1 DENNIS J. HERRERA, StateBar#l39669 City Attorney , 2 YVONNE R. MERE, State Bar# 173594 Chief of Complex and Affirmative Litigation 3 NATALIE M. ORR, State Bar #290590 JAIME M. HULING DELAYE, State Bar #270784 4 Deputy City Attorneys Fox Plaza 5 1390 Market Street, 6th Floor San Francisco, California 94102-5408 6 Telephone: (415) 554-3849 Facsimile: (415) 437-4644 7 E-Mail: [email protected] 8 Attorneys for Plaintiff PEOPLE OF THE STATE OF CALIFORNIA, 9 acting by and through DENNIS J. HERRERA AS CITY ATTORNEY OF SAN FRANCISCO 10 11 SUPERIOR COURT OF THE STATE OF CALIFORNIA 12 COUNTY OF SAN FRANCISCO 13 UNLIMITED JURISDICTION 14 PEOPLE OF THE STATE OF CALIFORNIA, case ~GC-18-5638 0 3 acting by and through DENNIS J. HERRERA 15 AS CITY ATTORNEY OF SAN FRANCISCO, COMPLAINT FOR INJUNCTIVE RELIEF 16 AND CIVIL PENALTIES FOR VIOLATIONS Plaintiff, OF BUSINESS AND PROFESSIONS CODE 17 SECTION 17200 vs. 18 TURO INC., and DOES 1-100, inclusive, 19 Defendants. 20 21 22 The PEOPLE OF THE STATE OF CALIFORNIA, by and through San Francisco City 23 Attorney DENNIS J. HERRERA ("the People"), file this Complaint against Defendants TURO INC. 24 and DOES ONE through ONE HUNDRED (collectively, "Turo"). The People allege as follows: 25 INTRODUCTION 26 1. This action arises out of Turo' s unlawful and unfair operation of a rental car business at 27 San Francisco International Airport ("SFO" or "the Airport") without a valid permit, in direct violation 28 of SFO's Rules and Regulations, the California Vehicle Code, and the California Penal Code. Until 1 COMPLAINT N :\CXLIT\LI2018\180640\01248287 .DOCX 1 August 10, 2017, Turo (f.k.a. "RelayRides, Inc.") held a valid SFO rental car permit and paid the 2 associated fees. Effective August 10, 2017, Turo voluntarily relinquished its existing permit and 3 represented to SFO that it would cease operations at the Airport. Instead, Turo has continued to 4 actively advertise and promote SFO car rentals on its website and has taken no apparent steps to 5 discontinue SFO transactions. 6 2. All other similarly situated rental car businesses comply with SFO's permit and fee 7 requirements. SFO strictly enforces these requirements in order to ensure a fair and even playing field 8 among competing companies, to manage the heavy volume of travelers and businesses at SFO, and to 9 fund the maintenance of crucial SFO facilities. 10 3. Turo's deliberate flouting of SFO's permit and fee requirements, and its continued 11 operation at the Airport in defiance of SFO's repeated directives, constitute unlawful and unfair 12 business practices in violation of the Unfair Competition Law, as codified in California Business and 13 Professions Code section 17200 et seq. (the "UCL"). Turo's practices contribute to congestion at SFO 14 terminals, deprive SFO of funds needed for its operation and maintenance, and confer on Turo an 15 unfair advantage over similarly situated businesses that operate lawfully and fairly. 16 PARTIES 17 4. Plaintiff PEOPLE OF THE STATE OF CALIFORNIA, by and through San Francisco 18 City Attorney Dennis J. Herrera, brings this action pursuant to California Business and Professions 19 Code section 17200 et seq. 20 5. Defendant TURO INC. is a corporation organized under the laws of Delaware with its 21 principal place of business located at 667 Mission Street, 4th Floor, San Francisco, California. Since 22 at least 2013, Turo has owned and operated a web-based rental car company that does business at 23 SFO. 24 6. The People are not aware of the true names and capacities of Defendants sued herein as 25 DOES 1 through 100, inclusive, and therefore sue these Defendants by such fictitious names. Each 26 fictitiously named Defendant is responsible in some manner for the violations of law alleged. The 27 People will seek leave of court to amend this Complaint to allege their true names and capacities when 28 that information is ascertained. 2 COMPLAINT N :\CXLIT\LI2018\180640\01248287 .DOCX 1 7. At all relevant times, each Defendant was an agent, servant, employee, partner, 2 franchisee or joint venturer o_f each other Defendant and at all times was acting within the course and 3 scope of said agency, service, employment, partnership, franchise or joint venture. Actions taken, or 4 omissions made, by Turo' s employees or agents in the course of their employment or agency for Turo 5 are considered to be actions or omissions of Turo for the purposes of this Complaint. 6 JURISDICTION AND VENUE 7 8. The San Francisco Superior Court has jurisdiction over this action. Turo conducts 8 unlawful and unfair business practices in the City and County of San Francisco ("San Francisco" or 9 "the City"), and the City Attorney has express authority under California Business and Professions 1O Code section 17204 to prosecute this case on behalf of the People of the State of California. 