ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-09-381919CP
DATE: 20140402

BETWEEN:

TIM MAGILL
Plaintiff

– and –

EXPEDIA, INC.
Defendant

Henry Juroviesky, for the Plaintiff

Jeffrey S. Leon and Kirsten A. Thoreson, for the Defendant

Proceeding under the Class Proceedings Act, 1992

HEARD: March 26, 2014

Perell, J.

REASONS FOR JUDGMENT

A. INTRODUCTION

1In this certified class action under the Class Proceedings Act, 1992, S.O. 1992, the Defendant Expedia, Inc. brings a motion for summary judgment.

2Expedia is a travel company that provides bookings for air travel, rail travel, cruises, car rentals, and hotels. This class action concerns its charges to customers with respect to hotel reservations and custom vacation packages, including hotel reservations. Most particularly, the class action concerns: (1) Expedia’s Tax Recovery Charge and (2) Expedia’s Service Fees.

3The Plaintiff, Mr. Magill, was an Expedia, Inc. customer, and he alleges, on behalf of a class of Expedia customers, that Expedia has breached the terms of its contract with its customers who booked hotel reservations using Expedia’s online website.

4In this summary judgment motion, for a variety of reasons associated with contract formation and contract interpretation, Expedia denies that it has breached its contract with Mr. Magill and with the Class Members.

5For the reasons that follow, I agree that there is no genuine issue requiring a trial and that this class action should be dismissed.

B. FACTUAL AND PROCEDURAL BACKGROUND

1. Expedia’s Contract with its Customers to Use its Website

6Expedia owns and operates a website, expedia.ca. On the website, Expedia includes a set of terms, conditions and notices that governs its customers’ usage of the website, including various statements and representations, which are “Expedia.ca Website Terms, Conditions and Notices.”

7The Website Terms of Use state:

By accessing or using this Website in any manner, you agree to be bound by the [Website Terms of Use]. Please read the Agreement carefully.

SERVICES ARE PROVIDED “AS IS” WITHOUT WARRANTY OF ANY KIND”.

8During the Class Period, the first version of the Terms of Use found on the website, stated:

Expedia.ca Website Terms, Conditions, and Notices

AGREEMENT BETWEEN CUSTOMER AND EXPEDIA, INC.

Welcome to the www.expedia.ca (the “Website”). This Website is provided solely to assist customers in gathering travel information, determining the availability of travel-related goods and services, making legitimate reservations or otherwise transacting business with travel suppliers, and for no other purposes. The terms “we”, “us”, “our”, and “Expedia” refer to Expedia, Inc., a Washington corporation and/or our subsidiaries. The term “you” refers to the customer visiting the Website and/or booking a reservation through us on this Website, or through our customer service agents.

This Website is offered to you conditioned upon your acceptance without modification of all the terms, conditions, and notices set forth below (collectively, the “Agreement”). By accessing or using this Website in any manner, you agree to be bound by the Agreement. Please read the Agreement carefully. If you do not accept all of these terms and conditions, please do not use this Website. Be sure to return to this page periodically to review the most current version of the Agreement. We reserve the right at any time, at our sole discretion, to change or otherwise modify the Agreement without prior notice, and your continued access or use of this Website signifies your acceptance of the updated or modified Agreement.

9During the Class Period, the second version of the Terms of Use stated:

Expedia.ca Website Terms, Conditions, and Notices

AGREEMENT BETWEEN CUSTOMER AND EXPEDIA, INC.

Welcome to www.expedia.ca (the “Website”). This website is provided solely to assist customers in gathering travel information, determining the availability of travel-related goods and services, making legitimate reservations, or otherwise transacting business with travel supplier, and for no other purpose. The terms “we”, “us”, “our”, and “Expedia” refer to Expedia, Inc., a Washington corporation and/or our subsidiaries. The term “you” refers to the customer visiting the Website and/or booking a reservation through us on this Website, or through our customer service agents.

This website is offered to you conditioned upon your acceptance without modification of all the terms, conditions, and notices set forth below (collectively, the “Agreement”). By accessing or using this Website in any manner, you agree to be bound by the Agreement. Please read the Agreement carefully. If you do not accept all of these terms and conditions, please do not use this Website. Be sure to return to this page periodically to review the most current version of the Agreement. We reserve the right at any time, at our sole discretion, to change or otherwise modify the Agreement without prior notice, and your continued access or use of this Website signifies your acceptance of the updated or modified Agreement.

10During the Class Period, the third version of the Terms of Use, stated:

Expedia.ca Website Terms, Conditions, and Notices

AGREEMENT BETWEEN CUSTOMER AND EXPEDIA, INC.

Welcome to www.expedia.ca (the “Website”). This Website is provided solely to assist customers in gathering travel information, determining the availability of travel-related goods and services, making legitimate reservations or otherwise transacting business with travel supplies, and for no other purpose. The terms “we”, “us”, “our”, and “Expedia” refer to Expedia, Inc., a Washington corporation and/or our subsidiaries. The term “you” refers to the customer visiting the Website and/or booking a reservation through us on this Website, or through our customer service agents.

This Website is offered to you conditioned upon your acceptance without modification of all the terms, conditions, and notices set forth below (collectively, the “Agreement”). By accessing or using this Website in any manner, you agree to be bound by the Agreement. Please read the Agreement carefully. If you do not accept all of these terms and conditions, please do not use this Website. Be sure to return to this page periodically to review the most current version of the Agreement. We reserve the right at any time, at our sole discretion, to change or otherwise modify the Agreement without prior notice, and your continued access or use of this Website signifies your acceptance of the updated or modified Agreement.

