Expedia 2013 Annual Report Download - page 46

2013 and took the matter under advisement. On December 5, 2012, a similar putative class action suit was filed
in federal district court in Connecticut against a number of credit card companies and e-commerce companies,
including Hotwire. Frank, et al. v. Trilegiant Corporation, Inc., et al., Case No. 3:12-CV-01721-SRU (U.S.
District Court, District of Connecticut). The court has yet to determine whether the Frank action may be
separately maintained, consolidated with Miller, or dismissed.
Securities Class Action Litigation
Manriquez v. Expedia. On August 27, 2013, a purported shareholder class action, Manriquez v. Expedia, et
al., Case No. 2:13-cv-01535, was commenced in the United States District Court for the Western District of
Washington against Expedia, Inc., and certain of its officers, alleging violations of the federal securities laws.
Since then, a second lawsuit containing substantially similar allegations has been filed, Thomas v. Expedia, et al.,
Case No. 2:13-cv-01735 (Western District Washington). The complaints generally allege that the Company
misrepresented or failed to disclose adverse information relating to its commercial relationship with TripAdvisor
and the financial performance of Hotwire. The complaints assert claims under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seek damages in an unspecified
amount. The plaintiffs seek to bring the actions on behalf of a class of shareholders who, in the aggregate,
purchased Expedia common stock between July 27, 2012 and July 25, 2013. On October 28, 2013, the
Policeman’s Annuity and Benefit Fund of Chicago filed a motion for consolidation, appointment as lead plaintiff
and approval of selection of counsel. On January 3, 2014, the court granted the motion. The two filed cases will
proceed as one case, and the Policeman’s Annuity and Benefit Fund of Chicago will serve as the lead plaintiff.
Derivative Litigation
Friedman v. Expedia, Inc. et al. On December 13, 2013, a putative derivative class action was filed by a
purported shareholder in the Court of Chancery of the State of Delaware. Friedman v. Expedia, Inc., et al., Case
No. 9161-CS. The complaint asserts claims for breach of fiduciary duties on behalf of Expedia, and against
certain current and former members of the board of directors for allegedly exceeding their authority under the
Company’s shareholder-approved 2005 Stock and Annual Incentive Plan. Plaintiff seeks declaratory and
equitable relief and damages.
Hotel Booking Practices Proceedings and Litigation
Matters Relating to Hotel Booking Practices. On July 31, 2012, the United Kingdom Office of Fair Trading
(“OFT”) issued a Statement of Objections alleging that Expedia, Booking.com B.V. and InterContinental Hotels
Group PLC (“IHG”) have infringed European Union and United Kingdom competition law in relation to the
online supply of hotel room accommodations. The Statement of Objections alleges that Expedia and
Booking.com entered into separate agreements with IHG that restricted each online travel company’s ability to
discount the price of IHG hotel rooms. The OFT limited its investigation to a small number of companies, but
stated that the investigation was likely to have wider implications for the industry within the United Kingdom.
The Statement of Objections does not constitute a finding of infringement and all parties have the opportunity to
respond. If the OFT were to maintain its objections after the companies’ responses, the OFT could issue a final
decision. An appeal of an adverse OFT decision is to the English courts but may involve a reference on matters
of European Union law to the European Court of Justice.
The parties have not formally responded to the Statement of Objections, but have instead voluntarily
proposed to address the OFT’s investigation by offering formal commitments. On August 9, 2013, the OFT
opened a consultation on the companies’ proposed commitments. The public consultation period ended on
September 13, 2013. After further revision to the formal commitments, a second public consultation was held
and concluded on January 17, 2014. On January 31, 2014, the OFT announced that it had formally accepted the
commitments offered by the parties, with no finding of fault or liability. The commitments provide online travel
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