Court Revives Tax Suit Against Travel Sites

(CN) - The 2nd Circuit sent a tax dispute back to the district court, saying the federal judge needed to decide if a lawsuit against Hotels.com, Hotwire, Expedia and other online travel sites qualifies for class certification.

Nassau County accused a slew of online companies of cheating New York municipalities out of a portion of their hotel occupancy taxes.

The county said the sites negotiated discounted room rates with hotels, but charged travelers retail rates for those rooms. The sites then based their occupancy taxes on the discounted rates, according to the lawsuit.

The district court dismissed the case, saying the county failed to show that it had exhausted its options before filing suit by trying to collect the full taxes.

"We remand for consideration of a different jurisdictional concern," the two 2nd Circuit judges wrote. They said the lower court had to decide if the complaint meets the requirements for class certification, "without which both we and the district court would lack jurisdiction."

Sonia Sotomayor, originally the third judge on the panel, was confirmed to the U.S. Supreme Court earlier this month.

Judges Walker and Calabresi revived the lawsuit and sent it back to the district court for a decision on class certification.

Defendants are Hotels.com, Hotwire, CheapTickets.com, Cendant Travel Distribution Services Group, Expedia, Lodging.com, Lowestfare.com, Maupintour Holding, Orbitz, Priceline.com, Site59.com, Travelocity.com, Travelweb.com and TravelNow.com.

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