Cases & Deals

Expedia, Hotels.com, and Hotwire secure series of victories in connection with occupancy tax in California

Clients Expedia, Inc.

Jones Day secured a series of victories on behalf of online travel companies Expedia, Inc., Hotels.com, and Hotwire LP (the "Expedia Entities") in connection with their ongoing transient occupancy tax ("TOT") litigation with various cities in California. After having previously prevailed in administrative mandamus actions against Anaheim and Santa Monica, on September 6, 2011, Jones Day obtained judgment on a writ of administrative mandamus against the City of San Diego in an action challenging a $21.3 million TOT assessment against the Expedia Entities and additional assessments against various online travel companies ("OTCs"). The trial on the writ of mandate took place before Los Angeles Superior Court Judge Elihu Berle on July 26, August 18, and September 6, 2012. In a detailed opinion, Judge Berle granted the OTCs' request for writ of mandate, denied the City's cross-motion for judgment, and confirmed that the OTCs were not obligated to collect and remit TOT. On February 6, 2013, Jones Day likewise obtained summary judgment against the City and County of San Francisco in an action challenging a $48 million TOT assessment against the Expedia Entities and other OTCs. Judge Berle held the OTCs were not obligated to collect and remit TOT because they were not "operators" of hotels and the amounts they charge and retain for their services were not "rent," as those terms are defined under San Francisco's TOT ordinance. This ruling means the Expedia Entities are entitled to a full refund of the $48 million they were required to "pay first" to challenge the assessment, plus more than $11 million in accrued interest. The Expedia Entities' victories in the Anaheim and Santa Monica actions were affirmed on appeal on November 1, 2012, and the Supreme Court subsequently denied the cities' respective petitions for review. Those favorable judgments are now final.

In re Transient Occupancy Tax Cases, JCCP Case No. 4472 (Super. Ct. Los Angeles Cty., Cal.)

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