Fairview Heights' suit against hotel agents removed to federal court

Steve Gonzalez Nov. 30, 2005, 7:28am

A class action lawsuit brought by Fairview Heights claiming hotel booking agents are pocketing excess sales tax has been removed to federal court.

Attorney’s for Priceline.com, Orbitz, Hotels.com, Hotwire, Cheap Tickets, Expedia, Travelnow.com, Travelocity.com, Travelweb, LowestFare.com and Site 59.com removed it on Nov. 28.

The suit was filed in St. Clair County Circuit Court on Oct. 5.

The defendants claim that the provisions enacted by the Class Action Fairness Act apply to any civil action commenced on or after Feb. 18, therefore the suit brought by the city is subject to federal jurisdiction.

They also claim that since the case exceeds $5 million and at least one member of the proposed class is a citizen of a different state, it should be taken out of St. Clair County.

The city claims hotel reservationists are keeping the difference between what they charge consumers in sales tax and what they remit. According to the suit, consumers are charged taxes based on retail room rates, but they pay the city a lesser amount based on wholesale room rates.

Fairview Heights is represented by Kevin Hoerner of Becker, Paulson, Hoerner & Thompson of Belleville, Paul Weiss and William Sweetnam of Freed & Weiss of Chicago, Bradley Lakin and Richard Burke of the Lakin Law Firm in Wood River, William Harte of Chicago and Karl Barth of Lovell Mitchell & Barth in Seattle.

According to the complaint, the defendants contract with hotels for rooms and sell the rooms to members of the public and charge and collect taxes from occupants based on the marked up rooms rates, but only remit tax amounts based on the lower negotiated rate, unlawfully retaining the difference.

"All taxing authorities in the State of Illinois authorized to impose a tax upon persons engaging in the business of renting, leasing or letting rooms in a hotel or motel on the gross rental receipts from such renting, leasing or letting," are eligible to join the class, the complaint states.

Russell Scott of Greensfelder, Hemker & Gale along with James Karen and Deborah Sloan of Jones Day in Dallas represent Hotels.com, Hotwire.com, Expedia.com and TravelNow.com.

Charles Joley of Donovan, Rose, Nester, & Joley in Belleville with Darrell Hieber of Los Angeles and Karen Valihura of Wilmington, Del., represent Priceline.com, Lowestfair.com and Travelweb LLC.

Troy Bozarth of the Burroughs Firm in Edwardsville and David McDowell of Morrison & Forester in Los Angeles represent Site59.com and Travelocity.com.

The case has been assigned to District Judge William Stiehl.


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