In Calderon et al. v. Sixt Rent a Car, LLC, __ F.4th __, 2024 WL 3823210 (Aug. 15, 2024), the court got a chance to flex its choice-of-law muscles. Putative class representatives from three states alleged breach of contract and violations of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) against Sixt Rent a Car, LLC. These plaintiffs claimed Sixt systemically charged its customers unfair, deceptive, and unauthorized Estimated Repair Costs and other fees in breach of the Rental Agreement. The district court granted summary judgment for Sixt on these claims. The Eleventh Circuit affirmed the district court’s FDUTPA ruling but reversed on breach of contract.
The fact pattern is familiar to anyone who has rented a car. Plaintiffs Calderon, Marin and Borel each made an online reservation with Sixt for a rental car. Consistent with Sixt’s standard practice, when the plaintiffs showed up to collect their keys, Sixt had each sign an electronic signature pad. That signature binds the renter to the “Face Page” of the Rental Agreement, a document that provides the terms of the rental—the vehicle, the daily rate, the length of the rental, etc. Each of the plaintiffs returned the rental car without issue, only to later receive a bill from Sixt for damage to the rental. None of the plaintiffs paid the damages in these bills out of pocket. Sixt cancelled its bill to Calderon outright, Marin’s bill was paid in part by his insurer and in part through his business, and Borel’s employer paid her invoice.
The Face Page is only a piece of the puzzle, though. By signing that document via the electronic signature pad at checkout, each of the plaintiffs “agree[d] to the Terms and Conditions printed on the rental jacket and to the terms found on this Face Page, which together constitute this [Rental] Agreement.” Those Terms and Conditions, in turn, are found in the “Rental Jacket,” a bright orange packet of documents made available to all renters when they pick up their rental cars. That Rental Jacket defines the Rental Agreement as containing “the Terms and Conditions on this page and the provisions found on the Face Page.” The plaintiffs’ breach-of-contract claim was premised on the Terms and Conditions, which set the rules for the kinds of fees and costs renters could be charged for.
The district court ruled that the only contract between Sixt and the plaintiffs was the Face Page, thus rejecting plaintiffs’ breach-of-contract claim as a matter of law. On appeal, the plaintiffs argued this was error because the Terms and Conditions were incorporated by reference into the Face Page.
The Eleventh Circuit agreed with the conclusion, in an opinion written by Judge Marcus, and how it got there is the fun part. Because the suit invokes the district court’s diversity jurisdiction, the Eleventh Circuit applied the substantive law of the forum state: Florida. Florida’s choice-of-law precedents require that a contract be governed by the law of the state in which the contract is made. Here, that led to three separate analyses because Calderon rented his car (and thus made the contract) in Florida, Marin did so in Arizona, and Borel in Colorado. Because these states have similar but distinct tests for determining whether a document is incorporated by reference into a contract, the Eleventh Circuit considered in each instance whether the Face Page the respective renter signed properly incorporated the Terms and Conditions.
As to Calderon, Florida recognizes incorporation by reference “where a writing [1] expressly refers to and [2] sufficiently describes another document,” instructing that it be interpreted as part of the signed writing. OBS Co. v. Pace Constr. Corp., 558 So. 2d 404, 406 (Fla. 1990). Both elements were satisfied: the Face Page Calderon signed expressly referred to the Terms and Conditions; it also sufficiently described the Terms and Conditions by informing the signer that they were contained in the bright orange Rental Jacket.
The analysis for Marin’s Arizona contract shook out similarly. A document can be incorporated there if the reference is clear, called to the signatory’s attention, and its terms are known or available to the parties such that they can consent to the terms. United Cal. Bank v. Prudential Ins. Co. of Am., 681 P.2d 390, 420 (Ariz. Ct. App. 1983). For the same reasons the court gave as to Calderon, the court ruled that the Face Page incorporated the Terms and Conditions by reference. Ditto in Colorado, where Borel had to show that both parties “had knowledge of and assented to the incorporated terms” and that those terms were “clearly and expressly identified” in the Face Page. French v. Centura Health Corp., 509 P.3d 443, 449 (Colo. 2022).
The Eleventh Circuit rejected out of hand Sixt’s argument that the Terms and Conditions could not be incorporated into the Face Page because there was evidence that no plaintiff had actually read either document. Each of the three jurisdictions, the court explained, had unforgiving rules for contract signatories: A signer is bound to abide by her contract even if she didn’t read it. Actual knowledge of terms is not necessary to bind a signatory; inquiry notice is sufficient. Sixt, then, had to lie in the bed that it made.
But the plaintiffs did not fare so well on their FDUTPA claims because they failed to satisfy the statutory element of actual damages. A FDUTPA claimant must show “out-of-pocket damages” to proceed on her claim. Himes v. Brown & Co. Secs. Corp., 518 So. 2d 937, 938 (Fla. 3d DCA 1987). None of these plaintiffs could do that because none paid out of pocket: Calderon’s claim was cancelled, Marin’s paid by his business and insurer, and Borel’s covered by her employer. Marin and Borel, though, argued that the collateral source rule permitted their FDUTPA claims to proceed to trial. Not so: The collateral source rule applies to damages, not liability. It allows a plaintiff to recover damages from a tortfeasor without offset for compensation the plaintiff received from a third party such as an insurer. Higgs v. Costa Crociere S.P.A. Co., 969 F.3d 1295, 1310 (11th Cir. 2020). The rule cannot be invoked to use a third-party’s payment as satisfaction for a statutory requirement of actual damages. The plaintiff herself must incur out-of-pocket damages to fulfill FDUTPA’s requirements. Marin and Borel never paid Sixt anything, so the Eleventh Circuit affirmed the district court’s grant of summary judgment on the FDUTPA claims.
Like many companies doing business within the Eleventh Circuit’s boundaries, Sixt relies on standard agreements to bind the multitude of consumers who purchase its goods and services. Companies using such agreements should take heed: Be careful what you incorporate by reference into these contracts. It could just breathe life into an otherwise-doomed lawsuit.