A proposed class action lawsuit claims that a group of car rental companies operating in the San Diego International Airport has imposed an illegal tax on their customers. The complaint names the following companies as defendants:
Payless Car Rental, Inc.;
Dollar Rent A Car, Inc.;
Fox Rent A Car, Inc.; and
Advantage Opco, LLC d/b/a Advantage Rent A Car.
The tax at the center of the lawsuit stems from an attempt by the Board of Port Commissioners of San Diego Unified Port District to raise funds for a planned parking facility near the city’s convention center. According to the complaint, the Board of Port Commissioners on April 10, 2018 adopted a new resolution that levied a $3.50 tax on car rentals at San Diego Port tidelands, including the airport and its nearby rental car center, to support the building of the parking structure. Each of the defendants subsequently began adding the tax, disguised as a “user fee,” to airport car rentals, the suit explains.
The case contends that this tax was not a valid “user fee,” however, and constitutes an illegal special tax in violation of Propositions 13 and 218 since it was not approved by two-thirds of local voters. The lawsuit also argues the tax places a disproportionate burden on out-of-state customers in violation of the Dormant Commerce Clause of the Constitution. From the case:
“The tax is also unlawful and invalid for violation of the Dormant Commerce Clause of the Unites [sic] States Constitution because it does not fairly approximate the use of the facilities for whose benefit they are imposed -- only a tiny percentage of the rental car customers who pay the fee will benefit from the parking garage that will be funded and built. Rental car customers who are traveling from out-of-state bear disproportionate costs in comparison to the negligible level of ‘quantifiable services’ they receive.”
According to the suit, this tax was successfully challenged on these grounds in a complaint filed in part by Dollar Rent-A-Car’s parent company and found to be unlawful by a judge in October 2019.
The complaint claims, however, that the rental companies continued to impose the $3.50 fee on consumers, with three out of the four named defendants still charging this fee to date. The case claims the defendants all charged this sum “despite knowing that the fee was illegal and improper.” By “illegally assessing a bogus tax on car rentals” and continuing to do so after the tax in question was found to be unlawful, the lawsuit argues the defendants ran afoul of California’s Consumer Legal Remedies Act and Unfair Competition Law.
The lawsuit seeks to represent a putative class covering all U.S. citizens who rented a vehicle from the defendants in San Diego between April 10, 2018 and the present and were assessed a $3.50 fee. The suit seeks restitution of the illegal fees collected by the defendants, as detailed above, for its class members.