Expedia 2013 Annual Report Download - page 35

We also lease approximately 945,000 square feet of office space for our international operations in various
cities and locations, including Argentina, Australia, Belgium, Brazil, Canada, China, Czech Republic, Denmark,
France, Germany, Greece, India, Indonesia, Ireland, Italy, Japan, Malaysia, Mexico, the Netherlands, New
Zealand, Philippines, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand,
Turkey, United Arab Emirates, the United Kingdom and Vietnam, pursuant to leases with expiration dates
through May 2023.
Part I. Item 3. Legal Proceedings
In the ordinary course of business, Expedia and its subsidiaries are parties to legal proceedings and claims
involving property, personal injury, contract, alleged infringement of third-party intellectual property rights and
other claims. The amounts that may be recovered in such matters may be subject to insurance coverage.
Rules of the SEC require the description of material pending legal proceedings, other than ordinary, routine
litigation incident to the registrant’s business, and advise that proceedings ordinarily need not be described if
they primarily involve damages claims for amounts (exclusive of interest and costs) not individually exceeding
10% of the current assets of the registrant and its subsidiaries on a consolidated basis. In the judgment of
management, none of the pending litigation matters that the Company and its subsidiaries are defending,
including those described below, involves or is likely to involve amounts of that magnitude. The litigation
matters described below involve issues or claims that may be of particular interest to our stockholders, regardless
of whether any of these matters may be material to our financial position or results of operations based upon the
standard set forth in the SEC’s rules.
Litigation Relating to Hotel Occupancy Taxes
Actions Filed by Individual States, Cities and Counties
City of Los Angeles Litigation. On December 30, 2004, the city of Los Angeles filed a purported class action
in California state court against a number of online travel companies, including Hotels.com, Expedia and
Hotwire. City of Los Angeles, California, on Behalf of Itself and All Others Similarly Situated v. Hotels.com, L.P.
et al., No. BC326693 (Superior Court, Los Angeles County). The complaint alleges that the defendants are
improperly charging and/or failing to pay hotel occupancy taxes. The complaint seeks certification of a statewide
class of all California cities and counties that have enacted uniform transient occupancy-tax ordinances effective
on or after December 30, 1990. The complaint alleges violation of those ordinances, violation of Section 17200
of the California Business and Professions Code, and common-law conversion. The complaint also seeks a
declaratory judgment that the defendants are subject to hotel occupancy taxes on the hotel rate charged to
consumers and imposition of a constructive trust on all monies owed by the defendants to the government, as
well as disgorgement, restitution, interest and penalties. On April 18, 2013, the trial court held that the online
travel companies are not liable to remit hotel occupancy taxes to the city of Los Angeles. On January 8, 2014, the
court entered final judgment in favor of the online travel companies.
City of Chicago Litigation. On November 1, 2005, the city of Chicago, Illinois filed an action in state court
against a number of online travel companies, including Hotels.com, Hotwire and Expedia. City of Chicago,
Illinois v. Hotels.com, L.P., et al., No. 2005 L051003 (Circuit Court of Cook County). The complaint alleges that
the defendants have failed to pay to the city the hotel accommodations taxes as required by municipal ordinance.
The complaint asserts claims for violation of that ordinance, conversion, imposition of a constructive trust and
demand for a legal accounting. The complaint seeks damages, restitution, disgorgement, fines, penalties and
other relief in an unspecified amount. On June 21, 2013 and subsequently on June 28, 2013, the court entered an
order and a supplemental order resolving the parties pending cross motions for summary judgment. The court
denied the defendant online travel companies’ motion for summary judgment and granted in part and denied in
part the city of Chicago’s motion for summary judgment holding the online travel companies liable for hotel
occupancy taxes.
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