In this week’s article, we examine the case of Village of Bedford Park v. Expedia, Inc., Nos. 16-3932, 16-3944 (7th Cir. 2017) in which “Thirteen Illinois municipalities (the municipalities) assert that the…online travel agencies (OTAs) have withheld money owed to them under their hotel tax ordinances. The OTAs operate their online travel websites under the ‘merchant model’; customers pay an OTA directly to reserve rooms at hotels the OTA has contracted with. The participating hotels set a room rental rate. The OTA charges the customer a price that includes that rate, the estimated tax owed to the municipality, and additional charges for the OTA’s services. After the customer’s stay, the hotel invoices the OTA for the room rate and taxes, and remits the taxes collected to the municipality. The municipalities argue that they have been shorted tax revenue over the years because the OTAs do not remit taxes on the full price that customers pay. To illustrate, assume a 5 percent tax. If a customer books a room directly with a hotel for $100 a night, the hotel collects $5 for taxes and remits that to the municipality. But if a customer books a room through an OTA for $100 and the hotel’s room rate is only $60, the OTA pays the hotel $63 and the hotel remits $3 to the municipality. The municipalities seek to collect the additional $2 from the OTAs. But none of the municipal ordinances place a duty on the OTAs to collect or remit the taxes, so the municipalities have no recourse against the OTAs. The OTAs are entitled to summary judgment against all of the municipalities”.
Terror Targets Update
Las Vegas Killer’s Brain Examined
In Fink, Las Vegas Gunman’s Brain Exam Only Deepens Mystery of His Actions, nytimes (2/9/2018) it was noted that
“Stephen Paddock, the 64-year-old gunman who killed 58 concertgoers in Las Vegas last October in the worst mass shooting in modern American history, had not had a stroke, brain tumor or a number of other neurological disorders that might have helped explain his actions, a recent autopsy and examination of the remains of his brain showed. Mr. Paddock’s brain did have changes commonly seen in Americans of his age, including evidence of atherosclerosis-fatty plaques inside blood vessels that can impair circulation, which brain cells rely on to survive-and damage to the brain’s blood vessels resulting from high blood pressure…The brain examination was conducted by Dr. Hannes Vogel…’With a good deal of screening, I didn’t see anything’, he said that could explain why Mr. Paddock became a calculating mass killed”.
The Bronx Bombers
In Kashbaum & Neuman, Two Bronx Brothers Arrested in Bomb-Making Scheme, nytimes (2/15/2018) it was noted that “A former teacher at a charter high school and his twin brother were arrested Thursday on federal bomb-making charges, stockpiling more than 32 pounds of ingredients for explosives in a closet in their apartment in the Bronx…The teacher paid high school students $50 an hour to break down fireworks to extract the explosive powder…Investigators also found diary writings referring to an ‘Operation Flash’ and a purple index card that read ‘Under the full moon the small ones will know terror’”.
Plane Crash In Iran
In 66 Feared Dead After Iran Plane Crash, nytimes (2/18/2018) it was noted that “A commercial plane crashed on Sunday in a foggy, mountainous region of Iran, most likely killing all 66 people on board…The Iran Aseman Airlines plane went down near its destination, the city of Yasuj, about 485 miles south of the capital, Tehran. …The plane was carrying 60 passengers, including one child, and six crew members…The cause of the crash was not immediately clear”.
Brain Injuries In Cuba
In Kolata, Diplomats in Cuba Suffered Brain Injuries. Experts Still Don’t Know Why, nytimes (2/15/2018) it was noted that “A group of American diplomats stationed in Havana appear to have symptoms of concussion without ever have received blows to their heads, medical experts have found. The diplomats originally were said to have been victims of a ‘sonic attack’ a possibility that the (FBI) reportedly ruled out in January. The experts’ report, published late Wednesday in the journal JAMA, does not solve the mystery, instead raising even more questions about what could have caused the brain injuries”.
Taliban Wants Peace?
In Taliban says Afghan War could continue for 100yrs with no result, calls on US to start peace talks, travelwirenews (2/15/2018) it was noted that “The Taliban has published a letter slamming the US president’s new Afghan strategy. It urges Americans and their elected representatives to lobby Donald Trump to choose negotiations, not escalation, in war-torn Afghanistan. The 10-page letter…makes use of statistics and figures in an attempt to sway the ‘American people’ and ‘peace-loving congressmen’ to pressure the White House into peace talks with the group-a move which Trump has publicly opposed”.
Recruiting Station For ISIS
In Paris suburb becomes ground zero in France’s struggle with radical Islam, travelwirenews (2/15/2018) it was noted that “Once branded a ‘no-go’ zone by authorities, the Paris suburb of Trappes has become a recruiting ground for Islamic State-and ground zero in France’s struggle to integrate Muslims into its staunchly secular state. According to French intelligence, 67 people from Trappes have joined the ranks of (ISIS) while other radicalized residents have carried out attacks inside France”.
Rome Sinkhole Swallows Cars
In Huge sinkhole swallows cars, prompts evacuations in Rome, travelwirenews (2/15/2018) it was noted that “A massive four-lane-wide swallowed at least 6 cars in Rome on Wednesday, forcing 20 families to flee their homes…The incident happened in the Italian capital’s Baldunia neighborhood on Wednesday evening”.
Indiana Woman Barred From Air Travel
In No Air Travel For Woman Charged With Attacking Crew On Flight To Detroit, travelwirenews (2/15/2018) it was noted that “An Indiana woman charged with attacking a Delta Air Lines crew on an international flight is barred from air travel while her case is pending. …Authorities say (Ms. X) had to be restrained on a Delta plane after attacking her husband and crew members during a Germany-to-Detroit flight on Jan. 14. She had been drinking wine. A Military police officer subdued (Ms. X) with flexible wrist cuffs and she was secured in her seat for the final 90 minutes. A mask and leg restraints were placed on (Ms. X) to stop her from spitting and kicking”.
Airline Passenger Protections Goodbye?
In McCartney, An End to Airline Red Tape-Or Consumer Protection?, wsj (2/8/2018) it was noted that “Airlines want to nix a host of rules that attempt to keep them from mistreating customers. The Transportation Department is considering it. The DOT has asked airlines to suggest changes or cuts to regulations, part of a broad initiative from President Trump, once the owner of a small airline, to reduce government red tape. It comes as DOT fines against airlines fell by half last year. The rules matter because DOT is just about the only protection consumers have in U.S. air travel. If the airlines get what they want, the government would weaken the tarmac delay rule, which imposes hefty fines for stranding passengers on planes for long periods and eliminate a requirement that they show the full price of a ticket when people shop. Carriers have also asked DOT to scrap the 24-hour grace period for a full refund when buying a ticket-you would pay a change fee even if you realized right away you booked the wrong date or made a mistake in the passenger name. They want to eliminate a rule that requires them to honor tickets sold for ‘mistake fares’ and they are asking for flexibility from a requirement they provide ‘prompt’ wheelchair service. They argue the term ‘prompt’ is ambiguous and complain that providing wheelchair service at zero charge costs the industry $300 million annually and exceeds benefits. They also want their own booking systems to be free from the DOT ban on display bias so they don’t have to disclose to consumers they exclude competitor’s flights and they want to drop requirements to show on-time and cancellation data with flights”. Stay tuned.
United! Cover Your Engine, Please
In Astor, Engine Cover Blows Off on United Airlines Flight, nytimes (2/13/2018) it was noted that “High over the Pacific on Tuesday, the casing blew off one of the engines on United Airlines Flight 1175. Passengers heard a loud bang and felt the plane shake violently. Those seated on the right side looked out their windows and saw pieces of metal flying. By the time the plane touched down safely in Honolulu around 40 minutes later, the engine was bare, its innards on full display”.
