Expedia Can’t Escape Hotel Booking Class Action Lawsuit

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Expedia will continue to face claims of false advertising and unfair business practices following a federal judge’s denial of its motion for dismissal.

U.S. District Judge Vince Chhabria summarily did away with defendant Expedia Inc.’s attempt to limit the claims it’s facing, concluding that “[i]t’s not even a close question” whether the hotel plaintiffs have adequately pled their claims.

Judge Chhabria found the plaintiffs’ allegations of false advertising and anticompetitive conduct are pled “plausibly and with great detail,” more than enough to survive a motion to dismiss.

The denial shuts down a motion for dismissal filed by Expedia this past August. The company sought to restrict the plaintiffs’ false advertising claims only to Google search engine ads, Facebook social media ads, and ads on specific websites identified in their complaint.

The judge also dismissed Expedia’s motion to dismiss the plaintiffs’ claims under the unfair prong of California’s Unfair Competition Law. Given that Expedia and its affiliates control 75 percent of the market for online travel agencies, the judge said, it’s practically self-evident that the plaintiffs’ allegations describe conduct that constitutes a violation of antitrust law.

Plaintiff Buckeye Tree Lodge and Sequoia Village Inn LLC started this Expedia false advertising class action lawsuit in August 2016. Among other allegations, the plaintiff accuses Expedia and its affiliates of running a “bait and switch” advertisement scheme, falsely advertising rooms at hotels with whom Expedia does not even do business.

These ads drive potential customers to Expedia’s website or to those of its affiliates, including Orbitz and Hotels.com. Upon attempting to reserve a room, customers are told the rooms are not actually available. The website then allegedly redirects the customer to “similar” hotels in the same area – hotels with whom Expedia does business.

Judge Chhabria’s current denial is a significant turnaround from his previous dismissal of the plaintiffs’ claims in January 2017. The judge then allowed the plaintiffs to amend their pleadings, saying they could adequately state claims based on the theory that they lost business because Expedia misled customers to believe the hotels were “sold out.”

Buckeye Tree Lodge and Sequoia Village filed an amended complaint in May of this year, this time adding co-plaintiff 2020 O Street Corporation Inc., owner and operator of The Mansion on O Street in Washington, D.C.

The two plaintiffs noted Expedia got in trouble years ago over similar allegations. In 2011, the company was fined €367,000 after a French hotel association accused the company of falsely representing their available hotel rooms as unavailable.

The plaintiff hotels are represented by attorneys Allison H. Goddard, James R. Patterson and Elizabeth A. Mitchell of Patterson Law Group, Pierce Gore of Pratt & Associates, Charles J. LaDuca, Joel Davidow and Alexandra C. Warren of Cuneo Gilbert & LaDuca LLP, and Tony C. Richa of Richa Law Group PC.

The Expedia Hotel Booking Class Action Lawsuit is Buckeye Tree Lodge and Sequoia Village Inn LLC, et al. v. Expedia Inc., et al., Case No. 3:16-cv-04721, in the U.S. District Court for the Northern District of California.

UPDATE: On Feb. 22, 2018, two hotels have filed a motion to certify a class action lawsuit accusing Expedia Inc., Hotels.com GP LLC and Orbitz LLC of engaging in a “classic bait and switch marketing scheme” by redirecting consumers to book reservations at hotels that are unaffiliated with the travel-booking sites, but which provide the companies with a cut of the booking.

UPDATE 2: On March 13, 2019, a federal judge partially certified a Class of hotel businesses that were allegedly harmed by Expedia redirecting customers to hotels that provide a cut of the booking to the travel reservation giant.