The court of appeals upheld a ruling getting Priceline off
the hook for promising one price and delivering another, because the terms and
conditions said that could happen.
Freeman booked a hotel room at a Trump property and was
charged a resort fee. He sued over that,
and over the service fee paid to Priceline.
Priceline allows customers to make travel arrangements through its
website; it can’t require a hotel to make a room available at any particular
rate. Priceline’s Name Your Own Price
service allows consumers to get deeply discounted rooms. A NYOP booking starts when a customer selects
dates of stay, general location, and quality/star rating of hotel, and names
the price she’s willing to pay. The
resulting “Contract Page” displays the details of the request, with an amount
designated as “Total Charges” at the bottom.
This is the offered price multiplied by the number of nights/rooms, plus
“Taxes and Service Fees.” The “Total
Charges” are charged to the customer’s credit card if a hotel accepts the
requested price.
Directly below “Total Charges” is a large, bold, blue
“Important Information.” Five bullet
points follow, of which the fourth is: “The reservation holder must present a
valid photo ID and credit card at check-in. The credit card is required for any
additional hotel specific service fees or incidental charges or fees that may
be charged by the hotel to the customer at checkout. These charges may be
mandatory (e.g., resort fees) or optional (parking, phone calls or minibar
charges) and are not included in your offer price.” In that bullet point, “charges” links to a
page that reiterates: “Depending on the property you stay at, you may also be
charged (i) certain mandatory hotel specific service fees, for example, resort
fees (which typically apply to resort type destinations and, if applicable, may
range from $10 to $40 per day), energy surcharges, newspaper delivery fees,
in-room safe fees, tourism fees, or housekeeping fees and/or (ii) certain
optional incidental fees …. Please
contact the hotel directly as to whether and which charges and service fees
apply.” Also, “Taxes and Service Fees”
on the Contract Page leads to the same page, which also says that the credit
card charge includes “an estimated amount to recover the amount we pay to the
hotel in connection with your reservation for taxes owed by the hotel … The
balance of the charge for Taxes and Fees is a fee we retain as part of the
compensation for our services ….” It
specifies that the fees can vary by hotel—meaning what the consumer gains on
the swings can be lost on the roundabouts.
Consumers have to initial a box on the Contract Page next to
“I have read, accept and agree to abide by Priceline.com’s terms and conditions
and privacy policy.” “[T]erms and conditions” also links to a page setting
forth the same information.
Freeman made a reservation, reading the terms and
conditions. He offered $89 per night;
the Trump Hotel accepted this price (standard room rate was $109 for the first
night and $119 for the second). He was
charged a $15/night resort fee plus occupancy tax.
Freeman argued that Priceline’s TV ads were deceptive
because they didn’t disclose that the price offered through NYOP wouldn’t be
the total price for the room, and that the resort fee/service fee information
was misleadingly buried deep in the process.
The trial court held that Priceline and Trump made sufficient disclosure
that some hotel fees may be mandatory, with resort fees as just one
example. “It would be impossible for
Priceline to notify a customer at the time of signing on whether a hotel will
require any mandatory fee, including a resort fee, because neither Priceline,
nor the customer, would know if any hotel meets the customer’s parameters until
after the credit information is entered on the page following the Contract
Page.” (Ed. note: of course, with these
charges, the hotel may well not meet the customer’s parameters. How come Priceline couldn’t program its
algorithm to include in the price used to assess NYOP compatibility any fees
that are mandatory for every guest?
Priceline could certainly require hotels to provide this information in
order to participate. A mandatory “fee”
is part of the price.)
Also, the Contract Page specifically included an estimate
for Taxes and Service Fees, which disclosed that Priceline could charge an
additional service fee. These
disclosures were clear and conspicuous as a matter of law, so there could be no
deceptive omission. The failure to
disclose in the TV ads was immaterial given that “a Priceline customer would
necessarily receive the multiple disclosures contained on Priceline’s Web site
before making a reservation.” The TV ads, “each of which display scenarios that
include elements of fantasy[,] contain limited information about Priceline’s
services and in no way enable a customer to bypass or otherwise avoid the
multiple disclosures on Priceline’s Web site.”
Also, the hyperlinks here conveyed adequate and unambiguous notice. (This seems like a good candidate for
regulatory action. It may have been
“unambiguous” that random fees could apply, but those fees could make the price
promises illusory.)
Freeman argued that deceptiveness was a question of fact,
but there was no triable issue here.
Nor was there unconscionability. The disclosures were clear and conspicuous,
and there was nothing substantively unconscionable. Freeman could have avoided the problem by
reserving a hotel room some other way, and nothing here shocked the conscience.
The same arguments that defeated the CLRA claim also doomed
the UCL claim. There was nothing unfair,
judged by the standard: “(1) The consumer injury must be substantial; (2) the
injury must not be outweighed by any countervailing benefits to consumers or
competition; and (3) it must be an injury that consumers themselves could not
reasonably have avoided.” Freeman could
have avoided his injury because of the conspicuous disclosure and other
alternate means to book a hotel room with some hotel that didn’t charge a
resort fee.
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