South Africa Predatory Pricing
In Major regional airline to face Competition Tribunal, tourismupdate.co.za (2/14/2018) it was noted that “The South African Competition Commission announced that it has referred SA Airlink to the Competition Tribunal for prosecution. This is on charges of ‘excessive and predatory pricing’ following complaints lodged by low-cost carrier Fly Blue Crane… regarding the Johannesburg-Mthatha route. Allegations lodged by the aggrieved parties claim that Airlink’s prices were excessive before Fly Blue Crane entered the route and were lowered to below cost subsequent to Fly Blue Crane entry. Upon Fly Blue Cane exiting the route, SA Airlink allegedly resumed its initial costing…’ The predatory pricing of SA Airlink contributed to the exit of Fly Blue Crane and the effect of the predation is also likely to deter future competition on this route from other airlines’, the commission stated”.
Speak Only English, Please
In Shine, Arabic-speaking passenger kicked off plane in 2016 sues Southwest Airlines, alleging racial bias, dallasnews (2/13/2018) it was noted that “A man who was removed from a 2016 Southwest Airlines flight after another passenger complained he made ‘potentially threatening’ comments in Arabic filed a federal racial discrimination lawsuit against the carrier Tuesday. Khairuldeen Makhzoomi-then a student at the University of California, Berkeley-was sitting on an April 6, 2016, flight from Los Angeles to Oakland, talking to his uncle by cellphone before the plane departed. ‘Shortly after taking his seat, Mr. Makhzoomi was approached by a Southwest Airlines official and local law enforcement officers, removed from the plane, interrogated, searched, publicly humiliated and denied further travel on the airline’, the lawsuit alleges…The lawsuit alleges that Makhzoomi was singled out because of the language he spoke. The filing recounts a conversation Makhzooomi said took place after he exited the flight in which an Arabic-speaking Southwest employee asked him why he was talking in Arabic”.
Speak Only Arabic, Please
In Pianigiani, Italy’s Far Right Targets a Museum Discount for Arabic Speakers, nytimes (2/12/2018) it was noted that “When the Egyptian Museum in the norther Italian city of Turin began offering two-for-one admissions for Arabic speakers last month, the offer seemed innocuous enough. After all, the artifacts in the museum, one of the largest collections outside Cairo, originated in Egypt, which is now the world’s largest Arab country. But in Italy’s heated campaign before national elections on March 4, nothing, it seems, is ever straightforward. This is especially so if the issue touches even tangentially on immigration. The Brothers of Italy, a small but vocal far-right party…took offense at the offer for ‘discriminating against Italians’ and staged a protest on Friday”.
Restaurant Reviews: IWasPoisoned .com
In Roose, Too Much Power to the People? A Food Safety Site Tests the limits, nytimes (2/13/2018) it was noted that “This is the era of internet-assisted consumer revenge, and as scorned customers in industries from dentistry to dog-walking have used digital platforms to broadcast their displeasure, the balance of power had tipped considerably in the buyer’s favor. This is especially true of IwasPoisoned, which has collected about 89,000 reports since it opened in 2009. Consumers use the site to decide which restaurants to avoid, and public health departments and food industry groups routinely monitor its submissions, hoping to identify outbreaks before they spread. The site has even begun to tilt stocks, as traders on Wall Street see the value of knowing which national restaurant chain might soon have a food-safety crisis on its hands”.
Train Plows Into Elephants
In Gettleman, Raj & Schultz, Speeding Train Plows Into Elephants in India, Killing 5 Animals, nytimes (2/12/2018) it was noted that “The night train to Silchar was moving fast-too fast, the authorities say. As it charged into a forested area of northeastern India on Saturday night, a group of villagers waved their flashlights frantically, urging the driver to slow down. He didn’t know why, but soon found out. Ahead in the darkness a large herd of elephants were ambling across the railway tracks…The 14-car passenger train plowed right into the herd. Two calves and two adult elephants were killed instantly, and an adult elephant was badly injured and died Monday…Indian forestry officials said the warnings had been ignored for a simple reason: The train was running 10 minutes late”.
