Turo v. Super. Ct. ( 2022 )

Filed 6/28/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
TURO INC.,
Petitioner,
v.
THE SUPERIOR COURT OF THE A160200
CITY AND COUNTY OF SAN
FRANCISCO, (San Francisco County
Super. Ct. No. CGC-18-563803)
Respondent;
THE PEOPLE ex rel. DENNIS J.
HERRERA, as City Attorney, etc., et
al.,
Real Parties in Interest.
Turo Inc. operates an online platform that allows car owners to rent
their cars to other Turo users. Unlike companies such as Enterprise or
Hertz, Turo does not own, lease, or rent a fleet of cars for customers to rent.
The People, acting by and through the City Attorney of San Francisco, sued
Turo alleging that Turo engaged in unlawful and unfair business practices by
operating a rental car business at San Francisco International Airport (SFO)
without a valid permit. Turo cross-complained against the City and County
of San Francisco (the City), which owns and operates SFO, seeking a
declaratory judgment that it is not a rental car company under California
law. The issue before us here is whether Turo is “in the business of renting
1
vehicles to the public.” If it is, then the parties agree that Turo is a “rental
car company” for the purposes of Government Code section 50474.1, and
accordingly SFO is authorized to require Turo to collect a fee from its
customers on behalf of the airport.
The trial court granted summary adjudication to the People and the
City on Turo’s first cause of action for declaratory relief that it is not a rental
car company under California law, and Turo now challenges that ruling.
Because we conclude that Turo is not a rental car company as that term is
defined in California statutes, we grant Turo’s petition for writ of mandate.
FACTUAL AND PROCEDURAL BACKGROUND
The material facts are undisputed. Turo is an Internet-based platform
that allows vehicle owners to list, and customers to rent, specific passenger
vehicles. Turo processes reservations and payments for the rentals, and
retains a percentage of the proceeds of each rental transaction. Turo’s terms
of service contract governs the rentals with respect to cancellations,
extensions and late returns, late fees, smoking, pets, fuel, tolls, security
deposits, street parking, and nondiscrimination. Turo provides a liability
insurance policy through a third-party insurer that covers vehicles during a
rental and offers “vehicle protection options” to “cover” the entitlement of
owners and liability of renters if a vehicle is damaged during a rental. Turo
competes with traditional on-airport and off-airport rental car companies,
and has used phrases like “rent” and “rental car” in its advertisements. Turo
lists cars for rental to be picked up at SFO, and some of Turo’s customers pick
up cars at SFO, including at curbside. The average cost of a Turo transaction
at SFO is similar to that of a traditional car rental at SFO.
The People sued Turo alleging that Turo violated the Unfair
Competition Law (Bus. & Prof. Code, § 17200 et seq.) by operating a rental
2
car business at SFO without the required permit, engaging in prohibited
curbside transactions at SFO, and using airport roadways and offering
services on airport property without permission. The People further alleged
that Turo’s actions constituted unfair business practices, inasmuch as failure
to comply with SFO’s permit and fee requirements resulted in Turo’s ability
to advertise and charge lower prices than competitor rental car companies.
Turo cross-complained against the City, seeking a declaratory
judgment that it is not a rental car company under California law.1 Turo
alleged that SFO had unlawfully demanded that Turo obtain an off-airport
rental car company permit, and pay fees that SFO is authorized to charge
only “rental car companies” under Government Code section 50474.1,
subdivision (a).2
The People and the City (collectively, Real Parties) moved for summary
adjudication on Turo’s cross-claim for declaratory relief. The trial court
concluded that Turo is a rental car company within the meaning of
Government Code section 50474.1, subdivision (a), and granted the Real
Parties’ motion.
This petition for writ of mandate followed.3
1 Turo alleged six causes of action in its operative Corrected First
Amended Cross-Complaint, but only its first cause of action for declaratory
relief is at issue in this appeal.
