Expedia 2012 Annual Report Download - page 38

November 1, 2010, the parties filed cross-motions for summary judgment. On December 19, 2012, the court
granted defendants’ motion for summary judgment and denied plaintiffs’ motion for summary judgment. The
court concluded that defendants could not properly be classified as operators of “taxable establishments” or
“business[es] subject to a room occupancy tax” under any of plaintiffs’ occupancy tax ordinances or resolutions
and are thus not subject to plaintiffs’ occupancy taxes. Plaintiffs have appealed.
Branson, Missouri Litigation. On December 28, 2006, the city of Branson, Missouri filed a lawsuit in state
court against a number of internet travel companies, including Hotels.com, Hotwire, and Expedia. City of
Branson, MO v. Hotels.com, L.P., et al., 106CC5164 (Circuit Court of Greene County, Missouri). The complaint
alleges that the defendants have failed to remit to the city hotel accommodation taxes as required by local
ordinance. The complaint asserts claims for violation of the local ordinance, as well as claims for declaratory
judgment, conversion, and demand for an accounting, and seeks unspecified damages. On November 26, 2007,
the court denied the defendants’ motion to dismiss. On July 29, 2011, defendant online travel companies filed a
second motion to dismiss. On January 28, 2012, the court granted defendants’ motion to dismiss. The city
appealed. On January 23, 2013 the Missouri Court of Appeals affirmed the ruling in favor of the online travel
companies.
City of Houston, Texas Litigation. On March 5, 2007, the city of Houston filed an individual lawsuit in state
court against a number of internet travel companies, including Hotels.com, Hotwire and Expedia. City of
Houston v. Hotels.com, L.P., et al., 2007-13227 (District Court of Harris County, 270th Judicial District, Texas).
The lawsuit alleges that the defendants have failed to pay to the city hotel accommodations taxes as required by
municipal ordinance. The lawsuit asserts claims for violation of that ordinance, conversion, imposition of a
constructive trust, civil conspiracy, and demand for accounting. The complaint seeks damages in an unspecified
amount. On January 19, 2010, the court ruled in favor of defendants on their motion for summary judgment
dismissing plaintiffs’ claims with prejudice. The city appealed. On October 25, 2011, the Texas Court of Appeals
affirmed the trial court decision that the online travel companies do not owe hotel occupancy taxes. The city then
sought review by the Texas Supreme Court of the decision by the Texas Court of Appeals’ holding that amounts
charged by online travel companies for their services are not subject to hotel occupancy tax. On October 26,
2012, the Texas Supreme Court denied the petition for review.
Cities of Goodlettsville and Brentwood, Tennessee Litigation. On June 2, 2008, the cities of Goodlettsville
and Brentwood, Tennessee filed a putative class action in federal court against a number of internet travel
companies, including Expedia, Hotels.com, and Hotwire. City of Goodlettsville and City of Brentwood v.
Priceline.com, Inc., et al., 3-08-0561 (United States District Court for the Middle District of Tennessee). The
complaint alleges that the defendants have failed to pay to the cities hotel accommodations taxes as required by
municipal ordinance. The complaint asserts claims for violation of the local ordinance, as well as claims for
unjust enrichment and conversion, and seeks damages in an unspecified amount. Plaintiffs have voluntarily
dismissed the City of Brentwood’s claims. Class certification has been granted. The parties filed cross-motions
for summary judgment. On February 21, 2012, the court granted the online travel companies’ motion and denied
the cities’ motion and held that online travel companies are not liable to remit hotel occupancy taxes. The cities
did not appeal.
City of Anaheim, California Litigation. On October 10, 2007, the city of Anaheim instituted an audit of a
number of internet travel companies, including Expedia, Hotels.com, and Hotwire, for hotel occupancy taxes. On
or before May 23, 2008, the city completed its audit and issued assessments against each of those online travel
companies. The online travel companies challenged those assessments through an administrative appeals process.
On January 28, 2009, the hearing examiner issued his decision, rejecting the online travel companies’ challenges
to those assessments. On February 6, 2009, the hearing examiner issued a decision setting forth the assessed
amounts due by each online travel company, including a total of approximately $17.7 million for the Expedia
companies. On February 11, 2009, the online travel companies filed a petition for writ of mandate in the
California superior court seeking to vacate the decision of the hearing examiner and asking for a declaratory
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