1 BILL LOCKYER Attorney General of California 2 ALBERT…

 1   BILL LOCKYER
     Attorney General of California
 2   ALBERT NORMAN SHELDEN
     Senior Assistant Attorney General
 3   MARGARET REITER
     Supervising Deputy Attorney General
 4   SETH E. MERMIN
      Deputy Attorney General
 5   State Bar No. 189194
     455 Golden Gate Avenue, Eleventh Floor
 6   San Francisco, CA 94102
     Telephone: (415) 703-5601
 7   Fax: (415) 703-5480
 8   JAMES P. FOX
     District Attorney, County of San Mateo
 9   State Bar No. 45169
     CHUCK FINNEY
10    Deputy District Attorney
     400 County Center, Third Floor
11   Redwood City, CA 94063
     Telephone: (650) 363-4097
12   Fax: (650) 363-4873
13   Attorneys for Plaintiff,
     The People of the State of California
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15                   IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
16                               FOR THE COUNTY OF SAN MATEO
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18    THE PEOPLE OF THE STATE OF CALIFORNIA,                    CASE NO.:
19                                  Plaintiff, COMPLAINT FOR
                                               INJUNCTION, CIVIL
20               v.                            PENALTIES, AND OTHER
                                               RELIEF
21    ACCELERON CORPORATION, ANDREW WONG,
      and BETTY Y. WONG,                       Date: November 9, 2004
22
                                                Defendants.
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     PEOPLE v. ACCELERON CORP.                COMPLAINT FOR INJUNCTION, CIVIL PENALTIES, AND OTHER RELIEF
 1           Plaintiff, the People of the State of California, by Bill Lockyer, Attorney General of the
 2   State of California, and James P. Fox, District Attorney of the County of San Mateo, allege the
 3   following on information and belief:
 4                                                PARTIES
 5           1.      Defendant Acceleron Corporation ("Acceleron") is a California corporation with
 6   its principal place of business at 734 East San Bruno Ave., San Bruno, California. Defendant
 7   Acceleron Corporation is the owner of the Payless rental car franchise with offices in San Bruno,
 8   California and Oakland, California. Acceleron is a franchisee of defendant Payless Car Rental
 9   System, Inc. ("Payless Corporate").
10           2.      Defendant Andrew Wong is an individual. Mr. Wong is the president and
11   treasurer of Acceleron and, as such, controlled, managed, and directed the activities of defendant
12   Acceleron.
13           3.      Defendant Betty Y. Wong is an individual. Ms. Wong is the vice-president and
14   secretary of Acceleron and, as such, controlled, managed, and directed the activities of defendant
15   Acceleron.
16           4.      All references in this Complaint to any of the defendants also include all of them,
17   unless otherwise specified. Whenever reference is made in this Complaint to any act of
18   defendants, such allegation means that each defendant acted individually and jointly with the
19   other defendants.
20           5.      At all relevant times, each defendant committed the act(s), caused others to
21   commit the act(s), or permitted others to commit the act(s) alleged in this Complaint.
22           6.      Any allegation about any acts of any corporate or other business defendant shall
23   mean that the corporation or other business did the acts alleged through its officers, directors,
24   employees, agents and/or representatives while they were acting within the actual or ostensible
25   scope of their authority.
26           7.      The violations of law alleged in this Complaint occurred, in relevant part, in the
27   Counties of San Mateo and Alameda as well as elsewhere in California.
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     PEOPLE v. ACCELERON CORP.                  COMPLAINT FOR INJUNCTION, CIVIL PENALTIES, AND OTHER RELIEF
 1
 2                                             BACKGROUND
 3            8.     Defendants Acceleron, Andrew Wong and Betty Wong (collectively
 4   "Defendants") are engaged in the business of renting cars to the public. Acceleron operates two
 5   Payless offices, one located at 734 San Bruno Avenue East in San Bruno, California, the other at
 6   500 Hegenberger Rd. in Oakland, California.
 7            9.     Beginning in 2003, Defendants installed global positioning system (GPS) tracking
 8   devices in certain of their vehicles offered for rental, and instituted a policy according to which
 9   renters who traversed certain geographical borders ­ specifically, who left the area comprising
10   California and two specific cities in Nevada ­ were surcharged a $1 penalty per mile traveled for
11   the entirety of the rental period.
12            10.    At the time the GPS tracking devices were first installed, renters were not notified
13   at the time of reservation about the presence of GPS tracking devices in their cars. At a later
14   date, Defendants changed their practice so that renters who at the time of reservation inquired
15   specifically about GPS tracking devices ­ but only those renters ­ were informed that the devices
16   might be present.
17            11.    At all relevant times, only those renters who at the time of reservation inquired
18   specifically about geographical restrictions were informed of the restrictions.
19            12.    At no time have renters been informed at the time of reservation that the penalty
20   for violating Defendants' geographical restriction policy would amount to $1 per mile traveled
21   for the entirety of the rental period, not just the miles driven in alleged violation of the policy.
22            13.    Between July 2003 and the spring of 2004, Defendants regularly assessed the $1
23   per mile traveled surcharge penalty, in some cases levying on renters a surcharge in excess of
24   $3000.
25            14.    Throughout the period at issue, Defendants' rental contracts contained a box
26   requiring a renter to acknowledge that the renter had been notified that Defendants' vehicles
27   could not be taken out of California and two specific cities in Nevada. At the counter, however,
28   Defendants' employees often failed to alert renters to these restrictions, in at least one instance