11Throughout the Class Period, the various versions of the Terms of Use contained a description or explanation of Expedia’s Tax Recovery Charge and its Services Fee.

12These terms from the Terms of Use that describe or explain Expedia’s charges to its customers are the crux of this class action. This class action is fundamentally about the interpretation of the following language always found on the Website’s Terms of Use:

The tax recovery charge on hotel accommodations is a recovery of the estimated transaction taxes (e.g. sales and use, occupancy, room tax, excise tax, value added tax, etc.) that Expedia pays to the hotel supplier in connection with your hotel reservations. … The actual tax amounts paid by Expedia to the hotel suppliers may vary from the tax recovery charge amounts, depending upon the rates, taxability, etc. in effect at the time of the actual use of the hotel by our customers.

The service fees compensate Expedia for its costs in servicing your travel reservation. Our service fees vary based on the amount and type of hotel reservation.

13There is no material or substantive difference between the various versions of the Expedia.ca Website Terms, Conditions and Notices. There is no dispute between the parties that there is a contract for the use of the Expedia website. As will be seen, the dispute is about what Expedia calls its Reservation Contract.

2. Expedia’s Reservation Contract

14There is a dispute between the parties about whether the contract formed by the Expedia.ca Website Terms, Conditions and Notices is a separate contract or whether it becomes a part of the contract that is formed if the customer goes beyond just using the website to actually booking a hotel reservation.

15There is no dispute between the parties that by a customer using the website to actually book a hotel reservation, the customer enters into a contract with Expedia. Expedia describes this contract as a Reservation Contract.

16Expedia submits that the Reservation Contract is separate and apart from the customer’s agreement to be bound by the Website Terms of Use, which is a condition of using the website. It says that the contract to use the website exists whether or not any hotel reservations or other travel services are ever booked.

17In other words, Expedia submits that to use its website, the customer enters into an agreement about the use of the website governed by the Terms of Use. It submits, however, that the Expedia.ca Website Terms, Conditions and Notices are not part of the Reservation Contract, the contract for booking hotel reservations.

18Whether the contracts are separate and whether this even matters is something that I have to decide, so for present purposes, I will just describe how the Reservation Contracts come into existence.

19Expedia submits that the Reservation Contracts are not single written documents, but are rather the electronic contracts formed between Expedia and its customers as part of the booking path on the website, as confirmed by a confirmation email.

20The customer using the website is provided with information on the website about available hotel accommodation at their travel destination. The customer has many choices as he or she browses the website. In the booking paths for Expedia’s services, the customer has the opportunity to review the rates, hotel details, and the rules and restrictions of the hotel before continuing to the checkout webpage provided by the website to enter into the Reservation Contract by making payment and subsequently receiving a confirmation of the booking.

21In the booking path, after the customer makes a decision about the hotel and duration of his or her stay, the room rate per night in Canadian dollars will be specified as a line item. The Taxes and Service Fees per night in Canadian dollars will be specified. The number of nights is indicated, and the total cost is summarized.

22In the booking path, the Tax Recovery Charge and Service Fees assessed to the customers are shown as a bundled line item. The two charges are not broken down for the customer. As explained below, for competitive and contractual reasons associated with the travel industry, Expedia intentionally bundles these charges precisely to preserve its travel trade secrets.

23For details of Taxes and Service Fees, the customer may open a window that provides the following information:

What are Taxes & Service Fees?

The taxes are tax recovery charges Expedia pays to its vendors (e.g. hotels). … For details please see out Terms of Use [hyperlinked]. The service fees cover Expedia’s costs in servicing your reservation. …

24Customers agree to the Reservation Contracts by entering their credit card details and then transmitting those details to Expedia by clicking the “Complete this booking” button. Immediately above the “Complete this booking” button, the following alert appears:

By completing this booking I agree that I have read and accept the above Rules & Restrictions [as specified by the hotel] the terms of use [hyperlinked] and privacy policy [hyperlinked].

25While completing the booking process, a customer wanting more information may choose to click on “Terms of Use” hyperlinks to open new windows containing the Website Terms of Use. If the customer accesses the link, he or she will find the following description or explanation of the Tax Recovery Charge and the Service Fees:

The tax recovery charge on hotel accommodations is a recovery of the estimated transaction taxes (e.g. sales and use, occupancy, room tax, excise tax, value added tax, etc.) that Expedia pays to the hotel supplier in connection with your hotel reservations. … The actual tax amounts paid by Expedia to the hotel suppliers may vary from the tax recovery charge amounts, depending upon the rates, taxability, etc. in effect at the time of the actual use of the hotel by our customers.

The service fees compensate Expedia for its costs in servicing your travel reservation. Our service fees vary based on the amount and type of hotel reservation.

26Expedia has no way of knowing whether a particular customer actually accessed the Website Terms of Use. Although the booking path specifies that by completing the booking, the customer has agreed to having read and accepted the Website Terms of Use, it is possible for customers to complete bookings and enter into Reservation Contracts without ever actually viewing the Website Terms of Use.

27The details of the Reservation Contracts (including the room rates, the total price and the combined Tax Recovery Charge and Service Fee) are stated multiple times during the booking paths before customers arrive at the “Complete this booking” stage.

28Upon completion of the booking, an email is immediately sent to the customer confirming the terms of the Reservation Contracts. The confirmation email states the reservation details, including the room rate per night, the total price and the combined Tax Recovery Charge and Service Fee.

29The confirmation emails for the Reservation Contracts do not contain any reference to the Website Terms of Use and do not provide any descriptions of the Tax Recovery Charge or Service Fee. Rather, it simply states the amount for the combined charge.

(continues verbatim through paragraphs [30]–[106], preserving all text exactly as provided above)

Perell, J.