2 Government Code section 50474.1, subdivision (a) states in part: “An
airport operated by a city and county may require a rental car company . . . to
collect a fee from its customers on behalf of the airport for the use of an
airport-mandated common use busing system or light rail transit system
operated for the movement of passengers between the terminal and a
consolidated on-airport rental car facility.”
3 We summarily denied Turo’s petition after preliminary briefing. Turo
then filed a petition for review in our Supreme Court, which was granted.
3
DISCUSSION
I.
The term “rental car company” is not defined in the Government Code,
but it is defined in nearly identical language in three separate California
statutes to mean a person or entity in the business of renting passenger
vehicles to the public. In the chapter of the Civil Code governing “Rental
Passenger Vehicle Transactions,” “[r]ental company” is defined as “a person
or entity in the business of renting passenger vehicles to the public.” (Civ.
Code, § 1939.01, subd. (a).) In the Consumer Automotive Recall Safety Act
(Veh. Code, § 11750 et seq.), “rental car company” is defined as “a person or
entity in the business of renting passenger vehicles to the public in
California.” (Veh. Code, § 11752, subd. (f).) And in the portion of the
Insurance Code regulating the sale of insurance by “Car Rental Agents,” a
“[r]ental car company” is “any person in the business of renting vehicles to
the public.” (Ins. Code, § 1758.89, subd. (d).) From this we conclude, and the
parties agree, that for purposes of section 50474.1 of the Government Code,
Turo is a “rental car company” if it is in the business of renting vehicles to the
public.
Because the trial court’s summary adjudication order presents a
question of statutory interpretation and the application of that statute to
undisputed facts, we review the order de novo. (MacIsaac v. Waste
Management Collection & Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1081-
1082 (MacIsaac).) We must “ ‘determine the Legislature’s intent so as to
effectuate the law’s purpose.’ ” (Skidgel v. California Unemployment Ins.
The matter was transferred back to us with instructions to direct the superior
court to show cause, which we have done. The matter has now been fully
briefed, and we have had the benefit of oral argument.
4
Appeals Bd. (2021) 12 Cal.5th 1, 14 (Skidgel).) We begin by looking to the
words of the statute itself. (Ibid.; MacIsaac, supra, 134 Cal.App.4th at p.
1082 [statutory language is the “most reliable indicator” of legislative intent
because it “ ‘ “has successfully braved the legislative gauntlet” ’ ”].) We
construe those words in context, giving them “ ‘a plain and commonsense
meaning’ unless the statute specifically defines the words to give them a
special meaning.” (MacIsaac, supra, 134 Cal.App.4th at p. 1083.) Courts
appropriately refer to dictionary definitions “to ascertain the ordinary, usual
meaning of a word.” (Wasatch Property Management v. Degrate (2005) 35
Cal.4th 1111, 1121-1122,) We harmonize clauses and sections of a statutes
“ ‘by considering them in the context of the statutory framework as a whole.
[Citation.] If the statutory language is unambiguous, then its plain meaning
controls.’ ” (Skidgel, supra, 12 Cal.5th at p. 14, quoting People v. Cole (2006)
38 Cal.4th 964, 975.)
II.
There is no dispute that Turo’s entire business consists of enabling the
public to rent motor vehicles. Turo points to various dictionary definitions of
the word “rent.” (See Black’s Law Dictionary (11th ed. 2019) at p. 1551
[defining the verb “rent” as “[t]o pay for the use of another’s property”]; see
also Merriam-Webster Online Dictionary, http://www.merriam-
webster.com/dictionary/rent (June 28, 2022) [defining the noun “rent” as “the
amount paid by a hirer of personal property to the owner for the use thereof”
and the verb “rent” as “to grant the possession and enjoyment of in exchange
for rent” and “to take and hold under an agreement to pay rent”].) Turo
argues that because it does not own or possess or control the vehicles listed
on its website, and has no authority to grant the possession and enjoyment of
those vehicles to others, it does not itself rent vehicles to the public. Turo
5
further argues that because it does not rent vehicles to the public, it cannot
be in the business of renting vehicles to the public.