Stay Away From Kuwait, Please
In Villamor, Philippines Bars Citizens From Working in Kuwait After Body Is Found, nytimes (2/12/2018) it was noted “The Philippines on Monday barred its citizens from traveling to Kuwait for employment, accusing the oil-rich gulf state of turning a blind eye to the abuse and even killing of domestic workers and other Filipinos. The announcement came days after the Philippine president, Rodrigo Duterte, responded angrily to reports that the body of a Filipino domestic worker had been found in a freezer in an apartment in Kuwait”.
Money Saving Travel Tips
In Eisenberg, Travel Insiders’ Top Tips on Deals, Luggage and Flight Delays, nextavenue (1/30/2018) it was noted that “The money-saving travel tips I picked up from Pauline Frommer…who said this could be an especially good year to find deals on hotels in America and international flights. Reason: travel to the U.S. is down 4 percent…The U.S. dollar is down more than 10 percent in the past year…Germany, France, New Zealand, The Bahamas and other countries have travel warnings about visiting the U.S., Frommer said…Our nation’s drop in tourism, plus growing competition from Airbnb, is keeping U.S. hotel rates down. ‘Now is the time to go to different places in the United States…International airfares are lower, she added, ‘partially because people are not flying into the U.S. as much as anymore, so the airlines have to fill planes with Americans. Frommers’ comparison of airfare search engines found that Momondo and Skyscanner were best for domestic and international flights”.
Disney Raises Prices
In Chapman, Disney raises park prices, plans fixed-date ticketing, msn (2/12/2018) it was noted that “Walt Disney Co. raised admission prices to its theme parks and said it plans to introduce fixed-date ticketing in coming months to help reduce crowding at peak times. Buoyed by new attractions, like Pandora-The World of Avatar, the theme parks and resorts accounted for a third of Disney’s $55.1 billion in 2017 revenue, with domestic attendance hitting a record high. The increased demand has generated crowding and longer waits for visitors during popular times like spring beaks”.
Disneyland Superfans Lawsuit
In Martin, They’re Disneyland superfans. Why a lawsuit is alleging gangster-like tactics against one social club, msn (2/10/2018) it was noted that “They stroll through Disneyland in packs of 20 or more, mostly crews that resemble a cross between the Hells Angels motorcycle gang and a grown-up Mickey Mouse Club with their Disney-themed tattoos and their matching denim vests strewn with trading pins and logos. Disneyland social clubs, by most accounts, are harmless alliances of friends and family who meet up at the park to share a needy obsession for all things Disney. With club names such as Tigger Army and Neverland Mermaids, how threatening can they be?…But a lawsuit filed in Orange County Superior Court revealed a dark undercurrent to the pastime. The head of one clubs has accused another of using gangster-like tactics to try to collect ‘protection’ money for a charity fundraiser at the park. The lawsuit reads like mob movie set in a theme park. The plot revolves around the Main Street Fire Station 55 Social Club whose leaders claim they have been bullied and terrorized by the head of the White Rabbits Social Club”. Stay tuned.
New Google Tips & Travel Tools
In Rosenbloom, New Google Tips and Tools for Travelers, nytimes (2/13/2018) it was noted that “Flight delay predictions, mobile trip-planning, automatic itinerary management, language translation through Bluetooth earbuds and a smartphone that enables users to learn about landmarks by tapping an icon and aiming the phone at them: These are among the travel innovations Google has been introducing in recent days and weeks. While a Google Pixel 2 smartphone costs upwards of $650, the company’s latest tools are free. In fact, they may already be on your phone, nudging Google closer to being a one-stop destination for on-the-go vacation planning”.
Uber And Local Taxes
In Iovino, San Francisco Sues to Block Law Favoring Uber & Lyft, courthousenews (2/8/2018) it was noted that “The City of San Francisco on Thursday asked a state judge to block a new law that lets Uber and Lyft drivers avoid paying local fees to operate on the city’s congested streets. ‘Uber and Lyft need to play by the same rules as every other business in San Francisco’…The lawsuit seeks to invalidate Senate Bill 182. Signed into law last year, the statute exempts drivers living outside of San Francisco from complying with the city’s business registration requirements…Not surprisingly, the ride-sharing companies see the issue differently. ‘SB 182 allows California rideshare drivers to hold one streamlined business license with predictable costs and reasonable privacy protections’, Lyft spokeswoman Chelsea Harrison said in an email”.
