Fairview Heights nets $56,733.68 in online travel settlement

Amelia Flood Apr. 15, 2009, 6:00am



The city of Fairview Heights has ended its four-year battle with online travel companies after settling an individual claim against Orbitz and its subsidiaries over local room taxes for $56,733.68.

The city had previously settled with other defendants including Priceline.com, Orbitz, Hotels.com, Hotwire, Cheap Tickets, Expedia, Travelnow.com, Travelocity.com, Travelweb, LowestFare.com and Site 59.com.

Orbitz and its three subsidiaries agreed last month to pay the city a lump sum and agreed to pay court costs and attorney's fees.

According to the Fairview Heights treasurer's office, $56,733.68 is the only money the city has received involving the claims against online travel companies.

Attorneys Al Paulson and Kevin Hoerner of Becker, Paulson, Hoerner and Thompson, PC, who acted as co-counsels for the city, did not return phone calls regarding the settlement by Tuesday afternoon.

Richard Burke of St. Louis also represented the city in the claims, which originally began as a class action.

In the suit, which was removed to federal court from St. Clair County Circuit Court, Fairview Heights had proposed to represent 50 Illinois municipalities.

The complaint alleged that online travel companies were collecting taxes from customers but not turning that money over to the local communities in which the rooms were booked. Fairview Heights also contended that the travel companies were charging customers retail room rates while only paying taxes on wholesale room rates as well as not paying a transient occupancy tax.

The class action fell apart last year when U.S. District Court Judge David Herndon ruled that Fairview Heights did not fit the requirements for the class and denied class certification. The city was free, however, to pursue lawsuits against Orbitz, Expedia and others it claimed owed money.

The class action suit stirred up trouble at home for the city when several aldermen claimed to have been misinformed about the nature of the suit.

Fairview Heights Alderman Bonnie Crossley previously said she felt the city council had been "deceived" about the suit, claiming the council did not realize it would proceed as a class action.

Alderman Gil Klein previously told the Record that, "class actions are an attorney's paradise," and that he had walked out of a May 1, 2007 executive session where the issue was discussed.

Klein, Crossley and Alderman Pat Baeske had not returned calls asking for new comment at press time Tuesday.

Mayor Gail Mitchell said that he did not mislead the council at anytime and that he and other members were "confused in the beginning."

"All the council were informed," Mitchell said. "I don't keep anything from the council."

With the end of the lawsuits, the city must now decide what to do with the money. It has yet to be allocated by the city council, although Mitchell said he believes it should go into the city's hotel-motel fund.

Similar lawsuits against online travel companies have been filed around the country. Most have been dismissed.

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