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October 12, 2006 By Adam Stone
No Big Rewards
So far these types of lawsuits have not helped governmental authorities reap big rewards.
In past months a Philadelphia court dismissed the city's lawsuit against Travelocity, Priceline, Orbitz and others. Plaintiffs in a Chicago case took a hit when a Cook County judge threw out all of the claims against one of the defendants, and dismissed the plaintiffs' breach of contract claim against the others.
In addition to issues surrounding fees and tourism taxes, some governments have framed their case as a matter of wholesale versus retail. An online marketer makes money by buying a room at one price from a hotel chain, then selling it at a higher price to the consumer. Governments argue that taxes should be based on the higher rate paid online, while Internet marketers counter that the tax should be calculated based on the actual (lower) amount paid for the room at the hotel level.
The bottom line, Sackler said, is that governments have been too quick to litigate, trusting the class action lawyers to generate generous payoffs.
"They haven't talked to us," he said. "They haven't gotten materials from us."
That appears to be the case in Leon County.
"I have personally not had any conversations with any of the Internet providers," said Leon County's Thiele.
The travel association calls it a case of "sue first, ask questions later," and Sackler questions whether local governments are doing themselves any favors chasing this particular fox.
"We're 20 months from where the first case was filed," he said, "and so far plaintiffs have gotten nowhere."
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