters. The use of the preposition "by" instead of "from" is consistent with prior and later documents which take as a matter of primary agreement - even expressly so state - that the industry will pass the entire assessment onto renters. ¶ 40. The vote among the Rental Car Defendants, a clear manifestation of their agreement to collect an assessment from renters, i.e., to pass-on the assessment, was unanimous. ¶ 40. There can be no clearer manifestation of agreement than a unanimous vote. As further evidence of the agreement and the CTTC's central role in facilitating and enforcing the agreement, the CTTC posted on its Web site under the caption "Passenger Car Rental Industry Tourism Assessment Program" a statement (contrary to every provision of the law making the pass-through of the assessment a matter of each firm's individual discretion) that "[t]his assessment rate shall be passed through to the customer." ¶ 41; Ex. H. No statute requires a mandatory pass-through; to the contrary, Government Code § 13995.65(f) makes charging consumers entirely discretionary. This use of mandatory language "shall be passed through" is further evidence of the industry's and the CTTC's prior mutual understanding that the assessment on the industry would not be borne in any part by them, but would be passed in a price-fixed charge onto renters. ¶¶ 3, 41. In a concession that its agreed mandatory pass-on activity was wrongful, following the filing of this lawsuit, the CTTC sought to cover up this now-damaging price-fixing admission and the CTTC's role in it by removing the language, "This assessment rate shall be passed through to the consumer," from its Web page. ¶ 41; Ex. H. 9 07CV2174H(BLM)

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As discussed briefly above, in an email string in January 2007 between a representative of Defendant National Car Rental and Terri Toohey of the CTTC, National complained that its "competitor Avis is not charging the tourism fee" (in effect a complaint that Avis may have been "cheating" on the conspiracy) and asked the CTTC "what can be done about that?" (i.e., to facilitate enforcement of the price-fixing agreement by getting Avis to charge the fee). ¶ 41; Ex. I. In response, the CTTC promised to "discuss the issue with our Executive Director" and that at "a meeting planned with the industry next week . . . I will put it on the agenda." ¶ 41; Ex. I. Then, on the agenda of the Passenger Car Rental Industry Tourism Assessment Meeting scheduled for Thursday, January 25, 2007, sent by email by Terri Toohey of the CTTC to the industry participants, agenda item 5(a) reads "airport location not charging the fee - unfair price advantage." ¶ 41; Ex. B. According to documents produced by the CTTC in response to a Public Records Act request, no further complaints or instances of noncompliance with the price-fixing agreement are recorded. ¶ 41. In a non-collusive market, competitors do not address with other competitors how they should price or whether a pricing differential is giving the competitor "an unfair pricing advantage." A competitive market competes on price; this one did not. The Rental Car Defendants also facilitated the conspiracy by separately itemizing the CTTC surcharge (although not required to do so) so that each company would be able to observe the others' compliance with the agreement. ¶ 41. Indeed, the only apparent element of entrepreneurism the Defendants showed with respect to the tourism assessment was in the ways they mischaracterized it to consumers. The descriptions misleadingly referred to it as a "tour tax," "tourist tax," a "mandatory airport related charge," a "governmentally mandated charge," and a "percentage charge established by the California Travel and Tourism Commission." ¶ 62. None of those characterizations are accurate. It is not a "tax" at all; charging it to renters, as the statute makes clear, is not "mandatory"; nor is the charge to the consumer for recovery of "all or some" of the assessment "established by the California Travel and Tourism Commission." ¶¶ 61-62. In fact the pass-on was established by the Rental Car Defendants with the help of the CTTC, acting as a group, in violation of the antitrust laws. ¶¶ 2-4, 6, 38-42. 10 07CV2174H(BLM)

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B.

The Agreement to Raise Base Rates in Conjunction with the Unbundling of the Airport Concession Fee