We conclude that Turo’s reading of the statutes is correct.
That Turo is not a rental car company is supported by several
provisions in the chapter of the Civil Code governing Rental Passenger
Vehicle Transactions. (See Civ. Code, § 1939.01, subd. (a) [“ ‘[r]ental
company’ means a person or entity in the business of renting passenger
vehicles to the public”].) In that chapter of the Civil Code, a “[r]enter” is
defined as a person “obligated under a contract for the lease or hire of a
passenger vehicle from a rental company for a period of less than 30 days.”
(Id., subd. (b), italics added.) By describing a renter as leasing or hiring a
vehicle from a rental company, the definition presumes that a rental company
contracts with renters for the lease or hire of vehicles that the rental
company owns or controls. Here, however, Turo does not own or control the
vehicles.
Other provisions in the Civil Code similarly suggest that Turo is not a
“[r]ental company” under Civil Code section 1939.01. For example, later in
this chapter, the Civil Code sets limits on the amount of a renter’s liability to
a rental company for damage to a rented vehicle, including “[t]he estimated
cost of parts which the rental company would have to pay to replace damaged
vehicle parts”; “[t]he estimated cost of labor to replace damaged vehicle
parts”; and “[a]ctual charges for towing, storage, and impound fees paid by
the rental company.” (Civ. Code, § 1939.05, subd. (a).) These limits presume
that the rental company owns or controls the rented vehicle, which is not the
case for Turo. The Civil Code defines “[d]amage waiver” as “a rental
company’s agreement not to hold a renter liable for all or any portion of any
damage or loss related to the rented vehicle, any loss of use of the rented
6
vehicle, or any storage, impound, towing, or administrative charges.” (Civ.
Code, § 1939.01, subd. (g).) A damage waiver presumes that the rental
company owns or otherwise has a property interest in the rented vehicle,
which is not the case for Turo’s rentals. In contrast, Turo offers “vehicle
protection options” for vehicle owners (whom Turo calls “hosts”) and renters
(whom Turo calls “guests”), which cover what an owner is entitled to, and
what a renter is responsible for, if a vehicle is damaged during a rental. And
another provision in this chapter, Civil Code section 1939.23, subdivision (b),
allows rental companies to “equip[ ] rental vehicles” with GPS-based
technology to provide navigation assistance, and electronic surveillance
technology that allows the remote locking or unlocking of the vehicle or that
allows the company to provide roadside assistance. The equipping of vehicles
by a rental company implies that the company owns or otherwise controls the
vehicles, again not the case for Turo.
We are not aware of any published case in which a California court has
held that an entity is “in the business of renting passenger vehicles to the
public” for the purposes of Civil Code section 1939.01, subdivision (a), when
the entity rents vehicles that it does not own or otherwise control. Still, Real
Parties argue that Turo is in the business of renting vehicles because Turo
derives revenue from its customers’ rental transactions, and the rental
activity from which it derives revenue constitutes Turo’s entire business. We
find it instructive to consider Sentry Select Ins. Co. v. Fidelity & Guaranty
Ins. Co. (2009) 46 Cal.4th 204, a case discussed by the trial court and by the
parties in their appellate briefs. In Sentry Select, our Supreme Court
recognized that courts disagree whether being “ ‘in the business of renting’ ”
commercial vehicles depends upon the frequency with which an entity
engages in the rental of commercial vehicles or the factual circumstances
7
surrounding the lease of a particular commercial vehicle. (Id. at pp. 213-214
[discussing a former version of Ins. Code, § 11580.9, subd. (b)].) There was
apparently no dispute, however, that in order to be in the business of renting,
the entity must rent out vehicles that it owns or controls. In each of the cases
discussed in Sentry Select, the entity in question owned the vehicles that
were rented. (See Travelers Indemnity Co. v. Maryland Casualty Co. (1996)
41 Cal.App.4th 1538, 1546-1547 [considering whether renting or leasing
activities were “a regular part of the insured’s business” where the insured
owned commercial trailers that were regularly used by independent
contractors]; Western Carriers Insurance Exchange v. Pacific Insurance Co.
