Resort fees case survives on nondisclosure, not bait and switch theory

Hall v. Marriott Int’l, Inc., No. 19cv1715-JO-AHG, 2023 WL 4417265, -- F.R.D. – (S.D. Cal. Mar. 30, 2023)

Previous opinion in this case about allegedly deceptive/inadequately disclosed mandatory “resort fees.” The court ends up certifying an issues California class, but rejecting the damages methodology for calculating class damages.

Marriott’s booking process shows prices starting “from” a particular rate:

 

"from 420 USD/night" ad

Clicking on “view rates” gets further information:

 

still says 420 at bottom but now there's a message at top in blue

If a resort fee applied, a notice would appear at the top of the screen in blue, bolded text that is outlined by a blue box, stating “Please note,” “USD 35 daily destination amenity fee will be added to the room rate.” The second page in the booking process also reflects the available rooms (e.g., queen or king room) and corresponding rates, without the resort fee included.

Once a consumer selects a particular room, they arrive at the third page in the booking flow:

 

at last the fees are at the bottom in the total

The subtotal shows a charge for “USD/night” and a separate charge for “USD taxes and fees,” which includes the resort fee. A more detailed breakdown of the charges showing the amount of the resort fee is available if the consumer clicks the “Summary of Charges” dropdown box:

 

at checkout the total is correct

Plaintiffs alleged both that Marriott inadequately disclosed resort fees on its own website and on the sites of third party online travel agencies. They brought the usual California claims.

The court dismissed all equitable claims because plaintiffs lacked standing to seek injunctive relief, and the court lacked jurisdiction over the equitable claims because damages hadn’t been shown to be inadequate.

CLRA: Plaintiffs had two theories of deception: (1) bait and switch based on the initial ad for the room rate that was unattainable without paying the resort fee, and (2) inadequate disclosure of the resort fee—the blue box was in smaller print, a different color font, and at the top instead of next to the price information at the bottom. The “taxes and fees” disclosure was allegedly confusing because it does not explicitly specify “resort fees” and causes consumers to believe that the fees are entirely government related.

Theory 1: On the one hand, “explicit and conspicuous qualifying disclosures can render allegedly deceptive statements non-deceptive as a matter of law,” but, “[e]ven when there is no question that the initial deception was cured by a later disclosure, a company can still be liable for deceptive practices that cause consumers to be lured in and ‘swept up’ in the buying process.” The latter situation occurs when deception causes “consumers to invest significant amounts of time and become so swept up in the buying process that later qualifying disclosures cannot cure the original deception,” and is exemplified by a brick and mortar store advertising 40% off in the window, which led consumers to enter, shop, decide to buy, and stand in line.  By the time qualifying disclosures were made, the consumers were “invested in the decision to buy and swept up in the momentum of events.” The plaintiffs had spent 40 minutes or more shopping, waited in lines of 15 or more people, and felt pressured to purchase once they reached the front of the line due to embarrassment.

By contrast,  “Marriott’s disclosures regarding the total price of the hotel stays are conspicuously disclosed by the end of the internet booking process.” The initial “from” (which I think is deceptive, since it’s not attainable) was followed by disclosure of additional fees multiple times. The plaintiffs didn’t invest significant time in the purchase process—at most 10 minutes total, and the higher price appeared on the second page of the booking flow. The plaintiffs were aware that the price increased throughout the booking process.

However, there were disputed issues of fact regarding the deceptiveness of Marriott’s booking process and the adequacy of its disclosures. “Unlike its disclosure of the total price, Marriott does not repeatedly and conspicuously disclose resort fees throughout the booking process.” There were genuine and material factual disputes about whether consumers would notice and understand the disclosures due to their font size, color, and placement within the context of the entire transaction. “Indeed, Plaintiffs point to survey evidence, that approximately 50% of consumers do not notice these disclosures and do not know they paid resort fees.”

Negligent misrepresentation failed because nondisclosure is not the same thing as making a false statement.

Marriott could not be held liable for allegedly deceptive statements on third-party sites. There was no evidence that Marriott controlled how they presented resort fee information. Under the CLRA, vicarious liability requires evidence of “personal participation in the unlawful practices and unbridled control” over those deceptive practices.

Marriott’s class action waiver defense failed as to the named plaintiffs, but could still be raised as to unnamed class members. Marriott bears the burden of proof on this issue, and pointed to no evidence in the record that the named plaintiffs had notice of Marriott’s terms and conditions and assented to them; even the terms and conditions they purportedly agreed to were absent from the record. However, Marriott sufficiently preserved and maintained its right to assert a class action waiver defense against the proposed class members.

Marriott also failed to show a lack of reliance. A plaintiff can show reliance by showing that the misrepresentation or omission at issue “played a substantial part ... in influencing his decision,” or by showing that the misrepresentation or omission was material. A plaintiff need not show that “[the challenged] misrepresentations were the sole or even the decisive cause of the injury-producing conduct.” Reliance for omissions is satisfied if the plaintiff demonstrates that “had the omitted information been disclosed [the plaintiff] would have been aware of it and behaved differently.” There was a triable issue, despite testimony from the lead plaintiffs that they chose Marriott on factors unrelated to resort fees, such as total price. Although this testimony may demonstrate that resort fees were not “the sole or even the decisive cause” of plaintiffs’ decisions to book their hotel rooms, it does not establish that resort fees were not a “substantial part” in their decision making.

The court found that it couldn’t certify a nationwide class, but Rule 23(a) was satisfied with respect to a California class. The Rule 23(b) problem was predominance. First, the proposed class definition encompassed a “potentially significant number” of unharmed consumers who saw the disclosure, which might be about 50% on plaintiffs’ own survey. Second, the proposed damages model likewise didn’t distinguish between injured and uninjured class members. The expert calculated the total amount of resort fees paid during the class period, but not all of that would reflect injury.

Still, the court certified a liability-only class. “Most critically, all of the essential liability elements of Plaintiffs’ CLRA and common law fraud claims can be resolved on a classwide basis using Plaintiffs’ common evidence.” This would also advance judicial economy, given the small size of individual recovery and large numbers of individual class members.