Turo Inc. v. City of Los Angeles

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

Present: The Honorable CHRISTINA A. SNYDER

Catherine Jeang Not Present N/A

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

Not Present Not Present

Proceedings: (IN CHAMBERS) - CITY’S MOTION FOR A PRELIMINARY

INJUNCTION (ECF No. 89, filed March 17, 2020)

TURO’S MOTION TO DISMISS CITY’S COUNTERCLAIMS

(ECF No. 90, filed March 17, 2020)

KWAN AND KORNAKOV’S MOTION TO DISMISS CITY’S

COUNTERCLAIMS (ECF No. 102, filed April 23, 2020)

I. INTRODUCTION

Plaintiff and counterdefendant Turo Inc. (“Turo”) operates an online and mobile

peer-to-peer car sharing platform whose users conduct business across the country,

including at Los Angeles International Airport (“LAX”). Defendant and counterclaimant

City of Los Angeles (“City”), which operates LAX, determined that Turo’s operations are

subject to the City’s regulations that apply to enterprises that transact business at LAX.

Turo disputes this determination. On July 12, 2018, Turo filed this action to obtain a

declaration that the City cannot enforce its LAX regulations against Turo. See ECF No. 1

(“Compl.”).

On January 14, 2019, the Court granted in part, and denied in part, the City’s motion

to dismiss. See ECF No. 39 (“MTD Order’). Turo did not file an amended pleading, and

its remaining claims request a declaration that: (1) California Government Code § 50474.3

prevents the City from classifying Turo as a rental car company subject to the City’s

regulations and fees; (2) that the fees threatened to be charged by the City are taxes that

must be submitted to, and approved by, voters pursuant to Article XIII-C, § 1(e) of the

California Constitution before they can be imposed; (3) that the imposition of the fees

threatened to be charged by the City would violate the Commerce Clause of the United

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

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No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

States Constitution because they are excessive and unrelated to a fair approximation of

what it costs to use LAX’s facilities; and (4) that the City’s attempts to enforce its

regulations and fees against Turo violates its rights secured by the Equal Protection Clause

of the Fourteenth Amendment. See Compl. 104-125. The City filed an answer on March

1, 2019, ECF No. 42, and an amended answer on April 10, 2019, ECF No. 43 (“Answer”).

After receiving the City’s answer, the Court held scheduling conference on May 20,

2019 to set case management dates, and established a July 26, 2019 deadline to file any

amended pleadings. See ECF No. 50 (“Scheduling Order”). The parties subsequently

stipulated to an order modifying certain case management dates, but retaining the July 26,

2019 amendment cutoff. See ECF No. 59.

On December 30, 2019, the City moved to amend the scheduling order, and for leave

to file a second amended answer and countercomplaint that alleges counterclaims against

Turo, as well as three individuals—Eric Kwan, Andras Smulovics, and Andrey

Kornakov—who allegedly conduct business at LAX using the Turo platform. See ECF

No. 71. The Court granted the motion on February 19, 2020. See ECF No. 79. The City

formally filed its countercomplaint on February 21, 2020. See ECF No. 80 (“CC”).

The countercomplaint asserts the following claims: (1) violation of Los Angeles

Municipal Code (““LAMC”) § 171.02(b) and related airport commerce regulations; (2)

trespass; (3) aiding and abetting trespass (only against Turo); (4) unjust enrichment; and

(5) unlawful and unfair business practices in violation of California Business and

Professions Code § 17200 (the “Unfair Competition Law” or “UCL”’). See CC 49 205-44.

Turo filed a motion to dismiss the countercomplaint on March 17, 2020. See ECF

No. 90 (“Turo MTD”). Kwan and Kornakov filed their own motion to dismiss the

countercomplaint on April 23, 2020, in which Smulovics subsequently joined. See ECF

No. 102 (“K&K MTD”). The City, meanwhile, filed a motion for a preliminary injunction

against Turo and the individual counterdefendants on March 17, 2020. See ECF No. 90

(“MPI”). The parties have filed oppositions and replies to each motion. See ECF No. 98

(“Opp. Turo MTD”), ECF No. 109 (““Opp. K&K MTD”), ECF No. 99 (“Turo Opp. PI.”),

ECF No. 107 (“K&K Opp. PI’), ECF No. 110 (‘Turo MTD Reply”), ECF No. 125 (“K&K

MTD Reply”), ECF No. 108 (“PI Reply”). The Court held a hearing on the motions on

June 8, 2020.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

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No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

All three motions are now before the Court.' Having considered the parties’

arguments, and the submissions in support thereof, the Court finds and concludes as

follows.

II. RELEVANT FACTS ALLEGED

A. The City Regulates Ground Transportation At LAX

The City of Los Angeles is a municipal corporation that owns and operates LAX.

CC § 127. California Government Code § 50474(f) authorizes the City to “regulate the use

of the airport” including the “means of transportation within or over the airport.” The City

exercises this authority through its Department of Airports, known as Los Angeles World

Airports (“LAWA”), as directed by ordinances that it may enact. Id. { 127. One such

ordinance states that “no person shall engage in any business or commercial activity of any

kind whatsoever on the Airport without first having applied for and obtained the

appropriate license, lease, or permit therefor.” See LAMC § 171.02(b).

LAWA Ground Transportation Rules and Regulations (“GTRR”) § 5.3 applies this

prohibition to unpermitted car rental businesses. Pursuant to GITRR § 5.3, “unless

specifically authorized] .. . a Rental Car Company is prohibited from causing its drivers,

employees, agents, contractors or licensees to load Rental Car Company customers at the

Airport.” LAWA defines a “Rental Car Company” as “[a|ny business that, directly or

indirectly, provides, procures and/or brokers rental vehicles as part of its business and/or

conducts, facilitates and/or manages vehicle rental activities as part of its business.” See

GTRR § 1.37. This definition specifically “includes . . .peer-to-peer car rental businesses

and car sharing businesses” that operate at LAX. Id.

A rental car company can obtain authorization to conduct business at LAX in

compliance with GTRR § 5.3 and LAMC § 171.02(b) either by entering into a Rental Car

Concession Agreement (“RCCA”) or a Non-Exclusive License Agreement (“NELA”) with

LAWA. See CC 4 150. Companies entering into a RCCA establish an on-site rental car

concession at LAX and may operate shuttle businesses in the central terminal area. In

exchange, these on-site companies must collect and remit customer facility charges to

Turo also filed a motion to strike certain material raised in the City’s reply brief in

support of its motion for a preliminary injunction. See ECF No. 121. Because the Court

does not rely on any of the challenged material, that motion is denied as moot.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

LAWA, and pay LAWA 10% of all gross receipts generated from their LAX business

subject to a minimum annual guarantee of $730,000. Id. Car companies that operate under

a NELA do not have on-site concessions and may not operate their own shuttles in the

central terminal area, but LAWA provides their customers a LAWA-operated shuttle bus

to a remote rental car facility. Id. In exchange, NELA-authorized businesses pay LAWA

a flat monthly fee of $6,120. NELA-authorized businesses do not collect customer

facilities charges or pay a percentage of their gross receipts. Id.

B. —_‘_Turo Provides Car Sharing Services Available At LAX

Turo operates an online and mobile peer-to-peer car sharing marketplace that allows

car owners to rent their cars to other Turo users. CC § 162. Turo does not own any of the

vehicles made available for rent on its platform, but its two-sided market facilitates

transactions between its users. Car owners use Turo’s platform to post rental listings, and

renters use Turo’s platform to search for and select a listed car to rent from pickup locations

across the United States, including airports. Id. 163-165. Turo collects payments from

renters, retains a portion as a transaction or service fee, and remits the remainder to the

owner that placed the listing. Id. § 165.

Turo provides its users with a variety of support services and functionalities in

addition to its core market-making service. For example, Turo provides owners who list

their cars with $1 million in liability insurance for each car they list, professional vehicle

photography to bolster their advertisements, and pre-screening services to vet individual

renters before they can rent an owner’s vehicle. CC §[ 167-168, 170. On the other side of

the platform, Turo provides renters with 24/7 roadside assistance and emergency support,

and confirms that vehicles listed on its marketplace adhere to certain quality standards. Id.

| 167-68. Turo also imposes a number of standard material terms on the rental agreements

formed between users, including cancellation terms, a cleaning policy, a late return policy,

a fuel policy, a smoking policy, and a pet policy. Id. § 172. Turo also allows owners to

have Turo set the rental price for each listed vehicle based on a variety of factors, including

factors informed by internal data. Id. § 171.

At least some portion of Turo’s business has come from vehicles made available to

rent at airports, including LAX. Id. 4 174-179. Although Turo does not mandate where

owners must make their vehicles available for pick-up, Turo has expressly advertised to

prospective renters that owners can deliver vehicles to nearby airports for pickup so renters

can avoid the inconvenience of obtaining a rental car from an on-site rental concession

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Title TURO INC. v. CITY OF LOS ANGELES

counter. Id. | 174-76. This includes specific advertisements on its website related to

LAX, including the representation that there are “200 cars available for delivery to Los

Angeles International Airport.” Id. 4 177.

