Claim against Hotwire for underestimating rental costs moves forward

Shahar v. Hotwire, Inc., 2013 WL 3877785 (N.D. Cal. July 25, 2013)

Shahar brought the usual California claims, plus breach of contract, alleging that Hotwire falsely or misleadingly stated the price for car rentals abroad. Shahar used Hotwire to rent a car in Israel. His contract allegedly set out a daily rental rate ($14), a rental term (5 days), a list of the estimated taxes and fees ($0), and an estimated trip total amount ($70), but when he picked up the car, the rental agency required him to pay an additional $60.00 for mandatory third-party liability insurance and $20.82 in taxes.

The court found that Shahar had standing to assert claims arising from car rentals in countries other than Israel. Plaintiffs can assert claims based on unpurchased products if there are substantial similarities in the accused products and similar underlying misrepresentations. Here, Shahar alleged that Hotwire intentionally omitted taxes and fees it knew its clients would have to pay. “The statements, regardless of the country or the car rented, are the same. There is no distinction between the service Sharhar was allegedly deceived into buying and the service purchased by others; the statements at issue all concern the estimation of foreign taxes and fees, were conveyed through the same website, and resulted in consumers purchasing the same underlying service regardless of where the cars were ultimately driven.”

The court also found that Shahar stated a claim for breach of contract, and for violations of the consumer protection statutes. Hotwire argued that no reasonable consumer would believe that Hotwire’s estimated price guaranteed the actual price.  “Depending upon specific context, an estimate may be a term of an enforceable contract. The term estimate is not conclusive of the legal effect of a communication; rather, the effect depends on context.”  Here, Shahar alleged that Hotwire calculated the total estimated price based on its exclusive and superior knowledge of the base rental rate, taxes, and fees. On the pleadings, this tended to show that Hotwire knew or had reason to know that Shahar would have to pay more, at a minimum, more than $0.  Hotwire’s allegedly intentional omission lured reasonable consumers with favorable, inaccurate terms.  This sufficiently stated a claim. 

Ford v. Hotwire, Inc., 2007 WL 6235779 (S.D. Cal. Nov. 19, 2007), held that there could be no claim based on allegations that Hotwire improperly failed to include, and therefore misrepresented, special fees in hotel rates charged directly by the hotels.  There, Hotwire’s contract “expressly states that its quoted rate does not include certain charges, such as resort fees, that a hotel may impose directly,” and the amount and mandatory nature of those special fees was readily available public information. Thus, in that case, the court found that no reasonable consumer could have been deceived.

Here, however, Shahar didn’t concede that the information on local taxes and fees was publicly available or that the contract expressly stated that fees were omitted.  The parties disputed the specific contract terms and the evidence that might provide context to those terms. Thus, the case would continue.