Opinion ID: 856348
Heading Depth: 3
Heading Rank: 1

Heading: Priceline’s “Name Your Own Price” Service

Text: Priceline, a Delaware corporation with headquarters in Norwalk, Connecticut, is a leading online retail vendor of travel accommodations, including hotel rooms, airfare, rental cars, and vacation packages. Priceline employs three business models to offer consumers hotel room reservations through the Priceline.com website. The first two models, which are not at issue here, allow the consumer to purchase a room at a particular hotel and at a particular advertised price set by Priceline. Under the “agency” model, Priceline books a room for a consumer at a hotel chosen by the consumer and charges the hotel a fee for its service. Under the “merchant” model, hotels provide Priceline with prices they will accept for bookings; Priceline offers consumers rooms at these hotels for a somewhat higher rate and retains the difference as its profit. At issue here is a third model, marketed to consumers as the Name Your Own Price service, which invites consumers to “bid” for hotel rooms. 1 Plaintiffs acknowledge that their breach of contract and CUTPA claims are “wholly dependent on the breach of fiduciary duty claim.” Appellants’ Br. 8. Accordingly, there is no need to consider any issue other than fiduciary relationship on this appeal. 3 A consumer who uses the Name Your Own Price service does not specify a particular hotel. Rather, the consumer indicates the date for which he seeks a hotel reservation, the desired neighborhood or geographic area for the hotel within the destination city (e.g., Times Square or Upper East Side in New York City), and the minimum “star” quality acceptable for the hotel. After setting these parameters, the consumer places his “bid,” reflecting the amount (absent taxes and fees) that he is willing to pay for a hotel satisfying the chosen criteria. The consumer is advised that “[i]f Priceline accepts your price,” it will book a reservation for him at a hotel “with an equal or higher star level than you requested.” Priceline.com website disclosure, “Important Information,” J.A. 163. The consumer then reviews the total charge (which adds estimated taxes and a service fee to the bid price) and enters payment information before clicking “book now.” At that point, Priceline uses an algorithm to search a proprietary inventory of discounted hotel rooms for a matching accommodation and, usually within a minute, reports to the consumer whether his bid was accepted and, if so, the identity of the hotel where a reservation has been booked. The hotel rates available to Priceline in its Name Your Own Price model are often far lower than publicly available rates. Priceline markets its Name Your Own Price service to consumers looking to “save even more” than with its other two reservation models, reporting possible savings of “up to 50% over other leading online sites.” Priceline.com home page, J.A. 158. Indeed, plaintiffs acknowledge that the Name Your Own Price service “allows customers to name the price they would pay for travel services at discounted prices.” Compl. ¶ 11. 4 Nevertheless, the Name Your Own Price model is designed so that “in almost all transactions” Priceline will not accept a bid unless it can locate a hotel room satisfying a customer’s parameters at a rate lower than the bid amount, with Priceline keeping the spread as a profit in addition to its stated service fee. Id. ¶ 16. This practice is not explicitly disclosed to consumers during the bidding process. At best, a fine-print statement advises consumers that Priceline retains the balance of charges paid for taxes and service fees on Name Your Own Price transactions “as part of the compensation for our services and to cover the costs of your reservation,” Priceline User Agreement, “Charges for Taxes and Service Fees,” J.A. 133 (emphasis added), implying to the careful reader that Priceline’s compensation has other “parts.” At the same time, however, Priceline has not kept its Name Your Own Price fee structure hidden. It was disclosed in the company’s initial public offering prospectus and discussed by the company’s founder in a nationally televised interview.