C. The Individual Counterdefendants Place Vehicles For Rent On Turo

Unlike the many car owners who can use Turo to rent their personal vehicles when

they are not in use, counterdefendants Kwan, Kornakov, and Smulovics are among the

Turo users who each own dozens of vehicles for the purpose of placing them for rent on

platforms like Turo’s. See CC 4 180-82, 4 185, {| 187-88. Kwan’s Turo page advertises

a “fleet” of more than 280 vehicles. Id. 182. Since 2016, Kwan has leased those vehicles

on Turo more than 32,000 times. Id. Smulovics’ Turo page lists 33 vehicles, which he has

rented out to Turo users more than 5,000 times since 2015. Id. §/ 185. Kornakov does

business as “101 Car Rental” and, in addition to his Turo host page, Kornakov maintains

the website □□□□□□□□□□□□□□□□□□□□□ Id. § 188. 101 Car Rental—which represents itself as

“a premium car rental company based in Los Angeles’— lists 58 vehicles, which Kornakov

has rented to Turo users at least 2,300 times since 2017. Id. § 187. The individual

counterdefendants’ vehicles are available to be picked up at LAX, sometimes with an

added surcharge. See id. 182, 185, 187.

D. The City Attempts To Regulate Turo And Its High-Volume Users

LAWA learned about Turo’s operations at LAX in 2016. CC 9192. LAWA

informed Turo on November 7, 2016 that GTRR § 5.3 and LAMC § 171.02(b) require

Turo to obtain authorization to conduct business at LAX, either by negotiating a NELA or

a RCCA with LAWA. Id. § 193. In response, Turo denied that its business operations

made it subject to the requirements of GTRR § 5.3 and LAMC § 171.02(b), and stated it

would “not be seeking a concession agreement or a [NELA] for a remote off-airport rental

car business at this time.” Id. § 194. Turo continued to operate at LAX. Id. fj 195-96.

On January 30, 2017, LAWA sent a second letter to Turo informing Turo that the

authorization requirements set forth in GTRR § 5.3 and LAMC § 171.02(b) apply to peer-

to-peer vehicle sharing platforms like Turo. Id. Turo did not cease operations, and

continued to conduct business at LAX. Id. 4 197.

LAWA sent Turo a formal cease and desist letter on April 3, 2017. Id. { 200. Turo

did not cease its operations. Id. § 202. Fifteen months later, Turo filed this action against

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

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Title TURO INC. v. CITY OF LOS ANGELES

the City for declaratory relief in July 2018, and the City responded with the counterclaims

and request for injunctive relief now before the Court in December 2019.

E. ‘Traffic Conditions Worsen Within The LAX Central Terminal Area

While the City’s dispute with Turo unfolded, traffic within the LAX central terminal

area became increasingly congested. See CC § 157. The deteriorating traffic conditions at

LAX have resulted in part from the construction of a major modernization project—the

Landside Access Modernization Project—that has reduced or narrowed the number of

available traffic lanes within the LAX central terminal area. Id. § 160. Reducing airport

vehicle traffic has, accordingly, become an increasingly important priority, and LAWA has

enacted new measures to remove vehicles from the central terminal area. Id. §] 160-61.

For example, LAWA has required on-site rental car concessionaires, and passengers

awaiting taxis or rideshare vehicles, to take shuttles to offsite locations to meet their ground

transportation, including the parking lot known as “LAX-it.” Id. § 161. The City claims

that Turo’s continuing operations undermine these efforts, and give Turo an advantage over

its competitors that comply with LAX regulations.

Il. LEGAL STANDARDS

A. Motion To Dismiss

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal

sufficiency of the claims asserted in a complaint. Under this Rule, a district court properly

dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence of sufficient

facts alleged under a cognizable legal theory.”” Conservation Force v. Salazar, 646 F.3d

1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t, 901 F.2d 696, 699

(9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does

not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds’ of his

‘entitlement to relief requires more than labels and conclusions, and a formulaic recitation

of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 555 (2007) (internal citations omitted). “Factual allegations must be enough to

raise a right to relief above the speculative level.” Id. (internal citations omitted).

In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all

material allegations in the complaint, as well as all reasonable inferences to be drawn from

them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be read in

the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors, 266

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

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Title TURO INC. v. CITY OF LOS ANGELES

F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to dismiss can

choose to begin by identifying pleadings that, because they are no more than conclusions,

are not entitled to the assumption of truth. While legal conclusions can provide the

framework of a complaint, they must be supported by factual allegations.” Ashcroft v.

Iqbal, 556 U.S. 662, 679 (2009): see also Moss v. United States Secret Service, 572 F.3d

962, 969 (9th Cir. 2009) (“[Flor a complaint to survive a motion to dismiss, the non-

conclusory ‘factual content,’ and reasonable inferences from that content, must be

plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,

determining whether a complaint states a plausible claim for relief will . . . be a context-

specific task that requires the reviewing court to draw on its judicial experience and

common sense.” Iqbal, 556 U.S. at 679.

Unless a court converts a Rule 12(b)(6) motion into a motion for summary judgment,

a court cannot consider material outside of the complaint (e.g., facts presented in briefs,

affidavits, or discovery materials). In re American Cont’! Corp./Lincoln Sav. & Loan Sec.

Litig., 102 F.3d 1524, 1537 (9th Cir. 1996) rev'd on other grounds sub nom Lexecon, Inc.

v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court may, however,

consider exhibits submitted with or alleged in the complaint and matters that may be

judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon Graphics Inc.

Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles, 250 F.3d 668,

689 (9th Cir. 2001).

B. Preliminary Injunction

A preliminary injunction is an “extraordinary remedy.” Winter v. Natural Res. Def.

Council, Inc., 555 U.S. 7, 22 (2008). The Ninth Circuit summarized the Supreme Court’s

clarification of the standard for granting preliminary injunctions in Winter as follows: “[a]

plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the

merits, that he 1s likely to suffer irreparable harm in the absence of preliminary relief, that

the balance of equities tips in his favor, and that an injunction is in the public interest.”

Am. Trucking Ass’n, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009); see

also Cal. Pharms. Ass’n_ v. Maxwell-Jolly, 563 F.3d 847, 849 (9th Cir. 2009).

Alternatively, “‘serious questions going to the merits’ and a hardship balance that tips

sharply towards the plaintiff can support issuance of an injunction, so long as the plaintiff

also shows a likelihood of irreparable injury and that the injunction 1s in the public interest.”

Alliance for the Wild Rockies v. Cottrell, 622 F.3d 1045, 1053 (9th Cir. 2010). Serious

questions are those “which cannot be resolved one way or the other at the hearing on the

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Title TURO INC. v. CITY OF LOS ANGELES

injunction.” Bernhardt v. Los Angeles Cty., 339 F.3d 920, 926 (9th Cir. 2003) (citation

omitted).?

A preliminary injunction, moreover, may only be awarded “upon a clear showing”

of evidence that supports each relevant preliminary injunction factor. Winter, 555 □□□□ at

22. “This ‘clear showing’ requires factual support beyond the allegations of the complaint,

but the evidence need not strictly comply with the Federal Rules of Evidence.” CI Games

S.A. v. Destination Films, No. 16-CV-05719-SVW-JC, 2016 WL 9185391, at *11 (C.D.

Cal. Oct. 25, 2016) (citing Flynt Distributing Co., Inc. v. Harvey, 734 F.2d 1389, 1394 (9th

Cir. 1984)). But while “a plaintiff may not support a motion for a preliminary injunction

by merely pointing to his complaint and the facts alleged therein,” Shaterian v. Wells Fargo

Bank, Nat. Ass’n, No. 11-CV-00920 SC, 2011 WL 2314151, at *4 (N_D. Cal. June 10,

2011), a “verified complaint . . . may afford the basis for a preliminary injunction.” K-2

Ski Co. v. Head Ski Co., 467 F.2d 1087, 1088 (9th Cir. 1972); accord Thalheimer v. City

of San Diego, 645 F.3d 1109, 1116 (9th Cir. 2011) (‘A verified complaint may be treated

as an affidavit, and, as such, it is evidence that may support injunctive relief’), overruled

? Turo argues that a stricter standard should apply to this motion, on grounds that the

relief sought here is, they contend, “mandatory” rather than “prohibitory.” See Turo PI

Opp. at 12 (citing Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d

873, 879 (9th Cir. 2009) for the proposition that “mandatory injunctions are not granted

unless extreme or very serious damage will result and are not issued in doubtful cases or

where the injury complained of is capable of compensation in damages”). According to

Turo, the City’s motion seeks mandatory relief since it seeks to alter the status quo by

directing the counterdefendants to take “affirmative” actions. Id.

The Court disagrees. A motion seeks mandatory relief only when it “goes well

beyond maintaining the status quo pendente lite.” Martin v. Int’] Olympic Comm., 740

F.2d 670, 675 (9th Cir. 1984). However, “the status quo is not simply any situation before

the filing of the lawsuit, but rather the last uncontested status that preceded the parties’

controversy.” Dept. of Parks & Rec. v. Bazaar del Mundo, Inc., 448 F.3d 1118, 1124 (9th

Cir. 2006). Accordingly, in cases where a movant “seeks merely to reverse action” taken

by the non-moving party that “gave rise to the parties’ dispute’”—n this case, preventing

the counterdefendants from conducting allegedly unauthorized operations—the requested

relief is prohibitory, not mandatory. Auntie Anne’s, Inc. v. Wang, No. 14-CV-01049-

MMM, 2014 WL 11728722, at *8 (C_D. Cal. July 16, 2014).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

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Title TURO INC. v. CITY OF LOS ANGELES

on other grounds Bd. of Trustees of Glazing Health & Welfare Tr. v. Chambers, 941 F.3d

1195 (9th Cir. 2019); see also Wright & Miller, 11A Fed. Prac. & Proc. Civ. § 2949 (3d

ed. 2020) (explaining that “pleadings may be considered” as evidence in support of a

preliminary injunction “if they have been verified”); e.g., Myers v. Thompson, 192 F.

Supp. 3d 1129, 1138 (D. Mont. 2016) (stating that the plaintiff's “verified complaint is

treated as an affidavit, and thus may be used as evidence to support an injunction”).

IV. DISCUSSION

Turo and the individual counterdefendants move to dismiss the City’s counterclaims,

while the City requests a preliminary injunction against Turo and each of the individual

counterdefendants based on several of those claims. The Court first addresses the motions

to dismiss, and then turns to consider the preliminary injunction.

A. Motions To Dismiss

Turo and the individual defendants each contend that the City’s counterclaims fail

to allege facts sufficient to support the elements of its claims. In addition, Turo claims that

it is immune from all of the City’s claims pursuant to the liability shield of the

Communications Decency Act of 1996 (“CDA”), 47 U.S.C. § 230.

For the reasons discussed in the sections that follow, the Court finds that CDA § 230

does not immunize Turo from the City’s claims, and that the City has adequately alleged

each of its claims for relief.

(1) CDA Section 230 Immunity

Section 230 of the CDA “provides internet companies with immunity from certain

claims in furtherance of its stated policy ‘to promote the continued development of the

Internet and other interactive computer services.’” HomeAway.com, Inc. v. City of Santa

Monica, 918 F.3d 676, 681 (9th Cir. 2019) (quoting 47 U.S.C. § 230(b)(1)). The relevant

statutory text provides that “[n]o provider or user of an interactive computer service shall

be treated as the publisher or speaker of any information provided by another information

content provider.” 47 U.S.C. § 230(c)(1). The statute then expressly pre-empts

inconsistent state laws: “No cause of action may be brought and no liability may be

imposed under any State or local law that is inconsistent with this section.” Id. § 230(e)(3).

The immunity is “not meant to create a lawless no-man’s-land on the Internet.” Fair

Hous. Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157, 1164 (9th

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Cir. 2008) (en banc). Conduct that is “unlawful when posed face-to-face or by telephone”

does not “magically become lawful when [conducted] electronically online.” Id.

Accordingly, the Ninth Circuit has limited the scope of Section 230 to “extend immunity

to ‘(1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to

treat, under a state law cause of action, as a publisher or speaker (3) of information provided

by another information content provider.”” HomeAway.com, Inc., 918 F.3d at 681

(quoting Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1100-01 (9th Cir. 2009)).

Turo claims that the City’s counterclaims seek to hold Turo liable for content

published by its users on Turo’s platform in contravention to this immunity. See Turo

MTD at 14-27. Specifically, Turo claims the City’s claims are barred by Section 230

because they seek to hold Turo liable for the actions of its users who publish rental listings

and select LAX as the designated pickup point for car rentals. According to Turo, because

the content of the rental listings are provided by third-party users, and because the City’s

claims seek to hold Turo—an interactive computer service—responsible for that content,

Section 230 applies.

The City does not dispute that Turo is an interactive computer service, but it contends

that Section 230 does not apply because the City seeks to hold Turo liable for its role

facilitating online rental car transactions, not as the publisher or speaker of its users’

listings.*

3 The City alternatively contends that Section 230 immunity does not apply because

Turo is, in any event, also a contributing publisher to the content of its users’ rental listings

since it allegedly encourages owners to make their vehicles available at LAX, and thus to

publish listings that state that their vehicles may be picked up at LAX. See Opp. Turo

MTD at 4-9. The Ninth Circuit “define|s] ‘publication’ in this context to ‘involve

reviewing, editing, and deciding whether to publish or to withdraw from publication third-

party content.”” HomeAway.com, 918 F.3d at 681-82 (quoting Barnes, 570 F.3d at 1102):

see also Roommates.com, 521 F.3d at 1170-71.

There is a split of authority as to whether soliciting or encouraging content makes

an interactive platform service a “publisher” for the purpose of applying Section 230

immunity. Compare Opperman v. Path, Inc., 84 F. Supp. 3d 962, 987 (N.D. Cal. 2015)

(holding that an interactive service will not be deemed a publisher if it “merely

encourage|s] the creation of the challenged conduct; the [interactive service] must have

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The Court agrees. “Section 230(c)(1) limits liability based on the function the

defendant performs, not its identity.” Force v. Facebook, Inc., 934 F.3d 53, 81 (2d Cir.

2019) (Katzmann, C.J., concurring in part). Applying this principle, the Ninth Circuit held

in HomeAway.com that Section 230 did not immunize companies providing peer-to-peer

home rental platform services from a City of Santa Monica ordinance that requires

homeowners to register their properties with the city before listing them on a home sharing

platform. See HomeAway.com, 918 F.3d at 681-684. The court explained that the

immunity did not apply because the City of Santa Monica did not seek to hold the platform

companies “liab/le] for the content of the bookings” posted by their users, but only for their

actions “processing transactions for unregistered properties.” Id. at 682, 684. The Ninth

Circuit underscored this holding in Dyroff v. Ultimate Software Group, Inc., 934 F.3d 1093

(9th Cir. 2019), where it repeated that the immunity did not apply to the defendants in

HomeAway.com because “the vacation rental platforms” in that case “did not face liability

for the content of their listings” but rather “from facilitating unlicensed booking

transactions.” Id. at 1098; accord Airbnb v. City and County of San Francisco, 217 F.

Supp. 3d 1066, 1074-74 (N._D. Cal. 2016) (concluding that Section 230 did not immunize

required another to create that content”) and La Park La Brea A LLC v. Airbnb, Inc., 285

F. Supp. 3d 1097, 1107 (C.D. Cal. 2017) (quoting same), with F.T.C. v. Accusearch □□□□□□

570 F.3d 1187, 1199-1200 (10th Cir. 2009) (holding that defendant service was a publisher

because it “affirmatively solicited” the challenged content) and F.T.C. v. LeadClick Media,

LLC, 838 F.3d 158, 176 (2d Cir. 2016) (holding that defendant service “materially

contribut[ed]” to the publication of the challenged content, and could thus be deemed a

publisher of that content, by soliciting it).

The Ninth Circuit has not squarely addressed the issue, but the en banc decision in

Roomates.com strongly suggests that encouragement can suffice to make an interactive

service a publisher. See Roomates.com, 521 F.3d at 1172 (holding that Section 230 did

not immunize Roomates.com because Roomates.com “elicits the allegedly illegal content

and makes aggressive use of it in conducting its business,” and distinguishing

Roomates.com from the defendant website in Carafano v. Metrosplash, Inc., 339 F.3d

1119, 1124 (9th Cir. 2003), to whom the immunity applied because that website “did

absolutely nothing to encourage the posting” of the challenged material). The Court need

not decide the issue, however, because, as explained in the accompanying text that follows,

the Court concludes that the City’s claims do not involve the publication of content, but

rather Turo’s conduct to facilitate car rental transactions.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

Airbnb from a San Francisco ordinance that held the platform service “liable only for [its]

own conduct, namely for providing, and collecting a fee for, booking services in connection

with an unregistered unit”).

To reach its decision, the HomeAway.com court rejected the platform companies’

objections that the Santa Monica ordinance required the companies (1) “to monitor the

content of a third-party listing” and (11) to “remove third party content” that does not

comply. Id. at 682-683. The Ninth Circuit held that “the only monitoring that appears

necessary in order to comply with the Ordinance relates to incoming requests to complete

a booking transaction—content that, while resulting from the third-party listings, is

distinct, internal, and non-public,” id. at 682, and that while “removal of these listings”

might present “the best option “from a business standpoint|,]| . . . the underlying duty ‘could

have been satisfied without changes to content posted by the website’s users,’” id. at 683.

Consistent with the holding in HomeAway.com, recent decisions by federal courts

across the country have also denied Section 230 immunity to platform services where it

was only the platforms’ commercial transaction-facilitating functions that were subject to

regulation. See, e.g., Airbnb, Inc. v. City of Bos., 386 F. Supp. 3d 113, 122 (D. Mass.

2019) (concluding that Section 230 did not immunize Airbnb from city ordinance that only

applied to Airbnb “in its capacity as a booking agent and payment processor’); State Farm

Fire & Cas. Co. v. Amazon.com, Inc., 390 F. Supp. 3d 964, 973-74 (W.D. Wis. 2019)

(concluding that “Amazon’s active participation in the sale’—including its function

“payment processing”—“‘is not activity immunized by the CDA”); see also Oberdorf v.

Amazon.com Inc., 930 F.3d 136, 153 (3d Cir. 2019), opinion vacated pending rehr’g en

banc, 936 F.3d 182 (3d Cir. 2019) (holding that Section 230 did not immunize Amazon

from common law claims that sought to hold Amazon liable for its “role in the actual sales

process’ —including “processing customer payments, relaying funds and information to

third-party vendors, and collecting the fees it charges for providing these services”—since

that conduct “extends beyond a mere editorial function” and does not constitute publication

of content by third-parties).

