Expedia 2009 Annual Report Download - page 31

complaint seeks certification of a nationwide class of all persons who were assessed a charge for “taxes/fees”
when booking rooms through Hotwire. The amended complaint alleges violation of Section 17200 of the
California Business and Professions Code, violation of the California Consumer Legal Remedies Act, and breach
of contract, and seeks imposition of a constructive trust on monies received from the plaintiff class, as well as
damages in an unspecified amount, disgorgement, restitution, interest and penalties. On March 15, 2007, the
court certified a class of all residents of the United States to whom Hotwire charged “taxes/fees” for the
facilitation of reservations for stand-alone hotel rooms on its website. The court has not yet required that Hotwire
provide notice to the potential class members. The trial on plaintiff’s Section 17200 claim that was set for the
week of January 12, 2009, was postponed and a new trial date was not set. The parties have reached a settlement
that was approved by the court on December 8, 2009.
Consumer Case against Expedia, hotels.com and Hotwire. On December 8, 2008, a putative class action
was filed in federal court in New York State against Expedia, hotels.com and Hotwire. Similar lawsuits were
filed at or about the same time against Priceline and Travelocity. See Matthew R. Chiste, et al. v. Hotels.com,
L.P., et al., No. 08 CV 10676 (United States District Court for the Southern District of New York). The
complaint alleges that the defendants are improperly charging and/or failing to pay hotel occupancy taxes and
engaging in other deceptive practices in charging customers for taxes and fees. The complaint seeks certification
of a nationwide class of all persons who booked a hotel room in New York City through the defendants. The
complaint asserts claims for deceptive business practices, conversion, breach of fiduciary duty and breach of
contract and seeks a declaratory judgment, injunctive relief and damages in an unspecified amount, but
exceeding $5,000,000. Defendants’ motion to dismiss has been fully briefed and is pending before the court.
Consumer Case against Expedia Canada. On June 26, 2009, a class action suit against Expedia Canada
Corporation was filed in Ontario, Canada, alleging that disclosures related to “taxes and service fees” were
deceptive. See Magill v. Expedia Canada Corporation and Expedia.ca, CV-09-381919-00LP (Ontario Superior
Court of Justice). The complaint asserts claims under the Competition Act and Consumer Protection Act as well
as claims of unjust enrichment, restitution, constructive trust, accounting and disgorgement and breach of
contract. It seeks damages in the amount of CA$50,000,000 for the class as well as interest, fees and alternate
damages measures.
Litigation Relating to Hotel Occupancy Taxes
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 internet travel companies, including hotels.com, Expedia
Washington 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 July 26, 2007, the
court signed an order staying the lawsuit until the cities have exhausted their administrative remedies. The case is
coordinated with the cases in San Diego, Anaheim and San Francisco. Los Angeles issued assessments of $15.7
million against Expedia, $14.8 million against hotels.com and $4.4 million against Hotwire on September 9,
2009. An administrative hearing challenging the assessments was held on December 3, 2009.
City of Findlay, Ohio Litigation. On October 25, 2005, the city of Findlay, Ohio filed a purported state
wide class action in state court against a number of internet travel companies, including hotels.com, Hotwire and
Expedia Washington. City of Findlay v. Hotels.com, L.P., et al., No. 2005-CV-673 (Court of Common Pleas of
Hancock County, Ohio). The complaint alleges that the defendants have failed to pay to the city hotel occupancy
taxes as required by municipal ordinance. The complaint includes claims for violation of that ordinance, violation
of the consumer protection act, conversion imposition of a constructive trust and declaratory relief. On
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