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Customers may think of Priceline.com with warm and fuzzy feelings thanks to travel discounts and former spokesman William Shatner, but the site doesn't have a fiduciary duty to disclose its discount-dealing profits to consumers.
Plaintiffs Lee Johnson and Joey Marie Kelly initiated a putative class action against Priceline for breach of fiduciary duty and contract arising from Priceline's alleged failure to disclose to its "Name Your Own Price" customers that a successful bid for a hotel room will generally exceed the amount Priceline pays the hotel vendor. Priceline retains the difference as profit.
A district court dismissed the case because Priceline, as a matter of law, did not stand in a fiduciary relationship to the Name Your Own Price customers. Wednesday, the Second Circuit Court of Appeals affirmed dismissal.
Johnson and Kelly's amended complaint may have placed too much emphasis on Shatner's persuasive powers. They explained that, "In one notable commercial [actor William] Shatner, on behalf of a customer, uses his seductive powers to convince a hotel reservationist to lower the room price on a four-star hotel room in Chicago from $200 to $99," Reuters reports. They argued that, through such ads Priceline represented itself "as a travel agent with the client's best interests in mind."
The Second Circuit disagreed, finding that "Nothing in the advertisements implies that customers retain control over this negotiation process." (Not even Shatner's gravelly voice and bedroom eyes. Sad face.)
According to the appellate court, "Once Priceline accepts a customer's bid, it is contractually obligated to provide the desired accommodations at the stated sum. After submitting the bid, however, the customer retains no authority over the manner in -- or price for -- which the reservation will be procured. Thus, neither the bid nor its acceptance gives rise to a fiduciary duty of disclosure."
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