Turo contends that HomeAway.com is not applicable because, unlike the City of

Santa Monica’s claims, “the City’s claims here would require Turo to monitor content

created and posted by its third-party users (1.e., location information for vehicle handoffs)

and to remove offending content or disallow such posts.” Turo MTD at 20. But

HomeAway.com is on point: in both cases, municipal rules imposed registration

requirements as a condition of doing business over a peer-to-peer platform within a covered

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘Oo’

Case No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

jurisdiction, see GTRR §§ 1.37, 5.3; LAMC § 171.02(b),* and the platform services were

alleged to have “process/ed] transactions” that did not comply with those requirements, see

CC 192-202. The only “location information” that Turo would need to monitor to

comply with the City’s rules is not materially dissimilar from the registration information

that the HomeAway.com defendants were required to monitor: both sets of information are

supplied by users directly to the platform companies and “relate[d] to incoming requests to

complete a booking transaction.” HomeAway.com, 918 F.3d at 682. And any obligation

on Turo to “remove offending content” could also be “satisfied without changes to content

posted by the website’s users” by, for example, eliminating an owner’s ability to post a

vehicle for rent at an address (or with geographic coordinates) that fall within the LAX

excludable area in the first place. Id. at 683.

Because “the Platforms face no liability for the content of the bookings” but “only

from” facilitating “unlicensed bookings,” Section 230 does not immunize their claims. See

HomeAway.com, 918 F.3d at 684.

(2) Sufficiency of the Factual Allegations

Turo and the individual counterdefendants also contend that the City fails to plead

facts sufficient to state any of the claims against them. For the reasons discussed below,

the Court disagrees.

(a) LAMC § 171.02(b) Claim

LAMC § 171.02(b) states that “[n]o person shall engage in any business or

commercial activity of any kind whatsoever on the Airport without first having applied for

and obtained the appropriate license, lease, or permit therefor.” GTRR § 5.3 establishes

that “the appropriate license” for car rental activities—which includes “peer-to-peer car

rental businesses and car sharing businesses,” GTRR § 1.37—1s either a NELA or a RCCA.

The City alleges that Turo and the individual counterdefendants violate this

prohibition by continuing to conduct business at LAX without obtaining, or even

4 Because the City’s other claims—for trespass, unjust enrichment, and resulting

violations of the UCL—arise from materially identical conduct (i.e., conducting business

on its premises without authorization), the HomeAway.com court’s reasoning applies

equally to Turo’s asserted immunity to those claims as well.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

attempting to obtain, either a NELA or a RCCA. See CC 4f§ 192-204, 9 205-214. The

City further alleges that it has suffered and continues to suffer harm as a result of the

counterdefendants unauthorized actions, including lost revenue and increased congestion

and passenger delay within the central terminal area. Id. 4] 213-14.

Turo and the individual counterdefendants concede that they have not obtained a

NELA or a RCCA, but they contend that the City fails to allege that (1) they are car rental

businesses, (11) that they conduct commercial activity “on” the airport, and (111) that the

City suffers any actual injury as a result of their conduct. See Turo MTD at 27-28, K&K

MTD at 5-10. None of these arguments 1s persuasive.

First, the City alleges that the counterdefendants operate rental car businesses as

defined by GTRR § 1.37. See CC § 144. That regulation clearly defines car rental

businesses to include “peer-to-peer car rental businesses and car sharing businesses” like

Turo, 101 Car Rental, and the other individual counterdefendants’ car sharing businesses.

See GTRR § 1.37. It makes no difference that LAWA’s definition of “car rental business”

in GTRR § 1.37 may be dissimilar from other definitions contained within unrelated bodies

of California law. See Alcala v. City of Corcoran, 147 Cal. App. 4th 666, 670 (2007)

(holding that the statutory definition of a term in one California statute does not govern the

application of the same term in a separate California statute); cf. Turo MTD at 28 n. 8

(pointing to distinct statutory definitions for rental car businesses under various provisions

of the California Insurance Code, the California Vehicle Code, and the California Civil

Code). LAWA’s authority to regulate commercial activity at LAX, and to define car rental

business, derives from the authority delegated to the City by California Government Code

§ 50474(f) to “[rjegulate the use of the airport,” and the California Government Code does

not define a car rental business or company.” LAWA accordingly had discretion to define

> Even if the California Government Code defined car rental business, that definition

would need to apply to § 50474, and even then, that definition could still permit LAWA’s

interpretation absent clear statutory language prohibiting it. See Yamaha Corp. of Am. v.

State Bd. of Equalization, 19 Cal. 4th 1, 7 (1998) (reviewing courts may defer to a

California agency’s interpretation of an ambiguous state statute to the extent its reasoning

is persuasive); see also New Cingular Wireless PCS, LLC v. Public Utilities Com., 246

Cal. App. 4th 784, 810 n.22 (2016) (explaining that “[t|he analytic framework established

in Yamaha drew heavily from Justice Jackson’s opinion for the United States Supreme

Court in [Skidmore v. Swift & Co, 323 U.S. 134, 140 (1944)][.]”). In this respect, the fact

that California Government Code § 50474.3(a)(5) defines “on-airport rental vehicle

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

such businesses in the course of administering its authority to regulate the airport’s use,

and its definition plainly reaches each of the counterdefendants.

Second, the City alleges that the counterdefendants conduct business “on” the

airport. See CC □□ 174-79, 4] 181-89. The contention that the counterdefendants cannot

conduct business “on” the airport as a matter of law because they process transactions

online is without merit. Turo operates a peer-to-peer car sharing platform that facilitates

car rental transactions that take place, among other locations, “on” LAX premises. Each

individual counterdefendant, moreover, executes vehicle handoffs “on” those same

premises in order to complete a transaction. See CC 4§§ 183-84. The individual

counterdefendants’ contention that they do not conduct any “recognizable business or

commercial activity” on LAX premises because they do not literally “purchas|e] or selll |

goods at LAX” but only “us[e] the public areas of LAX” to complete their transactions,

see K&K MTD at 8, rests upon an unreasonably narrow interpretation of the regulations.

Turo’s contention that it “does not conduct any commercial activity at LAX” because

“Turo has no physical presence” at LAX and “never enters LAX in order to engage in

commercial activity there” is likewise flawed. See Turo MTD at 28. Especially in a digital

economy, commercial activity often takes place beyond the location of an actual point-of-

sale. See S. Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2095 (2018) (observing that “instant

access to most consumers via any internet-enabled device” means that “a business may be

present in a [jurisdiction] in a meaningful way without that presence being physical in the

traditional sense of the term’) (citations and internal marks omitted); cf, K&K MTD at 7.

To take just one example, commercial airlines generate millions of dollars a year in

business revenue from LAX passenger bookings that, in many if not most cases, are

executed wholly online. That is commercial activity that takes place at LAX.° The

companies” as a subclass of airport “rental vehicle companies” (not otherwise defined)

indicates that the latter may include companies that, like peer-to-peer car sharing services,

conduct remote operations.

Wilson _v. Cook, 197 Cal. App. 3d 344 (1987), cited in the individual

counterdefendants’ reply, is not persuasive authority on this point. That case concerned a

state parks regulation that “prohibits the solicitation, sale, hawking or peddling of

merchandise or services in the park area without a permit.” Id. at 348 (citing 14 Cal. Code

Regs. § 4331). The court held that a sailboarding company did not violate Section 4331

by providing unpermitted sailboarding lessons in a state park since the “teaching activities

were incidental to prior arrangements made at respondents’ retail stores outside the park.”

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

individual counterdefendants are correct that California courts give “regulatory language

its plain, commonsense meaning,” Price v. Starbucks Corp., 192 Cal. App. 4th 1136, 1145-

46 (2011) (cited in K&K MTD at 6), and in this case, the plain, commonsense meaning of

“commercial activity .. . on the Airport” includes each of the counterdefendants’ business

operations.

Third, to the extent it is an element of the City’s LAMC § 171.02(b) claim for

damages,’ the City has adequately alleged facts articulating the actual injuries it has

suffered and continues to suffer as a result of the counterdefendants’ conduct. See CC

213-14. Specifically, the City claims that the counterdefendants’ unauthorized business

activities at LAX have caused the City to lose revenue from unpaid fees and also suffer

disrupted operations from the increased congestion and passenger delay those activities

have caused within the central terminal area. Id. It is immaterial to liability whether the

City’s injuries are “de minimis,” as the individual counterdefendants allege, or not. Cf.

K&K MTD at 9-10. If injury is indeed a substantive element of its LAMC § 171.02(b)

claim for damages, the City need only allege (and, to prevail, prove) some actual injury to

satisfy that element of its claim under California law. See, e.g., Jaimez v. Daiohs USA,

Inc., 181 Cal. App. 4th 1286, 1306 (2010) (“While there must be some injury in order to

recover damages, a very modest showing will suffice.”). The City has done so. See CC

213-214.

The City has therefore alleged facts that, if proven, would be sufficient to establish

a claim for a violation of LAMC § 171.02(b). The motions to dismiss this claim are denied.

(b) Trespass and Abetting Trespass Claims

“Trespass is an unlawful interference with possession of property.” Staples _v.