11 9. Venue is proper before this Court because Turo does business in San Francisco. 12 Specifically, Turo is headquartered in San Francisco, makes policy decisions out of its San Francisco 13 office, and advertises to San Francisco residents and tourists on its website. Furthermore, Turo 14 engages in rental car transactions that take place in San Francisco and/or involve San Francisco 15 residents. 16 GENERAL ALLEGATIONS 17 10. SFO is a world renowned international airport owned by the City and County of 18 San Francisco. The day-to-day operations of the Airport are governed by the Airport Commission, a 19 department of the City and County of San Francisco, pursuant to authority delegated by the 20 San Francisco Charter. The Airport Commission duly promulgates SFO's Rules and Regulations, 21 which "govern the general conduct of the public, tenants, employees, and commercial users of 22 San Francisco International Airport." (Foreword to SFO Rules and Regulations, available at 23 http://www.flysfo.com/ about-sfo/the-organization/rules-and-regulations.) Any person or entity that 24 violates the Rules and Regulations may be denied use of the Airport and subjected to administrative 25 fines, in addition to "other civil, legal or administrative penalties available under federal, state, local or 26 administrative law ...." (SFO Rules and Regulations, Rule 2.2.) 27 11. SFO is one of the busiest airports in the world, with approximately 53 million travelers 28 passing through SFO per year. Given the number of individuals who use SFO's roadways and 3 COMPLAINT N :\CXLI1\LI2018\180640\01248287 .DOCX 1 facilities, SFO must strictly regulate business operations on its property to ensure public safety and 2 convenience, as well as to enhance efficiency and productivity at the Airport. 3 12. Congestion is a particularly serious problem at SFO, given that tens of thousands of 4 vehicles traverse SFO's 1.5 miles of roadways on a daily basis. For this reason, SFO imposes 5 restrictions on individuals and entities that bring vehicles onto SFO property for commercial purposes. 6 Among other requirements, such individuals and entities must obtain permits, pay fees, and comply 7 with designated traffic routes. 8 13. Another manner in which SFO has attempted to address Airport congestion is by 9 investing in the AirTrain, a light rail transit system that connects SFO's terminals, parking garages, 10 Rental Car Center, and BART station. In 2017, the AirTrain transported over 8 million people. While 11 use of the AirTrain by the general public is optional, SFO requires all rental car companies to transport 12 customers between the Rental Car Center and the terminals via the AirTrain - a restriction that SFO 13 enforces through the terms of its permits. By requiring rental car customers to use the AirTrain, SFO 14 has significantly cut down on congestion at the terminals. 15 14. In addition to imposing rules to ensure fair and orderly business operations, the Airport 16 Commission sets fees to fund SFO's operations - including the maintenance of critical Airport 17 facilities like roadways. These fees are central to SFO's financial viability. They are also mandated 18 by federal law, which requires that SFO adopt "a schedule of charges for use of [its] facilities and 19 services" that renders the Airport "as self-sustaining as possible" as a condition for federal grants. (49 20 U.S.C. § 47107(a)(13)(A). See also 49 U.S.C. § 47101(a)(13) [articulating federal policy that airports 21 be as financially self-sustaining as possible].) 22 15. Rental car fees are a major source of income for SFO, and constituted approximately 23 11.5 % of SFO' s operating budget in fiscal year 2016-2017. There are two types of rental car 24 companies that operate at SFO, each of which is subject to a consistent set of permit and fee 25 requirements. "On-airport" rental car companies lease physical space at SFO's Rental Car Center fo:r; 26 the convenience of their customers through a competitive bidding process. Other companies, called 27 "off-airport" rental car companies, maintain headquarters outside SFO property but target SFO 28 travelers and use Airport roadways to collect and drop off their customers. Just like "on-airport" rental 4 COMPLAINT N :\CXLl1\LI2018\180640\01248287 .DOCX 1 car companies, "off-airport" rental car companies must pick up their customers at the Rental Car 2 Center instead of the terminal curbside. 3 16. SFO imposes fees on rental car companies through the terms of its permits. Both "on- 4 airport" and "off-airport" rental car companies are required to pay an "AirTrain fee" of $18 per rental 5 contract, which is passed through to customers, as well as 10% of gross receipts above a certain 6 threshold for SFO rental car transactions.