8-KRegulation FD

Expedia Group, Inc. 8-K Report, Regulation FD Disclosure (Nov 2, 2009)

Filed November 2, 2009For Securities:EXPE

Summary

Expedia, Inc. (EXPE) filed an 8-K on November 2, 2009, to disclose a significant jury verdict against its operating subsidiaries in the City of San Antonio, et al. v. Hotels.com, L.P. et al. lawsuit. The jury found that Expedia's subsidiaries and other online travel companies are responsible for collecting and remitting local hotel occupancy taxes in Texas because they "control hotels" under relevant ordinances. While Expedia disagrees with this verdict and intends to appeal, this ruling could have material financial implications. The jury rejected claims for conversion and punitive damages, which are positive developments. However, the actual amount of the judgment, including historical damages (estimated at approximately $15 million through May 2009) and potential penalties and interest, has not yet been determined by the court. Investors should monitor the appeals process and any further court proceedings to understand the full financial impact on Expedia.

Key Highlights

  • 1Expedia's subsidiaries were found liable for collecting and remitting local hotel occupancy taxes in a class-action lawsuit.
  • 2The jury determined that Expedia's subsidiaries "control hotels" under Texas municipal ordinances.
  • 3Historical damages through May 2009 were assessed at approximately $15 million.
  • 4Claims for conversion and punitive damages were rejected by the jury.
  • 5Expedia strongly disagrees with the verdict and plans to appeal the decision.
  • 6The final judgment amount is not yet determined and could include significant penalties and interest.
  • 7The ruling has the potential for material financial impact on Expedia.

Frequently Asked Questions

A jury found that Expedia's operating subsidiaries, including Hotels.com and Hotwire, are responsible for collecting and remitting local hotel occupancy taxes in Texas. This was based on the jury's determination that these online travel companies "control hotels" under the relevant ordinances.

The jury assessed historical damages at approximately $15 million through May 2009. However, the final judgment amount is still to be determined by the court and could include significant penalties and interest, making the total financial impact uncertain at this time.

No, the $15 million represents historical damages determined by the jury, but the final judgment amount has not been determined by the court. Furthermore, Expedia strongly disagrees with the verdict and intends to appeal the decision to the United States Court of Appeals for the Fifth Circuit, which could delay or alter any payment obligations.

The jury rejected the plaintiffs' claims for conversion (alleging wrongful retention of tax dollars) and punitive damages. This means Expedia is not being held liable for allegedly misusing collected tax funds or for malicious conduct, which is a positive aspect of the verdict for the company.