Expedia 2013 Annual Report Download - page 38

local ordinance, as well as claims for declaratory judgment, injunction, conversion, constructive trust,
accounting, unfair and deceptive trade practices and agency. On April 4, 2007, the court consolidated the Wake
County, Dare County, Buncombe County, and Mecklenburg County lawsuits. On May 9, 2007, the defendants
moved to dismiss the lawsuits. On November 19, 2007, the court granted in part and denied in part defendants’
motion to dismiss. On November 1, 2010, the parties filed cross-motions for summary judgment. On
December 19, 2012, the court granted defendants’ motion for summary judgment and denied plaintiffs’ motion
for summary judgment. The court concluded that defendants could not properly be classified as operators of
“taxable establishments” or “business[es] subject to a room occupancy tax” under any of plaintiffs’ occupancy
tax ordinances or resolutions and are thus not subject to plaintiffs’ occupancy taxes. Plaintiffs have appealed. The
North Carolina Court of Appeals heard arguments on the plaintiffs’ appeal on November 19, 2013.
City and County of San Francisco, California Litigation. On May 13, 2008, San Francisco instituted an
audit of a number of online travel companies, including Expedia, Hotels.com, and Hotwire, for hotel occupancy
taxes claimed to be due from 2000 through the third quarter of 2007. The city completed its audit and issued
assessments against the online travel companies. The online travel companies challenged those assessments
through an administrative process. The hearings examiner upheld that assessments. On May 9, 2009, the online
travel companies, including the Expedia companies, filed a petition for writ of mandate in the California Superior
Court seeking to vacate the decision of the hearing examiner and asking for declaratory relief that the online
travel companies are not subject to San Francisco’s hotel occupancy tax. Expedia, Inc. v. City and County of San
Francisco, et. al.; Hotels.com, Inc. v. City and County of San Francisco, et. al.; Hotwire, Inc. v. City and County
of San Francisco, et. al., (Superior Court of the State of California, County of San Francisco). On June 19, 2009,
the court granted the city’s demurrer on the “pay first” issue relating to pay-to-play provisions. Expedia and
Hotwire’s appeal of the “pay first” decision was denied, as was Hotels.com’s appeal. The total assessed amount
paid by the Expedia companies was approximately $48 million. On February 6, 2013, the court held that the
online travel companies are not liable to remit hotel occupancy taxes to San Francisco. On October 10, 2013, the
court entered judgment in favor of the online travel companies. On December 9, 2013, San Francisco filed a
notice of appeal. San Francisco also has issued additional tax assessments against the Expedia companies in the
amount of $24 million for the time period from the fourth quarter of 2007 through the fourth quarter of 2011. On
January 21, 2014, the city notified the Expedia companies that despite proceeding in court on these assessments
and the court order that taxes are not due to the city it now intends to proceed against the Expedia companies in
the administrative process to recover the additional assessment amount. The Expedia companies intend to seek
injunctive and other relief against any continuation of the administrative process.
Pine Bluff, Arkansas Litigation. On September 25, 2009, Pine Bluff Advertising and Promotion Commission
and Jefferson County filed a class action against a number of online travel companies, including Expedia, Inc.,
Hotels.com, and Hotwire. Pine Bluff Advertising and Promotion Commission, Jefferson County, Arkansas, and
others similarly situated v. Hotels.com LP, et. al. CV-2009-946-5 (In the Circuit Court of Jefferson, Arkansas).
The complaint alleges that defendants have failed to collect and/or pay taxes under hotel tax occupancy
ordinances. The court denied defendants’ motion to dismiss. Plaintiffs filed a motion for class certification. On
February 19, 2013, the court granted plaintiffs’ motion for class certification. Defendants appealed the class
certification decision, and on October 10, 2013 the Arkansas Supreme Court affirmed that decision.
Leon County, Florida et. al. Litigation. On November 3, 2009, Leon County and a number of other counties
in Florida filed an action against a number of online travel companies, including Expedia, Inc., Hotels.com and
Hotwire. Leon County, et. al. v. Expedia, Inc., et. al. Case No: 2009CA4319 (Circuit Court of the Second Judicial
Circuit, Leon County, Florida). The complaint alleges that defendants have failed to collect and/or pay taxes
under the county’s tourist development tax ordinances. Flagler, Alachua, Nassau, Okaloosa, Seminole, Pasco,
Pinellas, Hillsborough, Lee, Charlotte, Escambia, Manatee, Saint Johns, Polk, Walton and Wakulla counties were
added as plaintiffs. On April 19, 2012, the court granted the defendant online travel companies’ motion for
summary judgment, denied the plaintiffs’ motion and held that online travel companies have no obligation to
remit hotel occupancy taxes. On February 23, 2013, the court of appeals affirmed the trial court decision in the
Leon County, Florida litigation that online travel companies are not liable for hotel occupancy taxes. Thereafter,
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