Avis Motion to Dismiss by huangyuarong

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									             Case 1:11-cv-03166-TWT Document 24   Filed 12/09/11 Page 1 of 5




                   IN THE UNITED STATES DISTRICT COURT
                  FOR THE NORTHERN DISTRICT OF GEORGIA
                             ATLANTA DIVISION
FAITH ENTERPRISES GROUP, INC.,                )
On Behalf of Itself and All Others            )
Similarly Situation,                          )
                                              )
Plaintiff,                                    )
                                              )
                 vs.                          )    CIVIL ACTION FILE NO.
                                              )    1:11-CV-3166-TWT
AVIS BUDGET GROUP, INC., AVIS                 )
BUDGET CAR RENTAL, LLC, AND                   )
AVIS RENT A CAR SYSTEM, LLC                   )
                                              )
Defendants.                                   )


                   DEFENDANTS’ JOINT MOTION TO DISMISS
                      THE FIRST AMENDED COMPLAINT

            COME NOW Defendants Avis Budget Group, Inc. (“Avis Budget Group”),

Avis Budget Car Rental, LLC (“Avis Budget Car Rental”), and Avis Rent A Car

System, LLC (“Avis Rent A Car”) (collectively, “Avis”) and, pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure, move this Court for an order

dismissing the First Amended Complaint (the “FAC”) filed in this action by

Plaintiff Faith Enterprises Group, Inc. (“Faith”) for failure to state a claim on

which relief can be granted.




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            This Motion is based on the First Amended Complaint and on the

accompanying Memorandum of Law.

            WHEREFORE, Defendants pray that this Court:

                 (a) grant this Motion;

                 (b) dismiss the FAC for failure to state a claim on which relief can be

                 granted; and

                 (c) grant Defendants such other and further relief as may be just and

                 proper.



Dated: December 9, 2011                   __/s/ G. Patrick Watson _________

                                          G. Patrick Watson
                                          Georgia Bar No. 741226
                                          patrick.watson@bryancave.com
                                          Daniel B. Hauck
                                          Georgia Bar No. 431830
                                          daniel.hauck@bryancave.com

                                          BRYAN CAVE LLP
                                          One Atlantic Center, Fourteenth Floor
                                          1201 West Peachtree Street, NW
                                          Atlanta, Georgia 30309-3488
                                          Tel: (404) 572-5904
                                          Fax: (404) 572-6999

                                          Jonathan C. Solish
                                          California Bar No. 67609
                                          (Pro Hac pending)
                                          BRYAN CAVE LLP

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             Case 1:11-cv-03166-TWT Document 24       Filed 12/09/11 Page 3 of 5




                                           120 Broadway, Suite 300
                                           Santa Monica, CA 90401
                                           Tel: (310) 576-2100
                                           Fax: (310) 576-2200

                                           James D. Smith
                                           Arizona Bar No. 016760
                                           (Pro Hac pending)
                                           BRYAN CAVE LLP
                                           One Renaissance Square
                                           Two North Central Avenue, Suite 2200
                                           Phoenix, Arizona 85004-4406
                                           Tel: (602) 364-7000
                                           Fax: (602) 364-7070

Attorneys for Avis Budget Group, Inc., Avis Budget Car Rental, LLC and Avis Rent
A Car System, LLC

                             CERTIFICATION UNDER L.R. 7.1(D)

            Pursuant to Northern District of Georgia Local Rule 7.1(D), the undersigned

counsel for Plaintiffs hereby certifies that the above and foregoing pleading is a

computer document prepared in Times New Roman (14 point) font in accordance

with Local Rule 5.1(C).


            So certified this 9th day of December, 2011.

                                           __/s/ Daniel B. Hauck _________
                                           Daniel B. Hauck
                                           Georgia Bar No. 431830

Bryan Cave LLP
One Atlantic Center, Fourteenth Floor
1201 West Peachtree Street, NW

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            Case 1:11-cv-03166-TWT Document 24   Filed 12/09/11 Page 4 of 5




Atlanta, Georgia 30309-3488

Attorneys for Avis Budget Group, Inc., Avis Budget Car Rental, LLC and Avis Rent
A Car System, LLC




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            Case 1:11-cv-03166-TWT Document 24      Filed 12/09/11 Page 5 of 5




                  IN THE UNITED STATES DISTRICT COURT
                 FOR THE NORTHERN DISTRICT OF GEORGIA
                            ATLANTA DIVISION
FAITH ENTERPRISES GROUP, INC.,                  )
On Behalf of Itself and All Others              )
Similarly Situation,                            )
                                                )
Plaintiff,                                      )
                                                )
                vs.                             )    CIVIL ACTION FILE NO.
                                                )    1:11-CV-3166-TWT
AVIS BUDGET GROUP, INC., AVIS                   )
BUDGET CAR RENTAL, LLC, AND                     )
AVIS RENT A CAR SYSTEM, LLC                     )
                                                )
Defendants.                                     )

                              CERTIFICATE OF SERVICE

       This is to certify that I have this day served a true and correct copy of the
within and foregoing by filing the same with the Clerk of Court using the CM/ECF
filing system which automatically sends notice to counsel of record in this matter,

              This 9th day of December, 2011.


