STATE OF MINNESOTA COUNTY OF HENNEPIN

DISTRICT COURT FOURTH JUDICIAL DISTRICT CASE TYPE: CIVIL

WAYNE SPAR, individually and on behalf of the putative class, Plaintiff, v. CEDAR TOWING & AUCTION, INC., Defendant. Court File No. CLASS ACTION COMPLAINT (Jury Trial Demanded)

Plaintiff Wayne Spar (“Plaintiff”), by and through his attorneys Nichols Kaster, PLLP, brings this action for damages and other legal and equitable relief from violations of law perpetrated by Defendant Cedar Towing & Auction, Inc. (“Defendant”), stating the following claims on behalf of himself and other putative class members: PARTIES 1. 2. Plaintiff is a natural person residing in Ramsey County, Minnesota. Defendant is a domestic corporation with its principal place of business in

Hennepin County, Minnesota. Defendant is one of five Class A licensed towing companies operating in the City of Minneapolis; in fact, it is the largest tow-truck operator in the city. VENUE 3. Venue is proper in the Fourth Judicial District because a substantial part of the

events at issue in this lawsuit took place in Minneapolis, which is located in the Fourth Judicial District.

FACTUAL ALLEGATIONS Defendant’s Business Practices 4. Defendant operates a towing company licensed by the City of Minneapolis. In

operating with a Class A license, Defendant agrees to abide by applicable city ordinances, and Defendant holds itself out to the public as a compliant and abiding licensee. http://www.cedartowing.com/home_page_web_easy_002.htm (“We make every effort to follow the Minneapolis City Ordinances & Minnesota State Statutes.”) (last visited Dec. 13, 2011). 5. Defendant contracts with Minneapolis business establishments to remove

unauthorized vehicles from private property. 6. Defendant transports these vehicles to its impound lot where they remain until

their owners pay charges in order to retrieve them. 7. In 2008, the City of Minneapolis passed an ordinance capping the fees that towing

companies are permitted to charge in connection with the towing (the “Service Fee”) and storage (the “Storage Fee”) of an unauthorized vehicle; these caps are $207 and $27 respectively. See Minneapolis, Minn., Code of Ordinances § 349.270. These caps are adjusted for inflation and are currently set at $212 and $28 respectively. Id.; Matt McKinney, “Cedar Towing Under Police Investigation,” Star Trib. (Nov. 11, 2011). 8. The Minneapolis Code of Ordinances requires that towing companies obtain

written authorization on the appropriate forms from an authorized representative of the property owner before they can tow away vehicles. § 349.90. 9. Towing companies are permitted to charge Storage Fees the day after a vehicle is

towed. § 349.115.

2

10.

The Minneapolis Code of Ordinances requires that towing companies accept the

same methods of payment honored by the City at its impound facility, including credit cards. § 349.270. The City currently accepts cash, Visa, MasterCard, American Express, Personal

Checks, Travelers Checks, Money Orders, and Cashier Checks. See http://www.minneapolismn .gov/impound-lot/releasing-your-vehicle.asp (last visited Dec. 13, 2011). 11. In late August 2011, the city licensing department conducted a “spot inspection” McKinney, supra. The investigator noted, among other

of Defendant’s impound lot.

discrepancies, that Defendant was charging vehicle owners with a Storage Fee on the day the vehicle is towed, in violation of Minneapolis City Ordinance. Id. 12. The licensing department turned its investigation over to the city police

department, who in turn issued a search warrant and seized paperwork from Defendant on October 18, 2011 in connection with its police investigation. Id. 13. On November 11, 2011, the Star Tribune ran an article relating to the police and

licensing investigations. See id. Plaintiff’s Interactions with Defendant 14. Defendant tows cars from the private parking lot on the eastside of Lasalle

Avenue just north of Groveland Avenue. This lot services customers of Frattallone’s Ace Hardware, AM Food Market, and Urbanna. 15. On the evening of September 18, 2011, Plaintiff parked his Hyundai Accent in

this parking lot during a visit to an acquaintance’s house. 16. Hours after parking his vehicle, Plaintiff observed one of Defendant’s tow trucks

near Plaintiff’s vehicle.

