Eberhardt v. U-Haul International, Inc.

Background

Chris Eberhardt filed a proposed class action against U-Haul International, Inc. He alleged that, on March 23, 2023, Anthony Leso lost control of a rented U-Haul truck and damaged Eberhardt’s property in Santa Cruz County, California. Eberhardt alleged approximately $100,000 in damage to his fence, gazebo, and home walls, and alleged that Leso was uninsured.

Eberhardt alleged that U-Haul did not require renters or vehicle operators to show proof of insurance, did not automatically provide insurance, and advertised that insurance was not required. He initially asserted claims under California’s Unfair Competition Law (UCL) and for negligence on behalf of a proposed class of California citizens allegedly damaged by uninsured drivers of U-Haul vehicles.

U-Haul removed the case to federal court. The court previously granted U-Haul’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a claim. Eberhardt then filed an amended complaint asserting only a UCL claim.

Legal standard

The UCL prohibits unlawful, unfair, or fraudulent business acts or practices. Eberhardt proceeded under the UCL’s unfairness theory. To survive a Rule 12(b)(6) motion, a complaint must allege enough facts to make the claimed legal violation plausible. The court generally accepts factual allegations as true at this stage but does not accept unsupported legal conclusions or unreasonable inferences.

Court’s analysis

Eberhardt argued that U-Haul’s advertising encouraged drivers to violate California Vehicle Code section 16020(a), which requires drivers and vehicle owners to be able to establish financial responsibility and to carry evidence of that responsibility in the vehicle.

The court had previously explained that advertising rental vehicles to people without insurance could undermine California’s policy against such individuals driving. But the court had found that Eberhardt’s earlier complaint did not allege facts showing that U-Haul engaged in that type of advertising. The earlier complaint relied mainly on a U-Haul frequently asked questions webpage stating that U-Haul did not require insurance.

In the amended complaint, Eberhardt identified additional U-Haul webpage statements, including statements that customers did not need to provide insurance to rent equipment and could reimburse U-Haul for rental damage if they could not provide proof of insurance. Eberhardt characterized those statements as actively encouraging uninsured customers to rent and drive or tow U-Haul equipment.

The court rejected that characterization. It found that the statements were factual information about U-Haul’s products and appeared on webpages promoting U-Haul’s insurance product or answering customer questions. The court also noted that one statement, appearing on a page encouraging customers without insurance to purchase insurance from U-Haul, could instead be understood as encouraging compliance with California’s financial-responsibility requirement.

Disposition

Judge P. Casey Fitts granted U-Haul’s motion to dismiss. The court held that the amended complaint still did not allege facts sufficient to state a UCL violation. Because the court had previously allowed Eberhardt to amend and he had not cured the deficiencies, the court dismissed the claim with prejudice and without leave to amend.