Johnson v. Priceline.com Inc.
An online service that makes reservations, after a customer selects a price and location, may not owe a fiduciary duty to disclose its fee structure. Allegedly, the plaintiffs used Priceline.com's "Name Your Own Price" service to book reservations at four-star hotels, and Priceline.com did not inform them it paid the hotels less than the plaintiffs' bids and kept the difference. The plaintiffs filed a putative class action, on behalf of themselves and similarly situated individuals, alleging that Priceline.com breached its fiduciary duty. The District Court found that Priceline.com did not act as travel agent. Granting the defendant's motion to dismiss, the District Court wrote, "Priceline only provides a hotel reservation at a consumer's specified price[,] . . . a single arm's length transaction that is not characterized by a relationship of trust that more extensive arrangements and planning with a travel agent would entail." The plaintiffs' appeal cited case law that discusses the duties that travel agents owe to customers. The 2nd Circuit found that although the plaintiffs maintained that Priceline.com arranged travel schedules and itineraries, they did not prove Priceline.com served as a travel agent. Once a customer selects the price, location and quality and submits a bid, the customer cedes control of the selection of the vendor, and the amount paid to the vendor, to Priceline.com. Advertisements, in which an actor negotiates discounts, do not indicate customers control negotiations. "In sum," wrote the 2nd Circuit, "when a Name Your Own Price customer places an irrevocable bid for a hotel room satisfying certain specifications, he surrenders all control over how Priceline fulfills that bid and, thus, has no agency-based fiduciary claim against Priceline for failing to disclose that it has fulfilled the bid at a lower cost to itself." Neither the bid nor its acceptance lead to a fiduciary duty of disclosure, and the 2nd Circuit affirmed the judgment of the District Court, Arterton, J. Howard Stravitz and Matthew Hirsch represented the plaintiffs. Thomas Goldberg and Matthew Smith represented the defendant. Kirk Tavtigian, Martin Newhouse and John Pagliaro filed an amicus brief on behalf of New England Legal Foundation.