Moscow Hotel On Fire
In Evacuation after fire breaks out at iconic Moscow hotel, travelwirenews (2/12/2018) it was noted that “A fire at Moscow’s Cosmos hotel prompted an evacuation of over 200 people. The emergency seems to be low level, affecting only a small part of the building and has already been contained by first responders”.
World Tour Begins In Big Easy
In Yuan, The 52 Places Traveler, Starting an Intimidating World Tour in the Big Easy, nytimes (2/12/2018) it was noted that “On my first trip to New Orleans, eight years ago, I bought a new pair of sneakers. By the end of the week I had danced in the streets so much I’d worn holes through the bottoms of each of them, straight through to my socks. That, more than Mardi Gras or Jazz Fest or oak trees or gumbo, is my indelible image of the city. The only place in the world where I’ve had such a good time that the shoes melted right off my feet…I had just gotten my dream job as the lucky writer who gets to spend the next year traveling to every destination on the New York Times annual 52 Places to Go List-and New Orleans happened to be both No. 1 on the list and the first stop of the trip. It’s a thrilling opportunity…I had to quit my job as staff writer at New York Magazine…box up my entire apartment; and pack for a year on the road”.
Air Pollution In Bangkok
In Battle-hardened Bangkok locals unfazed by dust, travelwirenews (2/14/2018) it was noted that “People wear face masks while exercising in Lumpini Park in Pathumwan district of the Capital. Air pollution in the capital has been far above the so-called safe limits for two consecutive weeks”
Lights Out Again In Puerto Rico
In AP Puerto Rico Hit by Blackouts After Power Station Blast, nytimes (2/11/2018) it was noted that “An explosion and fire at an electric substation threw much of northern Puerto Rico into darkness late Sunday in a setback for the territory’s efforts to fully restore power more than five months after Hurricane Maria started one of the longest blackouts in United States history…The blast illustrated the challenges of restoring a power grid that was already crumbling before it was devastated by Maria, a Category 4 hurricane”.
Hotels Rely On OTAs
In Hotels Admit Steep Reliance on Online Travel Agencies-PhocusWire, travelwirenews (2/14/2018) it was noted that “Hotels have a high dependency on online travel agencies to distribute their inventory, with almost every other channel deemed to be low on the same scale. The is one of the top-line findings from a major study of hotel distribution association HEDNA’s hotel Analytics Work Group, prepared by accommodation technology companies Triometric and SnapShot. The study spoke to chain hotels, independent properties and management companies”.
Travel Law Cases Of The Week
In the Village of Bedford case the Court noted that “The facts of this case are not highly disputed, but their legal significance is. At issue is how the OTAs in this case-Expedia, Priceline, Travelocity and Orbitz-function and the thirteen tax ordinances.
“The OTAs enter into contracts with hotels, under which the hotels agree to make rooms available for the OTAs (which) then market those rooms and allow customers to reserve them through their websites. The OTAs do not pre-pay for rooms and re-rent them to customers and they do not bear any loss if the rooms are not reserved. And the hotels can cease offering rooms through the OTAs at any time”.
Method Of Payment
“When a customer reserves a room through an OTA, he pays the OTA directly-the OTA serves as the merchant of record on the customer’s credit card. The OTAs present the price in two-line items: first, a charge for the room and second, a charge for taxes and fees. The charge for the room includes the room rate as set by the hotel, plus additional charges set by the OTAs. The customer never sees the hotel’s room rate, but must agree to the OTAs terms and conditions, which state that the price charged includes the cost of the hotel plus consideration for the OTA’s services. The taxes and fees charge includes the estimated taxes the hotel will owe on the rental plus additional fees set by the OTA. If the customer incurs additional charges during the stay, he pays those to the hotel directly. After the customer checks out, the hotel invoices the OTA-or charges a virtual credit card provided by the OTA-for the room rate plus applicable taxes”.
