City of Columbus v. Hotels.com, L.P.
| Citation | 693 F.3d 642 |
| Decision Date | 10 September 2012 |
| Docket Number | 10–4545.,Nos. 10–4531,s. 10–4531 |
| Parties | CITY OF COLUMBUS, OHIO; City of Dayton; City of Findlay; City of Northwood; City of Rossford; City of Maumee; Perrysburg Township; Springfield Township; Monclova Township; Lake Township; Franklin County Convention Facilities Authority, Plaintiffs–Appellants, v. HOTELS.COM, L.P.; Expedia, Inc.; Internetwork Publishing Corporation; Orbitz, LLC; Priceline.com, Inc.; Travelocity.com, LP; Travelweb, LLC; Trip Network, Inc.; Hotwire, Inc.; Lowestfare.com, Inc., Defendants–Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
OPINION TEXT STARTS HERE
ARGUED:John T. Murray, Murray & Murray, Sandusky, Ohio, for Appellants. Michael R. Gladman, Jones Day, Columbus, Ohio, for Appellees. ON BRIEF:John T. Murray, Murray & Murray, Sandusky, Ohio, Michael P. Foley, Rendigs, Fry, Kiely & Dennis, Cincinnati, Ohio, for Appellants. Michael R. Gladman, Grant W. Garber, Jones Day, Columbus, Ohio, James P. Karen, Jones Day, Dallas, Texas, Jeffrey A. Rossman, McDermott Will & Emery LLP, Chicago, Illinois, Steven R. Smith, Connelly, Jackson & Collier LLP, Toledo, Ohio, Brian S. Stagner, Derek L. Montgomery, Kelly Hart & Hallman LLP, Fort Worth, Texas, Darrel J. Hieber, Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, California, Karen L. Valihura, Skadden, Arps, Slate, Meagher & Flom LLP, Wilmington, Delaware, for Appellees.
Before: MARTIN, GILMAN, and WHITE, Circuit Judges.
This case concerns alleged violations of local occupancy-tax laws by various online travel companies. Plaintiffs—cities, townships, and a county in the state of Ohio—sued various online travel companies, asserting that the online travel companies violated local tax laws by failing to pay a transient-occupancy tax on the difference between a contractually agreed-upon “wholesale” room rate, charged by the hotels to the online travel companies, and a higher “retail” rate charged by the online travel companies to the customers. The localities seeking recovery—the cities of Columbus, Dayton, Findlay, Northwood, Rossford, and Maumee; the townships of Perrysburg, Springfield, Monclova, and Lake; and Franklin County—have each enacted a separate ordinance, regulation, or resolution imposing guest occupancy taxes. The online travel companies filed a motion to dismiss. The district court granted the motion in part and denied the motion in part, determining that the online travel companies had no obligation to collect and remit guest taxes under any of the various guest tax laws at issue, but that the localities could still recover for any amounts the online travel companies collected as a tax but failed to remit to the localities. After the partial dismissal, the only remaining claim concerned whether the online travel companies collected money as a tax without remitting the collected money to tax authorities. The district court granted the online travel companies' motion for summary judgment, finding that the cities had not produced sufficient evidence to create a genuine issue of material fact as to whether the online travel companies collected taxes that were not remitted to the cities. The localities now appeal: (1) the district court's ruling that the online travel companies had no obligation to collect and remit guest taxes under the enacted laws; (2) the district court's order granting summary judgment for the online travel companies; and (3) the district court's order denying a motion to certify questions to the Ohio Supreme Court. For the reasons set forth below, we AFFIRM the judgment of the district court.
Defendants Hotels.com, L.P., Expedia, Inc., Hotwire, Inc., Travelocity, L.P., Orbitz, LLC, and Priceline.com, Inc., as well as certain subsidiaries and corporate siblings of these entities, are online travel companies. Although the online travel companies have various business practices, the parties agree that the online travel companies share the same basic business model. The online travel companies agree to pay lodging establishments a contractually agreed-upon “wholesale” rate if the online travel companies find customers to rent available rooms at the lodging establishments. Customers who rent the rooms from the online travel company then pay the online travel companies a higher “retail” rate to rent the rooms; the online travel companies pay the original “wholesale” rates, plus any taxes applicable to the “wholesale” price, to the lodging establishments. The localities allege that the online travel companies have violated local tax laws by failing to pay the local occupancy tax on the revenue they collect in the form of the difference between the “wholesale” room rate and the higher “retail” rate charged by the online travel companies.
