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City of Fairview Heights v. Orbitz

July 12, 2006

CITY OF FAIRVIEW HEIGHTS, PLAINTIFF,
v.
ORBITZ, INC. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Herndon, District Judge

MEMORANDUM AND ORDER

I. Introduction

Three motions are now before the Court: a motion to dismiss (Doc. 37) filed by Defendants; a motion to remand (Doc. 54) filed by Plaintiff City of Fairview Heights ("Plaintiff" or"City"); and a motion to file a surreply (Doc. 63) also filed by Plaintiff.*fn1 Plaintiff responds in opposition to Defendants' motion to dismiss, as do Defendants to Plaintiff's motion to remand. (Docs. 55, 58.) For the reasons below, the Court grants in part and denies in part Defendants' motion to dismiss, denies Plaintiff's motion to remand, and denies Plaintiff's motion to file a surreply.

II. Background

Plaintiff, an Illinois municipality, brings this suit on behalf of a putative class of Illinois municipalities in order to redress Defendants' failures to pay taxes allegedly owed to it and other putative class members. Plaintiff's position, in a nutshell, is that Defendants - owners and operators of Internet travel sites - unlawfully neglected to pay the full amount of hotel taxes due and owing under city ordinances. Plaintiff contends that Defendants accomplished this first by contracting with hotels and motels to resell their hotel rooms to consumers (at higher rates), and then by paying taxes only on the lower, contracted-for rates they paid to the hotels and motels themselves, not the rates actually paid by consumers.

Plaintiff originally brought this action in St. Clair County, Illinois. Defendants removed on November 28, 2005. (Doc. 1.) Plaintiff then petitioned the Judicial Panel on Multidistrict Litigation ("MDL Panel") to consolidate this matter with three other cases pending elsewhere in federal courts. (Doc. 47.) That effort, however, bore no fruit. Plaintiff's four-count Complaint now consists of a claim for a violation of Fairview Heights, Ill., Code § 36-2-2,*fn2 a claim alleging an Illinois Consumer Fraud and Deceptive Practices Act, 815 Ill. Comp. Stat. 505/01 et seq. ("ICFA" or the "Act") violation, a conversion claim, and a claim for unjust enrichment. (Doc. 2.)

III. Analysis

A. Plaintiff's Motion to Remand

1. Standard

A defendant may remove a case only if a federal district court would have original jurisdiction over the action. See 28 U.S.C. § 1441; Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Statutes providing for removal are construed narrowly, and doubts about removal are resolved in favor of remand. Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993). The burden of establishing jurisdiction in the federal courts falls on the party seeking removal. Id.

The Class Action Fairness Act (CAFA), which took effect on February 18, 2005, extends federal jurisdiction over class actions meeting certain prerequisites. Relevant to this case is a provision, 28 U.S.C. § 1332(d)(4)(A), providing that a district court must decline to exercise jurisdiction over class actions in which (1) more than two-thirds of the proposed class members are citizens of the state in which the action was originally filed; (2) at least one defendant is a defendant (a) from whom significant relief is sought, (b) whose alleged conduct forms a significant basis for the claims, and (c) who is a citizen of the state in which the action was originally filed; and (3) the principal injuries resulting from the alleged conduct were incurred in the state in which the action was originally filed, provided that "during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons." 28 U.S.C. § 1332(d)(4)(A).

2. Plaintiff's Motion

The parties' dispute centers on the latter provision above.*fn3 In Plaintiff's view, remand is appropriate here because no class action was filed in the three-year window preceding this case asserting the same or similar factual allegations against any Defendant. Defendants disagree. They point to a 2004 California state-court case (hereinafter referred to as "City of Los Angeles"*fn4 ) that, from their perspective, not only contains exactly the same defendants as this case does, but also asserts nearly identical claims.

The Court finds that 28 U.S.C. § 1332(d)(4)(A)(ii) is triggered here by City of Los Angeles, and thus that remand is inappropriate. For that subsection to foreclose remand, each of its three requirements must be satisfied: (1) within a three-year window, (2) no class action may have been filed asserting the same or similar factual allegations, (3) against any Defendant. 28 U.S.C. § 1332(d)(4)(A)(ii). City of Los Angeles satisfies each element. That case involves the exact same defendants as here, was filed in 2004, within the three-year window, and contains not only similar factual allegations, but in some places identical wording and structure to Plaintiff's Complaint. (See Doc. 58, Ex. B.) Paragraph twenty-four of the instant Complaint, which both introduces and lays the substantive foundation for Plaintiff's allegations, for example, is nearly identical to paragraph twenty-five of the Second Amended Complaint in City of Los Angeles, which performs the same functions.*fn5 (Docs. 2, 58, Ex. B.) The core allegations themselves, further, are almost exactly the same. Plaintiff here seeks redress for Defendants' alleged failures to remit taxes based on the rates paid by consumers, rather than the "wholesale" rates Defendants negotiated with hotel operators. The plaintiffs in City of Los Angeles sought the same thing.*fn6 (Compare Doc. 2, ¶¶ 26-27 with Doc. 58, Ex. B., ¶ 26.)

In opposition, Plaintiff declines to address these similarities. Instead, it makes a rather specious two-part argument: First, it claims that since both City of Los Angeles and the cases previously up for consolidation seek unpaid hotel-occupancy taxes, there are no differences between them. Then, it claims that because Defendants argued against consolidation before ...


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