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Online travel lawsuit moves forward

A nearly three-year-old lawsuit filed by the city of Columbus against on online travel company Orbitz LLC could be set for trial as early as late spring based on a ruling by Superior Court Judge Doug Pullen on Monday.

The city contends Orbitz, and other online travel companies, owe the city thousands of dollars in unpaid hotel occupancy taxes.

Pullen denied a motion by Orbitz’s attorneys to appeal an order by a special master appointed by Pullen to review documents.

Retired Court of Appeals Chief Judge Marion T. Pope reviewed documents being sought by attorneys representing the city, but Orbitz claimed they were protected by attorney-client privilege. Those documents included a joint defense agreement between Orbitz and other online travel companies facing similar lawsuits, e-mail by and between Orbitz employees or representatives and documents by and between Orbitz employees or representatives and employees or representatives of other online travel companies.

In December, Pope ordered the documents were not protected and recommended Pullen issue an order that the documents were not covered by privilege.

“I see no reason to go ahead and proceed — no reason other than the basic ‘I don’t like it,’” Pullen said.

Orbitz attorney Hugh B. McNatt of Vidalia argued the company should be able to appeal Pope’s findings.

“Judge Pope didn’t have any evidence, that’s exactly what I am saying,” said McNatt, who recently got involved in the case.

Pullen pointed out that attorneys on both sides — the city is being represented by Pope, McGlamry, Kilpatrick, Morri[JUMP]son & Norwood LLP of Columbus — were pleased when Pope was named special master.

“At both tables, if they had been wearing lipstick it would have been on the ears because everybody was smiling,” Pullen said. “Now, they are not smiling quite as much.”

Mike McGlamry, arguing for the city, urged Pullen to move forward. The case was filed in June 2006.

He said Orbitz and its attorneys had done whatever they could “to delay this case.”

The issue in question is how much Orbitz and other online travel companies pay in sales tax. The travel companies book blocks of rooms from hotel chains at discounted prices. They then sell those rooms to consumers online.

The taxes are paid on the rate the companies’ book the rooms from the hotels and not what the consumer pays. Cities across the country have challenged this practice, claiming it shorts them thousands of dollars a year in tax revenue.

The online companies argue that the difference in price is their fee and not taxable.

Columbus has filed similar lawsuits against Expedia Inc. and Hotels.com. Last fall, Pullen ordered Expedia to begin collecting tax on the full amount paid by consumers. That case is on appeal and scheduled to be heard in April by the Georgia Supreme Court.

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