OTAs Do Not “Sell” Hotel Rooms
“Although representatives from the OTAs, and statements made to the Securities and Exchange Commission, indicate that the OTAs ‘sell’ hotel rooms to customers, the OTAs assert that this a merely industry jargon…Contracts between hotels and the OTAs confirm that the OTAs do not actually buy, and never acquire the right to enter or grant possession of, hotel rooms. Instead, the OTAs take reservation requests from customers and transmit those to the hotels. The contracts require the hotels to honor those requests, but the customer does not obtain the right to occupy the rooms until he checks in at the hotel”.
OTAs Provide Additional Services
“The OTAs do provide additional services to customers between payment and check-in at the hotel. In fact, a customer will likely only deal with the OTA prior to checking in because OTAs handle reservation modifications, cancellations and refunds. The OTAs generally enforce a hotel’s cancellation policy, but sometimes set their own policies and charge their own cancellation fees. The OTAs also often provide customer service support, but some contracts specify that the OTAs will refer hotel-specific questions to the hotels”.
“Though each of the thirteen ordinances has unique aspects, all fall into one of the three general categories: those that place the duty to collect and remit the tax on owners, operators and managers of hotel or hotel rooms; those that apply to all persons engaged in the business of renting hotel rooms; and those that incorporate elements of both”.
Owners, Operators & Managers
“Seven municipalities-have ordinances that impose a tax on the use and privilege of renting, leasing or letting hotel and motel rooms. While the hotel guest bears responsibility for the tax, the ordinances generally place the duty of collecting the tax from the renter and paying it to the municipality on the owner, operator or manager of hotels”.
Engaged In Renting Rooms
“Three of the municipalities…impose a tax on persons engaged in the business of renting, leasing or letting rooms in a hotel. In (two of the municipalities) the tax rate is a percentage of gross rental receipts from renting, leasing or letting rooms in a hotel. (The third municipality’s) ordinance requires the tax ‘to be stated separately as an additional charge on individual billings’ but does not specify what amount the tax rate applies to”.
“The last three municipalities have ordinances encompassing elements of both types of taxes. For example, Des Plaines taxes all ‘persons engaged in the business of renting, leasing or letting rooms in a hotel or motel’. But the tax ordinance places a duty on operators of hotels or motels to keep records and on owners of hotels to file monthly tax returns reflecting the tax received. The ordinance also requires the owner to pay the taxes due at the time of filing. Warrenville’s ordinance is similar in relevant respects. Burr Ridge taxes ‘the use and privilege of engaging in the business of renting, leasing or letting of room(s) in a motel or hotel’. But the ordinance places the duty to pay the tax on ‘[t]he owner, manager or operator of each hotel or motel’”.
The court analyzed each of the three types of municipal ordinances. Regarding the category “owners, operators and managers” the Court noted that “OTAs do not perform the function of running a hotel. They perform one set of functions that a hotel does – making room reservations, processing financial transactions and handling customer service with respect to those transactions. But that the OTAs engage in one hotel function does not transform them into operators of hotels…most of the ordinances list those with the duty to collect a tax as owners, operators and managers of hotels…the OTAs (have) no duty to collect or remit hotel occupancy taxes”. Regarding the category of entities “engaged in the business of renting hotel rooms” the Court noted that “None of the ordinances define ‘engaged in the business of renting’ or ‘engaged in renting’…renting implies ownership and granting possession of property-here, hotel rooms. As discussed, the OTAs do not own hotels or hotel rooms and they cannot independently grant consumers access to hotel rooms. And regarding “hybrids” the Court noted that “The last three ordinances are slightly more complicated, but the OTAs are not required to pay taxes to the municipalities under any of them”.
The author, Thomas A. Dickerson, is a retired Associate Justice of the Appellate Division, Second Department of the New York State Supreme Court and has been writing about Travel Law for 42 years including his annually updated law books, Travel Law, Law Journal Press (2018), Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2018), Class Actions: The Law of 50 States, Law Journal Press (2018) and over 500 legal articles. For additional travel law news and developments, especially, in the member states of the EU see IFTTA.org.
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