Hoefke, 189 Cal. App. 3d 1397, 1406 (1987). To prove trespass under California law, the

Id. at 350. But that construction of Section 4331—a prohibition addressed to a narrow

range of specific conduct (soliciting, selling, hawking, peddling)—is inapposite to the

proper construction of the LAX rules at issue here, which more generally prohibit

unpermitted “commercial activity” at LAX.

7 Although the City is suing to enforce the ordinance, enjoin the counterdefendants,

and recover civil penalties, it also includes a request for damages in its countercomplaint.

See CC, Request for Relief { 6.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘Oo’

Case No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

City must allege (1) “ownership or control of the property” at issue, (2) the

counterdefendants’ “intentional, reckless, or negligent entry onto the property,” (3) the

counterdefendants’ “lack of permission for the entry or acts in excess of permission,” (4)

harm, and (5) that the counterdefendants’ conduct was “a substantial factor in causing the

harm.” Ralphs Grocery Co. v. Victory Consultants, Inc., 17 Cal. App. 5th 245, 261-62

(2017). Aider and abettor liability may be “imposed on one who aids and abets the

commission of a [trespass] if the person . . . knows the other’s conduct constitutes a

[trespass] and gives substantial assistance or encouragement to the other to so act[.]” Fiol

v. Doellstedt, 50 Cal. App. 4th 1318, 1325 (1996) (citations and marks omitted). To be

found liable, the abettor must act “with the intent of facilitating” the trespass. Casey v.

U.S. Bank Nat. Assn., 127 Cal. App. 4th 1138, 1146 (2005) (citation and marks omitted).

Substantial assistance, in turn, may be established by alleging facts that demonstrate that

the alleged abettor’s actions were a “substantial factor” in the trespasser’s “ability to

perpetrate” the trespass. See Neilson v. Union Bank of California, N.A., 290 F. Supp. 2d

1101, 1132 (C.D. Cal. 2003) (addressing the sufficiency of a pleading alleging intentional

tort abettor liability).

The City alleges that it controls LAX, that the counterdefendants have entered or

caused others to enter LAX to transact business (or at least, in Turo’s case, that it knowingly

provided substantial assistance to its users to do so), that the counterdefendants do not have

permission to enter for this purpose since they do not have a NELA or a RCCA, and that

the City has lost revenue and suffered increased congestion and passenger delays as a

result. See CC {f 174-79, 181-89, 9] 213-14, 49 216-22.

The counterdefendants contend that these allegations are inadequate to state a claim

for trespass because the City either (1) does not allege that the defendants physically entered

the property, and/or (11) cannot as a matter of law allege that the defendants lacked

permission to enter LAX, to the extent they entered to make vehicle handoffs, since LAX

is a public facility accessible to the public. See Turo MTD at 29-30: K&K MTD at 10-12.

Turo additionally contends that the City fails to state its abetting trespass claim because

(111) substantial assistance assertions are conclusory and fail to “suggest|| that Turo

provides any assistance to users with respect to . . . actually entering airport property.”

Turo MTD at 30. The Court disagrees.

First, the City need not allege actual physical entry to state a claim for trespass to

real property. “An entry may also be accomplished by setting in motion an agency which,

when put in operation, extends its energy to the plaintiff's premises to its material injury.”

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

Elton v. Anheuser-Busch Beverage Grp., Inc., 50 Cal. App. 4th 1301, 1306 (1996) (citing

75 Am. Jur. 2d Trespass § 11). The City’s allegations that Turo and the counterdefendants

facilitated and or else caused others—including some of the individual counterdefendants

themselves, see CC §f] 183-185, § 185, § 187—1o enter LAX property to transact business

without authorization satisfies this element. See Team Enters.. LLC v. W. Inv. Real Estate

Tr., 647 F.3d 901, 912 (9th Cir. 2011) (holding that “action causing” the “unauthorized”

“entry” onto plaintiff's property may “support a cause of action for trespass”); see also 5

Witkin, Summary of California Law, Torts § 803 (11th ed. 2019) (“There may be trespass

by personal intrusion of the wrongdoer or by . . . causing the entry of some other person”).

Second, although it is undisputed that LAX is a public facility operated by a public

agency, it is well-established that “merely permitting public access to a government facility

does not necessarily open it” for all purposes, or prevent the government from limiting

access permission. San Diego Comm. Against Registration & the Draft (CARD) v.

Governing Bd. of Grossmont Union High Sch. Dist., 790 F.2d 1471, 1475 (9th Cir. 1986)

(citing Greer v. Spock, 424 U.S. 828, 836 (1976)). The government’s power to regulate its

own property is broad, and may even permit the revocation of access permissions that

implicate upon core constitutional rights. Cf generally Minnesota Voters All. v. Mansky,

138 S. Ct. 1876, 1885 (2018) (reviewing the Supreme Court’s “forum-based approach for

assessing restrictions that the government seeks to place on the use of its property”)

(citation omitted). In this case, and pursuant to its authority to legitimately restrict the use

of its property, the State of California has enacted legislation permitting the City to

“Irjegulate” the “use” of the LAX premises. Cal. Govt. Code § 50474(f). The City has

exercised that authority by passing LAMC § 171.02(b), which imposes a relatively modest

prohibition that restricts the public from using LAX to transact unauthorized business

activity. The fact that LAX remains publicly accessible to persons who abide by its rules

does not somehow prevent the City, via LAWA, from revoking permission to those who

do not.

Third, as for aider and abettor liability, the City alleges that it repeatedly informed

Turo that its users were accessing LAX property to conduct unauthorized business

transactions. The City also demanded that Turo cease and desist from facilitating further

unauthorized transactions on airport premises. See CC 4 192-202. Despite its knowledge

that the City claimed that continuing to facilitate transactions by processing bookings and

coordinating vehicle handoffs would violate the City’s rules and constitute an unauthorized

use of its property, Turo continued to facilitate the unauthorized activities on LAX

property. Id. These facts establish both the intent and the substantial assistance elements

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

of the abettor claim. With respect to intent, acting with actual knowledge that continuing

to process bookings at LAX would cause a trespass at LAX amounts to acting “with the

intent of facilitating” the trespasses at LAX. Casey, 127 Cal. App. 4th at 1146; Fiol, 50

Cal. App. 4th at 1325 (intent established where alleged abettor “knows the other’s conduct

constitutes a [trespass] and gives substantial assistance” anyway); see_also People v.

Villalobos, 145 Cal. App. 4th 310, 322 (2006) (specific intent to abet a wrongdoer can be

inferred as a matter of California law by showing that the alleged aider and abettor took

intentional actions with knowledge that those actions would assist the wrongdoer). And

with respect to substantial assistance, the City’s allegations demonstrate that Turo’s

facilitation services were not just a “substantial factor” but indeed essential to the

commission of the alleged trespasses. Neilson, 290 F. Supp. 2d at 1132.8

For the foregoing reasons, the Court finds that the City has adequately alleged its

claims for trespass and abetting the same. Accordingly, the motions to dismiss these claims

are hereby denied.

(c) Unjust Enrichment Claim

Although the City asserts an unjust enrichment claim, unjust enrichment is not a

claim for relief but instead a “general principle underlying various legal doctrines and

remedies” that “is synonymous with restitution.” Rosal v. First Fed. Bank of California,

671 F. Supp. 2d 1111, 1133 (N.D. Cal. 2009) (collecting cases). In substance, the City

claims it is entitled to restitution on grounds that the counterdefendants have extracted a

benefit by violating City regulations and trespassing on City property. See McBride v.

Boughton, 123 Cal. App. 4th 379, 388 (2004) (a plaintiff may be entitled to restitution

Turo’s reliance on Schulz v. Neovi Data Corp., 152 Cal. App. 4th 86, 94 (2007)—

a case that in material part reversed an order sustaining a demurrer—is misplaced. In that

case, the Court of Appeal held that the plaintiff adequately alleged that two credit card

processing companies aided and abetted the operation of an illegal lottery by averring facts

that the companies provided processing services to the lottery operator “to encourage

participation and make more money” despite having “prior knowledge” that the lottery was

illegal. Id. at 94-96. The court ruled that the allegations were sufficient to allege that the

companies acquired “a direct stake in the success” of the illegal lottery, and knowingly

provided services to facilitate it. Id. That is, in substance, what the City claims Turo did

here.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

under an unjust enrichment theory where a defendant wrongfully extracts a benefit from

the plaintiff ).

The counterdefendants contend that the City is not entitled to recover pursuant to an

unjust enrichment theory because its “unjust enrichment claim is derivative of its other

claims and fails for the same reasons.” See Turo MTD at 31-32 (citing Van de Kamp v.

Bank of America, 204 Cal. App. 3d 819, 855 (1988) for the proposition that a plaintiff 1s

not entitled to recover for unjust enrichment where the defendant’s “benefit was derived

lawfully”); accord K&K MTD at 13 (“the City fails to allege any basis on which it could

be entitled to restitution against the [individual counterdefendants] because nothing in the

[countercomplaint] establishes an injustice that must be remedied”).

Because the Court finds that the City has adequately alleged its claims for violations

of LAMC § 172.02(b), for trespass, and for aiding and abetting trespass, see supra §§

IV.A.2.a-b, the motions to dismiss this claim are also denied.

