Expedia 2011 Annual Report Download - page 32

City of Atlanta, Georgia Litigation. On March 29, 2006, the city of Atlanta, Georgia filed suit against a
number of internet travel companies, including Hotels.com, Hotwire and Expedia. City of Atlanta, Georgia v.
Hotels.com, L.P., et al., 2006-CV-114732 (Superior Court of Fulton County, Georgia). 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 the ordinance, conversion, unjust enrichment,
imposition of a constructive trust, declaratory judgment and an equitable accounting. The complaint seeks
damages and other relief in an unspecified amount. Plaintiff’s first amended complaint was filed on October 23,
2009. On July 22, 2010, the court ruled on the parties’ cross-motions for summary judgment and held that online
travel companies are not innkeepers required to collect and remit taxes under the Atlanta ordinance. The court
also issued an injunction requiring the payment of taxes in the future on the grounds that the online travel
companies are third-party tax collectors. Both parties appealed. On May 16, 2011, the Georgia Supreme Court
affirmed the trial court decision. The case is proceeding on the city’s conversion claim and amended complaint
seeking back taxes.
City of San Antonio, Texas Litigation. On May 8, 2006, the city of San Antonio filed a putative statewide
class action in federal court against a number of internet travel companies, including Hotels.com, Hotwire, and
Expedia. See City of San Antonio, et al. v. Hotels.com, L.P., et al., SA06CA0381 (United States District Court,
Western District of Texas, San Antonio Division). 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, common-law conversion, and declaratory judgment. The complaint seeks damages in
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. On
July 1, 2011, the court entered findings of fact and conclusions of law holding defendant online travel companies
liable for hotel occupancy taxes.
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. On February 18, 2011, defendants filed a motion for summary judgment.
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
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