Travelers United, Inc. v. Hilton Worldwide Holdings Inc.

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TRAVELERS UNITED, INC., Plaintiff, v. HILTON WORLDWIDE HOLDINGS INC., et al., Defendants.

Civil Action No. 23-3584 (BAH)

United States District Court, District of Columbia

June 7, 2024

MEMORANDUM OPINION

BERYL A. HOWELL UNITED STATES DISTRICT JUDGE

Plaintiff Travelers United, Inc., a “nonprofit public interest organization” whose mission “is to improve and enhance travel for consumers,” initiated this putative class action in D.C. Superior Court, alleging violations of the District of Columbia Consumer Protection Procedures Act (“CPPA”), D.C. Code § 28-3901 et seq. Compl. ¶¶ 12-13, 110-21, ECF No. 1-2. In a one-count complaint brought “on behalf of the interests of . . . a class of consumers,” id. ¶¶ 92, 112 (citation omitted), plaintiff claims that defendants Hilton Worldwide Holdings Inc. and Hilton Domestic Operating Company Inc. (collectively “defendants” or “Hilton”), have “been systemically cheating consumers out of tens of millions of dollars each year” through their “deceptive Junk Fee practices” that “trick consumers into paying more” to book a hotel room “than they otherwise would,” id. ¶¶ 1, 16-17, 21, 119; see D.C. Code § 28-3905(k)(1)(D)(i).^[1]Shortly after the filing of plaintiff's complaint in Superior Court, defendants timely removed the case to this Court, asserting subject matter jurisdiction pursuant to the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. §§ 1332(d), 1453. Plaintiff now moves to remand for lack of Article III standing, Pl.'s Mot. to Remand, ECF No. 11; Pl.'s Mem. Supp. Mot. to Remand (“Pl.'s Mot.”) at 6, ECF No. 11-1, disputing defendants' allegations that plaintiff has associational and organizational standing sufficient to support the exercise of federal jurisdiction see Defs.' Not. Removal ¶¶ 4, 22, ECF No. 1.

This CAFA-generated remand litigation presents a “through-the-looking-glass-situation,” where defendants, as “the party invoking the court's jurisdiction,” seek to “establish the predicates” for plaintiff's Article III standing, in the face of plaintiff's vigorous denial of the same. Abigail All. for Better Access to Developmental Drugs (“Abigail All.”) v. Eschenbach, 469 F.3d 129, 132 (D.C. Cir. 2006) (citation omitted); see also Mot. Hr'g Tr. at 18:6-9, ECF No. 22 (plaintiff's counsel describing “through-the-looking-glass-situation” in which “defendant is foisting organizational or associational standing on an organization that has not pled that and does not seek that”). Underlying this dispute is CAFA, a statute enacted to address what some in Congress perceived as tactics by members of the plaintiffs' bar to “‘game' the procedural rules and keep nationwide or multi-state class actions in state courts[.]” Home Depot U.S. A., Inc. v. Jackson, 139 S.Ct. 1743, 1752 (2019) (Alito, J. dissenting) (quoting S. Rep. No. 109-14, at 5 (2005)).

Notwithstanding the peculiar posture presented in this remand litigation, the issue to be resolved-whether plaintiff has Article III standing to bring its CPPA suit in federal court-is straightforward. For the reasons explained below, plaintiff lacks Article III standing. Plaintiff's motion to remand is accordingly granted.

I. BACKGROUND

The statutory, factual, and procedural background relevant to resolving plaintiff's instant motion to remand is summarized below.

A. District of Columbia Consumer Protection Procedures Act (“CPPA”)

CPPA prohibits “an unfair or deceptive trade practice, whether or not any consumer is in fact misled, deceived, or damaged thereby,” D.C. Code § 28-3904, and defines the conduct covered by this proscription to include a variety of unlawful practices as well the “violat[ion] [of] any provision” of certain enumerated statutes, id. § 28-3904(y)-(ll). More specifically, as relevant here due to citation in plaintiff's complaint, CPPA's subsections (e), (f), and (f-1) prohibit making misrepresentations or omissions as to “a material fact” when those misrepresentations or omissions have “a tendency to mislead,” id. § 28-3904(e), (f), (f-1); subsection (h) proscribes persons from “advertis[ing] or offer[ing] goods or services without the intent to sell them or without the intent to sell them as advertised or offered,” id. § 28-3904(h); and subsection (j) prohibits “mak[ing] false or misleading representations of fact concerning . . . the price in comparison to price of competitors,” id. § 28-3904(j).

