Woodell v. Expedia Inc et al, No. 2:2019cv00051 - Document 45 (W.D. Wash. 2019)
Court Description: ORDER granting in part and denying in part Defendants' 15 Motion to Dismiss. The court ORDERS Plaintiff to file an amended complaint within 20 days of the filing date of this order. Signed by Judge James L. Robart. (SWT)
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Woodell v. Expedia Inc et al Doc. 45 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 PATRICIA WOODELL, 10 CASE NO. C19-0051JLR ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS Plaintiff, 11 v. 12 EXPEDIA INC, et al., 13 Defendants. 14 15 I. 16 INTRODUCTION Before the court is Defendants Expedia, Inc. (“Expedia”), EAN.com, LP (“EAN”), 17 Travelscape, LLC (“Travelscape”), and Hotels.com, L.P.’s (“Hotels.com”) (collectively, 18 “Defendants”) motion to dismiss Plaintiff Patricia Woodell’s putative class action 19 complaint. (MTD (Dkt. # 15).) Ms. Woodell opposes the motion. (Resp. (Dkt. # 37).) 20 The court has considered Defendants’ motion, all submissions filed in support of and in 21 opposition to the motion, the relevant portions of the record, and the applicable law. 22 // ORDER - 1 Dockets.Justia.com 1 Being fully advised, 1 the court GRANTS in part and DENIES in part Defendants’ motion 2 and DISMISSES Ms. Woodell’s complaint. The court also GRANTS Ms. Woodell leave 3 to amend her complaint within 20 days of the date of this order. 4 II. BACKGROUND 5 In her putative class action complaint, Ms. Woodell alleges as follows: 6 Consumers book hotels online “primarily for convenience and in order to shop for 7 the best price.” (Compl. (Dkt. # 1) ¶ 1.) Reservations.com, which is not a party to this 8 lawsuit, is an online booking company. (Id. ¶¶ 2, 21.) Reservations.com obtains its hotel 9 room inventory from third-party suppliers such as Expedia and its subsidiaries, including 10 EAN, Travelscape, and Hotels.com. (Id. ¶¶ 2, 22.) Hotels give Defendants the right to 11 sell their room reservations at retail rates generally set by Defendants. (Id. ¶ 3.) 12 When a consumer purchases a room reservation on Reservations.com’s website or 13 through its call center, the consumer pays a “Service Fee” of $14.99 per room to 14 Reservations.com. (Id. ¶¶ 4, 29, 32.) In addition, the consumer pays an amount to 15 Defendants, which is generally labelled as “Taxes & Fees.” (See id. ¶¶ 4, 29) Ms. 16 Woodell alleges that the “Taxes & Fees” “are represented to be monies ‘the hotels must 17 pay to the government,’” but “even without this representation[,] a reasonable consumer 18 would understand ‘Taxes & Fees’ to be monies owed to the government.” (Id. ¶ 4, 33, 19 34.) When Reservations.com sells a room reservation from Defendants’ inventory, the 20 // 21 22 1 No party has requested oral argument (see MTD; Resp.), and the court does not consider oral argument to be helpful to its disposition of the motion, see Local Rules W.D. Wash. LCR 7(b)(4). ORDER - 2 1 consumer’s credit card is charged $14.99 by Reservations.com, and the balance—the 2 room charge plus the “Taxes & Fees” charge—is charged by Defendants. (Id. ¶¶ 4, 35.) 3 Ms. Woodell’s complaint addresses solely the “Taxes & Fees” charges collected by 4 Defendants. (Id. ¶ 5.) 5 Ms. Woodell alleges that “[c]ontrary to Reservations.com’s representations and/or 6 the expectations of consumers, the ‘Taxes & Fees’ charged by Defendants are not the 7 actual taxes and fees remitted to governmental authorities but contain additional amounts 8 surreptitiously added by Defendants (the ‘tax overcharge’).” (Id. ¶ 6; see also id. ¶ 39.) 9 Ms. Woodell generally alleges that Defendants “populate[]” the room rates and “Taxes & 10 Fees” fields on the Reservation.com website and “unlawfully collect and retain the 11 ‘Taxes & Fees’ overcharge.” (Id. ¶¶ 9, 10; see also id. ¶ 23.) Ms. Woodell specifically 12 alleges that “the room rates and ‘Taxes & Fees’ charged on the Reservations.com website 13 are pass-through line items established and collected by Expedia.” (Id. ¶ 36.) She 14 further generally alleges that Defendants remit some of the “Taxes & Fees” charge to the 15 hotels, or sometimes directly to the governmental taxing authorities, but they retain the 16 tax overcharge. (Id. ¶¶ 10, 23.) More specifically, however, Ms. Woodell asserts that 17 “Expedia . . . remits the applicable taxes and fees to either the hotels or, in some 18 jurisdictions, to the government,” and “Expedia pockets the tax overcharge as additional 19 profit (above and beyond the ‘markup’ it already makes on the room price).” (Id. ¶¶ 36, 20 39.) 21 22 Ms. Woodell has not sued Resevations.com. (See generally id.) Indeed, she admits that Reservations.com is not involved in the collection of the “Taxes & Fees” ORDER - 3 1 charge at issue in this case or the remission process. (Id. ¶ 23.) However, Ms. Woodell 2 contends that Defendants have “engaged and continue to engage in a scheme to 3 unlawfully collect overcharges of taxes and fees through the use of online travel agents, 4 including but not limited to, Reservations.com.” (Id. ¶ 40.) She also alleges “[o]n 5 information and belief, Reservations.com has, at all relevant times hereto and continuing 6 through the present, been a knowing and willing participant in this scheme with 7 [Defendants].” (Id.) 8 9 Concerning her specific experience, Ms. Woodell alleges that on September 12, 2016, she booked a hotel room in Boise, Idaho, on the Reservations.com website, and 10 paid a total of $111.12 for the reservation. (Id. ¶¶ 46, 52.) Two charges—totaling 11 $111.12—appeared on her credit card statement. (See id. ¶¶ 49-50.) Ms. Woodell paid 12 $14.99 for a “Service Fee” to Reservations.com, and $96.23, which included $81.41 for 13 the room and $14.82 for “Taxes & Fees,” to Expedia. (Id. ¶¶ 47, 49-50.) Ms. Woodell 14 asserts that the total applicable taxes and fees that must be paid to the government for her 15 hotel reservation totaled $6.51, and therefore she was overcharged by $8.31. (Id. ¶ 48; 16 see also id. ¶ 8 (“Expedia subjected [Ms. Woodell] to a tax overcharge in 2016.”).) She 17 further alleges that because Reservations.com charges a $14.99 per room “Service Fee,” 18 the difference between the “Taxes & Fees” charged and actual taxes paid to 19 governmental entities “cannot reasonably be understood to be for ‘services.’” (Id. ¶ 61.) 