EAST ST. LOUIS – Online travel companies dropped two bombs on Fairview Heights, weakening the last local remnant of a grandiose class action that would have held them responsible for municipal room taxes in 50 Illinois cities.
In a Jan. 21 brief, seven companies notified U.S. District Judge David Herndon that a federal judge in North Carolina cleared them of liability for room taxes.
Their brief, by Robert Shultz of Edwardsville, also challenged for the first time the validity of the room tax ordinance in Fairview Heights.
Shultz claimed the city should have reenacted the tax after acquiring home rule power.
"The city never did so," he wrote.
"It only removed an exemption from the old law," he wrote.
Now the city council could face an inquiry into its financial foundation with nothing to gain but a few thousand dollars in room taxes.
Fairview Heights originally proposed a class action on behalf of cities except Chicago, where the tax ordinance differed from the model the others copied.
Herndon denied the city's motion for class certification last March.
"Plaintiff has failed to precisely identify a class of which it is a member," he wrote.
He held that even if the city amended the class definition, a class action would be impossible to manage.
Since then Fairview Heights has pursued its own tax claims against
13 companies, though the claims may not exceed a dollar per room.
Richard Burke of St. Louis, representing the city, wrote this year that Priceline rented 3,314 rooms in Fairview Heights from 1999 to
He wrote that Orbitz rented 524 rooms from 2004 to 2008.
He wrote that the city computed the taxes due and provided them to defendants.
They must make up the shortfall, he wrote.
He didn't specify how much, but the North Carolina case sheds light on the puny dimensions of the city's claim.
A North Carolina county with a three percent room tax presented an example of a company paying $70 for a room and selling it online for $100.
The disputed $30 difference, at three percent, equals 90 cents.
At that rate, even if Herndon ruled against them, Priceline and Orbitz together would owe $3,554.20.
Shultz filed his brief in support of a pending motion for summary judgment.
In the event that his North Carolina bomb and home rule bomb didn't hit his target, he also argued that Fairview Heights can't
tax transactions that don't occur there.
Herndon hasn't set a hearing on the motion.