(d) UCL 17200 Claim

The City also asserts that the counterdefendants’ conduct violates California

Business and Professions Code § 17200 prohibitions against unlawful and unfair business

conduct. The UCL prohibits “any unlawful, unfair or fraudulent business practice[.]” Cal.

Bus. & Prof. Code § 17200. “Because Business & Professions Code § 17200 is written in

the disjunctive, it establishes three varieties of unfair competition—acts or practices which

are unlawful, or unfair, or fraudulent.” Hodsdon v. Mars, Inc., 891 F.3d 857, 865 (9th Cir.

2018) (citing Cel-Tech Commce’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 181

(1999)). The City here asserts violations only of the unlawful and unfair prongs.

The UCL’s unlawful prong “borrow[s] violations of other laws and treats” them as

unlawful business practices “independently actionable under section 17200.” Farmers Ins.

Exch. v. Super. Ct., 2 Cal. 4th 377, 383 (1992). “Violation of almost any federal, state, or

local law may serve as the basis for a UCL claim” under the unlawful prong. Plascencia

v. Lending Ist Mortgage, 583 F. Supp. 2d 1090, 1098 (N.D. Cal. 2008). Here, the City

predicates its unlawful prong UCL claim on the counterdefendants’ alleged violations of

LAMC § 171.02(b).?

° The City cannot predicate its unlawful prong violation on the trespass claims

because “a common law violation . . . is insufficient . . . to state a claim under the unlawful

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

The scope of the UCL’s unfair prong “is not clearly defined under the UCL.”

Microsoft Corp. v. My Choice Software, LLC, No. 16-CV-162187-DOC-KES, 2017 WL

5643210, at *8 (C.D. Cal. Oct. 10, 2017). “There is authority,” however, “that the test to

determine whether a business practice is unfair differs depending on whether the plaintiff

in a UCL case is a competitor of the defendant or a consumer.” Drum v. San Fernando

Valley Bar Assn., 182 Cal. App. 4th 247, 253 (2010). The City is neither a competitor nor

a consumer of the counterdefendants’ services, but its unfairness theory (asserted in the

City’s enforcement capacity, see CC § 240) appears to fall more within the competitor

category. See CC 4 242 (alleging UCL unfair prong violation predicated on their wrongful

acquisition of “an unfair competitive advantage over their car rental company

competitors”). To state a competitor claim under the unfair prong of the UCL, the City is

required to allege “conduct that threatens an incipient violation of an antitrust law, or

violates the policy or spirit of one of those laws because its effects are comparable to or

the same as a violation of the law, or otherwise significantly threatens or harms

competition.” Cel-Tech Comme’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 187

(1999). Here, the City alleges that “Turo has gained an unfair competitive advantage for

itself and the other counterclaim-defendants over rental car businesses duly licensed by the

City to operate at LAX” by operating without the required permits. See CC 4 126.

The counterdefendants move to dismiss the UCL claims on grounds that (i) the City

lacks the statutory standing to assert those claims in an enforcement capacity, (11) that the

unlawful claim fails because the predicate LAMC § 171.02(b) claim fails, and (i111) because

the City fails to allege facts to describe how the counterdefendants have competed unfairly.

See Turo MTD at 32; K&K MTD at 14-15. The Court disagrees with these contentions.

First, the City has alleged facts that establish its standing to bring its claims in an

enforcement capacity. Sections 17204 and 17206(a) of the UCL authorize “a city attorney

of a city having a population in excess of 750,000” to bring an enforcement action under

prong of § 17200.” Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1044

(9th Cir. 2010): see also, e.g., Pneuma Int’l, Inc. v. Cho, 249 Cal. Rptr. 3d 93, 100 (2019),

vacated on other grounds, 2019 WL 3313607 (Cal. Ct. App. July 24, 2019) (holding that

“the trial court did not err in declining to base a UCL cause of action on the common-law

tort of trespass” because “a trespass ... does not satisfy the UCL’s ‘unlawful’ prong”).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘Oo’

Case No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

the UCL. The Court takes judicial notice of the fact that the City of Los Angeles, the

counterclaimant, has a population of approximately 3,990,456 residents. See U.S. Census

Bureau, Quick Facts: City of Los Angeles (July 1, 2018). Turo’s contention that the City

has “not added the city attorney as a party to the case” is unavailing. The City Attorney’s

Office is counsel for the City, and the City has alleged that it is bringing its UCL claim in

an enforcement capacity. See CC § 240.

Second, because the Court finds that the City has adequately alleged its LAMC

§ 171.02(b) claim, see supra § IV.A.2.a, the counterdefendants’ challenge to the unlawful

prong that depends on the insufficiency of that claim 1s without merit.

Third, the City has, notwithstanding the counterdefendants’ contentions, alleged

sufficient facts to support its unfair prong claim. Specifically, the City alleges that Turo

and the individual counterdefendants have obtained an unfair advantage over their

competitors by conducting operations at LAX without complying with the regulations that

would otherwise limit and levy fees against those operations. “The UCL reflects the

Legislature’s intent to discourage business practices” like those alleged here “that confer

unfair advantages in the marketplace to the detriment of . . . law-abiding competitors.”

Rose v. Bank of Am., N.A., 57 Cal. 4th 390, 397 (2013). The Court accordingly finds that

the City has alleged “conduct that . . . threatens or harms competition” that states a claim

under the unfair prong of the UCL. Cel-Tech, 20 Cal. 4th at 187.

The motions to dismiss are therefore also denied as to the UCL claim.

* * * *

For the foregoing reasons, the motions to dismiss are DENIED.

B. Preliminary Injunction

The City moves to preliminarily enjoin the counterdefendants from continuing to

operate at LAX without what it contends is the necessary authorization. It bases its motion

on three claims: (i) its LAMC § 171.02(b) claims against all counterdefendants, (11) its

trespass claim against the individual counterdefendants, and (111) its aiding and abetting

trespass claim against Turo.

For the reasons discussed below, the Court grants the City’s motion.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

(1) Merits of the City’s LAMC § 171.02(b) and Trespassing Claims

To prevail on its motion, the City must present evidence that at least raises “serious

questions” as to its likelihood to succeed on the merits of its three predicate claims.

Cottrell, 622 F.3d at 1053. The City’s ordinance violation and trespass theories are

straightforward and discussed in more detail in the preceding sections addressing the

counterdefendants’ motions to dismiss: according to the City, the counterdefendants

violate LAMC § 171.02(b), and trespass on City property at LAX, by conducting business

at LAX without the requisite permissions. See supra §§ IV.A.2.a-b. The Court has

concluded that these allegations—if proven to be true by satisfactory evidence—would be

sufficient to establish each of the counterdefendants’ liability. Id. The Court has also

concluded that Section 230 of the CDA does not immunize Turo from the City’s LAMC

§ 171.02(b) and trespassing claims, as a matter of law. See supra § IV.A.1.

The question presented pursuant to the merits prong of the preliminary injunction

analysis is thus limited to whether the evidence submitted by the City in support of its

claims is sufficient to raise a serious question as to their merits. The counterdefendants

contend that the City cannot meet this standard because it “relies exclusively on allegations

in its unverified” complaint “and the summary declaration of a LAWA employee

purporting the verify the allegations based on some unknown combination of her personal

knowledge and ‘information provided to [her] by City employees and counsell.|’” See

Turo PI Opp. at 13 (quoting Irwin Decl., § 3).

A “verified complaint . . . may afford the [evidentiary] basis for a preliminary

injunction.” K-2 Ski Co., 467 F.2d at 1088 (discussed supra at § III.B). Michelle Irwin,

the City’s verifying declarant, states that she is a senior manager at LAWA. See Irwin

Decl., 1. She asserts that she has reviewed the counterclaims, id. § 2, and that “[t]he

factual allegations in the counterclaims are true and accurate based on my personal

knowledge and information provided to me by City employees and counsel, with the

exception of the amount of certain fees charged by the City that have increased since the

Counterclaims were filed as a result of an annual adjustment,” id. 4 3. The factual

allegations she verifies accordingly include the City’s specific allegations about the size of

the individual defendants’ vehicle fleets available on Turo, the individual defendants’

advertisements about the availability of their vehicles to Turo users arriving at LAX

(including by “pickup,” “delivery,” or shuttle service via “unmarked shuttle vans”), the

number of transactions the individual defendants have completed using the Turo platform,

and Turo’s own representations that owners can deliver vehicles to nearby airports for

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

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Title TURO INC. v. CITY OF LOS ANGELES

pickup so Turo users can avoid the inconvenience of obtaining a rental car from an on-site

rental concession counter. Id. 4] 174-76, 4 182, {| 184-85, 4] 187-88. She also verifies

the City’s allegations that LAWA informed Turo that its users were accessing LAX

property to conduct unauthorized business transactions, that LAWA demanded that Turo

cease and desist from facilitating further unauthorized transactions on airport premises, and

that despite the knowledge that continuing to facilitate transactions by processing bookings

and coordinating vehicle handoffs would violate the City’s rules and constitute an

unauthorized use of LAX property, Turo continued to facilitate the unauthorized activities.

See CC 9] 192-202.

Turo and the individual counterdefendants are correct that a court deciding a motion

for a preliminary injunction “need not” consider “inadmissible evidence” and “may”

discount “conclusory affidavits” or those “without sufficient support in facts.” Barcarse v.

