Conquers First Step in California Back Tax Charges

Skadden achieved a key victory for Incorporated and other major Internet hotel reservation services when the L.A. County Superior Court granted a request by the companies to invalidate $21.3 million in taxes, interest and penalties assessed by the city of Anaheim over a nine-year period. Skadden has been’s lead counsel in more than 90 cases and proceedings against the major online travel companies; and recently obtained a victory in the Sixth Circuit, which affirmed the dismissal of a putative class action complaint filed by certain Kentucky cities. This followed another Skadden-led win in the U.S. Court of Appeals for the Fourth Circuit, which affirmed the dismissal of a putative class action complaint.

In the California case, an administrative hearing officer decided the online travel companies were hotel operators and that the amount they charged for facilitating reservations of hotel rooms was subject to the occupancy tax. Skadden challenged that decision in court, and the L.A. County Superior Court ruled that the Anaheim hearing officer's decision was incorrect as a matter of law. Accordingly, on February 1, Judge Carolyn Kuhl granted the online travel companies' request to overturn the hearing officer's decision and invalidate Anaheim's tax assessment.