3

17.

Plaintiff approached the driver and requested permission to remove the car from

the lot in lieu of receiving a tow. 18. 19. The driver demanded one-hundred dollars cash for the release of the vehicle. Plaintiff responded that he could retrieve the demanded cash from his

acquaintance’s residence, but the driver stated that he could not wait. He then proceeded to secure Plaintiff’s vehicle and tow it to Defendant’s impound lot. 20. Plaintiff then went to Defendant’s impound lot to retrieve his vehicle. Defendant

required that Plaintiff pay more than the maximum allowed for a tow by the Minneapolis Code of Ordinances in order to retrieve his vehicle, and Defendant required that he pay this amount in cash. 21. Unaware that Defendant was violating a Minneapolis City Ordinance, Plaintiff

paid the demanded amount in cash. CLASS ACTION ALLEGATIONS 22. Plaintiff brings this action individually and as a class action pursuant to Rules

23.01 and 23.02 of the Minnesota Rules of Civil Procedure. 23. The Minnesota Rule 23 Class is defined as follows:

All individuals who were towed by Defendant from privately owned property within the City of Minneapolis to Defendant’s impound lot at any time from September 1, 2008 until the present. 24. The individuals in the putative class as defined above are so numerous that

joinder of all members is impracticable. According to the Star Tribune, Cedar Towing towed more than 3,640 vehicles in 2011 alone. Although the precise number of such individuals is currently unknown, Plaintiff believes that the class as defined above includes over 1000 members. These individuals can be identified based on Defendant’s and/or the City’s records.

4

25.

There are questions of law and fact common to the putative class that predominate

over any questions solely affecting individual members, including, but not limited to: a. Whether Defendant was authorized to charged Plaintiff and the

putative class Services Fees and/or Storage Fees in access of the maximum amounts prescribed in Minneapolis Code of Ordinances section 349.270; b. Whether the Minneapolis Code of Ordinances section 349.115

authorizes Defendant to charge Plaintiff and the putative class Storage Fees on the day the vehicles are towed; c. Whether the Minneapolis Code of Ordinances section 349.270

authorizes Defendant to demand cash payment for the release of an impounded vehicle; d. Whether Defendant’s actions as alleged herein violate the Uniform

Deceptive Trade Practices Act (UDTPA), Minn. Stat. § 325D.44, and/or the Prevention of Consumer Fraud Act, Minn. Stat. § 325F.69, et seq.; e. Whether Defendant commits fraud by representing the amount and

applicability of the fees as more than what it is legally authorized to collect, and by demanding payment in cash when it is legally required to accept other methods of payment; f. Whether Defendant commits coercion by requiring Plaintiff and

the putative class to provide it with more money than legally required in order to order to repossess their vehicles; and

5

g.

Whether Defendant is unjustly enriched by charging Plaintiff and

the members of the putative class more than legally authorized for its towing services. 26. Plaintiff’s claims are typical of those of the putative class. Defendant charged

Plaintiff, like other members of the putative class, more for the towing of his vehicle than permitted by Minneapolis City Ordinance. 27. Given Plaintiff’s losses, Plaintiff has the incentive and is committed to the

prosecution of this action. Plaintiff will fairly and adequately protect the interests of the putative class and has retained as counsel a law firm that numerous courts have found sufficiently experienced in class actions to be appointed as class counsel. There are no conflicts between Plaintiff and the class he seeks to represent. 28. This action is maintainable as a class action because the prosecution of separate

actions by individual members of the class would create a risk of inconsistent or varying adjudications with respect to individual members of the putative class, which would establish incompatible standards of conduct for Defendant. 29. This action is maintainable as a class action because questions of law and fact

common to the putative class predominate over any questions affecting only individual members of the putative class and because a class action is superior to other methods for the fair and efficient adjudication of this action. 30. This action is maintainable as a class action because Defendant has acted on

grounds generally applicable to the class, thus making injunctive relief and corresponding declaratory relief appropriate with respect to the class as a whole.

6

31.

Plaintiff intends to send notice to all members of the putative class to the extent

required by Rule 23.03 of the Minnesota Rules of Civil Procedure. COUNT ONE VIOLATION OF THE UNIFORM DECEPTIVE TRADE PRACTICES ACT Minn. Stat. § 325D.44, et seq. 32. 33. Plaintiff re-alleges and incorporates all preceding paragraphs. The Uniform Deceptive Trade Practices Act (UDTPA), Minn. Stat. § 325D.44, et

seq., prohibits a proscribed list of deceptive trade practices in the course of business, including: • caus[ing] likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services; • caus[ing] likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another; • represent[ing] that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have; [and] • engag[ing] in any other conduct which similarly creates a likelihood of confusion or of misunderstanding. Minn. Stat. § 325D.44, subd. 1(2), (3), (5), (13). 34. 35. Towing and storage fees are capped by law. Licensed towing companies are required by law to accept methods of payment

other than cash. 36. By representing that vehicle owners owe fees in excess of the cap in cash,

Defendant causes a likelihood of confusion of misunderstanding with regards to the amount of monies owed to Defendant, and the acceptable methods of payment, by Plaintiff and the putative class. 37. These actions violate the UDTPA. 7

38. 39.

Defendant engages in this deceptive conduct willfully and knowingly. Plaintiff and the putative class are injured by Defendant’s unlawful actions and

are therefore entitled to relief as set forth below. COUNT TWO VIOLATION OF THE PREVENTION OF CONSUMER FRAUD ACT Minn. Stat. § 325F.69 40. 41. Plaintiff re-alleges and incorporates all preceding paragraphs. According to the Prevention of Consumer Fraud Act:

The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided herein. Minn. Stat. § 325F.69, subd. 1. 42. The Private Attorney General Act permits consumers to pursue a private cause of

action based upon violations of the Prevention of Consumer Fraud Act. Minn. Stat. § 8.31, subd. 3a. 43. The sale of merchandise includes the providing of a service under section

325F.68, subd. 2. 44. Defendant engages in and continues to engage in fraud, misrepresentations, and

deceptive practices as set forth herein. Defendant engages in deceptive and fraudulent practices when it fails to notify Plaintiff and members of the putative class of the applicable maximum charges established by the city and when it charges amounts in excess of those maximums. In addition to omitting material information, Defendant improperly communicates to Plaintiff and members of the putative class (1) that they are required to pay fees that were in actuality above

8

and beyond the acceptable amounts authorized by City Ordinance, (2) that they are required to pay Storage Fees when Defendant is not legally authorized to charge such fees, and (3) they are required to make payment in cash. 45. Defendant engages in such misrepresentations and deceptions with the intent that

Plaintiff and the putative class members will rely on such misrepresentations in connection with their payment of fees for Defendant’s services, and with the intent that Plaintiff and putative class members will pay the unauthorized charges. 46. Defendant’s misrepresentations, deceptions, and omissions are the direct cause of

Plaintiff and the putative class members’ overpayment for Service and Storage Fees. 47. The vindication of Plaintiff’s claims and the claims of the other putative class

members will benefit the public at large. Defendant is the largest tow truck company in the City of Minneapolis. Defendant towed more than 3,640 vehicles in 2011 alone. Like Plaintiff, many unsuspecting vehicle owners are unaware of the proper amounts Defendant may charge for Service Fees and Storage Fees and of the appropriate time when such fees accrue. There is a significant public interest in ensuring that companies adhere to city ordinances that are designed to protect captive consumers like Plaintiff and the putative class. 48. Plaintiff and the putative class are injured by Defendant’s unlawful actions and

are therefore entitled to relief as set forth below. COUNT THREE FRAUD 49. 50. Plaintiff re-alleges and incorporates all preceding paragraphs. As a Class A licensee, Defendant is aware of the maximum Service and Storage

Fees, and the circumstances upon which it may charge vehicle owners with a Storage Fee.

9

51.