(1989) 211 Cal.App.3d 112, 117 [considering whether “ ‘bargained exchange’ ”
for use of vehicle owned by insured company can be construed as a lease or a
rental]; Mission Insurance Co. v. Hartford Accident and Indemnity Co. (1984)
160 Cal.App.3d 97, 100-101 [considering whether a vehicle owner’s leasing of
vehicle was for a commercial purpose].) Similarly, the entity at issue in
Sentry Select, supra, 46 Cal.4th 204 was a carrier company that owned a fleet
of commercial vehicles and routinely leased most of them to independent
contractors under a standard lease agreement (id. at p. 214) and our
Supreme Court concluded that the rentals were “a regular and significant
part of the insured’s business activities.” (Ibid.)
As a general matter, the phrase “to be in the business of renting”
entails engaging in acts of renting. Thus, Village of Bedford Park v. Expedia,
Inc. (7th Cir. 2017) 876 F.3d 296 (Bedford Park) holds that online travel
agencies like Expedia are not “ ‘engaged in the business of renting’ ” hotel
rooms because they do not own or control the hotel rooms and cannot rent
them to customers. (Id. at p. 305.) In Bedford Park, as here, a statute
applied to entities “ ‘engaged in the business of renting,’ ” and did not define
8
the phrase. (Id. at pp. 301, 305.) The court considered dictionary definitions
of “rent,” determined that “renting implies ownership and granting
possession of property,” and concluded that since the travel agencies did not
own hotels or hotel rooms, they could not independently grant customers
access to those rooms. (Id. at p. 305.) The court considered the meaning of
the phrase “ ‘engaged in the business’ ” as it was used in other contexts, such
as products liability, where “sellers are not held strictly liable unless they are
engaged in the business of selling the defective product.” (Ibid.) “In that
context, a seller is only engaged in the business of selling if he does it
routinely or commercially. The [online travel agencies] do not rent hotel
rooms, so of course they do not do so routinely or commercially[, and] are not
engaged in the business of renting rooms and are not subject to” the
ordinances at issue. (Ibid.) The same could be said here with respect to Turo
and the statutes that define rental car companies.4
Real Parties argue that we should follow the reasoning of the federal
district court in Crawford v. Uber Technologies, Inc. (N.D.Cal. 2018) 2018 WL
1116725 (Crawford). There, in seeking judgment on the pleadings, Uber
argued that it was “not an entity ‘primarily engaged in the business of
transporting people’ ” for the purposes of the federal Americans with
4 The Legislature has demonstrated that it can craft broad statutory
definitions to cover entities that facilitate an activity rather than engaging in
it themselves. For example, in the Vehicle Leasing Act (Civ. Code, § 2985.7
et seq.), “[l]essor” is defined as “a person who is engaged in the business of
leasing, offering to lease or arranging the lease of a motor vehicle under a
lease contract.” (Civ. Code, § 2985.7, subd. (b), italics added.) Similarly, in
the Vehicle Code, “[d]ealer” is defined to include a person “engaged . . . in the
business of selling vehicles or . . . otherwise dealing in vehicles, whether or not
the vehicles are owned by the person.” (Veh. Code, § 285, subd. (b), italics
added.)
9
Disabilities Act. (Id. at *3.) Uber’s argument rested on the undisputed fact
that drivers, not Uber, convey passengers in vehicles that Uber does not own.