Nothing in the statute permitting the unbundling of the ACF authorized any pricing level change or price coordination by the Rental Car Defendants. ¶¶ 2, 5, 37, 43, 44. Starting in January 2007, coincident with the effective date of the statute, the Rental Car Defendants effected an approximate 9% price increase, not by separating out the ACF from the base billing rate, but by increasing the base rate. ¶¶ 5, 42-44. As a result, rental rates at California airports rose in January 2007 from December 2006 while they declined on average in the United States. ¶ 43. A survey of average nationwide prices for eight companies at ten non-California airports, between December 2006 and January 2007 showed a marked reduction in prices consistent with decreasing demand; at California airports prices increased. ¶ 43. In addition to running contrary to the downward movement of prices in other markets, the price increases at California airports were uncharacteristic for the industry. Because the airport rental car market is generally competitive, price increases are difficult to achieve and industry pricing historically is not one of industry-wide identical increases. ¶ 43. Nonetheless, such an aberrant price increase was achieved at California airports coincident with the occurrence of multiple meetings and communications among the industry participants, the documents pertaining to which, evidence the making of an explicit contemporaneous agreement to pass to consumers the other airport rental fee which was the subject of the same legislation, the tourism assessment. ¶¶ 38-41; Exs. A-H. III. ARGUMENT A. The Allegations in Plaintiffs' First Amended Complaint Are More Than Sufficient to Meet the Twombly Pleading Standard

As the Court stated in its Order: "[I]n resolving a Rule 12(b)(6) motion, the court construes the complaint in the light most favorable to the Plaintiff and accepts all well-pleaded factual allegations as true." Order at 5 (citing Cahill, 80 F.3d at 337-38); see also Williams, 523 F.3d at 937. Additionally, the Court "is bound to give the plaintiff the benefit of every reasonable inference to be drawn from the `well-pleaded' allegations of the complaint. Thus, the plaintiff need not necessarily plead a particular fact if that fact is a reasonable inference from facts properly alleged." Corrections USA v. Dawe, 504 11 07CV2174H(BLM)

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F. Supp. 2d 924, 929 (E.D. Cal. 2007) (citing Retail Clerks Int'l Ass'n v. Shermerhorn, 373 U.S. 746, 753 n.6 (1963)). Courts are not permitted to weigh evidence on a motion to dismiss. Williams, 523 F.3d at 939. Contrary to the Defendants' approach of considering the facts pled in the FAC in isolation, "substantive allegations of conspiratorial antitrust behavior should be considered as a whole." Vinci v. Waste Mgmt., 80 F.3d 1372, 1374 (9th Cir. 1996). Any "attempt to parse and dismember the complaints [is] contrary to the Supreme Court's admonition that `[t]he character and effect of a [Sherman Act] conspiracy are not to be judged by dismembering it and viewing its separate parts.'" In re Southeastern Milk Antitrust Litig., MDL No. 1899, slip op. at 14 (E.D. Tenn. May 20, 2008) (quoting Cont'l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962)). In In re Southeastern Milk, a Sherman Act case addressing the Twombly standard, the court made clear that it must view the complaint as a whole and accept all factual allegations as true in order to determine plausibility. Id. at 13. It is not proper to view factual allegations in isolation. Id. Even though the FAC pleads many detailed facts, under Twombly and its progeny, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations." Twombly, 127 S. Ct. at 1964; Weber v. Dep't of Veterans Affairs, 512 F.3d 1178, 1181 (9th Cir. 2008). As this Court stated in its Order, Twombly merely requires that a complaint allege facts making a conspiracy "plausible." 4/8/08 Order at 7 (quoting Twombly, 127 S. Ct. at 1965). Allegations rendering a conspiracy plausible are sufficient to overcome a motion to dismiss, even if "recovery is very remote and unlikely." Twombly, 127 S. Ct. at 1964-65 (citation omitted). Twombly did "not apply any `heightened' pleading standard, nor . . . seek to broaden the scope of the Federal Rule of Civil Procedure 9." Id. at 1973 n.14. Under Twombly, a complaint, read as a whole, need only "suggest that an agreement was made . . . [or] raise a reasonable expectation that discovery will reveal evidence of illegal agreement." Id. at 1965. "It is not necessary for a Plaintiff to show an explicit agreement among defendants in support of a Sherman Act conspiracy, `concerted action may be inferred from circumstantial evidence of the defendant's conduct and course of dealings.'" In re Dual-Dec Video Cassette Recorder Antitrust Litig., Nos. MDL-765, CIV 87-987, 1990 U.S. Dist. LEXIS 19207, at 12 07CV2174H(BLM)

