Web-based car company ruled a rental car company under California law
SAN FRANCISCO (June 17, 2021) — City Attorney Dennis Herrera released the following statement today regarding the First District Court of Appeal’s order denying Turo’s petition for writ of mandate. The writ petition asked the appellate court to review a trial court’s decision that Turo is a rental car company under California law.
Herrera sued Turo, a web-based rental car company, in 2018 for trying to game the San Francisco International Airport permit system. Turo relinquished its airport permit effective Aug. 10, 2017, and represented that it would cease operations at the City-owned airport, known widely by its three-letter international code, SFO. However, since then, Turo continued to operate at the airport without the requisite permits in defiance of repeated warnings from City officials.
In April 2020, a trial court granted Herrera a summary adjudication on a number of Turo’s claims and defenses, including equal protection claims, dormant commerce clause and California Constitution claims. The court also ruled that Turo is a rental car company under California law. On May 26, 2020, Turo filed a petition for writ of mandate with the First District Court of Appeal, asking the court to review and overturn the trial court’s ruling that Turo is a rental car company. Litigation in Herrera’s case against Turo has been stayed since June 10, 2020, per order of the trial court, pending the appellate court’s resolution of Turo’s writ petition.
“I’m pleased that the court has denied Turo’s petition for writ of mandate and we can now begin to litigate this case,” Herrera said. “Turo has to play by the same rules as every other company. They don’t get special treatment because their business includes a web platform. Just like every other business that operates at SFO, Turo needs to follow the laws that apply there. That includes having permits to operate vehicles at the airport.”
“SFO’s rules exist for a reason. Permits help control SFO’s traffic flow, enhance safety for travelers and maintain airport facilities. Our interest is in ensuring that travelers have a safe and convenient experience at SFO and that there is an even playing field for businesses operating there. Turo needs to pay its fair share for the public facilities it is profiting off of.”
For years, Turo (formerly operating as RelayRides), held a permit to operate as an “off-airport” rental car company at SFO. In August 2017 it relinquished that permit and advised SFO by letter that it would cease operations at the airport.
Instead, Turo has continued to operate at the airport and actively market it services to SFO travelers. Turo’s “Airport car rental” page on its website listed SFO as one of Turo’s “Top Airports.” Similarly, Turo’s “San Francisco” page listed “SFO Airport” as one of the suggested “Nearby Car Rental Locations.” Lower down on the page, it stated: “Airport Pickup Available” followed by the names of the three major Bay Area airports, starting with SFO. Turo touted its “’Curbside Delivery” at San Francisco International Airport, with many of its more than 200 SFO rental car listings expressly offering to drop off or pick up the rental car curbside at terminals. When prospective renters in San Francisco clicked the search box on Turo’s homepage to input their desired location, a dropdown menu populated by Turo listed “SFO – San Francisco International Airport” as the first suggested location.
According to the lawsuit filed in San Francisco Superior Court on Jan. 24, 2018, Turo’s flouting of SFO’s permit requirements violated state law prohibiting unfair and unlawful business practices by giving Turo an unfair advantage over the seven other “off-airport” rental car companies they’re competing against, all of whom complied with the airport’s permitting requirements. It also added to traffic at the airport and compromised funding for facilities maintenance and operation. Rental car fees are a major source of income for SFO, constituting approximately 11.5 percent of the airport’s operating budget in fiscal year 2016-2017.
“As a result of Turo’s willful noncompliance with SFO’s permit and fee requirements, Turo has been able to advertise and charge lower prices than competitor rental car companies who play by the rules — a textbook example of unfair competition,” Herrera’s civil complaint says.
According to the complaint, Turo’s conduct harms not only its competitors, but also the public:
- Turo has commercially exploited SFO’s roadways and facilities while depriving SFO of fees needed to maintain those facilities for public use.
- Turo’s continued participation in unlawful curbside pickups has contributed to congestion at the terminals and flouted rules designed for the safety and convenience of travelers.
- By actively promoting SFO rental car transactions after the expiration of its permit, Turo has misled both car owners and prospective renters about the lawfulness of such transactions and placed Turo car owners at risk of civil and criminal liability.
“Turo’s practices contribute to congestion at SFO terminals, deprive SFO of funds needed for its operation and maintenance, and confer on Turo an unfair advantage over similarly situated businesses that operate lawfully and fairly,” Herrera said.
The City is seeking a court order prohibiting Turo from engaging in rental car transactions at SFO; and encouraging or facilitating SFO transactions in any other manner until Turo fully complies with SFO’s permit and fee requirements. The lawsuit also seeks civil penalties of up to $2,500 per violation, reimbursement for costs from the lawsuit and other relief. The lawsuit was filed on behalf of the People of the State of California under California Business and Professions Code section 17200.
The case is: People of The State of California v. Turo Inc., San Francisco Superior Court Case No. CGC-18-563803, filed Jan. 24, 2018. Additional documentation from the case is available on the City Attorney’s website at: sfcityattorney.org
- People of The State of California v. Turo Inc. file stamped complaint
- Order on Motions for Summary Adjudication and Motions to Seal
- Petition for Writ of Mandate Denied
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