Expedia 2014 Annual Report Download - page 45

District of Connecticut). The complaint generally alleges that the defendants failed to adequately apprise
consumers that they were providing their credit card information to Trilegiant Corporation, which offered
membership in discount or other services programs through promotions appearing on the e-commerce
defendants’ websites. The complaint asserts claims against Hotwire for violation of RICO, the Electronic
Communications Privacy Act, state consumer protection statutes and for unjust enrichment. On December 7,
2012, Hotwire filed a motion to dismiss the complaint. The court held a hearing on that motion on September 25,
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). On March 28, 2014, the court consolidated the Miller and Frank putative
class action cases and granted Hotwire’s motion to dismiss as to both cases. Plaintiffs have filed a request for
interlocutory appeal of the trial court’s ruling granting the motions to dismiss filed in the Miller and Frank
putative class actions.
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. The defendants filed a motion to dismiss, which was granted on July 15, 2014, and
the court dismissed the lawsuit with prejudice. Plaintiff has appealed.
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 parties proposed to address the OFT’s concerns by offering commitments, and 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 companies with the right to provide non-public discounts on the
rate offered for room only hotel accommodation bookings at hotels located in the United Kingdom to eligible
European Economic Area resident members of the online travel companies’ closed groups. The commitments
also clarify the hotels’ rights to offer discounts under the same conditions to members of their closed groups. In
addition, the commitments require online travel agencies to modify their most favored nation clauses, as relevant,
so as not to apply to any discounting activities covered by the commitments. The commitments were expressed to
be binding on the parties through January 31, 2016. On March 31, 2014, Skyscanner Limited filed a judicial
review application challenging the OFT’s January 31, 2014 decision to accept the parties’ commitments. On
September 26, 2014, the United Kingdom’s Competition Appeal Tribunal (“CAT”) granted Skyscanner
Limited’s appeal, quashing the OFT commitments decision and removing the legally binding effect of the
commitments on Expedia and the other two parties. This judgment further requires the Competition & Markets
Authority (“CMA”), the United Kingdom’s competition authority, to review the decision of its predecessor body,
the OFT. The CMA did not appeal the CAT’s decision. The CMA is currently considering what further action it
may take in this case and the outcome of this assessment is uncertain.
The Directorate General for Competition, Consumer Affairs and Repression of Fraud, a directorate of the
French Ministry of Economy and Finance with authority over unfair trading practices, also has brought a lawsuit
in France against the Expedia entities objecting to certain most favored nations clauses in contracts with French
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