Priceline 2011 Annual Report Download - page 29

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resolution of the remaining claim, which was consolidated under Peluso v. Orbitz.com, et al., 11 Civ. 4407 on July 14, 2011.
On July 13, 2011, the plaintiffs filed a Notice of Appeal of the June 21, 2011 decision in the United States Court of Appeals for
the Second Circuit. On July 25, 2011, the Peluso court granted plaintiff's motion to voluntarily dismiss the claim against us in
the Northern District of Illinois. On December 6, 2011, the Second Circuit dismissed the appeal for lack of jurisdiction.
We intend to defend vigorously against the claims in all of the on-going proceedings described above.
Administrative Proceedings and Other Possible Actions
At various times, we have also received inquiries or proposed tax assessments from municipalities and other taxing
jurisdictions relating to our charges and remittance of amounts to cover state and local hotel occupancy and other related taxes.
Among others, the City of Philadelphia, Pennsylvania; the City of Phoenix, Arizona (on behalf of itself and 12 other Arizona
cities); the City of St. Louis, Missouri; the City of Paradise Valley, Arizona; the City of Denver, Colorado; City of Greenwood
Village, Colorado; City of Littleton, Colorado; City of Golden, Colorado; and the City of Portland, Oregon and County of
Multnomah, Oregon; and state tax officials from Arkansas, Florida, Indiana, Louisiana, Maryland, New Mexico, Ohio,
Pennsylvania, Texas, West Virginia, Wisconsin, and Wyoming have begun formal or informal administrative procedures or
stated that they may assert claims against us relating to allegedly unpaid state or local hotel occupancy or related taxes.
Between 2008 and 2010, we received audit notices from more than forty cities in the state of California. We have been
engaged in audit proceedings in each of those cities. We have also been contacted for audit by five counties in the state of
Utah.
Litigation Related to Securities Matters
On March 16, March 26, April 27, and June 5, 2001, respectively, four putative class action complaints were filed in
the U.S. District Court for the Southern District of New York naming priceline.com, Inc., Richard S. Braddock, Jay Walker,
Paul Francis, Morgan Stanley Dean Witter & Co., Merrill Lynch, Pierce, Fenner & Smith, Inc., BancBoston Robertson
Stephens, Inc. and Salomon Smith Barney, Inc. as defendants (01 Civ. 2261, 01 Civ. 2576, 01 Civ. 3590 and 01 Civ. 4956).
Shives et al. v. Bank of America Securities LLC et al., 01 Civ. 4956, also names other defendants and states claims unrelated to
us. The complaints allege, among other things, that we and the individual defendants violated the federal securities laws by
issuing and selling priceline.com common stock in our March 1999 initial public offering without disclosing to investors that
some of the underwriters in the offering, including the lead underwriters, had allegedly solicited and received excessive and
undisclosed commissions from certain investors. After extensive negotiations, the parties reached a comprehensive settlement
on or about March 30, 2009. On April 2, 2009, plaintiffs filed a Notice of Motion for Preliminary Approval of Settlement. On
June 9, 2009, the court granted the motion and scheduled the hearing for final approval for September 10, 2009. The
settlement, previously approved by a special committee of our Board of Directors, compromised the claims against us for
approximately $0.3 million. The court issued an order granting final approval of the settlement on October 5, 2009. Notices of
appeal of the Court's order have been filed with the Second Circuit. All of the appeals have now been resolved.
OFT Inquiry
In September 2010, the United Kingdom's Office of Fair Trading (the "OFT"), the competition authority in the
U.K., announced it was conducting a formal early stage investigation into suspected breaches of competition law in the hotel
online booking sector and had written to a number of parties in the industry to request information. Specifically, the
investigation focuses upon whether there are agreements or concerted practices between hotels and online travel companies
and/or hotel room reservation "wholesalers" relating to the fixed or minimum resale prices of hotel room reservations. In
September 2010, Booking.com B.V. and priceline.com Incorporated, on behalf of Booking.com, received a Notice of
Inquiry from the OFT; we and Booking.com are cooperating with the OFT's investigation. We are unable at this time to predict
the outcome of the OFT's investigation and the impact, if any, on our business, financial condition and results of operations.
We intend to defend vigorously against the claims in all of the proceedings described in this Item 3. We have accrued
for certain legal contingencies where it is probable that a loss has been incurred and the amount can be reasonably estimated.
Except as disclosed, such amounts accrued are not material to our Consolidated Balance Sheets and provisions recorded have
not been material to our consolidated results of operations. We are unable to estimate the potential maximum range of loss.
From time to time, we have been, and expect to continue to be, subject to legal proceedings and claims in the ordinary
course of business, including claims of alleged infringement of third party intellectual property rights. Such claims, even if not
meritorious, could result in the expenditure of significant financial and managerial resources, divert management's attention
from our business objectives and could adversely affect our business, results of operations, financial condition and cash flows.