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     PEOPLE v. ACCELERON CORP.                   COMPLAINT FOR INJUNCTION, CIVIL PENALTIES, AND OTHER RELIEF
 1   marking the acknowledgment box only after a renter who had driven across state lines had
 2   returned the car, and in another instance giving the renter ­ who was later surcharged an out-of-
 3   state driving penalty ­ directions to a destination in Oregon.
 4           15.     At the time the GPS tracking devices were first installed, renters were not notified
 5   at the rental counter about the presence of GPS tracking devices in their cars. At a later date,
 6   Defendants changed their practice to add a passage, in the middle of a paragraph in an addendum
 7   regarding optional insurance products, that stated that certain of Defendants' vehicles might
 8   contain a GPS device.
 9           16.     Throughout the period at issue, Defendants sold their customers Renter's Liability
10   Protection (RLP) coverage, assertedly to cover damage done by the renter to third parties and
11   their vehicles. For much of the period at issue, Defendants' customers were regularly informed
12   by Defendants' employees that unless a renter could present written proof of his or her own
13   liability insurance, the renter must purchase RLP in order to rent a car from Defendants. On at
14   least some occasions, renters' requests to have their insurance companies fax proof of insurance
15   to Defendants were denied.
16           17.     Beginning at some point in the period at issue and continuing until the present,
17   the stated policy of Payless Corporate has been that in California Payless does not rent cars to
18   renters who cannot show written proof of liability insurance at the rental counter. This policy
19   has been disclosed at the time of reservation only to renters who inquire specifically about
20   liability coverage. This policy has never been disclosed at the counter by Defendants; indeed, it
21   has been Defendants' practice to rent cars to renters who cannot show written proof of liability
22   insurance at the rental counter as long as they purchase RLP.
23                            FIRST CAUSE OF ACTION
24          VIOLATIONS OF BUSINESS AND PROFESSIONS CODE SECTION 17200
                     (UNLAWFUL BUSINESS ACTS OR PRACTICES)
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26           18.     The People reallege and incorporate by reference paragraphs 1 through 17 of this

27   Complaint.

28           19.     Defendants have engaged in unfair competition as defined by California Business


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     PEOPLE v. ACCELERON CORP.                  COMPLAINT FOR INJUNCTION, CIVIL PENALTIES, AND OTHER RELIEF
 1   and Professions Code section 17200 by engaging in the following acts or practices:
 2                   a.      By making untrue or misleading statements or omissions to consumers in
 3   violation of Business and Professions Code section 17500, as set forth in paragraph 21, which is
 4   incorporated here by reference;
 5                   b.      By charging renters $1 per mile traveled for the entire rental period for
 6   driving beyond the asserted geographical restriction, in violation of Civil Code section 1671,
 7   which forbids the assessment of liquidated damages penalties;
 8                   c.      By failing adequately to notify renters of the presence of a GPS device in
 9   their rental vehicles, in violation of Business and Professions Code section 17500 and article I,
10   section 1 of the California Constitution, which secures to all Californians the right to privacy;
11                   d.      By representing or implying that consumers were required to purchase
12   RLP coverage unless they could produce physical proof of their own liability coverage, in
13   violation of section 1936(n) of the Civil Code, which forbids a rental company from charging
14   any fee (beyond those enumerated in that provision) that must be paid by the renter as a
15   condition of renting the vehicle, and further specifies that a rental company must make the
16   purchase of any insurance or similar product optional.
17                   e.      By frustrating consumers' attempts to provide proof of liability coverage;
18                   f.      By offering for rental vehicles that failed to conform to equipment-related
19   requirements of the Vehicle Code, in violation of various provisions of Division 12 of that Code;
20                   g.      By compelling renters, when the class of vehicle a renter had reserved was
21   unavailable, to accept an "upgrade" to a more expensive vehicle and charging a higher rate than
22   the rate stated in the original rental reservation;
23                   h.      By compelling consumers, when no suitable vehicle was available for a
24   consumer with a reservation, to seek a suitable rental from another company and then failing to
25   pay the consumer the price difference between the rate stated in the reservation and the rate
26   actually paid to the other company;
27                   i.      By failing to give adequate notice (1) that "local renters" receive only 150
28   free miles per day rather than the unlimited mileage promised in Defendants' advertisements and