                                        __/s/ Daniel B. Hauck _________
                                        Daniel B. Hauck
                                        Georgia Bar No. 431830

Bryan Cave LLP
One Atlantic Center, Fourteenth Floor
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488

Attorneys for Avis Budget Group, Inc., Avis Budget Car Rental, LLC and Avis Rent
A Car System, LLC


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       Case 1:11-cv-03166-TWT Document 24-1    Filed 12/09/11 Page 1 of 29




                IN THE UNITED STATES DISTRICT COURT
               FOR THE NORTHERN DISTRICT OF GEORGIA
                          ATLANTA DIVISION
FAITH ENTERPRISES GROUP, INC.,            )
On Behalf of Itself and All Others        )
Similarly Situation,                      )
                                          )
Plaintiff,                                )
                                          )
              vs.                         )     CIVIL ACTION FILE NO.
                                          )     1:11-CV-3166-TWT
AVIS BUDGET GROUP, INC., AVIS             )
BUDGET CAR RENTAL, LLC, AND               )
AVIS RENT A CAR SYSTEM, LLC               )
                                          )
Defendants.                               )

    DEFENDANTS’ MEMORANDUM IN SUPPORT OF THEIR JOINT
      MOTION TO DISMISS THE FIRST AMENDED COMPLAINT

G. Patrick Watson                       Jonathan C. Solish
Georgia Bar No. 741226                  California Bar No. 67609
Daniel B. Hauck                         (Pro Hac pending)
Georgia Bar No. 431830                  BRYAN CAVE LLP
BRYAN CAVE LLP                          120 Broadway, Suite 300
One Atlantic Center, Fourteenth Floor   Santa Monica, CA 90401
1201 West Peachtree Street, NW          Tel: (310) 576-2100
Atlanta, Georgia 30309-3488             Fax: (310) 576-2200
Tel: (404) 572-6600
Fax: (404) 572-6999
                                        James D. Smith
                                        Arizona Bar No. 016760
                                        (Pro Hac pending)
                                        BRYAN CAVE LLP
                                        One Renaissance Square
                                        Two North Central Avenue, Suite 2200
                                        Phoenix, Arizona 85004-4406
                                        Tel: (602) 364-7000
                                        Fax: (602) 364-7070
      Case 1:11-cv-03166-TWT Document 24-1        Filed 12/09/11 Page 2 of 29




      Defendants Avis Budget Group, Inc. (“Avis Budget Group”), Avis Budget

Car Rental, LLC (“Avis Budget Car Rental”), and Avis Rent A Car System, LLC

(“Avis Rent A Car”) (collectively, “Avis”) submit this memorandum in support of

their joint motion to dismiss the First Amended Complaint (“FAC”) by Plaintiff

Faith Enterprises Group, Inc. (“Faith”).

                                   Introduction

      Faith’s second attempt to set forth a plausible claim for relief against Avis

suffers from the very same shortcomings as found in the original Complaint. Faith

contends that Avis has participated in a RICO conspiracy that involves providing

false information to customers about car availability at Independent Operator

Locations, such as Faith. In its initial Complaint, Faith alleged that the scheme

diverted customers to “more expensive” Company-Operated Locations [Dkt. No.

1, Compl. at ¶¶ 25, 87], but has now abandoned that contention. In the FAC, Faith

alleges that the scheme was motivated solely by a desire to avoid paying

commissions to Independent Operators. [FAC ¶¶ 86, 94]

      This assertion is meritless. Avis has established an elaborate car rental

network that includes a substantial investment not only in automobiles but also in

the “approximately 600” Avis-owned Independent Operator Locations like Faith.

[FAC ¶ 17] Yet, Plaintiff alleges that despite having deliberately created such a


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business model, Avis has now developed an illegal scheme that intentionally

directs available business away from the Independent Operators.

      The truth is, Avis can only generate revenue when its primary asset, its

vehicle fleet, is being utilized. Thus, there is a great incentive to maximize its car

rentals at all locations. Faith provides no logical explanation for why Avis would

risk losing potential rentals to competitors in order to prevent its own Independent

Operators from renting its available cars, when such rentals would profit both Avis

and the Independent Operators. In concocting its allegations of an elaborate and

irrational scheme to mislead customers about car availability so as to avoid paying

commissions to Independent Operators, Faith ignores the countless and obvious

elements that factor into Avis’ car availability and allocation decisions.

      Moreover, Faith’s entire case appears premised upon an intentional

misreading of Avis’ responsibilities to Faith under the Independent Operator

Agreement: namely, the assumption that Avis is not entitled to make decisions

about which of its own cars it allocates to locations and makes available for rent to

the public. Tellingly, Faith never claims that Avis was contractually required to

list for rent all of the cars on Faith’s lot, nor that it is entitled to a specific number

of vehicles at its location. Because of the clear contract language, the several state

law claims against Avis Rent A Car cannot survive under Georgia law.


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      Faith’s RICO claim suffers from multiple defects. First, as indicated above,

the claim is not plausible give the myriad of obvious alternative explanations about

Avis’ car allocation decisions.     Second, Faith cannot show proximate harm

stemming from Avis’ alleged acts, since those acts were expressly contemplated

under the contract. Third, Faith’s fails to plead the wire fraud-related elements of

its claim with particularity and omits specific allegations against each defendant as

required by Rule 9.     Fourth, Faith does not allege a proper RICO enterprise

because the activities of the enterprise are identical to those of Avis Rent A Car.

As a result, Faith’s claims should be dismissed.

                                   Background

      Avis operates a vehicle rental service that consists of a parent company,

Avis Budget Group, its wholly-owned subsidiary, Avis Budget Car Rental, and its

wholly-owned subsidiary, Avis Rent A Car. [FAC ¶¶ 1, 7-9] Avis utilizes three

types of locations to serve its customers, which are part of what the Complaint

describes as the “Avis System”:       (1) company-owned-and-operated locations

(“Company-Operated Locations”); (2) company-owned, third-party-operated

locations (“Independent Operator Locations”); and (3) franchisee/licensee

locations (“Franchise Locations”).      [FAC ¶¶ 17-23]       Independent Operator

Locations are managed by Independent Operators pursuant to an agreement known


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as the Independent Operator Agreement. [FAC ¶ 19] Avis Rent A Car and Faith

entered into an Independent Operator Agreement on December 16, 2005. [FAC,

Ex. A] This agreement governs the rights and obligations of each party concerning

the renting of Avis cars and the operation of the rental facility. [FAC ¶¶ 20-22]

      Faith alleges that Avis Rent A Car provided customers with “false

information” about availability of cars at Independent Operator Locations via its

control over Avis’ rental car reservation system, known as the “Wizard System.”

