Antitrust Law Daily Wrap Up, ADVERTISING—Cal. App.: Priceline’s fee disclosures did not violate California unfair practices laws, (Nov 8, 2013)

By Tobias J. Gillett, J.D., LL.M.

A customer of hotel reservation company Priceline.com, Inc. failed to state claims under California’s Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA), and False Advertising Law (FAL) against the company and a hotel over their alleged failure to reveal that the customer would be charged a resort fee and a service fee, a California appellate court has ruled (Freeman v. Priceline.com, Inc., November 7, 2013, Ferns, E.).

A customer using Priceline’s Name Your Own Price service requests a hotel by selecting the dates of stay and the location and quality of the hotel, and then entering a price the customer would be willing to pay. After this information is entered, a page (known as the “Contract Page”) is displayed containing a “Total Charges” amount, followed by the heading “Important Information” and five bullet points, including a statement revealing that a credit card is required for any additional fees that may be charged by the hotel at check-out, and that those fees are not included in the offer price. That statement contains a hyperlink to a page captioned “Charges for Taxes and Fees” that states that a customer may be charged for mandatory or optional service fees, including resort fees, and advises customers to contact the hotel directly to determine what service fees may apply.

Clicking on the hyperlink phrase “Taxes and Service Fees” just above “Total Charges” on the Contract Page leads to the same page, which also informs customers, in a separate paragraph, that the charge to their credit or debit cards will include a charge for taxes and fees. The statement notes that the fee includes an estimated amount to recover the amount Priceline pays to the hotel for taxes owed by the hotel, and may include profit to Priceline and compensation for its services that it will retain. A customer must place his or her initials next to the phrase “I have read, accept and agree to abide by Priceline.com’s terms and conditions and privacy policy” before the customer can proceed to the next screen, where he or she will enter credit or debit card information and submit an offer. The phrase “Terms & Conditions” is a hyperlink that leads to page containing the full agreement between Priceline and the customer, including the same paragraphs regarding charges and payment for taxes and fees and a statement noting that the price the customer names does not include Priceline’s tax and fee charges.

In 2010, Michael Freeman made a hotel price offer through the Name Your Own Price service, which was accepted by the Trump International Hotel Las Vegas. He reviewed the Total Charges on the Contract Page, including the Taxes and Service Fees charge and the bullet points below the Total Charges amount. When he checked into the hotel, the clerk requested that he provide a credit card to cover a $15 per night resort fee and an occupancy tax.

After his stay, Freeman filed suit, alleging that Priceline and Trump conspired with each other to conceal the fact that he would be charged the $15 per night resort fee, and that Priceline misrepresented the terms of the transaction by keeping for itself part of the Taxes and Services Fees amount. He asserted causes of action under California’s Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA), and False Advertising Law (FAL). The trial court granted summary judgment to Priceline and Trump.

Consumers Legal Remedies Act. The appellate court affirmed the district court’s decision. Freeman had contended that Priceline’s television advertisements were deceptive because they did not disclose that the price offered by a customer would not be the total price the customer would pay, and that Priceline’s resort fee and service fee information was misleading because it was “buried deep in the multiple screen reservation process, in very small print, without any emphasis.” Freeman alleged that this conduct violated the CLRA. The trial court had concluded that Priceline and Trump had satisfied their burden on summary judgment on Freeman’s CLRA claim by showing that they made sufficient disclosures.

The appellate court agreed with the district court that the television commercials’ failure to include information about additional fees was “immaterial” in light of the multiple disclosures that a Priceline customer would necessarily receive on Priceline’s website before making a reservation. Moreover, the fact that many of the disclosures were contained within hyperlinks did not raise a triable issue of fact because hyperlinks had previously “been held to convey adequate and unambiguous notice in a variety of situations,” and the evidence further showed that Freeman had read and agreed to abide by Priceline’s terms and conditions. Finally, to state a claim under the CLRA, an “omission must be contrary to a representation actually made by the defendant, or an omission of fact the defendant was obliged to disclose,” and here Freeman had provided no evidence that Priceline’s disclosures were contrary to other information it provided or that Priceline had concealed any information it was obliged to disclose.

Priceline and Trump also did not violate the CLRA by “inserting an unconscionable provision in the contract,” according to the court. The court explained that unconscionability under the CLRA had a procedural element, focusing on the factors of “oppression” arising from inequality of bargaining power and “surprise” arising from terms of the bargain that were hidden in a form drafted by the party seeking to enforce it, and a substantive element, focusing on whether the terms of the agreement created “overly harsh” or “one-sided” results that “shock[ed] the conscience.”

Here, the court found the resort fee and the service fee were clearly and conspicuously disclosed, and thus Freeman could not establish “surprise.” Moreover, Freeman could have reserved a hotel room through other sources, and thus he could not show “oppression.” “Finally, nothing about the content or manner of Priceline’s disclosures shocks the conscience,” the court concluded.

Unfair Competition Law. Freeman also failed to state a claim that the failure to disclose the possibility of a resort fee and the inclusion of a service fee constituted an unfair business practice under the UCL. Freeman failed to raise a triable issue regarding whether he suffered an unavoidable injury because all of the alleged unfair acts had been conspicuously disclosed, and Freeman had multiple other options for booking a hotel room. Freeman could have avoided his injury by booking with a hotel that did not charge a resort fee, or using other services that did not charge a service fee.

False Advertising Law. Freeman’s claim under the FAL “suffered from the same deficiencies as the CLRA claim,” because “none of disclosures made by Priceline were likely to mislead,” according to the court. Freeman had provided no evidence that would show that any Priceline employees or materials had made representations that were contrary to the information displayed on Priceline’s website regarding the payment of a resort fee and a service fee.

Finally, the trial court properly granted summary judgment to Trump on Freeman’s claim that Trump engaged in a civil conspiracy with Priceline, because “a civil conspiracy does not give rise to a cause of action unless an independent civil wrong has been committed,” and therefore Freeman’s failure to raise a triable issue of fact regarding his CLRA and UCL claims was fatal to his civil conspiracy claim.

The case is No. B242653.

Attorneys: Michael S. Geller (Law Office of Michael Geller Inc.) for Michael Freeman. Stacy R. Horth-Neubert (Skadden Arps, Slate, Meagher & Flom LLP) and Michael R. Davisson (Sedgwick LLP) for Priceline.com, Inc. Jill A. Martin for Trump Ruffin Tower I LLC and Trump Ruffin Commercial LLC.

Companies: Priceline.com, Inc.; Trump Ruffin Tower I LLC; Trump Ruffin Commercial LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews