Expedia 2012 Annual Report Download - page 41

Expedia that taxes are not due on their services, and denied the city’s appeal. The city appealed the decision by
the court of common pleas. On February 2, 2012, the Commonwealth Court of Pennsylvania affirmed the lower
court decision and held that taxes are not due from Expedia. On February 24, 2012, the city filed a petition for
review to the Pennsylvania Supreme Court. On August 15, 2012, the Pennsylvania Supreme Court denied review.
City of Santa Monica, California v. Expedia, Inc, et al., Case No. 108568 (Superior Court of the State of
California, County of Los Angeles, West District). On June 25, 2010, the city of Santa Monica brought suit
against a number of internet travel companies, including Hotels.com, Expedia and Hotwire. The city claims that
internet travel companies act as independent, nonexclusive sales agents for hotels and thus are obligated to
collect and remit occupancy tax on their services. The complaint includes claims for conversion, declaratory
relief, violations of California Civil Code § 2223, violations of California Civil Code § 2224, imposition of a
constructive trust, declaratory relief regarding application of the step transaction doctrine, and liability as agents
under California Civil Code §§ 2343, 2344. This case is consolidated in the Superior Court of the State of
California, Los Angeles with the pending claims by the City of Anaheim, San Francisco, San Diego and Los
Angeles. The Expedia companies were required to pay the approximately $3 million tax assessments to defend
against the city’s complaint. Defendants’ demurrer to the city’s complaint was granted on March 16, 2011. The
city has returned Expedia’s $3 million payment in exchange for a letter of credit. The City of Santa Monica filed
an appeal. On November 1, 2012, the California Court of Appeal affirmed the lower court’s decision dismissing
the city’s claims. On January 23, 2013, the California Supreme Court denied the city’s petition for review of the
court of appeal’s decision in this case.
Baltimore County, Maryland Litigation. On May 3, 2010, Baltimore County filed suit against a number of
internet travel companies, including Hotels.com, Expedia and Hotwire. Baltimore County v. Priceline.com, Inc.,
et al., Case No. MJG10CV1104 (United States District Court, District of Maryland, Northern Division). The
complaint alleges that the defendants have failed to pay county hotel occupancy taxes as required by municipal
ordinance. The complaint includes claims for declaratory judgment, violation of the tax code, conversion,
injunctive relief, unjust enrichment/assumpsit, imposition of a constructive trust and damages. On March 1,
2011, the court granted in part and denied in part the online travel companies’ motion to dismiss.
Hamilton County, Ohio Litigation. On August 23, 2010, the counties of Hamilton, Cuyahoga, and Erie
brought suit against a number of online travel companies, including Hotels.com, Expedia and Hotwire. Hamilton
County v. Hotels.com, et. al, Case No. A 1007729 (Court of Common Pleas, Hamilton County). The counties
claim that the online travel companies have failed to remit occupancy taxes. Plaintiffs assert claims for violation
of the counties’ transient occupancy taxes, unjust enrichment, money had and received, conversion, constructive
trust, breach of contract, declaratory judgment and damages. On February 11, 2011, defendants brought a motion
to dismiss. On July 29, 2011, the court granted in part and denied in part defendants’ motion to dismiss. On
October 31, 2012, defendants filed a motion for summary judgment.
State of Oklahoma Litigation. On November 2, 2010, the state of Oklahoma filed suit against a number of
online travel companies, including Hotels.com, Expedia and Hotwire. State of Oklahoma v. Priceline.com, Inc.,
et al., Case No. CJ-2010-8952 (In the District Court of Oklahoma, State of Oklahoma). The complaint includes
claims for declaratory judgment, right of action for sales tax owed, injunctive relief and damages. The complaint
seeks unspecified damages. Defendants brought a motion to dismiss, which the court granted on March 11, 2011.
The state did not appeal.
State of Montana Litigation. On November 8, 2010, the state of Montana filed suit against a number of
online travel companies, including Hotels.com, Expedia and Hotwire. State of Montana Department of Revenue
v. Priceline.com, Inc., et al. Case No. CD-2010-1056 (Montana First Judicial District, Lewis and Clark County).
The complaint includes claims for declaratory relief, injunctive relief, violation of the Lodging Facility Use Tax
Statute, violation of the Lodging Facility Sales and Use Tax Statute, violation of the Rental Vehicle Sales and
Use Tax, conversion, unjust enrichment, imposition of a constructive trust, and damages. The complaint seeks
unspecified damages. On January 31, 2011, defendants brought a motion to dismiss which the court denied on
December 1, 2011. The court has set a March 3, 2014 trial date for the case.
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