[FAC ¶¶ 24, 28] According to Faith, on certain days, the Wizard System informed

customers that Faith and other Independent Operator Locations were “sold out” of

cars, although internal records showed that vehicles were available. [FAC ¶ 36]

      Pursuant to the Independent Operator Agreement, Avis has complete

discretion concerning which cars it chooses to make available for rental:

      [Avis Rent A Car] shall furnish [the Independent Operator] with the
      vehicles to be rented on [Avis Rent A Car’s] behalf or on behalf of
      another Avis System member, which [Avis Rent A Car], in its sole
      discretion deems to be sufficient in quantity and class, from [the
      Independent Operator’s] location . . . .

[FAC, Ex. A at 2 (emphasis added)] Further, the Independent Operator Agreement

is an integrated contract that “supersedes all prior agreements, negotiations, and

discussions.” [Id. at 13.] Thus, the parties’ relationship is governed by an express




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agreement. Without claiming that Avis breached any agreement, Faith initiated

this litigation based upon an alleged RICO violation and certain state law claims.

                          The Applicable Legal Standard

      “To survive a motion to dismiss, a complaint must contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009), quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Id.

“Threadbare recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice.” Id. Consequently, “the tenet that a court

must accept as true all of the allegations contained in a complaint is inapplicable to

legal conclusions.” Id.

I.    Faith fails to state a plausible claim under RICO

      RICO provides a right of action to “[a]ny person injured in his business or

property by reason of a violation of section 1962.” 18 U.S.C. § 1964(c). Here,

Faith relies on § 1962(c), which makes it “unlawful for any person employed by or

associated with any enterprise . . . to conduct or participate, directly or indirectly,

in the conduct of such enterprise’s affairs through a pattern of racketeering


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activity.” 18 U.S.C. § 1962(c). To succeed on a claim under that section, the

plaintiff must show “(1) conduct (2) of an enterprise (3) through a pattern (4) of

racketeering activity.” Williams v. Mohawk Indus. Inc., 465 F.3d 1277, 1282 (11th

Cir. 2006) (internal quotation omitted).      “Racketeering activity” includes the

predicate acts of wire and mail fraud. 18 U.S.C. § 1961(1).

      A.    Avis’ alleged claim cannot survive in light of the obvious
            alternative explanations for its conduct

       Based on the factual allegations, the Court may infer “obvious alternative

explanation[s]” when ruling on a motion to dismiss. Iqbal, 129 S. Ct. at 1951-52.

The 11th Circuit embraced this concept in American Dental Association v. CIGNA

Corp., 605 F.3d 1283 (2010), when it affirmed the dismissal of a RICO claim. In

discussing those plaintiffs’ § 1962(d) conspiracy claim, the 11th Circuit pointed to

obvious alternative explanations for the defendants’ parallel conduct: specifically,

that the insurers use software to downcode and bundle healthcare providers’ claims

in order to manage costs. Id. at 1295. The 11th Circuit held that rather than

suggesting a RICO conspiracy, the allegations did not “plausibly suggest” that the

defendants “have acted in any way inconsistent with the independent pursuit of

their own economic self-interest.”      Id.   The alleged conduct was “equally

indicative of rational independent action as it is concerted, illegitimate conduct”

and did not satisfy Twombly. Id.

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      Here, rather than suggest a scheme to deprive Independent Operators of cars

to rent, Faith’s allegations are at least equally—if not overwhelmingly—indicative

of an obvious alternative explanation based in rational economic behavior: Avis

manages its fleet to maximize rentals and revenue.          Although Faith includes

allegations about “excess vehicles” on dates when the Wizard System allegedly

misrepresented sites as sold out, it offers only a hodgepodge of dates when specific

sites were “sold out” for specific rentals periods (e.g., no one-day rentals available,

“would not accept reservations for three-day rentals”) [FAC ¶¶ 37-52].

      This fails to suggest any fraud necessary to prevail upon a RICO claim. The

more plausible alternative explanation is that Avis chose to limit the types of

rentals at various sites in anticipation of particular risks and opportunities. If the

intent is to increase Avis’ revenue, no rational economic actor will deprive

Independent Operators of cars only to have “excess vehicles” sit in parking lots.

Rather, Avis would shift cars to maximize their economic utility. For example,

Avis may have limited car availability in order to meet expected demand

requirements, to minimize the risk of late returns, and to maximize the availability

of cars in areas where upcoming reservations are already in place. Thus, it makes

much more sense to accept the explanation that Avis tries to ensure it has adequate

cars available when it anticipates particular needs.


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      Similarly, no rational economic actor would shift cars to an Independent

Operator location when the cost of doing so would outweigh the benefit or when

other profitable opportunities exist.         Yet Faith’s Complaint demands this

nonsensical approach. Even within the same city, moving cars from one location

to another is costly. Avis must dispatch an employee-driver to drop off other

employees (one for each car) at the “surplus” location, who can then deliver the car

to the destination location.     This process involves significant expense and

coordination, meaning that often the more rational economic choice is to leave the

cars where they are.1

      This is not a case of a scheme to injure all the Independent Operators. It is

one Independent Operator’s unhappiness that Avis takes a macro view of fleet

management rather than a micro view focused solely on its small operation. Faith

seeks to obtain legal rights through RICO claims it was unable to secure in its

contract. The fact that the governing contract gives Avis “sole discretion” to

manage the fleet, as discussed infra, confirms this obvious alternative explanation.

