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A federal judge in Dallas ruled that plaintiffs suing Travelocity over allegations that it engaged in price-fixing with hotels would have to take their claims to arbitration in Tarrant County, Texas, where the online travel agency is headquartered.
U.S. District Judge Jane Boyle ruled June 15 that the provisions of Travelocity’s user agreement of February 4, 2010, require customers to individually arbitrate claims when the amount in dispute is less than $10,000.
In fact, if you want to book a hotel on Travelocity.com, you must consent to the user agreement, which bars participation in class action lawsuits.
The ruling is a blow to plaintiffs who seeks class action status for an amended complaint filed May 1 alleging that most-favored nation clauses between hotels and online travel agencies that bar the hotels from offering distribution partners lower rates than they do on the hotels’ own websites amount to a price-fixing scheme.
The ruling, however, appears to apply solely to Travelocity and the particulars of its user agreement, leaving other defendants, including Expedia, Hotels.com, Priceline.com, Booking.com, Orbitz, Wyndham, Carlson, Best Western, Choice Hotels, Hyatt Hotels, Starwood, Marriott, Trump Hotels, Hilton Kimpton, and EyeForTravel, still in play.
And, the ruling doesn’t necessarily remove Travelocity from the line of fire, either; the judge ordered the parties to provide updates on the arbitration proceedings every 90 days.
The plaintiffs unsuccessfully argued that Travelocity’s motion to compel arbitration, filed in April, would usurp their rights to file their claims as a class, and that it was unfair to compel arbitration in the same county where Travelocity has its headquarters.
It’s unclear if other defendants, to the extent that their own user agreements have provisions similar to Travelocity’s, will now likewise file motions to force arbitration.
Regulatory authorities in the U.K. are investigating similar hotel-price fixing issues involving online travel agencies and hotels.
Here’s the judge’s ruling: