Class Action Defense Cases-Shaw v. Marriott: Federal Court Holds Class Action Under District Of Columbia Unfair Business Practice Laws Properly Brought In United States And Survives Motion To Dismiss

Apr 30, 2007 | By: Michael J. Hassen

Federal Court for the District of Columbia Holds that Class Action Under District of Columbia Laws Predicated on Foreign Currency Exchange Rates Charged at Russian Hotel need not be Dismissed for Forum Non Conveniens and Survived Motion to Dismiss for Failure to State a Claim

Plaintiffs filed a putative class action against Marriott for unfair business practices under the Consumer Protection Procedures Act of the District of Columbia (CPPA) alleging that the company misrepresents the pricing practices at Marriott’s Moscow Hotel, specifically with respect to the exchange rates quoted by Marriott to its customers. Shaw v. Marriott Int’l, Inc., 474 F.Supp.2d 141, 142-43 (D.D.C. 2007). The action had been filed in the superior court, but the defense removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA). Id., at 143, 147 n.5. Plaintiff Shaw reserved a room at the Marriott-owned Renaissance Moscow Hotel at a rate of $425 per night. Id., at 143. The Marriott website stated that the exchange rate was 27.78 Russian rubles to the dollar, but when he checked out of the hotel, his bill reflected an exchange rate of 32 rubles to the dollar, id. Other class representatives had similar experiences. Id. Defense attorneys filed a motion to dismiss the class action for failure to state a claim or on the ground of forum non conveniens because the events central to the class action took place in Russia, id., at 144, which the district court denied, id., at 142.

The district court began with the forum non conveniens argument. The court readily concluded that the defense argument misstated the allegations of the class action complaint because the defense focused on acts in Russia and alleged violations of Russian law. Shaw, at 144-45. In point of fact, the court held, the class action focused on events that transpired at Marriott’s corporate headquarters in the District of Columbia and on violations of District of Columbia laws, id. The federal court also found that a balancing of the public and private interest factors supports keeping the case in the District of Columbia, id., at 145-46. Further, “There is no question that testimony from Marriott’s witnesses related to these claims is more accessible in the District of Columbia, as are business records and other documents.” Id., at 146.

With respect to the CPPA, defense attorneys argued that the statute “does not apply outside of the District of Columbia.” Shaw, at 147. The court held that the defense argument missed the mark, explaining at page 148: “Plaintiffs, American citizens and a permanent American resident, seek to apply a District of Columbia statute to a dispute between plaintiffs from various local jurisdictions in the United States, including the District of Columbia, and a United States corporate defendant headquartered in the District of Columbia, regarding policies and practices allegedly developed and adopted in the District of Columbia. The District of Columbia has a ‘strong interest in ensuring that its corporate citizens refrain from fraudulent activities.’” (Footnote and citation omitted.) After a thorough analysis, the federal court concluded that the CPPA claim survived the motion to dismiss, id., at 150.

Defense attorneys also moved to dismiss the unjust enrichment claim on the ground that the “voluntary payment” doctrine barred such relief. Shaw, at 150-51. Plaintiffs’ counsel argued that the payment was “not truly voluntary” because “[a]ny reasonable person trying to check out of a hotel in a foreign country would find it difficult if not impossible, under the circumstances, to refuse to pay their bill with no knowledge of what consequences such an action would engender.” Id., at 151. The district court concluded that the allegations in the class action complaint were sufficient to state a claim. Id.

NOTE: The court summarily rejected defense claims that Russian law applied, noting that the gravamen of the class action is that Marriott’s wrongdoing originated at its corporate offices in the District of Columbia, not that “something nefarious” transpired in Russia. Shaw, at 148.

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