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*50 (D. Ariz. July 26, 1990) (quoting Harkins Amusement Enters., Inc. v. Gen. Cinema Corp., 850 F.2d 477, 484 (9th Cir. 1988)). The Twombly plausibility standard does not "impose a probability requirement at the pleading stage." Twombly, 127 S. Ct. at 1965. Indeed, due to the secret nature of conspiracies, direct allegations of conspiracy are neither possible nor necessary. See In re Graphics Processing Units Antitrust Litig., 540 F. Supp. 2d 1085, 1096 (N.D. Cal. 2007). "[A] complaint need not be dismissed where it does not `exclude the possibility of independent business action.'" City of Moundridge v. Exxon Mobil Corp., Civil Action No. 04-940 (RWR), 2008 U.S. Dist. LEXIS 31236, at *12 (D.D.C. Apr. 16, 2008).19 In sum, as the Seventh Circuit recently held, Twombly recognizes "two easy-to-clear hurdles" under Rule 8: 1) Plaintiffs must provide fair notice to Defendants of their claims; and 2) Plaintiffs must plausibly suggest that they have a right to relief, which rises above a "speculative level." EEOC v. Concentra Health Servs., 496 F.3d 773, 776 (7th Cir. 2007). The FAC easily clears both hurdles. 1. Plaintiffs Have Alleged Substantial Direct Evidence of a Conspiracy with Respect to the Tourism Assessment

Defendants' only defense against the detailed collection of evidence against them pertaining to the tourism assessment is to parse each item of evidence and then argue that each item, construed in isolation and most favorably to Defendants, does not support a conspiracy. As described above, however, this approach runs contrary to the law, which requires that 1) the evidence be construed in the light most favorable to Plaintiffs; 2) allegations of antitrust behavior be read as a whole; and 3) a court not weigh inferences. Williams, 523 F.3d at 937, 939; Vinci, 80 F.3d at 1374. Without the benefit of discovery, Plaintiffs have pled detailed and explicit evidence The CTTC takes excessive liberty when it stitches together the following proposition in its brief: "If the allegations of the complaint are `consistent with conspiracy but just as much in line with a wide swath of rational and competitive business strategy unilaterally prompted by common perceptions of the market' the Section 1 claim must be dismissed. [Twombly, 127 S. Ct.] at 1964." CTTC Mem. at 14 (emphasis omitted). This partial quote is not from the section of Twombly in which the Court articulates its pleading standard, but rather is a preliminary comment citing to a scholarly article reflecting on the potential ambiguity of mere parallel conduct. Twombly, 127 S. Ct. at 1964. Under Twombly, the pleading of parallel conduct that is as consistent with conspiracy as independent action is sufficient to state a claim so long as the allegations are "placed in a context that raises a [plausible] suggestion of preceding agreement." Id. at 1966. This Court, in its prior Order, recognizes this distinction. 4/8/08 Order at 8. 13 07CV2174H(BLM)
19

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supporting the allegations of agreement among the Rental Car Defendants and demonstrating the CTTC's central facilitating role in the conspiracy. Read as a whole and in the light most favorable to Plaintiffs, this evidence paints a clear picture of a conspiracy among the Rental Car Defendants and the CTTC which, as a co-conspirator, is jointly and severally liable to the Plaintiffs and the Class. See William Inglis & Sons Baking Co. v. ITT Cont'l Baking Co., 668 F.2d 1014, 1052-53 (9th Cir. 1982) ("[A]ntitrust coconspirators are jointly and severably liable for all damages caused by the conspiracy."). The detailed evidence submitted by Plaintiffs, in conjunction with their FAC, clearly suffices to present a plausible price-fixing agreement among Defendants. ¶¶ 2-6, 3544; Discussion, infra, Part II. 2. Clear Evidence of Conspiratorial Behavior Among Defendants, Combined with Specific Allegations Relating to the 9% Charge, Renders a Conspiracy Plausible

Plaintiffs have also met the Twombly standard with respect to the January increase in base rates. Plaintiffs have alleged that in 2006 and prior, the Defendants had variable pricing patterns, but in January of 2007 the Rental Car Defendants each simultaneously increased their base rates in a manner which was contrary to non-conspiracy baseline indicators (i.e., prior industry pricing patterns, seasonal pricing movement, pricing in other geographical markets in which the defendants compete, and demand). ¶¶ 5, 43. Plaintiffs further allege that the "aberrant price movement" occurred following "the meeting among competitors to discuss pricing and the agreement to uniformly charge consumers the CTTC surcharge." ¶ 5; Discussion, infra Part II. The facts here are similar to those found sufficient in In re Graphic Cards Processing Units Antitrust Litigation, 540 F. Supp. 2d 1085 (N.D. Cal. 2007). There, plaintiffs pled that the

defendants' market behavior before the alleged conspiracy differed from that during the conspiracy with respect to the timing of product releases. Noting the "historically unprecedented change in behavior" pled against a baseline of pre-conspiracy behavior, the court sustained the complaint against a Twombly motion. Id. at 1091-95. A similar situation, indeed a more fulsome set of facts, has been pled here with respect to the January 2007 spike in base rates. The FAC pleads that the Defendants' identical pricing behavior was inconsistent not only with historical price patterns, but also with seasonal pricing, demand, and their contemporaneous pricing in other geographic markets 14 07CV2174H(BLM)