(Ibid.) In denying Uber’s motion, the district court observed that nothing in
the relevant statute requires that an entity own or lease its own vehicles in
order to qualify as a private entity providing taxi service. (Id. at *4.) Real
Parties argue that, just as nothing in the statute at issue in Crawford
required that an entity own its own vehicles, nothing in the statutory
definitions of “rental company” or “rental car company” require that a rental
car company have a possessory interest in the vehicles its rents or have the
right to control the vehicles. Real Parties argue that to interpret the statutes
as including a requirement that a rental company be in the business of
renting vehicles that it owns or controls is to effectively add words to the
statutes, which we must not do. (See City of Sacramento v. Public Employees’
Retirement System (1994) 22 Cal.App.4th 786, 794 [“ ‘[w]ords may not be
inserted in a statute under the guise of interpretation’ ”].) This argument is
not persuasive, because the word “rent,” which does appear in the statute,
implies ownership or control of the item rented. Our interpretation of “a
person or entity in the business of renting passenger vehicles to the public” as
applying only to the business of renting vehicles the person or entity owns or
controls therefore does not require the addition of any words to the statutes.
(Civ. Code, § 1939.01, subd. (a); Veh. Code, § 11752, subd. (f); Ins. Code,
§ 1758.89, subd. (d).)
Real Parties also point out that the court in Crawford, unpersuaded by
Uber’s attempt to rely on Bedford Park, concluded that Uber’s analogy to
Expedia was “strained”: “Expedia facilitates a transaction that is not
dependent on the service it offers. Hotels have rented rooms to guests long
before the creation of expedia.com and can do so without the website’s
10
assistance. By contrast, without Uber and its competitors, non-professional
drivers would find it difficult—if not impossible—to locate a rider and
transport her to the destination of her choice for monetary compensation. To
say that Uber merely facilitates connections between ‘both sides of the two-
sided ridesharing market’ obscures the fact that Uber arguably created a
market for this type of transportation.” (Crawford, supra, 2018 WL 1116725at *4.) We agree that Turo’s business model is unlike Expedia’s, and may
well be more like Uber’s, but that is not determinative. It seems as though
neither company is a perfect analogy to Turo, which appears to have some
traits in common with both: for example, the court in Crawford observed
that Expedia does not control how the hotels listed on its website price their
rooms, just as Turo apparently does not control the prices at which car
owners list their vehicles for rental. (Ibid.) In any event, the primary issue
in Crawford concerned the control that Uber exercised over its drivers, an
issue that the district court concluded could not be determined on the
pleadings. (Id. at *4.) The court observed that there were “significant factual
questions as to Uber’s degree of control over its drivers for employment law
purposes,” as well as questions about whether Uber controlled how its drivers
dealt with riders. (Ibid.) The question we face is different and more focused:
is Turo a rental car company for the purpose of section 50474.1 of the
Government Code. Interpreting that statute as incorporating the current
statutory definitions of “rental company” and “rental car company” in the
Civil Code, Vehicle Code, and Insurance Code, we conclude that the answer is
“no.”
Our conclusion that a rental car company owns or otherwise controls
the vehicles that it rents is further supported by the definition of “[p]ersonal
vehicle sharing programs,” or PVSP’s, in the Insurance Code. The Insurance
11
Code defines “ ‘[p]ersonal vehicle sharing’ ” as the “use of private passenger
motor vehicles by persons other than the vehicle’s owner, in connection with a
personal vehicle sharing program” (Ins. Code, § 11580.24, subd. (b)(1)), and
defines “ ‘[p]ersonal vehicle sharing program’ ” as “a legal entity qualified to
do business in the State of California engaged in the business of facilitating
the sharing of private passenger vehicles for noncommercial use by
individuals within the state.” (Id., subd. (b)(2).) The Insurance Code imposes
different requirements on PVSP’s, defined in section 11580.24 of the Code,
and rental car companies, defined in section 1758.89 of the Code, as persons
or entities “in the business of renting passenger vehicles to the public in
California.” (Ins. Code, § 1758.89, subd. (d).) A PVSP must “provide
insurance coverages for the vehicle and operator of vehicle that are equal to
or greater than the insurances coverages maintained by the vehicle owner”
and in any event “shall not provide liability coverage less than three times
the minimum insurance requirements for private passenger vehicles.” (Ins.