Cent. Mortg. Co., No. 12-CV-05608-JAK (FFMx), 2012 WL 12878674, at *2 (C.D. Cal.

Aug. 1, 2012) (discussed in Turo PI Opp. at 13, 28) (citing Am. Passage Media Corp. v.

Cass Comme’ns, Inc., 750 F.2d 1470, 1473 (9th Cir. 1985)). Whether or not Irwin’s

summary declaration lacks the sort of foundation that would allow her to testify at trial in

accordance with the Federal Rules of Evidence, it is “within the discretion of the district

court” to consider such evidence at the preliminary injunction stage. Barcarse, 2012 WL

12878674 at *2 (quoting Republic of the Philippines v. Marcos, 862 F.2d 1355, 1363 (9th

Cir. 1988)). And it is well-established that “a preliminary injunction may be granted based

on affidavits or the allegations in a ‘verified complaint,’ despite their lack of conformity

with the Federal Rules of Evidence regarding hearsay and personal knowledge.”

Neighborhood Assistance Corp. of Am. v. First One Lending Corp., No. 12-CV-00463

DOC-MLG«x, 2012 WL 1698368, at *14 (C_D. Cal. May 15, 2012) (citing Republic of the

Philippines, 862 F.2d at 1363, K-2 Ski Co., 467 F.2d at 1088, and Flynt, 734 F.2d at 1394).

Courts in this district have not hesitated to grant motions for preliminary injunction, even

when solely supported by such evidence. See, e.g., Ford Motor Co. v. Ultra Coachbuilders

Inc., No. 00-CV-00243-VAP, 2000 WL 33256536, at *1 (C.D. Cal. July 11, 2000), aff'd,

238 F.3d 428 (9th Cir. 2000) (granting plaintiff's motion for a preliminary injunction even

though plaintiff “submitted no evidence in support of its Motion other than its verified

Complaint” because “[t|he Court may consider allegations in a verified Complaint in ruling

on a Motion for Preliminary Injunction’’) (citing Republic of the Philippines, 862 F.2d at

1363 and K—2 Ski Co., 467 F.2d at 1088).

Pursuant to the foregoing, and upon review of the countercomplaint’s specificity and

incorporated exhibits, the Court finds that the verified allegations in the City’s

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

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Title TURO INC. v. CITY OF LOS ANGELES

countercomplaint not only raise serious questions as to the merits of the City’s claims, but

indicate a strong likelihood of success on those claims. Critically, the Court reaches this

conclusion in part because the evidence submitted by Turo and the individual

counterdefendants generally confirms the City’s verified allegations. See, e.g., Kwan

Decl., {5-7 (acknowledging that Kwan uses Turo to pick up customers at LAX and deliver

them to the vehicles they rent from him, but contending that he does “not conduct point-

of-sale transactions while on LAX property,” and only completes customer bookings

“offsite” or “electronically”); Kornakov Decl., {§ 5-6 (acknowledging that Kornakov’s

provides car sharing services to passengers at LAX using Turo, including by using “areas

of LAX that require a fee to use, such as parking structures,” but contending that he

“ensure|[s| the fee is always paid to the City,” and that he does “not conduct point-of-sale

transactions while on LAX property”); Benn Decl., § 5 (President of Turo acknowledging

that “users may coordinate through Turo’s platform to hand off cars at or near LAX”):

Mangahas Decl., 6 (Turo Vice President of Analytics admitting that between March 1,

2020 and March 25, 2020 alone, “there were 2,234 trips” booked on Turo where “the host

and guest had selected LAX as the preliminary location for the vehicle handoff,” and that

these transactions were expected to generate “at least $526,286”): Park Decl., 6 (Turo’s

traffic engineering expert acknowledging that, in 2018, 124 Turo vehicle handoffs took

place at LAX on average each day, but contending that “Turo user handoff volumes are

immaterial and essentially unnoticeable”). At no point, moreover, does any representative

from Turo dispute receiving the City’s demands, or continuing to facilitate and/or execute

vehicle handoffs at LAX without either a NELA or a RCCA. Neither Kwan, Kornakov,

nor Smulovics claim to possess a NELA or a RCCA, either.

Taken together, these facts comprise a “clear showing” that the City is likely to

prevail on its claims that Turo and the individual counterdefendants are conducting

unauthorized business transactions at LAX, and that the individual counterdefendants are

consequently trespassing on LAX property with Turo’s substantial assistance.

(a) Irreparable Harm

Although the City contends that it need not establish irreparable harm because this

case “involve[es] statutory enforcement” and “the applicable statute authorizes injunctive

relief,” MPI at 8-9 (quoting F.T.C. v. Consumer Defense LLC, 926 F.3d 1208, 1214 (9th

Cir. 2019), which holds that “the traditional irreparable injury showing is not required” in

certain federal enforcement actions), the City also contends it has and will, in any event,

continue to suffer irreparable injury in the form of increased congestion at LAX and

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘Oo’

Case No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

trespasses upon its property mghts, id. at 19-21. See also CC Ff 157, 160-61, 190, 213-14

(verified allegations).

Turo and the individual counterdefendants respond that (i) the rule in Consumer

Defense has no application to this case because it involves enforcement of a municipal

ordinance and not a federal statute, (11) that the City fails to present evidence that its claimed

injuries are irreparable, and (111) that the City’s delay in seeking the injunction supports an

inference that its claimed injuries are not irreparable. See Turo PI Opp. at 13-23; K&K PI

Opp. at 11-15.

As to their first argument, the Court agrees with Turo and the counterdefendants that

Consumer Defense does not exempt federal actions to enforce state or municipal law from

the federal procedural requirement that requires a preliminary injunction movant to

demonstrate irreparable harm. The Supreme Court has held that “a departure” from the

ordinary rule of federal equity—adopted by Congress in Federal Rule of Civil Procedure

65—that requires a preliminary injunction movant to establish irreparable injury can only

be justified if such a departure was clearly “intended” by “Congress.” eBay Inc. v. 10

MercExchange, L.L.C., 547 U.S. 388, 391 (2006) (emphasis added). “Congress,” the

Ninth Circuit later elaborated, “may intervene and guide or control the exercise of the

courts’ discretion,” but before a federal court can “depart from established principles,”

Congressional intent must be clear: “[u]|nless a statute in so many words, or by a necessary

and inescapable inference, restricts the court’s jurisdiction in equity, the full scope of that

jurisdiction is to be recognized and applied.” Cottonwood EnvtL Law Ctr. v. US. Forest

Serv., 789 F.3d 1075, 1089-90 (9th Cir. 2015). Put simply, “eBay precludes presumptions

of or categorical rules regarding irreparable injury unless Congress has restricted the

traditional equitable jurisdiction of the court.” Perez v. Valley Garlic, Inc., No. 16-CV-

01156-AWI-EPG, 2017 WL 772147, at *16 (E.D. Cal. Feb. 27, 2017) (emphasis added).

Courts must therefore apply the “traditional four-factor framework that governs the award

of injunctive relief’ unless Congress clearly indicates otherwise. Perfect 10, Inc. v.

Google, Inc., 653 F.3d 976, 979-980 (9th Cir. 2011) (citing eBay, 547 U.S. at 394).

Although the Ninth Circuit has not had occasion to squarely address whether a state

law enforcement agency (like the City here) must also establish irreparable harm to obtain

a preliminary injunction even when predicated on a state law that, as a matter of substantive

law, does not require such a showing in a suit by such agency, the Court finds that the

Ninth Circuit’s reasoning in Consumer Defense, Cottonwood, and Perfect 10 supports a

conclusion that the irreparable injury requirement applies equally to such movants. The

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

Seventh Circuit took a similar position 1n a case involving materially similar facts. In City

of South of Bend v. Consolidated Rail Corp., 974 F.3d 1340 (7th Cir. 1992) (unpublished

disposition), the court stated that the City of South Bend would have been obligated to

establish irreparable harm before it could obtain a “temporary injunction” in federal court

to prevent the defendant train operator from violating “municipal ordinances prohibiting

the sound of train whistles.” While the Seventh Circuit ultimately dismissed the case for

lack of subject matter jurisdiction, the court’s discussion of the irreparable harm

requirement is consistent with the Ninth Circuit’s holding that “any presumption in favor

of injunctive relief is unwarranted unless Congress expresses its intent” to create such a

presumption. Cottonwood, 689 F.3d at 1089-1090. The Court finds the Seventh Circuit’s

ruling to be persuasive and consistent with the law of this circuit. See Perez, 2017 WL

772147, at *16 n.16 (acknowledging that “[t]he Second Circuit appears to be of a different

understanding,” but distinguishing its decision in City of New York v. Golden Feather

Smoke Shop, Inc., 597 F.3d 115, 120-21 (2d Cir. 2010)—which, under different facts,

excused the City of New York from establishing irreparable harm to enforce a state

regulation that did not require such a showing when an analogous federal statute that the

City also sought to enforce also did not require that showing—as inconsistent with the law

of this circuit).'°

Having determined that the City is required to demonstrate irreparable harm unless

clearly exempted by Congress, the next question is whether Congress has created such an

exemption for state law enforcement actions. The City does not contend that it has, and

with good reason. Congress obviously did not enact LAMC § 171.02(b) or GTRR § 5.5,

so the exemptions contained within those provisions cannot evince Congressional intent to

The City’s contention that a state or local government can invoke different

procedural standards to claims deriving from its enactments is also inconsistent with the

federal courts’ longstanding obligation to apply relevant federal procedural rules when they

conflict with state procedural law. See Hanna v. Plummer, 380 U.S. 460, 471 (1965): Sims

Snowboards, Inc. v. Kelly, 863 F.2d 643, 646 (9th Cir. 1988) (holding that the four-part

test for a preliminary injunction, which derives from Federal Rule of Civil Procedure 65,

is procedural since it “set|s] out the procedural requirements for injunctions”): e.g.,

Anselmo v. Mull, No. 12-CV-1422 WBS, 2012 WL 5304799, at *5 (E.D. Cal. Oct. 25,

2012) (“[F]ederal, not state, standards govern issuance of a preliminary injunction when a

federal court is sitting in diversity or exercising supplemental jurisdiction over state law

claims.”) (citing cases).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

waive the irreparable harm requirement, or otherwise alter the ordinary equitable procedure

of the federal courts. Nor has Congress provided that state law enforcement lawsuits are

exempt as a general matter.

