Johnson v. Priceline.Com, Inc.

711 F.3d 271 (2nd Cir. 2013)

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Nature of the Case

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Facts

D is an online retail vendor of travel accommodations, including hotel rooms, airfare, rental cars, and vacation packages. D offers consumers hotel room reservations through the Priceline.com website. A consumer can purchase a room at a particular hotel and a particular advertised price set by Priceline. Under the 'agency' model, D books a room for a consumer at a hotel chosen by the consumer and charges the hotel a fee for its service. Under the 'merchant' model, hotels provide D with prices they will accept for bookings; D offers consumers rooms at these hotels for a somewhat higher rate and retains the difference as its profit. D also has a Name Your Own Price service, which invites consumers to 'bid' for hotel rooms. A consumer indicates the date for which he seeks a hotel reservation, the desired neighborhood or geographic area, and the minimum 'star' quality acceptable for the hotel. The consumer places his 'bid,' and is advised that 'if D accepts your price,' it will book a reservation at a hotel 'with an equal or higher star level than requested.' The consumer can review the booking before clicking 'book now.' D uses its lookup table to match the booking order with rooms it can get at a cheaper price. D reports back to the consumer whether the bid was accepted and, if so, the identity of the hotel where a reservation has been booked. Of course, D will not accept a bid unless it can locate a hotel room satisfying a customer's parameters at a rate lower than the bid amount, with Priceline keeping the spread as a profit in addition to its stated service fee. This modus operandi is not explicitly disclosed to consumers during the bidding process. A fine-print statement advises consumers that D retains the balance of charges paid for taxes and service fees on Name Your Own Price transactions 'as part of the compensation for our services and to cover the costs of your reservation.' Ps used the Name Your Own Price service to make reservations at four-star hotels. Ps claim that D was their agent and that D failed to disclose that it was paying the hotels less than Ps' bids for the reserved rooms. Ps used William Shatner's commercials for D that D will use threats and 'seductive powers' to persuade hotels to discount their rates for D customers. Ps also point to after-the-fact confirmations advising them that their bids were accepted by the hotels, rather than by D. D moved to dismiss and it was granted. It held there was no fiduciary relationship and no breach of contract. Ps appealed.