Cooley Secures Appellate Victory for Important ‘Sharing Economy’ Platform
San Francisco – July 1, 2022 – Cooley secured a significant victory for Turo, an online, peer-to-peer car-sharing marketplace that connects car owners with users seeking cars, providing an important legal precedent for other online platforms and “sharing economy” companies. The Cooley team was led by partner Matthew D. Brown, who argued the appeal, along with partners Benjamin Kleine and Bethany Lobo. Ashley Kemper Corkery was the lead associate on the appeal phase of the case, and partner Michael Rhodes and former partner, US Solicitor General Elizabeth Prelogar, provided invaluable insights. The successful outcome earned the team a runner-up spot as part of Am Law Litigation Daily's Litigator of the Week Runners-Up and Shout Outs list.
On June 28, in a unanimous decision, the California Court of Appeal vacated and reversed a ruling by the San Francisco County Superior Court that held Turo is a “rental car company” under California law. The appellate court concluded that, “Turo is not a rental car company as that term is defined in California statutes.” The court reasoned that because Turo does not own or control the vehicles listed on its platform, it does not “rent” cars at all – and thus cannot be “in the business of renting passenger vehicles to the public.”
The case began more than four years ago, when the San Francisco city attorney’s office sued Turo, alleging that it failed to obtain a rental car company permit from San Francisco International Airport. Turo filed a cross-claim seeking a court declaration that it was not a rental car company and thus could not be forced to obtain an inapplicable rental car company permit and pay related fees. Concurrently, Turo has been litigating similar issues with other airports and has at all times maintained it is not a rental car company and should not be required to acquire rental car company permit. The court’s affirmation of Turo’s long-standing position is a critical ruling for the company and its users.
The Cooley team secured this key ruling after more than two years of litigating the case in trial court and an additional two years on appeal. The decision effectively establishes that entities cannot be “in the business of” doing an activity that the entities do not themselves do. As such, the decision is important not only for Turo but also for other online platforms and “sharing economy” companies that enable or facilitate users’ transactions and might otherwise be subject to inappropriate regulations and liability risks.
As a pioneer of the sharing economy and travel industry, Turo bills itself as a safe, supportive community with operations in 7,500+ cities across the US, Canada and the UK. Turo offsets 100% of its estimated global carbon emissions by investing in greenhouse gas-reducing projects.
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