Hotels.com, L.P. v. Pine Bluff Advertising & Promotion Comission
430 S.W.3d 56
Ark.2013Background
- OTCs sued by Pine Bluff Advertising and Promotion Commission, Jefferson County, and City of North Little Rock for failing to collect/remit full hotel taxes on hotel room sales via the internet.
- OTCs contract with hotels for discounted room prices; OTCs charge purchaser, remit to OTC, and payout to hotel the discounted price plus taxes; OTCs keep the difference.
- Class Representatives sought declaratory judgment and class certification alleging tax obligations on OTC-furnished services under state and local tax statutes and ordinances.
- OTCs argued exhaustion of administrative remedies, lack of predominance due to ordinance variances, DFA standing, and that class action was not superior given ongoing DFA investigations.
- Circuit Court certified two classes: Class A (advertising and promotion commissions) and Class B (counties/cities with gross receipts tax), and granted declaratory relief.
- OTCs appealed contending abuse of discretion on exhaustion and predominance; the Arkansas Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Exhaustion requirement for class certification | OTCs: exhaustion is required before suit; cannot pursue declaratory judgment without administrative remedies. | Class Representatives: exhaustion not required for declaratory judgment; remedies futile for County/City. | Exhaustion not required for Commission, County, and City. |
| Predominance given ordinance variances | OTCs: variances prevent common issues from predicating liability class-wide. | Class Representatives: common questions predominate; statutes/intent provide overarching issues; minor variances do not defeat certification. | Predominance satisfied; common issues predominate despite some variances. |
Key Cases Cited
- Campbell v. Asbury Auto., Inc., 2011 Ark. 157, 381 S.W.3d 21 (Ark. 2011) (common issues may support predominance even with bifurcation of damages)
- United American Ins. Co. v. Smith, 2010 Ark. 468, 371 S.W.3d 685 (Ark. 2010) (precedent on predominance and class certification standards)
- Georgia-Pacific Corp. v. Carter, 371 Ark. 295, 265 S.W.3d 107 (Ark. 2007) (analysis of predominance and common issues in class actions)
- FirstPlus Home Loan Owner 1997-1 v. Bryant, 372 Ark. 466, 277 S.W.3d 576 (Ark. 2008) (framework for assessing predominance and common issues)
- Kersten v. State Farm Mut. Auto. Ins. Co., 2013 Ark. 124, S.W.3d (Ark. 2013) (preliminary treatment of class-action predominance considerations)
- Arkansas Med. & Mech. v. Bobbitt, 2010 Ark. 76, 360 S.W.3d 129 (Ark. 2010) (support for commonality and predominance in class actions)
- Union Pac. R.R. v. Vickers, 2009 Ark. 259, 308 S.W.3d 573 (Ark. 2009) (class-certification framework and commonality considerations)
- The Money Place, LLC v. Barnes, 349 Ark. 518, 78 S.W.3d 730 (Ark. 2002) (procedural guidance on class-action prerequisites)
- Consumers Co-op. Ass’n v. Hill, 233 Ark. 59, 342 S.W.2d 657 (Ark. 1969) (administrative-exhaustion doctrine in context of agency challenges)
- Rehab Hosp. Servs. Corp. v. Delta-Hills Health Sys. Agency, Inc., 285 Ark. 397, 687 S.W.2d 840 (Ark. 1985) (declaratory-judgment supplementation of ordinary actions; exhaustion considerations)