Orbitz 2009 Annual Report Download - page 92

In addition to the commitments and contingencies shown above, we are required to make principal
payments on our Term Loan and pay down amounts outstanding on our Revolver (see Note 8 — Term Loan
and Revolving Credit Facility). We also expect to make approximately $226 million of payments in connection
with the tax sharing agreement with the Founding Airlines (see Note 9 — Tax Sharing Liability). Also
excluded from the above table are $6 million of liabilities for uncertain tax positions for which the period of
settlement is not currently determinable.
Company Litigation
We are involved in various claims, legal proceedings and governmental inquiries related to contract
disputes, business practices, intellectual property and other commercial, employment and tax matters.
We are party to various cases brought by consumers and municipalities and other U.S. governmental
entities involving hotel occupancy taxes and our merchant hotel business. Some of the cases are purported
class actions and most of the cases were brought simultaneously against other Internet travel companies,
including Expedia, Travelocity and Priceline. The cases allege, among other things, that we violated the
jurisdictions’ hotel occupancy tax ordinance with respect to the charges and remittance of amounts to cover
taxes under the ordinance. While not identical in their allegations, the cases generally assert similar claims,
including violations of local or state occupancy tax ordinances, violations of consumer protection ordinances,
conversion, unjust enrichment, imposition of a constructive trust, demand for a legal or equitable accounting,
injunctive relief, declaratory judgment, and in some cases, civil conspiracy. The plaintiffs seek relief in a
variety of forms, including: declaratory judgment, full accounting of monies owed, imposition of a constructive
trust, compensatory and punitive damages, disgorgement, restitution, interest, penalties and costs, attorneys’
fees, and where a class action has been claimed, an order certifying the action as a class action. An adverse
ruling in one or more of these cases could require us to pay tax retroactively and prospectively and possibly
pay penalties, interest and fines. The proliferation of additional cases could result in substantial additional
defense costs.
We have also been contacted by several municipalities or other taxing bodies concerning our possible
obligations with respect to state or local hotel occupancy or related taxes. The cities of New Orleans,
Louisiana, Phoenix, Arizona, North Little Rock and Pine Bluff, Arkansas, 26 cities in California (including
Los Angeles and Oakland), an entity representing 84 cities and 14 counties in Alabama, the counties of
Jefferson, Arkansas, Brunswick and Stanly, North Carolina, Duval County, Florida and the Hawaii Department
of Taxation issued audit notices against the Company. These municipalities have not issued assessments, but
have requested information to conduct an audit and/or have requested that the Company register to pay local
hotel occupancy taxes. Additional jurisdictions have begun audit proceedings and some have issued assess-
ments. They include: the cities of Anaheim, San Diego and San Francisco, California, the counties of Miami-
Dade and Broward, Florida, the cities of Alpharetta, Cartersville, Cedartown, College Park, Dalton, East Point,
Hartwell, Macon, Rockmart, Rome, Tybee Island and Warner Robins, Georgia, the counties of Augusta,
Clayton, Cobb, DeKalb, Fulton, Gwinnett, Hart and Richmond, Georgia, the city of Philadelphia, Pennsylva-
nia, and state tax officials from Indiana and Wisconsin. The Company disputes that any hotel occupancy or
related tax is owed under these ordinances and is challenging the assessments made against the Company. If
the Company is found to be subject to the hotel occupancy tax ordinance by a taxing authority and appeals the
decision in court, certain jurisdictions may attempt to require us to provide financial security or pay the
assessment to the municipality in order to challenge the tax assessment in court.
We believe that we have meritorious defenses and we are vigorously defending against these claims,
proceedings and inquiries. We have not recorded any reserves related to these hotel occupancy tax matters.
Litigation is inherently unpredictable and, although we believe we have valid defenses in these matters
based upon advice of counsel, unfavorable resolutions could occur. While we cannot estimate our range of
loss, an adverse outcome from these unresolved proceedings could be material to us with respect to earnings
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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)