Ohio allows municipalities and townships to levy excise taxes on “transactions by which lodging by a hotel is or is to be furnished to transient guests.” Ohio Rev.Code § 5739.08. Each of the localities in this action enacted laws—ordinances, resolutions, and regulations—imposing excise and occupancy taxes on hotel lodging and transient accommodation. See Columbus, Ohio, City Codes §§ 371.01–371.99; Findlay, Ohio, Cod. Ords., pt. 1, §§ 195.01–195.99; Rossford, Ohio, Cod. Ords., pt. 1, tit. 9, ch. 195; Monclova Twp., Ohio, Monclova Twp. Lodging Tax Code of Regs.; Franklin Cnty., Ohio, Franklin Cnty. Convention Facilities Auth., Tax Reg.; Dayton, Ohio, §§ 36.130–36.143; Northwood, Ohio Code of Ords., §§ 882.01–882.99; Maumee, Ohio, Cod. Ords. §§ 195.01–195.06; Perrysburg Twp., Ohio, Res. No. 505.56; Springfield Twp. Ohio, Res. No. 505.56; Lake Twp., Ohio, Trs. Res. No. 505.56.
Based on these laws, the localities seek to recover allegedly unpaid occupancy taxes from the online travel companies. The district court divided the tax laws at issue into three groups. The first category—the ordinances in the cities of Findlay, Columbus, and Rossford, the regulation in the Township of Monclova, and the regulation in Franklin County—places the tax collection burden on the “vendor.” These laws define “vendor” as a person who owns or operates the hotel or transient accommodation “and who furnishes the lodging.” The Monclova regulation also defines vendor to include “the agents and employees of such person.” The second category—the ordinances adopted in the cities of Dayton, Northwood, and Maumee—places the tax collection burden on the “operator.” “Operator” is defined as a person who is the “proprietor of the hotel whether in the capacity of owner, lessee, licensee, or any other capacity.” Where an owner operates the hotel through a “managing agent of any type or character ... the managing agent shall be deemed an operator for the purposes of this division.” The final category—the resolutions in the townships of Perrysburg, Springfield, and Lake—places the tax collection burden on “hotels.” “Hotels” are defined as “every establishment kept, used, maintained, advertised, or held out to the public to be a place where sleeping accommodations are offered to guests.”
This case began as two separate suits. The first, brought by the City of Findlay, was filed in state court and was removed to the Northern District of Ohio. The second, filed by the cities of Columbus and Dayton, was filed in the Southern District of Ohio. In both cases, the online travel companies moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The later-filed action was transferred to the district court handling the first-filed action, and the district court granted each motion in part and denied each motion in part. The district court ruled first on the claims brought by Findlay and later extended that ruling to the suits involving Columbus and Dayton. The two cases were consolidated, and the other localities joined the suit as plaintiffs. After consolidation, the district court ruled that its determinations regarding Findlay, Columbus, and Dayton applied with equal force to the ordinances from Northwood, Rossford and Maumee, and to the resolutions enacted in the townships of Springfield, Lake, and Perrysburg, and the regulations enacted in Monclova Township and Franklin County.
In granting the online travel companies' motion to dismiss, the district court determined that the online travel companies had no obligation under any of the ordinances, regulations, or resolutions to collect and remit guest taxes. The district court determined that the localities could still recover for any amounts the online travel companies labeled as a tax and collected from customers, but did not remit to taxing authorities. In so deciding, the district court determined that the laws created tax-collection obligations only for “vendors,” “operators,” and “hotels,” and that the online travel companies do not fit into any of these definitions.
Both the localities and the online travel companies moved for summary judgment on the issue of whether the online travel companies had collected money “denominat[ed] as a sales and/or bed tax” that was not remitted to the localities. The localities also sought to certify questions to the Ohio Supreme Court. The district court granted summary judgment for the online travel companies and denied summary judgment for the localities. The district court found that the localities had not produced sufficient evidence to create a genuine issue of material fact as to whether the online travel companies collected money denominated as a tax that was not remitted to the localities. The district court also denied the localities' motion to certify questions to the Ohio Supreme Court. The localities now appeal: (1) the district court's ruling that the online travel companies had no obligation to collect and remit guest taxes under the tax laws; (2) the court's grant of summary judgment for the online travel companies; and (3) the court's denial of the motion to certify questions to the Ohio Supreme Court.
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