Court Rules Turo Not A Car Rental Company
On June 28, 2022, the California Court of Appeals for the First District, Division 2, ruled that Turo is not a car rental company. The Court found that Turo Inc. operates an online platform that allows car owners to rent their cars to other Turo users. Unlike companies such as Enterprise or Hertz, Turo does not own, lease, or rent a fleet of cars for customers to rent.
Its finding was based on the following facts which were not disputed by the parties: Turo is an Internet-based platform that allows vehicle owners to list, and customers to rent, specific passenger vehicles. Turo processes reservations and payments for the rentals and retains a percentage of the proceeds of each rental transaction. Turo’s terms of service contract governs the rentals with respect to cancellations, extensions and late returns, late fees, smoking, pets, fuel, tolls, security deposits, street parking, and nondiscrimination. Turo provides a liability insurance policy through a third-party insurer that covers vehicles during a rental and offers “vehicle protection options” to “cover” the entitlement of owners and liability of renters if a vehicle is damaged during a rental. Turo competes with traditional on-airport and off-airport rental car companies and has used phrases like “rent” and “rental car” in its advertisements.
How Did it Come to This?
The term “rental car company” is not defined in the Government Code, but it is defined in nearly identical language in three separate California statutes to mean a person or entity in the business of renting passenger vehicles to the public.
These are the three statutes:
- “rental company” is defined as “a person or entity in the business of renting passenger vehicles to the public.” (Civ. Code, § 1939.01, subd. (a).
- “rental car company” is defined as “a person or entity in the business of renting passenger vehicles to the public in California.” (Veh. Code, § 11752, subd. (f).
- “rental car company” is “any person in the business of renting vehicles to the public.” (Ins. Code, § 1758.89, subd. (d).
The Court found that Turo does not rent cars to the public, instead, Turo’s entire business consists of enabling the public to rent motor vehicles.
The Court then looked at the dictionary definition of rent and found the following:
- The verb “rent” as “[t]o pay for the use of another’s property”]; see also Merriam-Webster Online Dictionary, http://www.merriamwebster.com/dictionary/rent (June 28, 2022)
- the noun “rent” as “the amount paid by a hirer of personal property to the owner for the use thereof” and the verb “rent” as “to grant the possession and enjoyment of in exchange for rent” and “to take and hold under an agreement to pay rent”].)
Turo argued that because it does not own or possess or control the vehicles listed on its website and has no authority to grant the possession and enjoyment of those vehicles to others, it does not itself rent vehicles to the public.
The Court agreed! If you would like to read the case in its entirety, follow this link Turo v. San Francisco.