20 Ms. Woodell alleges that a similar tax overcharge is applied to every reservation through 21 Reservations.com that uses Expedia’s room inventory, resulting in millions of dollars of 22 overcharges annually throughout the United States. (Id. ¶¶ 53-63.) ORDER - 4 1 Ms. Woodell alleges that the “Taxes & Fees” portion of her bill is charged in a 2 manner “[c]ontrary to Reservations.com’s representations and/or the expectations of 3 consumers.” (Id. ¶ 6; see also id. ¶ 39.) However, Ms. Woodell does not allege that she 4 noticed the “Taxes & Fees” charge at the time of booking, that the charge factored into 5 her decision to book the hotel room at issue, that she was confused by the charge, how 6 she interpreted the charge, or whether the charge would have made a difference in her 7 decision to book the hotel room if she had noticed it and understood it differently at the 8 time of booking. (See generally id.) As noted above, she alleges that consumers book 9 hotels online “primarily for convenience and in order to shop for the best price” (id. ¶ 1), 10 and she does not allege that any other considerations motivated her at the time she made 11 her booking on September 12, 2016 (see generally id.) 12 13 Ms. Woodell alleges that non-party Reservations.com has, “[a]t times,” explained “Taxes & Fees” as follows: 14 The taxes are tax recovery charges we pay to our vendors. We retain our service fees and compensation in servicing your travel reservation. Amounts displayed in the Taxes and Fees line for prepaid hotel transactions include an estimated amount we expect the hotel to bill for applicable taxes, government fees, and other charges that the hotels must pay to the government. Please note that you may also incur other charges that we do not collect and are not included in the quotes price, such as hotel resort fees, hotel energy surcharges, parking fees, pet fees, and incidental charges. These amounts will be collected from you directly by the hotel unless otherwise indicated on the site. 15 16 17 18 19 (Id. ¶ 33 (italics in complaint).) Ms. Woodell does not claim that she saw this alleged 20 misrepresentation or that it was on the Reservations.com website at the time of her 21 // 22 ORDER - 5 1 booking. (See generally id.) She does not explain when or where Reservations.com 2 made this alleged misrepresentation. (See generally id.) 3 Ms. Woodell alleges that Reservations.com “hosts” its website and “does its own 4 marketing of its services.” (Id. ¶ 18.) She does not allege any communication, meeting, 5 agreement, or moment in time when Defendants and Reservations.com agreed to 6 coordinate regarding representations about the “Taxes & Fees” charge that appears on the 7 Reservations.com website. (See generally id.) 8 Ms. Woodell brings a claim under the Racketeer Influenced and Corrupt 9 Organizations Act (“RICO”), 18 U.S.C. § 1962(C)-(D). (Compl. ¶¶ 74-110.) In doing 10 so, she alleges that Defendants, along with Reservations.com and other entities, 11 “associated with, and conducted or participated in the affairs of, a RICO enterprise (the 12 ‘Tax Fraud Enterprise’), whose purpose was to deceive consumers into believing they 13 were paying a legitimate ‘Taxes & Fees’ charge.” (Id. ¶ 77.) She alleges that Defendants 14 and Reservations.com “operated an association-in-fact enterprise engaged in interstate 15 and foreign commerce, which was formed for the purpose of obtaining money from 16 consumers for inflated ‘Taxes & Fees’ payments, through which they conducted a pattern 17 of racketeering activity under 18 U.S.C. § 1961(4).” (Compl. ¶ 78.) Alternatively, she 18 alleges that non-party Reservations.com “constitutes a single legal entity ‘enterprise’ 19 within the meaning of 18 U.S.C. § 1961(4), through which . . . Defendants conducted 20 their pattern of racketeering activity in the [United States].” (Compl. ¶ 79.) She also 21 alleges that Defendants committed at least two predicate acts of racketeering activity 22 // ORDER - 6 1 involving mail and wire fraud under 18 U.S.C. §§ 1341 (mail fraud) and 1343 (wire 2 fraud). (Compl. ¶ 94-110.) 3 In addition to her RICO claim, Ms. Woodell asserts a claim for violation of 4 Washington’s Consumer Protection Act (“CPA”), RCW ch. 19.86. (Compl. ¶¶ 132-40.) 5 She also asserts equitable claims of conversion (id. ¶¶ 111-16), unjust enrichment (id. 6 ¶¶ 117-24), and constructive trust (id. ¶ 125-31). Defendants move to dismiss each of 7 Ms. Woodell’s claims. (See generally MTD.) The court now considers Defendants’ 8 motion. 9 10 11 III. A. ANALYSIS Standard of Review Federal Rule of Civil Procedure 12(b)(6) provides for dismissal for “failure to 12 state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). When 13 considering a motion to dismiss under Rule 12(b)(6), the court construes the complaint in 14 the light most favorable to the nonmoving party. Livid Holdings Ltd. v. Salomon Smith 15 Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The court must accept all well-pleaded 16 facts as true and draw all reasonable inferences in favor of the plaintiff. Wyler Summit 17 P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). The court, 18 however, is not required “to accept as true allegations that are merely conclusory, 19 unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State 20 Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 21 “To survive a motion to dismiss, a complaint must contain sufficient factual 22 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft ORDER - 7 1 v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 2 570 (2007)); see also Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 3 2010). “A claim has facial plausibility when the plaintiff pleads factual content that 4 allows the court to draw the reasonable inference that the defendant is liable for the 5 misconduct alleged.” Iqbal, 556 U.S. at 677-78. “A pleading that offers ‘labels and 6 conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ 7 . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further 8 factual enhancement.’” Id. at 678 (quoting Twombly, 550 U.S. at 555, 557). General, 9 conclusory allegations of wrong-doing that do not identify how each defendant 10 purportedly engaged in the wrongful conduct and do not provide each defendant fair 11 notice of the claims against them do not meet the Supreme Court’s Iqbal/Twombly 12 pleading standard. See Trice v. Damion, No. 216CV01348MMDNJK, 2017 WL 187149, 13 at *2 (D. Nev. Jan. 17, 2017) (citing Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 555); 14 see also Doop v. Woodford, No. 1:14CV01933 DLB PC, 2015 WL 2345314, at *2 (E.D. 15 Cal. May 14, 2015) (“Plaintiff cannot simply group all Defendants together and allege, 16 generally, that they violated his rights. Such statements do not meet the pleading 17 requirements.”) (citing Iqbal, 556 U.S. at 678). Dismissal under Rule 12(b)(6) may also 18 be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged 19 under a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 20 (9th Cir. 1990). 21 22 Claims of fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). See Fed. R. Civ. P. 9(b). Under Rule 9(b), “a party must ORDER - 8 1 state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 2 9(b). “Fraud can be averred by specifically alleging fraud, or by alleging facts that 3 necessarily constitute fraud (even if the word ‘fraud’ is not used).” Vess v. Ciba-Geigy 4 Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003). Rule 9(b) requires that an allegation of 5 fraud be “specific enough to give defendants notice of the particular misconduct . . . so 6 that they can defend against the charge and not just deny that they have done anything 7 wrong.” Id. at 1106 (quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993)). In 8 other words, an allegation of fraud “must be accompanied by ‘the who, what, when, 9 where, and how’ of the misconduct charged.’” Id. (citing Cooper v. Pickett, 137 F.3d 10 616, 627 (9th Cir. 1997)). The plaintiff must identify “what is false or misleading about 11 the statement, and why it is false.” Id. (quoting Decker v. GlenFed, Inc., 42 F.3d 1541, 12 1548 (9th Cir. 1994)). 