1
  Faith alleges that for two consecutive days in March 2011, Avis listed five
Independent Operators in Charlotte, North Carolina as “sold out,” even though
“Avis Rent A Car internal records show that more than 400 excess vehicles were
available at the company-operated Las Vegas airport location for those dates.”
[FAC ¶ 39] This allegation may have been unintentional; but the reason such cars
are not made available in that situation is obvious: it is neither practical nor
economical to transport rental cars long distances to fill minor gaps in availability.


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      B.     Faith’s alleged injuries lack proximate cause to the alleged harm

      The Supreme Court has long held that in the RICO context, not all factually

injured plaintiffs can recover. Holmes v. Secs. Investor Protection Corp., 503 U.S.

258, 268 (1992) (requiring RICO plaintiffs to show proximate cause). “When a

court evaluates a RICO claim for proximate causation, the central question it must

ask is whether the alleged violation led directly to the plaintiff’s injuries.” Anza v.

Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006). By requiring a direct relation

between the alleged violation and injury, courts do not need to engage in the

difficult task of “ascertain[ing] the amount of a plaintiff’s damages attributable to

the violation, as distinct from other, independent factors.” Holmes, 503 U.S. at

269. Similarly, it eliminates the risk of multiple recoveries and acknowledges that

“directly injured victims can generally be counted on to vindicate the law as

private attorneys general, without any of the problems attendant upon suits by

plaintiffs injured more remotely.” Bridge v. Phoenix Bond & Indem. Co., 553 U.S.

639, 655 (2008), quoting Holmes, 503 U.S. at 269-70.

      The injury Faith claims to have suffered—namely, the loss of commissions

from car rentals—was caused not by any alleged misrepresentations to customers

or alleged RICO violations, but by Avis’s exercise of its express contractual right

to decide which cars are allocated to Faith and others within the Avis System.


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      In Hemi Group, LLC v. City of New York, 130 S.Ct. 983 (2010), an online

company based in New Mexico sold cigarettes to New Yorkers without charging

them New York taxes. The Commerce Clause barred any attempt by New York to

force an out-of-state seller to collect cigarette taxes. The Jenkins Act, however, is

a federal statute that requires out-of-state vendors to provide states with customer

sales information. The New Mexico company violated the Jenkins Act by failing

to provide customer information to New York. The City of New York seized upon

this violation of law to bring a RICO claim against the online retailer. Id. at 987.

      The Court saw the case as a RICO claim against “a company for lost taxes it

had no obligation to collect, remit or pay, which harmed a party to whom it owed

no duty.” Id. at 994. The Court held that the City’s “injuries here were not caused

directly by the alleged fraud, and thus were not caused ‘by reason of’ it.” Id. at

994. The same is true here: Faith filed a RICO claim against Avis alleging lost

rentals to persons Avis had no obligation to rent to and to whom Avis owed no

duty. As such, Faith lacks proximate harm resulting from Avis’ alleged actions.

      Although arising in the context of Federal antitrust laws rather than RICO,

Valley Products Co. v. Landmark, 128 F.3d 398 (6th Cir. 1997), further illustrates

why Faith cannot show that its injuries were caused by a purported RICO




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violation.2 In Valley Products, a hotel company decided to limit the number of

approved suppliers to its hotels. After it terminated several approved supplier

agreements pursuant to the 60-day notice provisions, the terminated suppliers

brought a Sherman Act § 1 case. In dismissing these claims, the court held that the

“loss of logoed amenity sales suffered by Valley upon cancellation of its vendor

agreement flowed directly from the cancellation, as we see it; the sales losses

would have been suffered as a result of the cancellation whether or not [defendant]

had entered into the alleged tying arrangements with the franchisees.” Id. at 404.

      The Sixth Circuit in Valley Products further cited with approval the district

court decision, finding that the plaintiffs’ “would have suffered the identical loss if

their contracts with [defendant] had simply been terminated, even if no preferred

vendor agreement . . . existed.” Id. The Sixth Circuit further found that the prior

vendor agreement had “explicitly provided” for termination and that termination

had been done in accordance with the agreement. Id. It was the termination of the

agreement, by its terms, “that caused the harm complained of.” Id.

      In this case, Avis simply exercised its express contract right to allocate its

fleet according to its sole discretion, which at times allegedly had the effect of

2
  Because Congress modeled the civil action provisions of RICO on the antitrust
laws, courts look to antitrust cases in defining concepts of causation under RICO.
Anza, 547 U.S. at 457.


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making certain cars unavailable (either physically or on the Wizard System) to

Faith. Pursuant to the Independent Operator Agreement, Avis furnishes vehicles to

Faith that, “in its sole discretion deems to be sufficient in quantity and class . . . .”

[FAC, Ex. A at 2 (emphasis added)] The exercise of that right to determine the

allocation of vehicles “caused the harm complained of”—not anything Avis may or

may not have represented to customers. Thus, like the vendor agreement in Valley

Products, because Independent Operator Agreement “explicitly provided” for Avis

to unilaterally make its cars available for rent, this circumstance cannot be the

basis for Faith’s alleged harm.