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in which the Defendants compete. ¶¶ 5, 43. In addition, as with Graphic Cards, Plaintiffs pled that this aberrant and unprecedented price movement took place in the context of industry communications. Like Graphic Cards, the aberrance of the conspiracy conduct against competitive baselines is sufficient to render the alleged conspiracy "plausible" for Twombly purposes.20 Defendants argue that this pricing is explained by a common response to the legislation allowing the unbundling of the fee. That, however, might explain the allocation of price as between the base rate and the ACF, but does not (innocently) explain a uniform and historically unprecedented and geographically peculiar increase in the total price.21 Their only (and oft-repeated response) is to cite to their interpretation of Professor Fellmeth's pre-filing letter to the Legislature. RCD Mem., Ex. A. Apart from the highly questionable procedural propriety of finding a "fact" on a motion to dismiss by interpreting a letter in a way which contradicts what is pled in the Complaint,22 the letter does not even state what the Defendants suggest it says. What the Fellmeth letter states is that "[t]he end result is going to be an industry-wide price hike of 10% - all of it new profit for the industry." Id. It merely predicted that as a result of the legislation there would be a 10% price increase; it does not say that this will result from the unilateral and independent decision making of the defendants, or as a natural and non-collusive consequence of the bill as opposed to either their express or tacit collusion. Professor Fellmeth was predicting a possible unlawful price-fix, not at all suggesting that such a result was legislatively authorized or intended. The Supreme Court has long recognized that Section 1 of the Sherman Act reaches both explicit and tacit collusion. It has long been the law: that an unlawful conspiracy may be and often is formed without simultaneous action or agreement on the part of the conspirators . . . [and that] [a]cceptance by competitors, without previous agreement, of an invitation to participate in a plan, the necessary consequence of which, if carried out, is a restraint of interstate commerce, is sufficient to establish an unlawful conspiracy under the Sherman Act. CTTC cites to an earlier opinion in the Graphics Card case dismissing the original complaint ignoring this subsequent decision sustaining the amended complaint. CTTC Mem. at 17. 21 Thus if the pre-January bundled price had been $100 including a $10 ACF, a predictable postlaw price change (putting other factors aside) may have been a total $100 price allocated as a $90 base price and a $10 ACF; not a price increase to a total price of $110. 22 "All allegations of material fact in the complaint are taken as true and construed in the light most favorable to the plaintiff." Williams, 523 F.3d at 937. Courts may not consider matters outside the pleadings on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989). 15 07CV2174H(BLM)
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Interstate Circuit, Inc. v. United States, 306 U.S. 208, 227 (1939). Professor Fellmeth, a former antitrust professor, is well familiar with this bedrock principle of Sherman Act conspiracy law. Less detail than that found in the current FAC also sufficed to pass Twombly muster in Moundridge, 2008 U.S. Dist. LEXIS 31236. There plaintiffs pled only that natural gas prices increased in the face of constant supply, did not fall below the alleged agreed price, that the defendants reported high profits and the years, locations and the defendants who allegedly participated in the agreement. Id. at *3. Finally, a circumstance additional to those pled in Graphic Cards and Moundridge is pled in the FAC. Here, at the time of the price hike, and in the months leading up to it, the Rental Car Defendants and the CTTC were meeting, discussing and agreeing with respect to AB 2592 and pass-on of the tourism assessment, the very law that allowed the Rental Car Defendants to break out the 9% fee. The similarity of the events and people involved also supports an inference of a conspiracy. See In re Static Random Access Memory (SRAM) Antitrust Litig., MDL No. 1819, 2008 U.S. Dist. LEXIS 15826, at *47 (N.D. Cal. Feb. 14, 2008) (citing, among other things, the fact that "the same actors associated with certain Defendants were responsible for marketing both SRAM and DRAM" and that allegations regarding the DRAM wrongdoing supported an inference of a conspiracy in the SRAM industry). Plaintiffs have also alleged recognized "plus factors" which are supportive, along with the explicit detailed evidence referred to previously, of an inference of conspiracy. Evidence of a conspiracy exists "when [a company] rigidly refuses to make any sales by lowering prices by even de minimis amounts." Blechman, Conscious Parallelism, Signaling and Facilitating Devices: The Problems of Tacit Collusion Under the Antitrust Laws, 24 N.Y.L. Sch. L. Rev. 881, 899 (1979) (cited in Twombly, 127 S. Ct. at 1965 n.4). Furthermore, Defendants clearly had the opportunity to conspire. See In re Petroleum Prods. Antitrust Litig., 906 F.2d 432, 447 (9th Cir. 1990); C-O-Two Fire Equip. Co. v. United States, 197 F.2d 489, 493 (9th Cir. 1952). The CTTC offered the Rental Car Defendants a forum, facilitated the conspiracy, and maintained its confidentiality via violations of the Bagley-Keene Act, Cal. Gov't Code §§ 11120, et seq. Not only is it clear here that Defendants met and 16 07CV2174H(BLM)