13 B. 14 RICO Under RICO, a plaintiff must allege that the defendant participated in the conduct 15 of an enterprise through a pattern of racketeering activity that proximately caused the 16 plaintiff’s harm. Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 997 17 (9th Cir. 2014). Defendants argue that Ms. Woodell’s RICO claim fails because she 18 inadequately alleges the following elements: (1) any racketeering activity; (2) a pattern 19 of such activity; (3) an enterprise; (4) that Defendants directed the conduct of an 20 enterprise; and (5) proximate causation. The court will consider each of these elements 21 in turn. 22 // ORDER - 9 1 1. Racketeering Activity 2 Ms. Woodell bases her RICO claim on mail and wire fraud as the alleged 3 underlying racketeering activity. (See Compl. ¶¶ 94-102); see also 18 U.S.C. §§ 1341 4 (mail fraud), 1343 (wire fraud). Because she bases her RICO claim on fraud, her 5 allegations must comply with Federal Rule of Civil Procedure 9(b), which requires that 6 circumstances constituting fraud be stated with particularity. Fed. R. Civ. P. 9(b); see 7 Alan Neuman Prods, Inc. v. Albright, 862 F.3d 1388, 1392-93 (9th Cir. 1989) 8 (concluding that a complaint failed to properly allege a RICO claim based on mail and 9 wire fraud because the allegations were not sufficiently particular to satisfy Rule 9(b)); 10 Bitton v. Gencor Nutrientes, Inc., 654 F. App’x 358, 363 (9th Cir. 2016) (“Circumstances 11 constituting fraud must be pleaded with particularity; that is also the case when alleged 12 fraud forms the predicate acts of a RICO claim.”) (internal quotation marks and citations 13 omitted); Desoto v. Condon, 371 F. App’x 822, 824 (9th Cir. 2010) (affirming the district 14 court’s dismissal of the plaintiff’s RICO claim because the allegations concerning the 15 predicate acts of mail and wire fraud were too vague and conclusory). 16 Defendants argue that Ms. Woodell fails to plead Defendants’ alleged racketeering 17 activity—mail and wire fraud violations—with sufficient particularity. “The mail and 18 wire fraud statutes are identical except for the particular method used to disseminate the 19 fraud, and contain three elements: (A) the formation of a scheme to defraud, (B) the use 20 of the mails or wires in furtherance of that scheme, and (C) the specific intent to 21 defraud.” Eclectic Props. E., 751 F.3d at 997 (citing Schreiber Distrib. Co. v. Serv-Well 22 Furniture Co., Inc., 806 F.2d 1393, 1399 (9th Cir. 1986)). ORDER - 10 1 2 a. Mail Fraud Nowhere in her complaint does Ms. Woodell allege any specific use of the mails 3 in furtherance of a fraudulent scheme. (See generally Compl.) At most, she generally 4 alleges: 5 6 7 [Defendants and Reservations.com] violated 18 U.S.C. § 1341 by sending and receiving, and by causing to be sent and/or received, materials via U.S. Mail or commercial interstate carriers for the purpose of executing the unlawful scheme to design, manufacture, market, and sell hotel room reservations by means of false pretenses, misrepresentations, promises, and omissions. 8 (Compl. ¶ 97(a); see also id. ¶ 100 (“[Defendants and Reservations.com] also 9 communicated by U.S. Mail, by interstate facsimile, and by interstate electronic mail 10 with various other divisions of Expedia, Inc., and other third-party entities in furtherance 11 of the scheme.”).) Ms. Woodell must plead both the alleged fraud and facts relating to 12 the alleged use of the mails. Vaugh v. Diaz, No. 12-CV-1181 BEN JMA, 2013 WL 13 150487, at *3 (S.D. Cal. Jan. 14, 2013) (citing Lancaster Comm. Hosp. v. Antelope 14 Valley Hosp. Dist., 940 F.2d 397, 405 (9th Cir. 1991)). General allegations concerning 15 the use of the mails is insufficient. See Lancaster Comm. Hosp., 940 F.2d at 405 16 (finding that contentions regarding the use of the mails were too generalized to satisfy 17 Rule 9(b) where “no specific mailings are mentioned”); Hill v. Opus Corp., 841 F. Supp. 18 2d 1070 (C.D. Cal. 2011) (“Courts have been particularly sensitive to Fed. R. Civ. Pro. 19 9(b)’s pleading requirements in RICO cases in which the ‘predicate acts’ are mail fraud 20 and wire fraud, and have further required specific allegations as to which defendant 21 caused what to be mailed . . . , and when and how each mailing . . . furthered the 22 ORDER - 11 1 fraudulent scheme” (citing Gotham Print, Inc. v. Am. Speedy Printing Ctrs., Inc., 863 F. 2 Supp. 447, 457 (E.D. Mich. 1994)). Accordingly, the court dismisses Ms. Woodell’s 3 RICO claim predicated on the alleged racketeering activity of mail fraud. 4 5 b. Wire Fraud The court next considers the adequacy of Ms. Woodell’s pleading concerning the 6 alleged racketeering activity of wire fraud. Specifically, Ms. Woodell alleges that 7 “the . . . ‘Taxes & Fees’ charged on the Reservations.com website are pass-through 8 items established and collected by Expedia.” (Compl. ¶ 23.) She also alleges that “the 9 amount charged by Expedia on Reservations.com bookings as . . . ‘Taxes & Fees’ . . . is 10 significantly more than the sum actually owed to the government for ‘applicable taxes, 11 government fees, and other charges that he hotels must pay to the government.’” (Id. 12 ¶ 39.) She further alleges, on information and belief, that “Expedia pockets the tax 13 overcharge as additional profit (above and beyond the ‘markup’ it already makes on the 14 room price).” (Id.) Finally, she alleges that this scheme has been repeated millions of 15 times through the Reservations.com website. (Id. ¶ 12, see also id. ¶¶ 53-63.) These 16 allegations meet the Rule 9(b) pleading requirement of “sufficient particularity” for 17 asserting a predicate act of wire fraud in a RICO claim against Expedia. 18 In other portions of the complaint, however, Ms. Woodell charges Defendants 19 collectively with this same conduct. (See, e.g., id. ¶ 9 (“[T]he room rates and ‘Taxes & 20 Fees’ are fields populated on the Reservations.com website by Defendants. At the time 21 of booking, Defendants collect the ‘Taxes & Fees’ charge directly from 22 Reservations.com’s customers, and Defendants later remit the (much lower) actual taxes ORDER - 12 1 and fees to either the hotels or—in some jurisdictions—directly to the government.”); id. 2 ¶ 10 (“As part of the tax overcharge scheme, Defendants unlawfully collect and retain 3 the ‘Taxes & Fees’ overcharge.”); see also id. ¶¶ 94-110 (alleging that Defendants and 4 Reservations.com engaged in wire fraud without attributing any specific conduct to any 5 specific Defendant).) “Rule 9(b) does not allow a complaint to merely lump multiple 6 defendants together but ‘require[s] plaintiffs to differentiate their allegations when suing 7 more than one defendant . . . and inform each defendant separately of the allegations 8 surrounding his alleged participation in the fraud.” Swartz v. KPMG LLP, 476 F.3d 756, 9 764-65 (9th Cir. 2007) (quoting Haskin v. R.J. Reynolds Tobacco Co., 995 F. Supp. 10 1437, 1439 (M.D.Fla.1998) (citation, quotation omitted)). At a minimum, a plaintiff 11 must identify the role of each defendant in the alleged fraudulent scheme. Id. at 765. 