      Moreover, here the difficulties inherent in quantifying potential injury to

Faith counsel in favor of dismissal. Quantifying Faith’s supposed injury would

require somehow identifying how many cars Faith would have rented absent Avis’

alleged conduct.     This calculation, in turn, requires determining how many

customers, if any, actually sought to rent cars from Faith, saw that it was “sold out”

and proceeded to rent a car from a presumably less convenient company-owned

location or from a competitor. Even if this could be determined, the Court would

need to ascertain numerous other factors such as the price and duration of such

rental, type of cars, any loss damage waiver or gas purchased, etc. The Supreme




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Court expressly counseled against allowing “these types of intricate, uncertain

inquiries from overrunning RICO litigation.” Anza, 547 U.S. at 460.

      C.    Faith does not adequately plead the predicate wire fraud offense

      Faith relies on alleged violations of the federal wire fraud statute (18 U.S.C.

§ 1343) by Avis as the predicate acts underlying the alleged the RICO violation.

To prove the predicate wire fraud offense, a plaintiff must show: (1) the defendant

participated in a scheme or artifice to defraud; (2) with the intent to defraud; and

(3) used interstate wire transmissions for the purpose of executing the scheme or

artifice to defraud. United States v. Williams, 527 F.3d 1235, 1240 (11th Cir.

2008). As illustrated below, Avis’ conduct is entirely consistent with both the

contract and sound business practices and do not amount to fraud of any sort.

            1.     Avis did not defraud its customers or Independent
                   Operators by making business decisions about the
                   availability of its cars to rent

      Avis did not engage in a “scheme to defraud” either the public or the

Independent Operators by allegedly refusing to make available its own cars at

certain locations even though such cars were ostensibly “available” for rent. “A

scheme to defraud requires proof of a material misrepresentation, or the omission

or concealment of a material fact calculated to deceive another out of money or

property.” United States v. Maxwell, 579 F.3d 1282, 1299 (11th Cir. 2009). An


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“intent to defraud” is determined according to “whether the defendant attempted to

obtain, by deceptive means, something to which he was not entitled.” United

States v. Bradley, 644 F.3d 1213, 1240 (11th Cir. 2011).

      Avis’ alleged representations on the Wizard System about the availability of

cars cannot constitute a misrepresentation—they merely reflect Avis’ internal

planning and business decision-making.       At best, the FAC alleges that Avis

refrained from making offers to customers for available rental cars on certain days.

Fraud does not arise from an independent business decision concerning the use of

one’s own assets. See, e.g., United States v. Rothwell, 387 F.3d 579, 585 (6th Cir.

2004) (“That is, if a bank loans a borrower $1000 to purchase a car having a value

of only $500, it may be a bad business decision by the bank but it is not fraud in

the absence of a misrepresentation by the borrower affecting the initial loan

decision.”) (emphasis added).

      As noted above, Avis has complete discretion concerning which cars it

chooses to make available for rental.     [FAC, Ex. A at 2]       The fact that an

Independent Operator has Avis cars on its lot on a particular day (or that Avis has

cars available at other locations) does not mean that Avis has furnished those




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vehicles “to be rented” to customers on that day.3 Faith’s wire fraud claim requires

first accepting this erroneous premise, then taking an unwarranted step further to

conclude that the absence of those vehicles from the Wizard System constitutes an

intentional scheme by Avis to defraud customers out of money or property that

they are entitled to. A potential customer is not entitled to rent a car that Avis has

not made available to rent. Accepting these allegations as fraud would undermine

both the Independent Operator Agreement and Avis’ own business discretion.4

             2.    Faith failed to allege wire fraud with particularity

       A civil RICO claim based upon wire fraud must be pled with specificity as

required by Federal Rule of Civil Procedure 9(b). Liquidation Comm’n of Banco

3
  Decisions regarding car availability are affected by numerous factors never
acknowledged in the Complaint, including: (1) present and desired allocation of
cars among locations; (2) ongoing fleet maintenance, vehicle recalls, acquisition
and retirement; and (3) anticipated changes in demand, e.g., holidays, block
reservations, etc.
4
  Faith’s RICO claim also appears to suggest (but does not expressly allege) that
Avis defrauded Independent Operators, citing statements from Avis’ website about
the opportunities provided by Avis to Independent Operators like Faith. [FAC ¶
23] But where the terms of the contract are clear and there is a merger clause, a
party cannot claim to have been deceived such as to create a cause of action under
RICO. Curtis Inv. Co., LLC v. Bayerische Hypo-Und Vereinsbank, 1:06CV2752,
2007 WL 4564133 at *9 (N.D. Ga. Dec. 20, 2007) aff’d sub nom. Curtis Inv. Co.,
LLC v. Bayerische Hypo-und Vereinsbank, 341 F. App’x 487 (11th Cir. 2009).
Although Avis disputes any characterization that its website statements are untrue,
the merger clause in the Independent Operator Agreement nonetheless expressly
disclaims statements made outside the contract. [FAC, Ex. A at 13]


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      Case 1:11-cv-03166-TWT Document 24-1          Filed 12/09/11 Page 17 of 29




Intercontinental, S.A. v. Renta, 530 F.3d 1339, 1355 (11th Cir. 2008). To satisfy

the Rule 9(b) standard, RICO complaints must allege: (1) the precise statements,

documents, or misrepresentations made; (2) the time and place of and person

responsible for the statement; (3) the content and manner in which the statements

misled the plaintiff; and (4) what the defendants gained by the alleged fraud.

Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1380-81 (11th

Cir. 1997). Even if the kind of behavior described in the FAC could constitute

wire fraud, Faith fails to plead wire fraud with the requisite particularity.

      Faith alleges that Avis Rent A Car provided “false information” to

customers about the availability of vehicles at Independent Operated Locations.

According to the FAC, “Avis Rent A Car uses the Wizard System” to represent to

customers that cars at such locations were “sold out,” even though cars were

allegedly “available” at those locations. [FAC ¶ 36] Faith alleges 14 specific days

over the past four years when this situation allegedly occurred at its location.

