Eberhardt v. U-Haul International, Inc.

Background

On March 23, 2023, Anthony Leso lost control of a rented U-Haul truck and crashed into Chris Eberhardt’s property in Santa Cruz County, California. Eberhardt alleged approximately $100,000 in damage to his fence, gazebo, and home walls. He alleged that Leso was uninsured and had rented the truck from U-Haul; U-Haul disputed that Leso was an authorized driver.

Eberhardt filed this putative class action on behalf of California citizens allegedly damaged by uninsured drivers of U-Haul vehicles. He asserted two claims: violation of California’s Unfair Competition Law (UCL) and negligence. U-Haul moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

UCL claim

The UCL prohibits unlawful, unfair, or fraudulent business practices. Eberhardt alleged that U-Haul’s practices were both unlawful and unfair.

For the unlawful theory, Eberhardt relied on California Vehicle Code section 16020(a), which requires drivers and owners of motor vehicles to be able to establish financial responsibility. He argued that U-Haul violated the statute by failing to ensure that Leso had insurance and by advertising to uninsured drivers.

The court rejected that theory. It concluded that section 16020(a) did not expressly require rental companies to ensure that their vehicles’ drivers were insured. The court also found that the statute did not implicitly impose that requirement. California Vehicle Code section 14608(a) specifically addressed rental companies’ obligations concerning drivers and required license-related checks, but did not require inquiries into drivers’ financial responsibility. Because Eberhardt did not allege that U-Haul itself was unable to establish financial responsibility for the truck, he failed to state a UCL claim under the unlawful-practice theory.

For the unfair-practice theory, Eberhardt argued that U-Haul’s conduct undermined section 16020(a). The court rejected the argument insofar as it sought to impose on U-Haul an insurance-verification duty that the statute did not contain. The court stated that advertising, promoting, or marketing vehicles to uninsured drivers might constitute an unfair practice because it could undermine the policy against uninsured driving. But the complaint alleged only that U-Haul’s website stated that it “does not require insurance.” The court found that this statement, without additional facts, did not show that U-Haul actively encouraged anyone to violate section 16020(a).

Negligence claim

Under California law, negligence requires a duty of care, breach, causation, and damages. Eberhardt claimed that section 16020(a) supplied a duty requiring U-Haul to ensure that the truck’s driver was insured.

The court held that Eberhardt had not alleged facts showing a violation of section 16020(a), and that the statute did not impose the claimed duty of care on rental companies. The statute addressed the financial responsibility of vehicle owners and drivers and did not state that owners owed other people an additional obligation concerning the drivers’ insurance. The court again relied on section 14608(a), noting that when the California Legislature addressed rental companies’ duties toward drivers, it required license-related inquiries but did not require financial-responsibility inquiries.

Disposition

Judge P. Casey Pitts granted U-Haul’s motion to dismiss. The court allowed Eberhardt to file an amended complaint within 21 days of the order.