12 Thus, although Ms. Woodell’s specific allegations concerning Expedia are sufficient, her 13 generalized allegations—lumping the three remaining Defendants together with respect 14 to the same conduct—are not. 15 Ms. Woodell counters that the Rule 9(b) standard may be “relaxed as to matters 16 within the opposing party’s knowledge.” (Resp. at 9 (quoting Moore v. Kayport 17 Package Exp., Inc., 885 F.2d 531, 540 (9th Cir. 1989)).) She also argues that she 18 alleges with specificity the roles each Defendant played (see Resp. at 9), as follows: For 19 Travelscape, she alleges that it “contracts with hotel properties for room inventory at 20 wholesale prices,” which, in turn, is offered for sale by Reservations.com. (Comp. 21 ¶¶ 19, 83.) She also alleges that Travelscape “administers payments for reservations” 22 made through Reservations.com. (Id.) For EAN, she alleges that it “contracts with . . . ORDER - 13 1 Reservations.com . . . to provide . . . third parties with hotel room inventory” obtained by 2 Expedia, Travelscape, and Hotels.com. (Id. ¶¶ 18-20, 82.) For Hotels.com, Ms. 3 Woodell alleges that it “provides room inventory to Reservations.com and/or collects 4 monies paid for room reservations sold by Reservations.com.” (Compl. ¶ 20.) 5 However, the “relaxation” of the Rule 9(b) particularized pleading requirement 6 for matters within the opposing party’s knowledge “does not nullify Rule 9(b).” See 7 Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993). Indeed, “a plaintiff who makes 8 allegations on information and belief must state the factual basis for this belief.” Id. 9 Alleging “no more than suspicious circumstances” is insufficient. Id. Here, Ms. 10 Woodell has not even alleged suspicious circumstances with respect to Travelscape, 11 EAN, and Hotels.com. The specific conduct she alleges regarding each of these 12 Defendants does not inform them of their “alleged participation in the fraud,” Swartz, 13 476 F.3d at 764-65, which in this case is Expedia’s purported misrepresentation on 14 Reservations.com’s website regarding the “Taxes & Fees” charge. Rather, her 15 allegations describe nothing more than legitimate business conduct—contracting for 16 hotel room inventory at wholesale prices and administering payments for reservations. 17 (See Compl. ¶¶ 18-20, 82-83.) Accordingly, the court concludes that Ms. Woodell has 18 failed to plead wire fraud as a predicate act for her RICO claim with sufficient 19 particularity to satisfy Rule 9(b) for Defendants Travelscape, EAN, and Hotels.com and, 20 therefore, grants Defendants’ motion with respect to these Defendants. 2 21 2 22 The authorities Ms. Woodell cites are distinguishable. In In re Volkswagen, No. MDL 2672 CRB (JSC), 2017 WL 4890594, at *10 (N.D. Cal. Oct. 30, 2017), In re ORDER - 14 1 2. A Pattern of Racketeering Activity 2 A “pattern” of racketeering activity requires “at least two acts of racketeering 3 activity” within ten years of each other, 18 U.S.C. § 1961(5), and a related “threat of 4 continuing activity,” Howard v. Am. Online, Inc., 208 F.3d 741, 746 (9th Cir. 2000). 5 Defendants assert that “[f]or the same reasons she failed to adequately allege any 6 racketeering activity, [Ms.] Woodell fails to adequately allege a pattern of racketeering 7 activity.” (MTD at 9.) 8 9 With respect to Expedia, the court disagrees. Ms. Woodell alleges that as many as four million rooms were booked on Reservation.com’s website during the class period 10 and a “substantial portion of these rooms came from Expedia’s inventory.” (Compl. ¶ 67; 11 see also id. ¶ 53 (“On information and belief, a similar [tax overcharge] is applied to 12 every reservation booked through Reservations.com that uses Expedia’s room inventory, 13 and Expedia is illegally retaining millions of dollars in overcharges annually as a 14 result.”).) These allegations plausibly allege a “pattern” of racketeering activity for 15 Expedia. Of course, because the court has held that Ms. Woodell failed to adequately 16 plead any racketeering activity for Defendants Travelscape, EAN, and Hotels.com, see 17 supra § III.B.2, she logically also fails to allege a pattern of such activity for them. 18 19 20 21 22 Chrysler-Dodge-Jeep Ecodiesel Marketing, Sales Practices, & Product Liability Litigation, 295 F. Supp. 3d 927, 977 (N.D. Cal. 2018), and In re Duramax Diesel Litigation, 298 F. Supp. 3d 1037, 1057 (E.D. Mich. 2018), the courts excused the plaintiffs’ “lumping together” of certain defendants due to the manner in which those defendants “chose[] to operate” by blurring the legal boundaries between the corporate subsidiaries. Thus, under those circumstances, it was reasonable for the courts to plausibly infer that the knowledge of one defendant could be attributed to other defendants. See, e.g., In re Volkswagon, 2017 WL 4890594, at * 11. That type of corporate integration or blurring of corporate entities is not alleged here. (See generally Compl.) ORDER - 15 1 Accordingly, the court grants this portion of Defendants’ motion for Travelscape, EAN, 2 and Hotels.com, but denies it for Expedia. 3 3. RICO Enterprise 4 Defendants also argue that Ms. Woodell fails to adequately allege a RICO 5 Enterprise. (MTD at 9-11.) RICO enterprises come in two varieties: (1) an 6 association-in-fact, or (2) a “legal entity.” See 18 U.S.C. § 1961(4). An 7 association-in-fact is a “group of persons associated together for a common purpose of 8 engaging in a course of conduct.” Boyle v. United States, 556 U.S. 938, 946 (2009). A 9 “legal entity” applies to the “infiltration of legitimate businesses [the enterprise] by 10 racketeers [the defendants].” River City Mkts., Inc. v. Fleming Foods W., Inc., 960 F.2d 11 1458, 1461 (9th Cir. 1992) (citing United States v. Turkette, 452 U.S. 576, 580 (1981). 12 Ms. Woodell alleges both types of enterprises in the alternative. (See Compl. ¶¶ 78-79.) 13 a. Association-in-fact 14 To plead an association-in-fact enterprise, Ms. Woodell must allege that the 15 association-in-fact: (1) has a common purpose, (2) is an ongoing organization, and (3) 16 its various associates function as a continuing unit. See Odom v. Microsoft, 486 F.3d 17 541, 552-53 (9th Cir. 2007). Further, Ms. Woodell “must allege that the group engaged 18 in enterprise conduct distinct from their own affairs.” Comm. to Protect our Agric. 19 Water v. Occidental Oil & Gas Corp., 235 F. Supp. 3d 1132, 1173 (E.D. Cal. 2017) 20 (citing Odom, 486 F.3d at 549)). Ms. Woodell alleges that Defendants and 21 Reservations.com formed an association-in-fact enterprise. (See Compl. ¶ 86.) As 22 // ORDER - 16 1 discussed below, Ms. Woodell fails to adequately allege that this putative 2 association-in-fact has a common purpose. 