City of Portland v. Homeaway.com, Inc.
| Decision Date | 09 March 2017 |
| Docket Number | No. 3:15–cv–01984–MO,3:15–cv–01984–MO |
| Citation | 240 F.Supp.3d 1099 |
| Parties | CITY OF PORTLAND, Plaintiff. v. HOMEAWAY.COM, INC. and Homeaway, Inc., Defendants. |
| Court | U.S. District Court — District of Oregon |
Denis M. Vannier, J. Scott Moede, City of Portland, Kenneth A. McGair, Simon Whang, Portland City Attorney's Office, Portland, OR, for Plaintiff.
Michael Simons, Vinson & Elkins LLP, David C. Lawrence, Akin Gump Strauss Hauer & Feld LLP, Austin, TX, Rachel C. Lee, Per A. Ramfjord, Stoel Rives LLP, Portland, OR, for Defendants.
Plaintiff City of Portland ("the City") sued Defendants HomeAway.com, Inc. and HomeAway, Inc. (collectively "HomeAway") for failure to comply with various provisions of the Portland City Code collectively known as the "Transient Lodgings Tax." After I dismissed its original Complaint [1], the City filed an Amended Complaint [34], which HomeAway now moves to dismiss. For the reasons set forth below, HomeAway's Motion to Dismiss for Failure to State a Claim [37] is GRANTED in part and DENIED in part.
HomeAway operates an online vacation rental marketplace where people interested in making their homes available for short-term rental may advertise their property. Travelers interested in renting a property can access HomeAway's websites to search for and find available properties. HomeAway puts the traveler in contact with the owner or lessee of the property to sort out the details of the lodging arrangement. HomeAway has property listings located all over the world, including in Portland.
In 1972, the City enacted a Transient Lodgings Tax Ordinance, Portland City Code ("PCC") § 6.04.010, et seq. ("the Ordinance"), providing in part that "[e]very [hotel] operator renting rooms or space for lodging or sleeping purposes in this City ... shall collect a tax from the transient" to be remitted to the City. PCC § 6.04.030(A) (2015). The Ordinance applies to hotel "Operators," defined by the Ordinance as PCC § 6.04.010(M). The Ordinance authorizes the City to levy fines against Operators that do not comply with the Ordinance. See, e.g. , PCC § 6.04.170.
On January 21, 2015, the Portland City Council passed amendments to the Ordinance that took effect on February 20, 2015.1 The apparent goal of the City Council in passing the amendments was to extend the Ordinance to cover "Booking Agents." The Ordinance defines "Booking Agent" as PCC § 6.04.010(D). The Ordinance expressly lists "[o]nline travel booking sites" as examples of "Booking Agents." Id.
After the City Council passed the 2015 amendments to the Ordinance, the City sent HomeAway notices in which the City contended that HomeAway was in violation of various provisions of the Ordinance. Included in these notices was an assessment of $2,540,106 in presumptive taxes, penalties, and interest. HomeAway refused to pay the assessment, claiming it was not in violation of the Ordinance because it was not an Operator or Booking Agent and therefore did not fall under the Ordinance's terms. On October 21, 2015, the City filed this lawsuit against HomeAway seeking a declaratory judgment that HomeAway is an Operator or a Booking Agent, a reduction of fines to judgment, a reduction of presumptive taxes to judgment, and an injunction enjoining HomeAway's operations in Portland.
On May 17, 2016, I held oral argument on HomeAway's first Motion to Dismiss [7]. From the bench [28], I GRANTED HomeAway's motion and DENIED the City's request for injunctive relief. I later provided an Opinion and Order [29] clarifying my rulings. In my Opinion and Order, I held that: (1) the City had not sufficiently alleged that HomeAway is an Operator under the Ordinance; (2) the Portland City Charter ("the Charter") does not grant the City authority to impose tax collection obligations on Booking Agents; (3) the City had not sufficiently alleged that HomeAway falls under the City's authority to impose tax collection obligations on Booking Agents under the relevant Oregon state statutes; and (4) the Ordinance does not impose any regulatory duties or responsibilities on HomeAway as a Booking Agent. I dismissed the Complaint but granted leave to amend.
