Turo Fires Back at SF City Attorney's Lawsuit Over SFO Fees
Peer-to-peer car-sharing company Turo Inc. has fired back against a lawsuit filed by the San Francisco city attorney, claiming the charges San Francisco International Airport (SFO) seeks from Turo are an unlawful tax.
February 23, 2018 at 04:09 PM
4 minute read
Peer-to-peer car-sharing company Turo Inc. has fired back against a lawsuit filed by the San Francisco city attorney, claiming the charges San Francisco International Airport (SFO) seeks from Turo are an unlawful tax.
What's more, the San Francisco-based startup claims the city attorney's office is doing the bidding of multinational rental car companies—in particular, Enterprise Rent-a-Car and its parent Enterprise Holdings—whose fees provide a significant portion of SFO's revenue.
“Enterprise views Turo as an existential threat and aims to use its influence to regulate, tax, or litigate Turo out of the peer-to-peer car-sharing market,” wrote Turo's lawyers at Cooley in court papers filed Friday. “Turo seeks to ensure that its new approach to peer-to-peer car sharing is not stymied by heavy-handed regulations meant to protect the status quo and the interests of the large national car rental companies, to the detriment of entrepreneurial San Francisco residents looking to offset the high cost of car ownership in the city by taking advantage of the economic opportunity created for them by Turo.”
John Cote, a spokesman for the city attorney's office, pushed back against the notion that the city attorney is acting on Enterprise's behalf.
“Our interest has always been to ensure that travelers have a safe and convenient experience at SFO and that there is an even playing field for businesses operating there,” Cote said. “Any suggestion otherwise is simply fiction.”
The San Francisco city attorney sued Turo last month, claiming it flouts rules designed to prevent congestion around SFO and to provide funding for airport infrastructure. Turo has continued to provide SFO rentals via its website even though its permit to provide “off-site” rental car services at the airport expired last summer. The city contends Turo allows people who rent through its site to have vehicles delivered curbside at SFO's terminals—skirting rules designed to filter rental car customers to areas away from the terminals via the airport's AirTrain light rail system.
In the cross-complaint that Turo's lawyers filed Friday, the company points out that the California legislature has embraced its “sharing economy” model for cars by amending the state's insurance code to recognize “person vehicle sharing programs” as a distinct kind of entity from rental car companies. The Cooley lawyers claim SFO seeks to charge Turo in a similar manner to how it charges rental companies—$18 per transaction plus 10 percent of the cost for reservations.
“Imposing this charge on Turo users is irrational, unfair, and unlawful,” wrote Turo's lawyers, pointing out that the charges to users could amount to 10 to 20 times the $3.80 charged for curbside pickups by transportation network companies such as Uber and Lyft.
Turo is seeking a declaratory judgment finding that it is not a rental car company and that it can't be compelled to comply with a regulatory regime that wasn't designed to cover a technology platform. The company is also asking a judge to find that SFO's attempt to impose the fee is an unlawful tax under the California Constitution, which requires either sign-off from local voters or that a “fee” charged by a local government bear a reasonable connection to the cost of the service provided.
Turo also claims the charges violate the dormant commerce clause of the U.S. Constitution and the equal protection clause of the U.S. and California constitutions, arguing Turo and its users would be charged fees that far exceed similarly-situated companies like Uber and Lyft.
Cote, the city attorney's office spokesman, said that companies “don't get a special set of rules just because [their] business includes a web platform.”
Cote said that Turo is trying to “have its cake and eat it too” by marketing itself to customers as a rental car company and arguing in court that it's not one. He also said that Turo advertises SFO service but then argues in court that it doesn't operate at the airport.
“Turo's goal in these tactics is simply to avoid paying their share of the fees their competitors pay,” Cote said.
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