Expedia 2010 Annual Report Download - page 31

an unspecified amount, restitution and disgorgement. On October 30, 2009, a jury verdict was entered finding
that defendant online travel companies “control hotels,” and awarding approximately $15 million for historical
damages against the Expedia companies. The jury also found that defendants were not liable for conversion or
punitive damages. The final amount of the judgment against the Expedia companies has not been determined. In
further proceedings, the court will determine, among other things, whether the tax is actually due on the amounts
that the online companies retained for their services and the amount, if any, of penalties and interest, which could
be significant.
City of Gallup, New Mexico Litigation. On May 17, 2006, the city of Gallup, New Mexico filed a putative
statewide class action in state court against a number of internet travel companies, including Hotels.com, Hotwire and
Expedia. City of Gallup, New Mexico, et al. v. Hotels.com, L.P., et al., CIV-06-0549 JC/RLP (United States District
Court, District of New Mexico). The case was removed to federal court on June 23, 2006. The complaint alleges that
the defendants have failed to pay to the city hotel accommodations taxes as required by municipal ordinances. The
complaint asserts claims for violation of those ordinances, conversion, and declaratory judgment. The complaint
seeks damages in an unspecified amount, restitution and disgorgement. On April 18, 2007, the court granted
plaintiffs’ motion to dismiss its own lawsuit. On July 6, 2007, the city of Gallup refiled its lawsuit. Plaintiff filed its
first amended complaint on January 16, 2009. The court certified the class on July 7, 2009. On March 1, 2010, the
court denied the city’s motion for summary judgment and held that the online travel companies do not have tax
obligations under the city’s ordinance and that defendants have not collected taxes that have not been remitted.
Town of Mount Pleasant, South Carolina Litigation. On May 23, 2006, the town of Mount Pleasant, South
Carolina filed suit in state court against a number of internet travel companies, including Hotels.com, Hotwire
and Expedia. Town of Mount Pleasant, South Carolina v. Hotels.com, et al., 2-06-CV-020987-PMD (United
States District Court, District of South Carolina, Charleston Division). The case was removed to federal court on
July 21, 2006. The complaint alleges that the defendants have failed to pay to the city hotel accommodations
taxes as required by municipal ordinance. The complaint asserts claims for violation of that ordinance,
conversion, constructive trust and legal accounting. The complaint seeks damages in an unspecified amount. On
April 26, 2007, the court consolidated the lawsuits filed by the city of Charleston and the town of Mt. Pleasant.
The parties executed a settlement agreement in October 2010 and the case has been dismissed.
Columbus, Georgia Litigation. On May 30, 2006, the city of Columbus, Georgia filed suit against
Expedia, Inc. in state court and on June 7, 2006 filed suit against Hotels.com in state court. Columbus, Georgia v.
Hotels.com, Inc., et al., SU-06-CV-1893-8 (Superior Curt of Muscogee County); Columbus, Georgia v. Expedia,
Inc, SU-06-CV-1794-7 (Superior Court of Muscogee County). The complaints allege that the defendants have
failed to pay the city hotel accommodations taxes as required by municipal ordinance. The complaints assert
claims for violation of that ordinance, unjust enrichment, imposition of a constructive trust, equitable accounting,
and declaratory judgment, and seek damages in an unspecified amount, restitution and disgorgement. On
September 22, 2008, the court issued an injunction requiring Expedia and Hotels.com to collect and remit taxes
on services on an ongoing basis. Expedia and Hotels.com subsequently paid approximately $110,000 in
outstanding past tax amounts demanded by the city and ceased to list Columbus, Georgia hotels on their
websites. In June 2010, the parties filed cross-motions for summary judgment. Plaintiff also filed a motion to
require Expedia and Hotels.com to again list Columbus, Georgia hotels on their sites. On January 28, 2011, the
court granted the city’s motion for summary judgment and denied Expedia’s motion for summary judgment.
Lake County, Indiana Convention and Visitors Bureau Litigation. On June 12, 2006, the Lake County
Convention and Visitors Bureau, Inc. and Marshall County filed a putative statewide class action in federal court
on behalf of themselves and all other similarly situated political subdivisions in the state of Indiana against a
number of internet travel companies, including Hotels.com, Hotwire and Expedia. Lake County Convention and
Visitors Bureau, Inc., et al. v. Hotels.com, LP, 2:06-CV-207 (United States District Court for the Northern
District of Indiana, Hammond Division). The complaint alleges that the defendants have failed to pay to
municipalities hotel accommodations taxes as required by municipal ordinances. The complaint asserts claims for
violation of those ordinances, conversion, unjust enrichment, imposition of a constructive trust, and declaratory
judgment, and seeks damages in an unspecified amount. On March 3, 2010, defendants’ motion for summary
judgment for failure to exhaust administrative remedies was granted.
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