Priceline 2010 Annual Report Download - page 183

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officer appointed by the City issued a ruling holding the Company and other online travel companies liable for
transient occupancy tax. The Company has filed a judicial action challenging that ruling. In another example, in
January 2011, in Travelscape, LLC v. South Carolina Department of Revenue, a case in which the Company was not
a defendant, the South Carolina Supreme Court affirmed a lower court decision holding that Travelscape, an online
travel company, was subject to that state’s sales tax because Travelscape was “engaged . . . in the business of
furnishing accommodations.” In light of this ruling, the Company recorded a $1.7 million charge to general and
administrative expenses for the year ended December 31, 2010. In July 2010, in City of Atlanta v. Hotels.com, L.P.,
the court issued a ruling expressly holding that the Company (and its co-defendants) were not hotel “operators”
under the City of Atlanta’s ordinance and were not liable for claimed historic tax amounts. At the same time,
however, the City of Atlanta court found that under the “merchant” model, the Company (and its co-defendants)
have undertaken an obligation to collect taxes and granted plaintiff’s request for an injunction, prospectively
enjoining defendants to collect and remit occupancy tax on their compensation for reservation facilitation services to
the City of Atlanta. The City of Atlanta decision is on appeal.
Several jurisdictions, including the states of New York and North Carolina, amended their respective laws
in an effort to tax online travel companies and “merchant” model gross revenue. The Company has complied with
applicable amended laws.
Lastly, the Company reached agreements with the respective plaintiffs resolving the claims for purported
back taxes in County of Monroe, Florida v. Priceline.com, Inc. et al., County Commissioners of Worcester,
Maryland v. Priceline.com, Inc., et al., and Mayor & City Council of Baltimore v. Priceline.com, Inc., et al., as well
as three individual cases that had been previously consolidated for pretrial purposes, City of Charleston, South
Carolina v. Hotels.com, et al.; Town of Mount Pleasant, South Carolina v. Hotels.com, et al.; and City of North
Myrtle Beach, South Carolina v. Hotels.com, LP, et al. These cases have been dismissed. The Company also
reached an agreement with the plaintiff in County of Brevard, Florida v Priceline.com, Inc., et al. and that case was
dismissed on January 12, 2011. As part of each of the agreements, plaintiffs have agreed to not assert claims based
on the ordinance at issue in the respective action for a period of time, ranging from two to four years. The
settlement amounts in these cases are not material to the Company’s results of operations for the year ended
December 31, 2010.
The currently pending occupancy tax matters are listed below. The Company intends to defend vigorously
against the claims in all of the proceedings described below.
Statewide Class Actions and Putative Class Actions
Such actions include:
x City of Los Angeles, California v. Hotels.com, Inc., et al. (California Superior Court, Los Angeles
County; filed Dec. 2004)
x City of Rome, Georgia, et al. v. Hotels.com, L.P., et al. (U.S. District Court for the Northern
District of Georgia; filed Nov. 2005)
x City of San Antonio, Texas v. Hotels.com, L.P., et al. (U.S. District Court for the Western District
of Texas; filed May 2006)
x City of Jacksonville, Florida, et al. v. Hotels.com, L.P., et al. (Circuit Court, Fourth Judicial
Circuit, Duval County, Florida; filed July 2006)
x Lake County Convention and Visitors Bureau, Inc. and Marshall County, Indiana v. Hotels.com,
L.P., et al. (U.S. District Court for the Northern District of Indiana; filed June 2006)
x County of Nassau, New York v. Hotels.com, LP, et al. (U.S. District Court for the Eastern District
of New York; filed Oct. 2006); (U.S. Court of Appeals for the Second Circuit; appeal filed Sept.
2007)
x City of Gallup, New Mexico v. Hotels.com, L.P., et al. (U.S. District Court for the District of New
Mexico; filed July 2007)
x City of Goodlettsville, Tennessee, et al. v. priceline.com Incorporated, et al. (U.S. District Court
for the Middle District of Tennessee; filed June 2008)
x Township of Lyndhurst, New Jersey v. priceline.com Incorporated, et al. (U.S. District Court for
the District of New Jersey; filed June 2008); (U.S. Court of Appeals for the Third Circuit; appeal
filed Apr. 2009)
x County of Monroe, Florida v. Priceline.com, Inc. et al. (U.S. District Court for the Southern
District of Florida; filed Jan. 2009)