Harris sued Sands for the usual statutory California claims. He stayed at the Palazzo Resort Hotel and
Casino, and received a bill $44.80 bigger than he expected, due to two separate
“resort fee” charges of $22.40, which he thought were optional based on use of
certain goods or services. He’d booked
the room through the Palazzo website, which, as part of the booking process,
lists a variety of prices on the “Check Rates” page. These prices don’t include a resort fee or
taxes. From that page, visitors can click “Reserve Now.” The reservation page lists the “Reservation
Total,” “Total Room Tax,” and the “Grand Total” in 8.5–point font. Immediately
below the Grand Total, a separate line reads, in 7–point font: “ *Total does
not include applicable daily resort fee of $20 plus tax.” Likewise, the ticky box for “I accept the
Terms & Conditions” has a hyperlink that leads to a separate page stating,
inter alia, that “[r]ates do not include applicable daily Resort Fee of $20
plus tax .” Thus, Harris saw on his “Reserve Now” page:
Reservation Total: $368.00
Total Room Tax: $44.16
Grand Total: $412.16
*Total does not include applicable daily resort fee of $20
plus tax
His reservation confirmation email reflected his payment of
$412.16 and included the same language.
(Note that while Harris loses, this is the kind of conduct that
regularly leads to regulation. While extremely careful visitors might notice
that the “Grand Total” is nothing of the kind, plenty of people will blow past
it—even reasonable consumers can’t pay attention to absolutely everything—and,
faced with the charge later, will simply accept it, even if the amount might
have changed their decisionmaking earlier.
The Palazzo has a sales advantage over hotels whose grand totals truly
reflect every charge, contributing to a “market for lemons.” And strikingly, they didn’t charge his credit
card the true price—waiting instead for checkout to add in the fee, when it was
far too late for him to notice and perhaps change his plans.)
The court first found that Harris had standing to seek
injunctive relief on behalf of a class, even though he now knows the truth and
won’t get fooled again. Construing
standing more narrowly would bar federal courts from enjoining false advertising
under the California consumer protection laws, and that’s dumb. The very existence of the class action
creates a kind of “tension” with standing doctrine, and because some class
members don’t know what Harris now knows, he had standing to ask for injunctive
relief for the same injury he suffered.
He also had standing to challenge the practice as applied by a separate
hotel also owned by defendants; “[a[ny relevant differences between the
experience of visitors booking at the Palazzo and the Venetian would be
addressed more appropriately in an assessment of typicality and adequacy of
representation in the context of a class certification motion.”
However, the website wasn’t false or misleading as a matter
of law. A reasonable consumer would’ve
seen the disclosure. Harris argued that
the “Grand Total” was false or misleading because it wasn’t the grand
total. But defendants explicitly
disclosed the existence and amount of the resort fee and that tax would be
charged on it. The disclosure was
directly beneath the “Grand Total” and above more information that consumers
had to examine to verify the purchase.
It wasn’t “tucked away inconspicuously,” and was repeated in the email
Harris received. “Seven point font is
certainly readable to someone who is otherwise able to read the 8.5 point font
that made up the rest of the text.”
While the terms “Grand Total”
followed by a caveat expressed next to an asterisk might not be as explicit a
phrase as “Grand Total Not Including the $20 Resort Fee and Taxes You Will Be
Charged Upon Checking Out,” the hotel’s phraseology and word placement would
need to be taken completely out of context to be misunderstood or considered
false, as the Palazzo’s website says almost exactly the same thing, but on two
lines instead of one. The asterisked caveat notifies the consumer that the
“Grand Total” is not entirely grand.
(What the court doesn’t get at is why the Grand Total isn’t grand—the misleading nature of the
separation. It would be very interesting
to get a consumer survey on this, though the real problem here is exploitation
of cognitive limitations—including the phenomenon that once a consumer has
decided to pay $X for something, it appears more attractive, since we hate
regretting our choices; an increase to $X+20 may not be rejected even though the
consumer wouldn’t have chosen to purchase at the $X+20 price initially.)
Harris’s even less persuasive argument was that “applicable”
does not mean mandatory. But in the
ordinary meaning of the word, it does, at least as far as Harris was
concerned. Just as businesses aren’t
entitled to choose which laws are applicable to them, consumers aren’t entitled
to choose which fees are applicable to them: “all applicable fees apply, and
the hotel, and the related tax authority, decide which fees are applicable.”
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