3 Ms. Woodell pleads that Defendants and Reservations.com “associated for the 4 common purpose of obtaining tax overpayments from consumers.” (Id. ¶ 85.) However, 5 this and other similar, conclusory allegations fall short of the pleading standard. 3 Except 6 for the allegation that Expedia established and collected the “Taxes & Fees” charge as 7 “pass-through line items” on Reservations.com’s website (id. ¶ 36), the complaint 8 contains no specific factual allegations that any other Defendant acted with an objective 9 unrelated to ordinary business aims (see generally id.). Ms. Woodell’s formulaic, 10 conclusory allegations concerning these Defendants 4 are insufficient to create facial 11 plausibility concerning an association-in-fact. See Iqbal, 556 U.S. at 678. Indeed, Ms. 12 Woodell admits in her complaint that the alleged enterprise “functioned by selling hotel 13 room reservations to the consuming public,” and that such “bookings are legitimate 14 transactions.” (Id. ¶ 86; see also id. ¶¶ 87 (alleging that the enterprise “involved 15 commercial activities . . . including the marketing, promotion, advertisement, and sale of 16 hotel room reservations throughout the country, and the receipt of monies from the hotel 17 bookings.”); 92 (“The enterprise involved commercial activities . . . such as the 18 3 19 20 (See also Compl. ¶ 86 (“Expedia and its co-conspirators, through their illegal Tax Fraud Scheme, engaged in a pattern of racketeering activity, which involves a fraudulent scheme to increase revenue for Expedia and the other entities and individuals associated-in-fact with the Enterprise’s activities through the illegal scheme to collect tax overpayments.”).) 4 21 22 (See, e.g., Compl. ¶ 78 (alleging that Defendants and Reservations.com “operated an association-in-fact enterprise . . . which was formed for the purpose of obtaining money from consumers for inflated ‘Taxes & Fees’ payment, through which they conducted a pattern of racketeering activity”).) ORDER - 17 1 marketing, promotion, advertisement, and sale of hotel room reservations throughout the 2 country, and the receipt of monies from those sales.”).) 3 Allegations that are consistent with ordinary business activities or purposes are 4 insufficient when pleading an association-in-fact RICO enterprise. See In re Jamster 5 Mktg. Litig., No. 05CV0819 JM (CAB), 2009 WL 1456632, at *5 (S.D. Cal. May 22, 6 2009) (finding RICO claims were not adequately pleaded because, after plaintiff’s legal 7 conclusions were set aside, all that remained was “conduct consistent with ordinary 8 business conduct and an ordinary business purpose”); see also Gomez v. Guthy-Renker, 9 LLC, No. EDCV1401425JGBKKX, 2015 WL 4270042, at *8-9 (C.D. Cal. July 13, 10 2015) (finding that a routine contract for services did not constitute a distinct enterprise); 11 cf. Odom, 486 F.3d at 543 (finding a RICO enterprise’s common purpose was 12 adequately pleaded where the complaint alleged specific facts describing the fraudulent 13 means used to carry out the scheme). Where the alleged association-in-fact is formed 14 through routine contracts for services, the “common purpose” element is unmet because 15 the entities are pursuing their own individual economic interests, rather than a shared 16 purpose. See Gomez, 2015 WL 4270042, at *9 (citing In re Countrywide Fin. Corp. 17 Mortg.-Backed Sec. Litig., No. 2:11-CV-07166-MRP, 2012 WL 10731957, at *8 (C.D. 18 Cal. June 29, 2012) (“[F]rom the face of the [amended complaint] it appears that each of 19 the non-parties identified by [the plaintiff] entered into a business relationship for their 20 own commercial reasons. Even if . . . the non-parties’ actions assisted [the defendant] . . 21 . the [amended complaint] makes clear that the assistance was in response to each 22 entity’s own business incentives. Parties that enter commercial relationships ‘for their ORDER - 18 1 own gain or benefit’ do not constitute an ‘enterprise.’”).) Based on the foregoing 2 authorities, the court concludes that Ms. Woodell fails to adequately allege a “common 3 purpose” for her association-in-fact. See Odom, 486 F.3d at 552-53. Accordingly, the 4 court grants this portion of Defendants’ motion. 5 6 b. Legal Entity Ms. Woodell alternatively argues that non-party Reservations.com is a single legal 7 entity enterprise through which Defendants conducted a pattern of racketeering activity. 8 (See Resp. at 13.) Insofar as 18 U.S.C. § 1961(4) defines an “enterprise” to include any 9 “partnership, corporation . . . or other legal entity . . . ,” Ms. Woodell is correct. See 10 Gov’t Emps. Ins. Co. v. KJ Chiropractic Ctr. LLC, No. 612CV1138ORL40DAB, 2015 11 WL 12839139, at *2 (M.D. Fla. Feb. 16, 2015) (“Under the statute, it cannot be disputed 12 that [the corporate defendant] constitutes an enterprise within the meaning of 18 U.S.C. § 13 1961(4) because it is a legal entity.”). Accordingly, the court denies this portion of 14 Defendants’ motion. The difficulty with this allegation, however, arises in the next 15 element of Ms. Woodell’s RICO claim—namely, whether Defendants “conduct[ed] or 16 participate[d], directly or indirectly, in the conduct of such enterprise’s affairs.” See 18 17 U.S.C. § 1964(c). 18 4. Directed the Conduct of a RICO Enterprise 19 The “conduct” element of a RICO claim requires Ms. Woodell to allege that a 20 defendant has “some part in the directing of the enterprise’s affairs.” Reves v. Ernst & 21 Young, 507 U.S. 170, 179 (1993). Ms. Woodell fails to allege facts supporting a 22 plausible theory that Defendants “participated in the conduct of the ‘enterprise’s affairs,’ ORDER - 19 1 not just their own affairs.” See id. at 185 (quoting 18 U.S.C. § 1962(c)) (emphasis in 2 Reves); see also id. (holding that “to conduct or participate, directly or indirectly, in the 3 conduct of the enterprise’s affairs” under 18 U.S.C § 1962(c), requires “participat[ing] in 4 the operation or management of the enterprise itself”). 5 Once again, at most, Ms. Woodell alleges that Expedia establishes and collects the 6 “Taxes & Fees” charge as “pass-through line items” on Reservations.com’s website. 7 (See Compl. ¶ 36.) This alleged action does not amount to participation in the operation 8 or management of Reservations.com as a “legal entity” enterprise or Ms. Woodell’s 9 alleged association-in-fact enterprise. This is particularly so in light of her allegations 10 that Reservations.com hosts its own website, “does its own marketing of its services,” 11 and obtains its inventory of hotel reservations through multiple third-party suppliers and 12 not just through Defendants. (Id. ¶¶ 2, 18, 22-23, 82.) Ms. Woodell’s remaining 13 allegations are all too general and conclusory to meet the pleading standard and raise this 14 element of her claim from the merely possible to the plausible. 5 See Iqbal, 556 U.S. at 15 678. 