[FAC ¶ 34] Faith provides examples of similar situations that allegedly occurred

to other Independent Operators elsewhere–all during 2011. [FAC ¶¶ 37-52]

      Missing from the FAC are any allegations about who saw these alleged

misrepresentations and subsequently relied on these statements. See, e.g., Am.

Dental Ass’n, 605 F.3d at 1292 (“Plaintiffs’ complaint provides a list of mailings


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     Case 1:11-cv-03166-TWT Document 24-1        Filed 12/09/11 Page 18 of 29




and wires, without ever identifying any actual fraud.”). Instead, Faith replaces

these missing allegations with a conclusory statement that “[c]ustomers have

reasonably relied on the misrepresentations in the Wizard System regarding

availability of vehicles at Faith.” [FAC ¶ 35] Such averments are factually devoid

and offer mere guesswork that is not entitled to the presumption of truth. Iqbal,

129 S. Ct. at 1951. Faith cannot set forth a plausible RICO claim based upon wire

fraud without alleging that any customers actually saw and relied upon the alleged

misrepresentations during the specific dates and at the specific locations that are

identified in the FAC.

      Furthermore, pursuant to Rule 9(b), a plaintiff is required to make targeted

allegations with respect to each defendant, and cannot lump together all of the

defendants in the fraud allegations. Brooks, 116 F.3d at 1381. “[I]n a case

involving multiple defendants . . . the complaint should inform each defendant of

the nature of his alleged participation in the fraud.”      Id. (internal quotations

omitted). Faith relies solely upon newly added “alter ego” allegations to suggest

joint conduct and liability against all three Defendants. [FAC ¶¶ 10-13] But

without any allegations actually explaining each Defendants’ alleged participation

in the wire fraud offense, Faith cannot sustain its RICO claim here.




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        Case 1:11-cv-03166-TWT Document 24-1      Filed 12/09/11 Page 19 of 29




        D.    Faith does not adequately plead the “enterprise” element required
              under RICO

        Section 1962(c) limits RICO liability to a “person employed by or associated

with any enterprise.”     18 U.S.C. § 1962(c).      An “enterprise” includes “any

individual, partnership, corporation, association or other legal entity, and any union

or group of individuals associated in fact, although not a legal entity.” 18 U.S.C.

§ 1961(4). Importantly, the RICO “person” must be separate and distinct from the

RICO “enterprise” named in the complaint. United States v. Goldin Indus., Inc.,

219 F.3d 1268, 1270 (11th Cir. 2000) (“Goldin I”) (listing unanimous agreement

among circuit courts concerning this requirement).              This distinctiveness

requirement is rooted in the statute’s plain language—one cannot “associate” with

himself, so the enterprise must reflect multiple participants coming together to

execute the scheme.

        Although it is permissible for a RICO defendant to be both a “person” under

the statute and a part of the enterprise, there is no liability under RICO where the

alleged enterprise “is nothing more than a subdivision or part of the person.”

United States v. Goldin Indus., Inc., 219 F.3d 1271, 1276 (11th Cir. 2000) (“Goldin

II”).   “The distinction between the RICO person and the RICO enterprise is

necessary because the enterprise itself can be a passive instrument or victim of the

racketeering activity.” Goldin I, 219 F.3d at 1270. To help draw this distinction,

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     Case 1:11-cv-03166-TWT Document 24-1         Filed 12/09/11 Page 20 of 29




courts look to the conduct of each entity: “[T]he activities of the alleged enterprise

must be distinguishable from the normal day to day activities of these [RICO]

‘persons.’” Myers v. Lee, No. 1:10cv131, 2010 WL 3745632, at *5 (E.D. Va. Sept.

21, 2010).

      Similarly, a RICO enterprise cannot consist merely of a single business

entity whose conduct is simply its regular business activity. Davis v. Mut. Life Ins.

Co. of N.Y., 6 F.3d 367, 377 (6th Cir. 1993) (“An organization cannot join with its

own members to undertake regular corporate activity and thereby become an

enterprise distinct from itself.”). In Fitzgerald v. Chrysler Corp., 116 F.3d 225,

228 (7th Cir. 1997), Judge Posner rejected the notion that a firm relying on

independent operators could comprise a RICO enterprise whereas a vertically

integrated firm would escape liability:

      [W]here a large, reputable manufacturer deals with its dealers and
      other agents in the ordinary way, so that their role in the
      manufacturer’s illegal acts is entirely incidental, differing not at all
      from what it would be if these agents were the employees of a totally
      integrated enterprise, the manufacturer plus its dealers and other
      agents (or any subset of the members of the corporate family) do not
      constitute an enterprise within the meaning of the statute.

      Here, Faith alleges an enterprise that is not distinct in any way from the

Defendants, particularly Avis Rent A Car, and thus fails to satisfy the standard for

pleading an enterprise. The “enterprise” alleged in the FAC is again the “Avis


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      Case 1:11-cv-03166-TWT Document 24-1        Filed 12/09/11 Page 21 of 29




System,” which is described as the “1,300 Avis System locations operated by Avis

Rent a Car and its licensees (franchisees) and ‘independent operators’ throughout

the United States.”    [FAC ¶¶ 1, 72]      Although Faith attempts to bolster the

distinction among these various entities in its newest iteration of the complaint, the

truth remains the same: “Avis System” is simply Avis Rent A Car and its agents—

the Independent and Franchise Operators. See Riverwoods Chappaqua Corp. v.

Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d Cir. 1994) (holding distinctness

requirement not satisfied “by alleging a RICO enterprise that consists merely of a

corporate defendant associated with its own employees or agents carrying on the

regular affairs of the defendant”) (emphasis added). Avis is engaged in precisely

the same day-to-day activity as the alleged enterprise of Avis Rent A Car and the

Independent and Franchise Operators: renting vehicles to customers. Faith fails to

identify any distinction between the activity of RICO Defendants and the

enterprise alleged here.

II.   Faith’s state law claims against Avis Rent A Car are barred by the
      Independent Operator Agreement

      Faith brings three additional claims against one or more of the Avis

companies concerning violations of state law: (1) breach of duty of good faith and

fair dealing; (2) breach of fiduciary duty; and (3) unjust enrichment. Faith claims

that Avis breached its “fiduciary and contractual duties by routinely and

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     Case 1:11-cv-03166-TWT Document 24-1         Filed 12/09/11 Page 22 of 29




systematically failing to provide sufficient vehicles to Independent Operators.”

[FAC ¶ 4; see also FAC ¶ 27]

      Georgia adheres to the principle of lex loci delicti, which requires that the

substantive law of the state where the tort was committed governs the claim.

Dowis v. Mud Slingers, Inc., 279 Ga. 808, 815-16 (2005). Here, Faith avers that it

is a Georgia corporation that operates in Atlanta, Georgia. [FAC ¶ 6] The alleged

harm took place in Georgia, and thus Georgia law applies to these claims.

      A.     No breach of fiduciary duty exists against Avis Rent A Car

      In Georgia, a breach of contract generally cannot constitute a tort unless a

special or confidential relationship exists between the parties. Miles v. Great S.

Life Ins. Co., 197 Ga. App. 540, 541 (1990). “The party asserting the existence of

a confidential relationship has the burden of establishing its existence.” Canales v.

Wilson Southland Ins. Agency, 261 Ga. App. 529, 531 (2003). “[I]n the majority

of business dealings, opposite parties have trust and confidence in each other’s

integrity, but there is no confidential relationship by this alone.” Newitt v. First

Union Nat’l. Bank, 270 Ga. App. 538, 545 (2004) (internal quotations omitted).

Because there is no confidential relationship by virtue of the business relationship

alone, “most business relationships are not fiduciary relationships.” Id. at 546.




                                         21
     Case 1:11-cv-03166-TWT Document 24-1         Filed 12/09/11 Page 23 of 29




      Here, Avis had no fiduciary duty to Faith.        The Independent Operator

Agreement spells out all of the terms of the contract between Avis and Faith. It

further includes an integration clause that expressly disclaims any prior

agreements, negotiations or discussions. [FAC, Ex. A at 13] Nothing in the

contract or in the relationship between the parties suggests that a fiduciary

relationship exists. Without establishing this relationship, Faith cannot sustain its

claim for breach of fiduciary duty.

      B.     No breach of implied covenant of good faith and fair dealing
             exists against Avis Rent A Car

      Under Georgia law, “[e]very contract imposes upon each party a duty of

good faith and fair dealing in its performance and enforcement.”           Brack v.

Brownlee, 246 Ga. 818, 820 (1980) (citation omitted). But “[i]f an agreement by

its express terms grants a party absolute or uncontrolled discretion in making a

decision, then no duty of good faith is implied as to that decision.” Hunting

Aircraft, Inc. v. Peachtree City Airport Auth., 281 Ga. App. 450, 453 (2006).

      In any event, “the common law requirement of good faith and fair dealing is

not an independent source of duties for the parties to a contract.” Am. Casual

Dining, LP, 426 F. Supp. 2d 1356, 1370 (N.D. Ga. 2006). As a result, an alleged

breach of an implied covenant of good faith and fair dealing is not recognized as an

independent cause of action from a contract claim. Stuart Enter. Int’l, Inc. v.

                                         22
     Case 1:11-cv-03166-TWT Document 24-1          Filed 12/09/11 Page 24 of 29




Peykan, Inc., 252 Ga. App. 231, 234 (2001). Similarly, there can be no liability for

exercising a right under contract. It is “well settled that a party does not breach its

obligation of good faith where it exercises a right that it has under the contract.”

Tommy McBride Realty, Inc. v. Nicholson, 286 Ga. App. 135, 136-37 (2007).

“There can be no breach of an implied covenant of good faith where a party to a

contract has done what the provisions of the contract expressly give him the right

to do.” Nobel Lodging, Inc. v. Holiday Hospitality Franchising, Inc., 249 Ga. App.

497, 500 (2001) (internal quotations omitted).

      In bringing this claim, Faith persists in misrepresenting the key language of

the Agreement. Although Paragraph 107 of the FAC confirms that Avis Rent A

Car allocates cars in a quantity “which [Avis Rent A Car], in its sole discretion

deems to be sufficient in quantity and class, from [the Independent Operator’s]

location. . . .”   [Emphasis added; bracketed words and ellipses in original],

Paragraph 109 distorts the contract language as follows: “Avis Rent A Car has not

acted in good faith in exercising its discretion to furnish vehicles ‘sufficient in

quantity and class’ to Plaintiff and each Class member.”              This allegation

intentionally misreads the Agreement.

      Nevertheless, Faith’s claim here fails on multiple grounds.            First, no

independent cause of action exists for a breach of the implied covenant of good


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      Case 1:11-cv-03166-TWT Document 24-1          Filed 12/09/11 Page 25 of 29




faith and fair dealing, meaning Faith’s claim cannot be sustained here. Second,

Avis has the right to allocate vehicles to Faith in its “sole discretion,” and it did so.

[FAC, Ex. A at 2] Under Georgia law, this express right to sole control over the

decision-making means that Avis Rent A Car bears no duty of good faith and fair

dealing to Faith concerning the availability of cars.