As part of its enforcement regime, CPPA authorizes a “public interest organization” to bring a representative suit “on behalf of the interests of . . . a class of consumers” to “seek[] relief from the use by any person of” an unlawful trade practice, provided “the consumer or class could bring an action” under the statute, and the public interest organization has a “sufficient nexus to the interests involved of the . . . class to adequately represent those interests.” Id. § 28-3905(k)(1)(D)(i)-(ii). In enacting this provision, the D.C. Council “convey[ed] a clear legislative intent to modify Article III's strictures . . . with a more expansive statutory test,” such that “[i]f an entity . . . meets the CPPA statutory test governing public interest organization standing, it has standing to sue ‘without regard to whether it also satisfies traditional Article III standing requirements.'” Ctr. for Inquiry Inc. v. Walmart, Inc., 283 A.3d 109, 116 n.4 (D.C. 2022) (first alteration in original) (quoting Animal Legal Def. Fund v. Hormel Foods Corp., 258 A.3d 174, 179 (D.C. 2021)).

CPPA authorizes injured consumers to recover actual damages; the greater of treble damages or $1,500 per violation; attorney's fees; punitive damages; an “injunction against the use of the unlawful trade practice”; “additional relief as may be necessary to restore to the consumer money or property . . . which may have been acquired by means of the unlawful trade practice”; and/or “[a]ny other relief which the court determines proper.” Id. § 28-3905(k)(2)(A)-(F).

B. Factual Background

Plaintiff describes itself as a “nonprofit public interest organization” that “has been instrumental in advocating against hidden hotel fees both federally and locally in the District,” including through meetings with members of Congress, the D.C. Council, and others, to “educat[e], alert[], and advocat[e] against hidden hotel Junk Fees.” Compl. ¶¶ 12-14; see also Compl. ¶ 4 n.2 (defining “junk fees” as “‘unfair or deceptive fees that are charged for goods or services that have little or no added value to the consumer' or fees that are ‘hidden,' such as those ‘disclosed only at a later stage in the consumer's purchasing process or not at all'” (quoting Unfair or Deceptive Fees Trade Regulation Rule Commission Matter No. R207011, 87 Fed.Reg. 67413, 67413 (Nov. 8, 2022) (to be codified at 16 C.F.R. pt. 464))). Defendant Hilton Worldwide Holdings Inc. “owns, manages, and franchises a broad portfolio of hotels,” including in Washington, D.C., while the second Hilton entity named in plaintiff's complaint, Hilton Domestic Operating Company Inc., “appears to be Hilton's primary operating entity in the United States.” Compl. ¶¶ 16-17.

The complaint alleges that Hilton has engaged in “junk fee practices” that “deceiv[e] consumers and trick[] them out of their hard-earned money.” Id. ¶¶ 7, 49 (capitalization omitted). As illustrative examples, plaintiff describes “four separate occasions in the booking process [when] Hilton advertises a room price that does not include Junk Fees that a consumer must ultimately pay to Hilton in order to book the room.” Id. ¶ 76. “[D]uring the booking process, Hilton continues to advertise an incomplete and inaccurate room price that does not include Junk Fees, as it partitions Junk Fees from the room rate, and does not even conspicuously disclose the Junk Fee.” Id. ¶ 77. Further, “by calling the Junk Fee ‘mandatory'” and “by telling consumers that it must assess the fee ‘per room, per night,' just as it must assess mandatory taxes ‘per room, per night,'” Hilton “creates the false and deceptive impression that the fee is an amount that Hilton is obligated to charge by law or for other reasons outside of its control, rather than a fee Hilton chooses to charge for its own solitary gain.” Id. ¶ 78. By “misrepresent[ing] and conceal[ing] the actual cost of its rooms,” id. ¶ 49, Hilton “induc[es] consumers to undertake the search and cognitive effort to pick a hotel room and to psychologically commit to a room based on an inaccurate room rate,” id. ¶ 86, all “to increase its revenues without appearing to raise the room rate at its hotels,” id. ¶ 51.

Based on these allegations about “Hilton deceiving customers about the rates of its hotel rooms,” id. ¶ 48, plaintiff, on September 20, 2023, commenced this putative class action in D.C. Superior Court alleging, in a single count, that defendants' “deceptive Junk Fee practices” constitute “an unfair and deceptive trade practice” in violation of the CPPA, id. ¶¶ 74-75, 110-21. As a public interest organization suing “on behalf of the interests of . . . a class of consumers,” to which the organization has a “sufficient nexus . . . to adequately represent those interests,” D.C. Code § 28-3905(k)(1)(D) plaintiff seeks to certify two proposed classes, pursuant to D.C. Superior Court Rule of Procedure 23, see Compl. ¶¶ 15, 92, 95-97. These two classes are (1) a “nationwide class” consisting of “[a]ll individuals in the United States who booked a room at a Hilton hotel within the District of Columbia for personal use and paid a resort, destination, and/or other similar fee to Hilton,” id. ¶ 96; and (2) a “District of Columbia” class consisting of “[a]ll residents of the District of Columbia” who did the same, id. ¶ 97. Plaintiff alleges that “Hilton's deceptive Junk Fee practices...