16 Specifically, Ms. Woodell has not adequately alleged that Defendants’ actions 17 “were undertaken on behalf of the enterprise as opposed to on behalf of [Defendants] in 18 their individual capacities, to advance their individual self-interests.” United Food & 19 // 20 21 22 5 (See, e.g., Compl. ¶¶ 77 (alleging that Defendants “were associated with, and conducted or participated in the affairs of, a RICO enterprise . . . , whose purpose was to deceive consumers into believing they were paying a legitimate ‘Taxes & Fees’ charge.”); 78 (alleging Defendants “operated an association-in-fact enterprise”); 90 (alleging Defendants “participated in the operation and management of [the enterprise] by directing its affairs”).) ORDER - 20 1 Commercial Workers Unions & Emp’rs. Midwest Health Benefits Fund v. Walgreen Co., 2 719 F.3d 849, 854 (7th Cir. 2013). In Walgreen, an employee health benefit fund alleged 3 that a pharmaceutical company and drug manufacturer engaged in a scheme to defraud 4 insurers by filling prescriptions for generic drugs with more expensive dosages than 5 prescribed, in violation of RICO. Id. at 850. The Walgreen court explained that “[t]he 6 complaint d[id] not allege, for instance, that officials from either company involved 7 themselves in the affairs of the other,” among other things, but instead defendants’ 8 interactions “show[ed] only that the defendants had a commercial relationship.” Id. at 9 855. The court finds this analysis persuasive here and concludes that Ms. Woodell fails 10 to adequately allege that Defendants directed the affairs of a RICO enterprise. 11 Accordingly, the court grants this portion of Defendants’ motion. 12 5. Proximate Causation 13 “[A] plaintiff may sue under [RICO] only if the alleged RICO violation was the 14 proximate cause of the plaintiff’s injury.” Anza v. Ideal Steel Supply Co., 547 U.S. 451, 15 452 (2006); see also Ally Bank v. Castle, No. 11-CV-896 YGR, 2012 WL 3627631, at 16 *12 (N.D. Cal. Aug. 20, 2012) (“[T]he plaintiff's injury must be proximately caused by 17 defendant’s commission of a predicate act, not by some other conduct of the defendant.”) 18 “Although proximate cause, not reliance, is the essential element of statutory standing 19 under RICO, proving reliance is necessary where it is integral to [the plaintiff’s] theory of 20 causation.” Hoffman v. Zenith Ins. Co., 487 F. App’x 365, 365 (9th Cir. 2012) (citing 21 Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 659 (2008)); see Negrete v. Allianz 22 Life Ins. Co. of N. Am., 287 F.R.D. 590, 606 (C.D. Cal. 2012) (“Without proving reliance ORDER - 21 1 in some form, plaintiffs will be unable to demonstrate the causal linkage between the 2 defendant’s alleged misrepresentations and the class members’ injuries.”). 3 Ms. Woodell alleges that a “reasonable consumer” would expect that a charge for 4 “Taxes & Fees” would consist of “amounts imposed by taxing authorities.” (Comp. 5 ¶ 34.) She alleges that she was “overcharged” $8.31 because she paid $14.82 in “Taxes 6 & Fees” when only $6.51 was due to the government. (Id. ¶¶ 47-48.) However, she does 7 not allege that she read or even noticed the “Taxes & Fees” charge at the time she made 8 her reservation. (See id. ¶¶ 46-53 (describing Ms. Woodell’s alleged experience using 9 Reservations.com).) She does not allege that the charge would have affected her 10 transaction if she had noticed it or what she would have interpreted the phrase to mean if 11 she had seen it. (See id.) She does not allege that she would not have completed the 12 transaction had she understood that not all of the $14.82 listed under “Taxes & Fees” 13 would be paid to a governmental entity or that a portion of the $14.82 would be retained 14 by Expedia. (See id.) In short, she does not plead that, except for the alleged 15 misrepresentation concerning “Taxes & Fees,” she would not have suffered an injury. As 16 a result, the court concludes that Ms. Woodell fails to adequately allege proximate cause. 17 Ms. Woodell nevertheless argues that, under the Supreme Court’s decision in 18 Bridge, “there is no reliance requirement . . . as a person can be injured by reason of a 19 pattern of . . . . mail fraud even if he has not relied on any misrepresentations . . . .” 20 (Resp. at 19 (citing Bridge, 553 U.S. at 649) (internal quotation marks omitted).) 21 Although this may be true, the Supreme Court also acknowledged that “[i]n most cases, 22 the plaintiff will not be able to establish even but-for causation if no one relied on the ORDER - 22 1 misrepresentation.” Bridge, 553 U.S. 658. Where a plaintiff’s theory of causation 2 depends on reliance, reliance is required to establish causation. See Hoffman, 487 F. 3 App’x at 365. Ms. Woodell nevertheless attempts to clear the but-for causation hurdle by 4 arguing that she relied on the “legitimacy” of the “Taxes & Fees” charge. (Resp. at 19 5 (citing Compl. ¶¶ 106-07).) Yet, she never alleges that she would not have made the 6 reservation, submitted her payment, or taken any other action had she known that a 7 portion of the “Taxes & Fees” charge was illegitimate. (See generally Compl.) 8 9 Ms. Woodell also attempts to recast her theory as one of omission—rather than an affirmative misrepresentation—arguing that she should be entitled to a presumption of 10 reliance. (Resp. at 19, 22-23.) However, the presumption of reliance has typically been 11 applied in securities fraud cases where a defendant is required to disclose something and 12 does not, so the plaintiff is presumed to have relied on the fact that there was no 13 disclosure. See Poulos v. Caesars World, Inc., 379 F.3d 654, 666 (9th Cir. 2004). Even 14 if the presumption applies outside of that context, it does not apply to cases involving 15 affirmative representations or “mixed claims” of representations and omissions. Id. at 16 667 (holding that there is no for presumption of reliance for a RICO claim that “cannot be 17 characterized primarily as claims of omission”). Ms. Woodell’s RICO claim depends on 18 the alleged affirmative misrepresentation of the “Taxes & Fees” charge. Thus, her theory 19 is at best “mixed” between alleged misrepresentations and omissions. Accordingly, the 20 court concludes that a presumption of reliance is inapplicable. Because Ms. Woodell 21 fails to adequately plead that her $8.31 injury was proximately caused by Defendants’ 22 // ORDER - 23 1 purported RICO violation, the court grants Defendants’ motion and dismisses her RICO 2 claim. 3 C. 4 CPA Claim To state a claim under the CPA, Ms. Woodell must allege: (1) an unfair or 5 deceptive act or practice, (2) occurring in trade or commerce, (3) affecting the public 6 interest, (4) injury to a person’s business or property, and (5) causation. Panag v. 7 Farmers Ins. Co., 204 P.3d 885, 889 (Wash. 2000) (citing Hangman Ridge Stables, Inc. 8 v. Safeco Title Ins. Co., 719 P.3d 531, 535 (Wash. 1986)). Defendants argue that Ms. 9 Woodell fails to adequately plead the first, third, and fifth elements. (MTD at 14-18.) 