The Court therefore concludes that the City is required to demonstrate irreparable

injury. But ultimately, whether or not the City is required to establish irreparable injury to

obtain a preliminary injunction, the Court finds that the City has made that showing here.

According to the City’s verified allegations, the counterdefendants’ unauthorized

operations aggravate traffic congestion within LAX. See, e.g., CC 4f§ 213-14. The

counterdefendants do not dispute that they facilitate or execute vehicle handoffs within

LAX, see Kwan Decl., §{ 5-7, Kornakov Decl., §] 5-6, Mangahas Decl., § 6, and Turo’s

own expert estimates that, at least as of two years ago, approximately 127 vehicles were

handed off at LAX as a result of Turo every day, see Park Decl., § 6. While conclusory

assertions of possible injury are not enough to establish irreparable harm, see Herb Reed

Enters., LLC v. Florida Entm’t Mgmt., Inc., 736 F.3d 1239, 1250 (9th Cir. 2013), the

counterdefendants’ own declarations demonstrate that their operations are in fact

specifically impacting traffic flow at LAX—at least to some degree. That injury—and the

resulting trespass against the City’s property rights—is not compensable at law, and is

sufficient to establish irreparable harm. See, e.g., eBay, Inc. v. Bidder’s Edge, Inc., 100 F.

Supp. 2d 1058, 1067 (N.D. Cal. 2000) (holding that defendant’s “ongoing violation of

eBay’s fundamental property right to exclude others from its computer system” was “akin

to the traditional notion of a trespass to real property” and therefore “causes sufficient

irreparable harm to support a preliminary injunction,” even where total effect of

defendant’s unauthorized access to eBay’s systems amounted to “no more than 0.70% of

the data transferred by eBay” systems).

The City’s delay—it filed suit requesting injunction relief nearly four years after

learning about Turo’s conduct, CC § 192—does not preclude injunctive relief. While “a

party requesting a preliminary injunction must generally show reasonable diligence,”

Benisek v. Lamone, 138 S. Ct. 1942, 1944-45 (2018), “delay is only one factor among the

many that we consider in evaluating whether a plaintiff is likely to suffer irreparable harm

absent interim relief,” and “by itself is not a determinative factor in whether the grant of

interim relief is just and proper.” Cuviello v. City of Vallejo, 944 F.3d 816, 833 (9th Cir.

2019) (citations omitted); see also Lydo Enters., Inc. v. City of Las Vegas, 745 F.2d 1211,

1214 (9th Cir. 1984) (explaining that courts are “loath to withhold relief solely on that

ground”). “[T]ardiness is not particularly probative in the context of ongoing, worsening

injuries.” Arc of California v. Douglas, 757 F.3d 975, 990 (9th Cir. 2014). For example,

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

in Arc of California, “the alleged injuries resulted from various cuts in compensation,

enacted over a period of time and having a cumulative impact.” Id. The effect was such

that “the magnitude of the potential harm bec|ame] apparent gradually, undermining any

inference that the plaintiff was sleeping on its rights.” Id. (citation omitted). Here, the City

claims that the cumulative deleterious impacts of Turo’s operations only became apparent

over time as construction at LAX constrained traffic lanes and made Turo’s continued

trespass and regulatory violations increasingly intolerable, even if only marginally so. See

CC 157, 160-61; Bidder’s Edge, 100 F. Supp. 2d at 1067.

The Court accordingly concludes that the City is likely to suffer continued

irreparable harm in the absence of injunctive relief.

(b) Balance of Equities and Public Interest

The remaining factors also favor a preliminary injunction.

First, the City contends that equity favors an injunction because, without one, the

City’s real property mghts will be violated and it will have diminished ability to exercise

“regulatory control” over its property, including to “control congestion,” “reduce delays,”

“ensure the safety of those traveling on its roadways,” and “assure a level playing field

among rental car companies.” See MPI at 17-19. The counterdefendants respond that an

injunction would devastate their businesses and/or impose onerous compliance costs. See

generally Kwan Decl., Kornakov Decl., Gangadharan Decl., Mangahas Decl. But “a

defendant who builds a business model based upon a clear violation of the property rights

of [a] plaintiff cannot defeat a preliminary injunction by claiming the business will be

harmed if the defendant is forced to respect those property rights.” Bidder’s Edge, 100 F.

Supp. 2d at 1068-69 (citing Triad Sys. Corp. v. Southeastern Exp. Co., 64 F.3d 1330, 1338

(9th Cir. 1995) (defendant “cannot complain of the harm that will befall it when properly

forced to desist from its infringing activities”) and Cadence Design Sys., Inc. v. Avant!

Corp., 125 F.3d 824, 830 (9th Cir. 1997) (reversible error to consider business effects on a

copyright infringer’s business in considering balance of equities after concluding that

plaintiff was likely to succeed on merits of infringement action)); accord Windsurfing Int’l

Inc. v. AMF, Inc., 782 F.2d 995, 1003 n. 12 (Fed. Cir.1986) (“One who elects to build a

business on a product found to infringe cannot be heard to complain if an injunction against

continuing infringement destroys the business so elected.”).

Second, as for the public interest, the public has an interest in the protection of

property rights, in their representatives’ ability to exercise regulatory control over the

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

City’s publicly-operated airport, and in fair and lawful competition, especially in an

emerging market. See WeRide Corp. v. Kun Huang, 379 F. Supp. 3d 834, 854 (N_D. Cal.

2019) (concluding that “an injunction would be in the public interest” because “[c]ourts

often find that the public has a strong interest in protecting . . . property rights,” and because

“an injunction would also promote fair and lawful competition in an emerging market”);

Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 329 F. Supp. 3d 1070, 1122 (N_D. Cal.

2018) (asserting that “the public interest nearly always weighs in favor of protecting

property rights”); United States v. Cty. of Maricopa, 151 F. Supp. 3d 998, 1011 (D. Ariz.

2015), aff'd 889 F.3d 648 (9th Cir. 2018) (observing that a government’s “duty to enforce

its laws may justify” injunctive relief); United States v. Tribune Publ’g Co., No. 16-CV-

01822-ABP (JWx), 2016 WL 2989488, at *5 (C.D. Cal. Mar. 18, 2016) (stating that “the

preservation of competition is always in the public interest” and favors injunctive relief).

The Court for these reasons finds that equity and the public interest support the

requested injunction.

* * * *

For the foregoing reasons, the motion for a preliminary injunction is GRANTED.

V. CONCLUSION

For the foregoing reasons, the Court DENIES the motions to dismiss the City’s

counterclaims, and GRANTS the City’s motion for a preliminary injunction. Additionally,

Turo’s motion to strike certain material from the City’s reply is DENIED AS MOOT

because the Court does not consider that material in reaching its disposition.

The counterdefendants, and any persons acted in concert with them, shall be

enjoined from engaging directly or indirectly in any commercial activity at LAX, without

written authorization from the City, as follows:

(1) Turo shall not permit its users to use the Turo platform to arrange vehicle

handoffs at LAX, where a vehicle handoff shall be deemed to include (a)

leaving a vehicle on LAX property and arranging for a Turo user or customer

to access it there, or (b) travelling on any roadway on LAX property in order

to pick up or drop off a vehicle for any Turo user or customer;

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘0’

No. 2:18-CV-06055-CAS-GJSx Date June 19, 2020

Title TURO INC. v. CITY OF LOS ANGELES

(2) the individual counterdefendants shall not conduct any vehicle handoffs at

LAX, where a vehicle handoff shall be deemed to include (a) leaving a vehicle

on LAX property and arranging for a Turo user or customer to access it there,

or (b) travelling on any roadway on LAX property in order to pick up or drop

off a vehicle for any Turo user or customer;

(3) Turo shall not accept any reservations or payments for, or otherwise facilitate

in any way, any car-sharing transaction leading to a vehicle handoff that takes

place on LAX property, where a vehicle handoff shall be deemed to include

(a) leaving a vehicle on LAX property and arranging for a Turo user and/or

customer to access it there, or (b) travelling on any roadway on LAX property

in order to pick up or drop off a vehicle for any Turo user or customer.

IT IS SO ORDERED.

00 0

Initials of Preparer CM)