Reed v. Zipcar, Inc., 527 F. App'x 20

Zipcar members pay an annual fee and agree to return reserved cars to the origin at the end of the reservation; members consent to a $50 hourly late fee for tardy returns.
Naomi Reed, a Zipcar member, paid the $50 late fee twice after returning cars within one hour of reservation expiration and sued in a putative class action in federal court (diversity jurisdiction).
Reed alleged Zipcar’s $50 fee is unlawful under Massachusetts law as an unfair, disproportionate liquidated-damages penalty; she sought restitution, money had and received, unjust enrichment, and Chapter 93A relief, citing lower late fees charged by some competitors.
The district court dismissed under Fed. R. Civ. P. 12(b)(6): it rejected a standalone unlawful-penalty cause of action, dismissed equitable claims because an express contract governed the dispute and adequate legal remedies existed, and found Reed’s Chapter 93A pleading implausible for lacking factual support that the fee was grossly disproportionate or procedurally unconscionable.
Reed appealed; the First Circuit reviewed de novo whether the complaint pleaded plausible claims and affirmed the dismissal.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Zipcar’s $50 late fee violates Mass. Gen. Laws ch. 93A as an unlawful liquidated-damages penalty	Reed: fee is not a reasonable forecast of damages, is grossly disproportionate, and is higher than competitors’ fees	Zipcar: fee is contractual, reflects expected damages and business judgment; Reed’s allegations are conclusory and lack a reasonable approximation of damages	Court: Reed failed to plead plausibly that damages were easily ascertainable at formation or that the fee was grossly disproportionate; Chapter 93A claim dismissed
Whether Reed may pursue equitable claims (unjust enrichment, money had and received) despite an express contract	Reed: equitable relief appropriate because fee is unlawful and contract terms should not bar restitution	Zipcar: express contract governs; equitable claims cannot override a valid contract; adequate remedy at law exists	Court: equitable claims barred by the express contract and availability of legal remedies; dismissal affirmed
Whether declaratory relief that the fee is illegal should be granted	Reed: sought a declaration that fees are unlawful	Zipcar: declaratory relief depends on a valid underlying claim	Court: declaratory claim parasitic on insufficent substantive allegations; no independent basis for relief; dismissed

Ashcroft v. Iqbal, 556 U.S. 662 (allegations must state a plausible claim for relief)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
NPS, LLC v. Minihane, 886 N.E.2d 670 (Mass.) (liquidated-damages defense: damages difficult to ascertain at contracting required)
Kelly v. Marx, 705 N.E.2d 1114 (Mass.) (liquidated damages invalid if grossly disproportionate or unconscionably excessive)
Linkage Corp. v. Trustees of Boston Univ., 679 N.E.2d 191 (Mass.) (definition of unfair under Chapter 93A)
Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118 (contract bars unjust enrichment claim)