On July 11, 2016, the City filed its Amended Complaint [34]. HomeAway moves to dismiss the Amended Complaint for failure to state a claim. I held oral argument on the current motion on December 16, 2016.
When reviewing a motion to dismiss, the court must "accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party." Knievel v. ESPN , 393 F.3d 1068, 1072 (9th Cir. 2005). A court need not accept legal conclusions as true because "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). To survive a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Id. (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A pleading that offers only "labels and conclusions" or " ‘naked assertion[s]’ devoid of ‘further factual enhancement’ " will not suffice. Id. (quoting Twombly , 550 U.S. at 555, 557, 127 S.Ct. 1955 ). While a plaintiff does not need to make detailed factual allegations at the pleading stage, the allegations must be sufficiently specific to give the defendant "fair notice" of the claim and the grounds on which it rests. See Erickson v. Pardus , 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam) (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).
Federal Rule of Civil Procedure 15 provides that a court should freely give leave to amend a complaint "when justice so requires." Fed. R. Civ. P. 15(2). As such, when a court dismisses a complaint for failure to state a claim, "leave to amend should be granted ‘unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.’ "
DeSoto v. Yellow Freight Sys., Inc. , 957 F.2d 655, 658 (9th Cir. 1992) ). If amendment would be futile, the court need not grant leave to amend. Id.
HomeAway argues that the Amended Complaint should be dismissed for three principal reasons: (1) the City has failed to allege sufficient facts to show that HomeAway is a Managing Agent, and therefore an Operator, under the Ordinance; (2) the City has failed to allege sufficient facts to show that HomeAway is a Booking Agent under the Ordinance or a Transient Lodging Intermediary under relevant Oregon state statutes; and (3) even if HomeAway is deemed an Operator under the Ordinance, federal law preempts the City's claim seeking to compel HomeAway to provide customer information and display permit numbers when advertising. I will address each argument in turn.
The City's First, Fourth, Sixth, Ninth, and a portion of its Eleventh Claims are all premised on the notion that HomeAway qualifies as an Operator under the Ordinance. The Ordinance defines an Operator as a PCC § 6.04.010(M). The City does not allege that HomeAway is a proprietor of hotel properties. Thus, HomeAway can be an Operator only if it qualifies as a Managing Agent.
A Managing Agent is defined as a "person with general power involving the exercise of judgment and discretion, as opposed to an ordinary agent who acts under the direction and control of the principal." Managing Agent , Black's Law Dictionary (10th ed. 2014). As such, to be a Managing Agent under the Ordinance, a person must exercise judgment and discretion in performing the functions of a hotel proprietor. See id. ; PCC § 6.04.010(M).
The parties dispute whether a Managing Agent must perform all the functions of a proprietor or merely a subset of those functions. HomeAway argues that the Ordinance's reference to "his/her" functions, without any additional limiting terms, means that a Managing Agent must perform all of an Operator's functions in order to be considered an Operator. The City suggests that the performance of an Operator's significant functions is sufficient, as long as the entity exercises judgment and discretion in performing those functions.
I agree with HomeAway. The Ordinance provides no limiting term to "his/her functions," and the City provides no persuasive reason to read one into the text. See Or. Rev. Stat. § 174.010 (2016); Ramirez v. Haw. T & S Enters., Inc. , 179 Or.App. 416, 39 P.3d 931, 936 (2002). The fact that a Managing Agent can be of any type or character does not limit the functions that a Managing Agent must perform in order to be deemed an Operator. Moreover, a contrary interpretation of the Ordinance's language would lead to a rather strange result. If the Ordinance could be...
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...to dismiss, the scope of review is generally limited to the allegations in the complaint. See City of Portland v. HomeAway.com, Inc., 240 F. Supp. 3d 1099, 1111 (D. Or. 2017). The extraneous facts and allegations in Plaintiff's Response are not persuasive, and in either course, the Court wi......