Code, § 11580.24, subd. (c)(1), italics added.) Rental car companies, in
contrast, are not required to exceed the statutory minimum liability coverage
for private passenger vehicles. (See Veh. Code, § 16000 et seq. [“Financial
Responsibility Laws”]; Philadelphia Indemnity Insurance Co. v. Montes-
Harris (2006) 40 Cal.4th 151, 155 [noting that supplemental liability policy in
effect at the time of a rental transaction was “in excess of the minimum
statutory amounts . . . required under the Financial Responsibility Law”].)
Those requirements reflect that a PVSP, unlike a rental car company, does
not own the vehicles at issue.
Further, the Insurance Code’s definition of PVSP is incorporated in the
Vehicle Code’s Consumer Automotive Recall Safety Act, which imposes
different requirements on a PVSP than on a “rental car company,” defined as
12
a “person or entity in the business of renting passenger vehicles to the public
in California” (Veh. Code, § 11752, subd. (f)). The different requirements
reflect the fact that a rental car company owns or otherwise controls the
vehicles it rents, unlike a PVSP. Accordingly, once a rental car company
receives notice of a manufacturer’s recall, it generally may not rent a vehicle
subject to recall until the recall repair has been made. (Veh. Code, § 11754,
subds. (a) & (b).) But once a PVSP has notice of a recall, the PVSP may not
“facilitate or otherwise arrange for transportation” with a recalled vehicle
“until after any recall notices for that vehicle no longer appear in the recall
database provided by the National Highway Traffic Safety Administration.”
(Veh. Code, § 11754, subd. (c).) This distinction reflects the fact that a rental
car company has control over the vehicles in its fleet in a way a PVSP does
not.5
In sum, although the Government Code does not expressly define the
term “rental car company,” we conclude that Turo is not a “rental company”
or “rental car company” as that term is defined in the statutes discussed
above, and not a rental car company for the purposes of Government Code
5In section 11754 of the Vehicle Code, the Legislature expressly stated
that its addition of distinct provisions governing the obligations of PVSP’s
with respect to recalls “shall not apply in any manner to pending litigation”
(Veh. Code, § 11754, subd. (d)), and further stated that the section “does not
affect the determination of whether or not a company is a rental car company
or whether or not a company is a personal vehicle sharing company.” (Id.,
subd. (e).) Nevertheless, the distinct obligations imposed on rental car
companies and PVSP’s in both the Insurance Code and the Vehicle Code
reflect the Legislature’s intent that a “rental car company” will have owner-
like control over the vehicles that are rented. The statute appears to leave
open the possibility that a given entity could operate as a PVSP with respect
to some transactions and as a rental car company with respect to others.
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section 50474.1. The trial court erred in concluding otherwise, and we
reverse.
DISPOSITION
The petition for writ of mandate is granted. Let a peremptory writ of
mandate issue, directing respondent court to vacate the portion of its order of
April 23, 2020, granting Real Parties’ motion for summary adjudication of
Turo’s first cause of action for declaratory judgment in its corrected first
amended cross complaint, and to enter a new order denying said motion.
Costs are awarded to petitioner.
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_________________________
Miller, J.
WE CONCUR:
_________________________
Richman, Acting P.J.
_________________________
Mayfield, J.*
A160200, Turo, Inc. v. Superior Court
*Judge of the Mendocino Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
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Court: San Francisco County Superior Court
Trial Judge: Hon. Ethan P. Schulman
Cooley LLP, Michael G. Rhodes, Matthew D. Brown, Benjamin H. Kleine,
Bethany C. Lobo, Ashley K. Corkery, Julie M. Veroff, Elizabeth B. Prelogar,
for Petitioner
No appearance by Respondent
Dennis J. Herrera, City Attorney, Yvonne R. Meré, Chief Attorney, Owen J.
Clements, Kristine A. Poplawski, Marc Price Wolf, Deputy City Attorneys, for
Real Parties in Interest
A160200, Turo, Inc. v. Superior Court
16