Car rental chain Hertz will be allowed to pull to the curb a class action accusing it of improperly charging fees at non-airport car rental locations in Chicago and elsewhere, as a federal judge said the customer contract allows the dispute to go to an arbitrator.
On March 6, Kathryne Anne Kurth, of Chicago, had filed suit in Cook County Circuit Court against The Hertz Corporation, alleging she was repeatedly overcharged for car rentals in late 2017 and early 2018, paying concession fee recovery charges four different times despite not incurring the concession fee, which amounts to about $5 per rental. She filed an amended complaint after a subsequent rental.
After the case was removed to federal court, Hertz moved to compel arbitration and a partial motion to dismiss. Judge Sara L. Ellis issued an opinion on that motion Oct. 24.
John F. Ward
| Jenner & Block
According to court documents, all five transactions originated at Hertz’s agency at 401 N. State St., Chicago, where rentals do not generate concession fees as the site is not near any Chicago airport. According to Kurth’s original complaint, those fees are only applicable in situations where Hertz has to pay a concession or commission fee to an airport, hotel, train station or other agent.
Kurth belonged to the Hertz Gold Plus Rewards Program. She joined before the company updated its member agreement in 2016 to include an arbitration provision for disputes outside of property damage, personal injury or death. Customers are allowed to opt out of the arbitration provision, but Kurth did not do so until her fifth rental on March 15.
Ellis said Kurth also didn’t respond to Hertz’s motion to compel arbitration, “effectively waiving any argument in opposition to its motion.” But even if she had, the judge continued, she wouldn’t have prevailed, as the Gold Plus member agreement “clearly demonstrates the parties’ agreement to send the threshold matter of arbitrability to the arbitrator.”
Hertz argued the dispute over the final rental — added after the initial filing — should be dismissed because at the time Kurth rented that car she was aware Hertz was improperly charging the fee, so much so she’d already filed a lawsuit. That knowledge undercuts her ability to effectively allege a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act because she can’t say the company deceived her.
Kurth countered by saying the argument she was deceived constitutes an application of the voluntary payment doctrine and that the 2018 Illinois First District Appellate Court ruling in McIntosh v. Walgreens Boots All, Inc., establishes the doctrine doesn’t bar claims such as hers.
However, Ellis said Kurth incorrectly interpreted McIntosh, nothing the plaintiff in that case specifically alleged he was unaware of the alleged deceptive act when completing a purchase. She further said that other cases on which McIntosh relies also involved plaintiffs unaware of being overcharged as a transaction occurred. Ellis said Kurth’s claim can’t be amended to correct the deficiency and dismissed that aspect with prejudice.
Likewise, the failure of Kurth’s fraud claim also negated unjust enrichment claims stemming from her final rental, Ellis said. She stayed the case pending arbitration.
Kurth is represented by attorneys Clinton A. Krislov, Kenneth T. Goldstein and Christopher M. Hack, of the firm of Krislov & Associates, of Chicago.
Hertz is represented by attorneys John F. Ward and Michelle R. Singer, of the firm of Jenner & Block LLP, of Chicago.