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communicated during the period just before the price increase was effectuated, but it is also clear based on evidence gathered to date, that they were having discussions and communications regarding the very matters at issue. Further, the Defendants all acted within a short time frame. See In re Tableware Antitrust Litig., 484 F. Supp. 2d 1059, 1076 (N.D. Cal. 1007). Defendants charged supracompetitive prices. In re Uranium Indus. Antitrust Litig., 466 F. Supp. 958, 962 (J.P.M.L. 1979). Also, with the new law going into effect, Defendants were motivated to conspire. See First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 287 (1968). And finally, although the Rental Car Defendants "vary among themselves" in base rates (¶ 36) and price differently between customer groups, by season, and in advertising - the price hike as alleged is imposed with uniformity over time and between Defendants and customer groups. Defendants' reliance on Kendall is misplaced. In Kendall, despite the opportunity to conduct discovery (including depositions) and five attempts to state a claim, the Plaintiffs did "not allege any facts to support their theory that the Banks conspired or agreed with each other or with the Consortiums to restrain trade." Kendall, 518 F.3d at 1048. Notwithstanding discovery, Kendall's allegations failed to go beyond conclusory allegations that the banks had adopted merchant discount fees or followed network set interchange rates. Id. It was clear that there could be no "reasonable expectation" that additional discovery would reveal evidence of illegal agreement because the appellants had already had the opportunity to conduct discovery. Id. at 1046. Here, Plaintiffs have not yet had the opportunity to conduct discovery and have pled substantial and explicit evidence of a conspiracy. Finally, Defendants' reliance on In re Late Fee & Over-Limit Fee Litig., 528 F. Supp. 2d 953 (N.D. Cal. 2007), is unavailing. There the Court cited to the fact that it found the "heart" of the complaint's allegations centered on a chart which in fact showed varying prices and that the Defendants' prices "have all followed different pricing paths at different times, not even roughly in parallel." Id. at 962. Also, the complaint provided "no details as to when, where, or by whom this alleged agreement was reached." Id. In other words, the complaint as described by the In re Late Fee Court bears no relation to the FAC, which details the who, what, where, and when from 17 07CV2174H(BLM)

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which identical and contemporaneous price increases resulted. ¶¶ 1-7, 12-28, 35-55. B. The FAC States Claims Under the UCL and CLRA

Plaintiffs have asserted valid claims under both California's Unfair Competition Law ("UCL") and the Consumer Legal Remedies Act ("CLRA") based on the following facts. The Rental Car Defendants entered into an unlawful conspiracy to fix prices with respect to their rental car rates. The conspiracy consisted of two components: 1) a 9% price hike in their base rates, and 2) an agreement to pass-on the 2.5% tourism assessment to consumers. The Rental Car

Defendants misrepresented the nature of the 2.5% assessment, implying that it was owed by consumers to a taxing authority or was governmentally mandated, and omitting the fact that the uniform charge to renters resulted from their own agreement. By agreeing to uniformly pass the charge along to consumers, the Rental Car Defendants left consumers with no choice or any ability to shop around for a company with lower or no tourism fee and effectively forced them to pay a price-fixed charge. These facts violate both the UCL and the CLRA and they are certainly not authorized by the CTMA. 1. The Government Code Provides No Defense for the Price-Fixing Conspiracy Alleged in the FAC

The Rental Car Defendants' assertion that they are immunized from any liability based upon application of the antitrust laws (including the UCL) is baseless. Section 13995.