10 11 12 The court considers these elements in turn. 1. Unfair or Deceptive Act An unfair or deceptive act is one undertaken with “a capacity to deceive a 13 substantial portion of the public.” Saunders v. Lloyd’s of London, 779 P.2d 249, 256 14 (Wash. 1989) (quoting Hangman Ridge, 719 P.2d at 535). Ms. Woodell relies on the 15 same factual allegations to underpin her CPA claim as she does to underpin her RICO 16 claim—alleged misrepresentation regarding “Taxes & Fees.” (See, e.g., Compl. ¶¶ 132- 17 40.) Thus, just as Rule 9(b)’s heightened pleading standard applies to Ms. Woodell’s 18 allegations concerning mail and wire fraud, see supra § III.B.1., those same heightened 19 pleading standards apply to Ms. Woodell’s allegations of the unfair or deceptive act 20 underpinning her CPA claim. For example, in Fidelity Mortgage Corp. v. Seattle Times 21 Co., 213 F.R.D. 573 (W.D. Wash. 2003), the plaintiff claimed that the defendant violated 22 the CPA by publishing “false, deceptive, and/or misleading Interest Rates.” Id. at 574. ORDER - 24 1 The court explained that, “[e]ven with regard to complaints that do not specifically plead 2 fraud, the Ninth Circuit has consistently held that cases that are ‘grounded in fraud’ or 3 ‘sound in fraud’ must satisfy the particularity requirement of Rule 9(b).” Id. at 575. 4 Thus, although Ms. Woodell avoids using the term “fraud’ in describing her CPA claim 5 (see Compl. ¶¶ 132-40), her CPA allegations are still governed by the heightened Rule 6 9(b) standard, see Anderson v. Clow (In re Stac Elecs. Sec. Litig.), 89 F.3d 1399, 1405 7 n.2 (9th Cir. 1996) (noting that the failure to use the word “fraud” does not change the 8 nature of the claim). 9 The court agrees with Ms. Woodell that the alleged mislabeling of the “Taxes & 10 Fees” charge could constitute an unfair or deceptive act under the CPA. (See Resp. at 21 11 (citing Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 170 P.3d 10, 19 12 (Wash. 2007) (holding that the defendant engaged in an unfair or deceptive act or 13 practice as a matter of law when it mislabeled a surcharge).) However, although Ms. 14 Woodell pleads with particularity Expedia’s involvement in this alleged deceptive act, 15 see supra § III.B.1 (citing Compl. ¶¶ 12, 23, 39), her collective and generalized 16 allegations concerning the remaining Defendants are insufficient under Rule 9(b), see 17 generally id. Thus, for the same reasons that the court concluded that Ms. Woodell’s 18 allegations concerning the alleged “Taxes & Fees” misrepresentation meet Rule 9(b)’s 19 pleading requirements for her RICO claims against Expedia, but not for her RICO claim 20 against the other Defendants, see supra § III.B.1, the court also so concludes here 21 concerning this element of her CPA claim. 22 // ORDER - 25 1 2. Impact on the Public Interest 2 Ms. Woodell can establish impact on the public interest by showing that the 3 conduct “injured other persons,” or even “had the capacity to injure other persons.” 4 RCW 19.86.093. The court agrees with Ms. Woodell that she has not alleged an 5 “essentially private dispute.” See Shugart v. GYPSY Official No. 251715, its Engines, 6 Mach., Appurtenances, No. 2:14-CV-1923RSM, 2015 WL 1965375, at *3 (W.D. Wash. 7 May 1, 2015) (“Where a transaction can be characterized as essentially a private dispute 8 rather than a consumer transaction, it may be difficult to show a public interest in the 9 subject matter.”) (internal quotations and citations omitted). Rather, she has alleged 10 hundreds of thousands of similar transactions using the same alleged “Taxes & Fees” 11 misrepresentation. (Compl. ¶¶ 8, 67.) These allegations are sufficient to meet this 12 element of her CPA claim. The court, therefore, denies this portion of Defendants’ 13 motion. 14 3. Proximate Causation 15 Proximate cause is a required element of a CPA claim. See Hangman Ridge, 719 16 P.3d at 539 (“A causal link is required between the unfair or deceptive acts and the injury 17 suffered by plaintiff.”). As noted above in the court’s discussion of proximate causation 18 of Ms. Woodell’s RICO claim, Ms. Woodell does not allege that she read or even noticed 19 the “Taxes & Fees” charge, that the phrase would have affected her booking had she 20 noticed it, what she would have interpreted the phrase to mean had she seen it, that she 21 would not have completed the booking had she understood that Expedia would retain a 22 portion of the amount listed as “Taxes & Fees,” or that she would have taken any other ORDER - 26 1 course of action other than the one she did. See supra § III.B.5; (see also Compl. 2 ¶¶ 46-53 (describing Ms. Woodell’s alleged experience booking a hotel room through 3 Reservations.com).) In other words, she does not allege that, except for Defendants’ 4 alleged deceptive act, the outcome of her booking would have been any different. Just as 5 the court concluded that Ms. Woodell failed to plead proximate cause for her RICO 6 claim, see supra § III.B.5, the court similarly concludes that she fails to plead proximate 7 cause for her CPA claim, as well. 8 Ms. Woodell nevertheless argues that the Washington Supreme Court’s decision 9 in Indoor Billboard/Washington stands for the proposition that payment of an invoice 10 alone may be sufficient for proximate causation where the invoice contains an alleged 11 misrepresentation even without reliance. (See Resp. at 22-23 (citing Indoor 12 Billboard/Wash., 170 P.3d at 22.) Although true, the Indoor Billboard/Washington court 13 also expressly rejected the plaintiff’s argument that the court should “adopt a per se rule 14 and hold that payment of [the defendant’s] invoice is per se sufficient to establish the 15 proximate cause of plaintiff’s damages . . . because mere payment of an invoice may not 16 establish a causal connection between the unfair or deceptive act or practice and 17 plaintiff’s damages.” Id. Instead, the court formulated the test for proximate cause as 18 follows: “A plaintiff must establish that, but for the defendant’s unfair or deceptive 19 practice, the plaintiff would not have suffered an injury.” Id. As discussed above, 20 because Ms. Woodell does not allege that, except for Defendants’ alleged deceptive act, 21 the outcome of her booking would have been any different, she does not overcome this 22 pleading hurdle. ORDER - 27 1 Further, in Indoor Billboard/Washington, the discussion of proximate cause arose 2 in a distinct factual context—the plaintiff knew about and allegedly relied on the alleged 3 misrepresentation, but independently investigated the alleged misrepresentation and 4 decided to pay the invoice anyway. Id. at 22-23. “Because the record was insufficient to 5 determine whether the CPA plaintiff would have paid the surcharge notwithstanding the 6 deceptive billing practice (the parties disputed whether the plaintiff knowingly agreed to 7 pay the charge), the court concluded a material issue of fact existed as to causation.” 