As a Class A licensee, Defendant is aware that it must accept the payment

methods accepted by the Minneapolis impound facilities. 52. In requesting payment for services in cash and in an amount which exceeds the

maximum allowed by law, Defendant made false representations to Plaintiff and members of the putative class about the monies Plaintiff and class members owed Defendant. 53. Defendant intentionally neglects to inform Plaintiff and members of the putative

class that it is charging them inapplicable and/or excessive Service and Storage Fees. 54. Defendant engages in these omissions and representations with the intent to

induce Plaintiff and members of the putative class to rely on its representations and provide Defendant with cash payments, greater than it is entitled to under law. 55. As a result of Defendant’s omissions and representations, Plaintiff and the

putative class provide Defendant with cash payments in the amount requested, rather than the amount legally required. 56. Because of this, Plaintiff and the putative class suffered actual damages equal to

the difference between the amount paid and the amount authorized under the Minneapolis Code of Ordinances. COUNT FOUR COERCION 57. 58. Plaintiff re-alleges and incorporates all preceding paragraphs. Defendant tows vehicles owned by Plaintiff and the putative class without their

authorization or consent. Plaintiff and other members of the putative class affirmatively object to the towing of their vehicles.

10

59.

Defendant holds these vehicles under its subjection until Plaintiff and the putative

class pay for their release. 60. Plaintiff and the putative class have a legal right to retrieve their vehicles from

Defendant at the rates proscribed by the Minneapolis Code of Ordinances. 61. Nonetheless, Defendant knowingly charges Plaintiff and the putative class more In doing so, Defendant violates the Minneapolis Code of

than permitted under the law.

Ordinances and acts outside the bounds of its Class A towing license. 62. Plaintiff and the putative class are forced to pay these improper rates, against their

free will, so that they may repossess their vehicles. 63. In paying Defendant in excess of the legally authorized rates, Plaintiff and the

putative class receive no additional rights or benefits. 64. Defendant’s wrongful conduct causes damage to Plaintiff and the putative class

because it forces Plaintiff and the putative class to pay more for the release of their vehicles then they are legally required to pay. Plaintiff and the putative class suffered actual damages equal to the difference between the amount paid and the amount authorized under the Minneapolis Code of Ordinances. COUNT FIVE UNJUST ENRICHMENT 65. 66. Plaintiff re-alleges and incorporates all preceding paragraphs. Defendant receives an impermissible and unearned financial gain by charging

more for its towing and storage services than permitted by law.

11

67.

Defendant’s actions and omissions with regard to the applicable fees described

herein provide Plaintiff and the putative class with no additional benefit and are charged without the consent of Plaintiff, the putative class, or the City of Minneapolis. 68. Defendant’s actions and omissions are thus unjust and provide Defendant with an

impermissible financial gain. 69. It would be inequitable for Defendant to retain profits, benefits, and other

compensation from the practices alleged herein. Thus, Plaintiff and the putative class are entitled to restitution and other appropriate relief as outlined below. PRAYER FOR RELIEF 70. WHEREFORE, Plaintiff, on behalf of himself and the putative class, prays for

judgment against Defendant as follows: A. putative class; B. C. D. E. F. Designation of Plaintiff as a Class Representative; Appointment of Nichols Kaster, PLLP as class counsel; Judgment in favor of Plaintiff on all counts; Declaration that the practices complained of herein are unlawful; An Injunction requiring Defendant to cease and desist from Certification of this action as a class action on behalf of the

engaging in these unlawful practices; G. H. by law; An award of actual damages and restitution; An award of pre-judgment and post-judgment interest as provided

12

I.

An award of attorneys’ fees and costs, Minn. Stat. §§ 8.31, subd.

3a, 325D.45, subd. 2; and J. Any further remedy the Court may deem just and proper.

Date: December 16, 2011

NICHOLS KASTER, PLLP

______________________________ E. Michelle Drake #0387966 Rebekah L. Bailey #0389599 80 South Eighth Street 4600 IDS Center Minneapolis, MN 55402-2242 Telephone: (612) 256-3200 Fax: (612) 338-4878 drake@nka.com bailey@nka.com ATTORNEYS FOR PLAINTIFF

13