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     PEOPLE v. ACCELERON CORP.                    COMPLAINT FOR INJUNCTION, CIVIL PENALTIES, AND OTHER RELIEF
 1   other statements and (2) of who qualifies as a "local renter" ­ in violation of Civil Code section
 2   1936(n)(4) as well as Business and Professions Code section 17500; and
 3                   j.      By assessing renters for visible vehicle damage months after those renters
 4   returned the vehicles, when at the time the renters returned the vehicles Defendants made no
 5   mention of any damage having been done.
 6                          SECOND CAUSE OF ACTION
 7          VIOLATIONS OF BUSINESS AND PROFESSIONS CODE SECTION 17500
                      (UNTRUE OR MISLEADING ADVERTISING)
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 9           20.     The People reallege and incorporate by reference paragraphs 1 through 19 of this

10   Complaint.

11           21.     Defendants have violated section 17500 of the Business and Professions Code by

12   making untrue or misleading statements and omissions to consumers with an intent to induce

13   them to enter into rental car contracts, as follows:

14                   a.      By failing properly to inform renters before the rental period how the

15   geographic restriction surcharge would be calculated (i.e. $1 per mile traveled for the entire

16   rental period), or that GPS devices would be used to monitor renters' movements;

17                   b.      By failing properly to disclose to renters that the purchase of RLP was

18   optional; and

19                   c.      By failing properly to inform "local renters" that Defendants' stated and

20   advertised offer of unlimited mileage was not available to them.

21           22.     At the time that Defendants made the above statements or omissions, they knew

22   or should have known that these statements or omissions were untrue or misleading.

23
24   WHEREFORE, Plaintiff prays for judgment as follows:

25           1.      Pursuant to Business and Professions Code sections 17203 and 17535, that all

26   Defendants, their agents, employees, officers, representatives, successors, partners, assigns, and

27   all persons acting in concert or participating with them, be permanently enjoined from violating

28   Business and Professions Code sections 17200 and 17500, including but not limited to the


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     PEOPLE v. ACCELERON CORP.                  COMPLAINT FOR INJUNCTION, CIVIL PENALTIES, AND OTHER RELIEF
 1   violations alleged in this Complaint;
 2           2.      Pursuant to Business and Professions Code sections 17206 and 17536, that the
 3   Court assess a civil penalty against each Defendant for each violation of Business and
 4   Professions Code section 17200 or 17500 alleged in the Complaint, as proved at trial;
 5           3.      That the People recover their costs of suit; and
 6           4.      That the Court grant such other and further relief as it may deem just and proper.
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     Dated: November 9, 2004
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10   JAMES P. FOX                                          BILL LOCKYER,
     District Attorney, San Mateo County                   Attorney General
11   CHUCK FINNEY                                          ALBERT NORMAN SHELDEN,
     Deputy District Attorney                              Senior Assistant Attorney General
12                                                         MARGARET REITER,
                                                           Supervising Deputy Attorney General
13   By____________________                                SETH E. MERMIN,
           CHUCK FINNEY                                    Deputy Attorney General
14         Attorneys for the Plaintiff
           People of the State of California
15                                                         By
                                                                   SETH E. MERMIN
16                                                                 Attorneys for the Plaintiff
                                                                   People of the State of California
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     PEOPLE v. ACCELERON CORP.                  COMPLAINT FOR INJUNCTION, CIVIL PENALTIES, AND OTHER RELIEF