8 Panag v. Farmers Ins. Co. of Wash., 204 P.3d 885, 900 (Wash. 2009) (interpreting 9 Indoor Billboard/Washington). Therefore, “Indoor Billboard[/Washington] . . . holds 10 that when the alleged injury is payment of an amount not actually owed, a plaintiff must 11 prove the deceptive billing practice induced the payment to establish causation.” Id. 12 Merely alleging that Ms. Woodell paid the total amount charged for her hotel booking on 13 Reservations.com does not establish this link. And, as discussed above, Ms. Woodell has 14 not alleged any facts that otherwise establish this causal link. The court concludes that 15 Ms. Woodell has not adequately alleged proximate causation for her CPA claim and, 16 therefore, grants this portion of Defendants’ motion. 17 D. Conversion 18 Defendants assert that Ms. Woodell’s claim for conversion should be dismissed 19 because “[a]n ‘authorized’ payment by the payor is not the proper subject of the tort of 20 conversion under Washington law. (MTD at 18 (citing Alhadeff v. Meridian on 21 Bainbridge Island, LLC, 220 P.3d 1214 (Wash. 2009)).) Ms. Woodell does not respond 22 to this portion of Defendants’ motion and, indeed, implicitly concedes that Defendants’ ORDER - 28 1 motion to dismiss her conversion claim has merit. (See Resp. at 24 (submitting “that— 2 except with respect to the claim for conversion—[Defendants’] motion to dismiss should 3 be denied”).) Accordingly, the court grants this aspect to Defendants’ motion and 4 dismisses Ms. Woodell’s claim for conversion with prejudice and without leave to 5 amend. 6 E. Unjust Enrichment and Constructive Trust 7 The elements of a claim for unjust enrichment are: (1) a benefit conferred upon 8 the defendant by the plaintiff; (2) an appreciation or knowledge by the defendant of the 9 benefit; and (3) the acceptance or retention by the defendant of the benefit under such 10 circumstances as to make it inequitable for the defendant to retain the benefit without the 11 payment of its value. Young v. Young, 191 P.3d 1258, 1262 (Wash. 2008). Similarly, 12 “[a] constructive trust arises where a person holding title to property is subject to an 13 equitable duty to convey it to another on the ground that he would be unjustly enriched if 14 her were permitted to retain it.” Proctor v. Forsythe, 480 P.2d 511, 514 (Wash. Ct. App. 15 1971). Defendants argue that because Ms. Woodell failed to adequately allege either a 16 RICO or a CPA claim, “there is no basis to find that . . . Defendants’ alleged retention of 17 a portion of the ‘Taxes & Fees’ is somehow ‘unjust’ or ‘inequitable.’” (MTD at 20.) 18 The court disagrees. The elements Ms. Woodell must allege for her RICO and 19 CPA claims are distinct from her unjust enrichment and constructive trust claims. See 20 supra § III.B, C. She need not allege either a RICO or a CPA claim to allege 21 “circumstances” rendering inequitable Defendants’ retention of the funds at issue for 22 purposes of her unjust enrichment claim. See Young, 191 P.3d at 1262. Similarly, she ORDER - 29 1 need not allege either a RICO or a CPA claim to adequately plead a claim for 2 constructive trust. For a constructive trust, Ms. Woodell only needs to allege “some 3 element of wrongdoing.” Baker v. Leonard, 548, 843 P.2d 1050, 1055 (Wash. 1993). 4 Further, although such wrongdoing is ordinarily found in the form of “fraud, 5 misrepresentation, or bad faith, . . . [e]quity’s need for flexibility requires that 6 wrongdoing not be so limited.” Id. 7 Specifically, Ms. Woodell alleges that “a reasonable consumer would expect that 8 amounts collected as ‘Taxes & Fees’ would be the amounts imposed by taxing 9 authorities,” that such fees were “surreptitiously collected by Expedia or one of the other 10 Defendants,” that the amount collected “is always higher than the taxes remitted on the 11 hotel rooms,” and that “Expedia pockets the tax overcharge.” (Compl. ¶¶ 34-35, 39, 45.) 12 Thus, the court concludes that for purposes of her unjust enrichment and constructive 13 trust claims, Ms. Woodell has sufficiently alleged “wrongdoing” or “circumstances” 14 rendering Expedia’s retention of the fees at issue inequitable—to wit, the collection and 15 retention of a surreptitiously inflated charge. 16 However, to state a claim for either unjust enrichment or constructive trust, Ms. 17 Woodell must allege that the defendant “retain[s] the benefit” or “hold[s] title to the 18 property,” respectively. See Young, 191 P.3d at 1262; Proctor, 480 P.2d at 514. Here, 19 Ms. Woodell specifically alleges that “Expedia pockets the tax overcharge.” (Compl. 20 ¶ 39; see also id. ¶¶ 50 (“Expedia separately charged Plaintiff’s credit card . . . the ‘Taxes 21 & Fees.”); 52 (“Minimum of $8.31 illegally retained by Expedia as extra revenue.”); 53 22 (“Expedia is illegally retaining millions of dollars in overcharges annually.”).) Although ORDER - 30 1 Ms. Woodell also alleges that “Defendants retained . . . these funds” and Defendants . . . 2 retained the overcharge as extra revenue” (id. ¶¶ 121, 128), these generalized, collective 3 allegations do not move her claims against EAN, Travelscape, and Hotels.com from the 4 mere possible to the plausible—particularly given her specific allegations concerning 5 Expedia. See Iqbal, 556 U.S. at 679. Accordingly, the court grants Defendants’ motion 6 to dismiss Ms. Woodell’s equitable claims for unjust enrichment and constructive trust 7 against EAN, Travelscape, and Hotels.com, but denies it with respect to Expedia. 8 F. 9 Leave to Amend When dismissing a case for failure to state a claim, the district court “should grant 10 leave to amend . . . unless [the court] determines that the pleading could not possibly be 11 cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 12 2000) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)) (internal quotation 13 marks omitted). Except with respect to her claim for conversion, see supra § III.D, the 14 court cannot conclude, that Ms. Woodell is unable to cure the defects in her claims. 15 Accordingly, the court grants Ms. Woodell leave to amend her complaint, including all of 16 her claims except for conversion, within 20 days of the filing date of this order. 17 18 IV. CONCLUSION As detailed above, the court GRANTS in part and DENIES in part Defendants’ 19 motion to dismiss (Dkt. # 15). The court DISMISSES Ms. Woodell’s claim for 20 conversion with prejudice and without leave to amend. The court DISMISSES her RICO 21 and CPA claims but GRANTS her leave to amend these claims. The court DISMISSES 22 her equitable claims for unjust enrichment and constructive trust against EAN, ORDER - 31 1 Travelscape, and Hotels.com but GRANTS her leave to amend these claims. The court 2 ORDERS Ms. Woodell to file an amended complaint within 20 days of the filing date of 3 this order. If Ms. Woodell fails to timely file an amended complaint, the court will 4 dismiss her RICO and CPA claims with prejudice and will dismiss her equitable claims 5 for unjust enrichment and constructive trust against EAN, Travelscape, and Hotels.com 6 with prejudice. 7 Dated this 22nd day of July, 2019. 8 9 A 10 JAMES L. ROBART United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 ORDER - 32
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