      In sum, Avis Rent A Car has merely exercised its rights under the contract.

If Faith is dissatisfied with those terms, it always had and still maintains the right

to terminate the contract after providing 90 days written notice. [FAC, Ex. A at

10] Consequently, Faith’s claim here should be dismissed.

      C.     No claim for unjust enrichment exists against Avis Rent A Car

      Faith claims that Avis was unjustly enriched by requiring Independent

Operators to honor coupons. [FAC ¶¶ 112-16] In Georgia, a claim for unjust

enrichment cannot survive where there is an express contract between the parties.

Camp Creek Hospitality Inns, Inc. v. Sheraton Franchise Corp., 139 F.3d 1396,

1413 (11th Cir. 1998) (citations omitted); Parks v. Thompson Builders, Inc., 296

Ga. App. 704, 706 (2009) (“Unjust enrichment is an equitable concept and applies

when as a matter of fact there is no legal contract . . . .”) (internal quotations

omitted). Here, the relationship between Avis Rent A Car and Faith is governed




                                           24
     Case 1:11-cv-03166-TWT Document 24-1       Filed 12/09/11 Page 26 of 29




by the Independent Operator Agreement. This existence of this agreement bars

Faith’s unjust enrichment claim.

                                   Conclusion

      Faith cannot expand its contract rights by filing RICO claims. Nothing

alleged in the FAC shows that any customers were defrauded by information

provided on Avis’ website about vehicle availability. To find otherwise would be

to undermine the business discretion that is necessary for any business—large or

small—to operate.

      Avis is simply under no obligation to make all of its cars available to

customers at all times at all of its locations. Under the Independent Operator

Agreement, the sole discretion concerning the allocation of cars resides with Avis.

Indeed, the existence and plain language of the Independent Operator Agreement is

fatal to Faith’s various state law claims. Consequently, the FAC states no viable

causes of action and should be dismissed.




                                        25
     Case 1:11-cv-03166-TWT Document 24-1      Filed 12/09/11 Page 27 of 29




Dated: December 9, 2011              __/s/ G. Patrick Watson _________

                                     G. Patrick Watson
                                     Georgia Bar No. 741226
                                     patrick.watson@bryancave.com
                                     Daniel B. Hauck
                                     Georgia Bar No. 431830
                                     daniel.hauck@bryancave.com

                                     BRYAN CAVE LLP
                                     One Atlantic Center, Fourteenth Floor
                                     1201 West Peachtree Street, NW
                                     Atlanta, Georgia 30309-3488
                                     Tel: (404) 572-5904
                                     Fax: (404) 572-6999

                                     Jonathan C. Solish
                                     California Bar No. 67609
                                     (Pro Hac pending)
                                     BRYAN CAVE LLP
                                     120 Broadway, Suite 300
                                     Santa Monica, CA 90401
                                     Tel: (310) 576-2100
                                     Fax: (310) 576-2200

                                     James D. Smith
                                     Arizona Bar No. 016760
                                     (Pro Hac pending)
                                     BRYAN CAVE LLP
                                     One Renaissance Square
                                     Two North Central Avenue, Suite 2200
                                     Phoenix, Arizona 85004-4406
                                     Tel: (602) 364-7000
                                     Fax: (602) 364-7070


Attorneys for Avis Budget Group, Inc., Avis Budget Car Rental, LLC and Avis Rent
A Car System, LLC

                                       26
     Case 1:11-cv-03166-TWT Document 24-1         Filed 12/09/11 Page 28 of 29




                     CERTIFICATION UNDER L.R. 7.1(D)

      Pursuant to Northern District of Georgia Local Rule 7.1(D), the undersigned

counsel for Plaintiffs hereby certifies that the above and foregoing pleading is a

computer document prepared in Times New Roman (14 point) font in accordance

with Local Rule 5.1(C).


      So certified this 9th day of December, 2011.

                                        __/s/ Daniel B. Hauck _________
                                        Daniel B. Hauck
                                        Georgia Bar No. 431830

Bryan Cave LLP
One Atlantic Center, Fourteenth Floor
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488

Attorneys for Avis Budget Group, Inc., Avis Budget Car Rental, LLC and Avis Rent
A Car System, LLC




                                         27
      Case 1:11-cv-03166-TWT Document 24-1         Filed 12/09/11 Page 29 of 29




                IN THE UNITED STATES DISTRICT COURT
               FOR THE NORTHERN DISTRICT OF GEORGIA
                          ATLANTA DIVISION
FAITH ENTERPRISES GROUP, INC.,                 )
On Behalf of Itself and All Others             )
Similarly Situation,                           )
                                               )
Plaintiff,                                     )
                                               )
              vs.                              )     CIVIL ACTION FILE NO.
                                               )     1:11-CV-3166-TWT
AVIS BUDGET GROUP, INC., AVIS                  )
BUDGET CAR RENTAL, LLC, AND                    )
AVIS RENT A CAR SYSTEM, LLC                    )
                                               )
Defendants.                                    )


                             CERTIFICATE OF SERVICE

       This is to certify that I have this day served a true and correct copy of the
within and foregoing by filing the same with the Clerk of Court using the CM/ECF
filing system which automatically sends notice to counsel of record in this matter,

             This 9th day of December, 2011.

                                        __/s/ Daniel B. Hauck _________
                                        Daniel B. Hauck
                                        Georgia Bar No. 431830

Bryan Cave LLP
One Atlantic Center, Fourteenth Floor
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488

Attorneys for Avis Budget Group, Inc., Avis Budget Car Rental, LLC and Avis Rent
A Car System, LLC


                                         28

								
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