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Zipcar Can’t Duck Late-Fee Class Action

SAN FRANCISCO (CN) - A federal judge refused to dismiss a class action accusing Zipcar of charging excessive late fees of $50 an hour.

Gabriela Bayol claimed that the company's late fee of $50 per hour, up to $150, violates the Consumer Legal Remedies Act and the Unfair Competition Law because it sets liquidated damages in a consumer contract.

She claims that the fees are unconscionable and unfair, because "they are included in a contract of adhesion and are unreasonably favorable to Zipcar."

She also claims that "it would not be impracticable to calculate Zipcar's actual damages when a car is returned late, that Zipcar did not conduct a reasonable endeavor to estimate its actual damages, and that the late fees imposed bear no reasonable relation to Zipcar's actual damages."

U.S. District Judge Thelton Henderson on Jan. 29 denied Zipcar's motion to dismiss.

Zipcar claimed that its late fees are not liquidated damages and that Bayol's factual allegations are insufficient.

But Henderson found that Bayol had demonstrated that the late fees are liquidated damages and said that "it will be Zipcar's burden, going forward, to demonstrate the validity of these fees."

Henderson said that Bayol's allegations are "plausible enough to proceed to discovery."

Bayol is represented by L. Timothy Fisher, with Bursor & Fisher, of Walnut Creek.

Zipcar is represented by William P. Donovan Jr., of Santa Monica.

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