Plaintiffs sue Priceline over “Name Your Own Price” and because Priceline didn’t protect them from poor bidding practices and the knowledge that Priceline needs to make a profit to stay in business.
Johnson v. Priceline.com, Inc. – US Court of Appeals, 2nd Circuit
Lo and behold, advertising where the former Star Trek star pretends to negotiate discounted hotel rates for Priceline customers does not create a fiduciary duty and corresponding duty to disclose a profit motive for a business.
Priceline’s Name Your Own Price (“NYOP”) is designed to not accept a bid unless it can get a hotel room meeting a customer’s specifications at a rate lower than the bid amount, with Priceline keeping the spread. In other words, it is not a nonprofit, either by design or circumstance.
Priceline did not explicitly say it was making money from customers using NYOP, but it didn’t hide it either.
Two plaintiffs got the hotels they were looking for at prices they were willing to pay, but they claimed they were harmed because Priceline didn’t tell them it was paying the hotels less than the NYOP bid amount. The plaintiffs looked to the William Shatner commercials to contend that Priceline owed a fiduciary duty to the plaintiffs to tell them that the cost of providing the service was less than the price the customers paid.
The court looked for a fiduciary duty. The plaintiffs said that because an agency relationship exists between Priceline and its customers with respect to NYOP, “fiduciary duties automatically apply by operation of law.” The court said that the plaintiffs failed to demonstrate that Priceline was a travel agent, with the corresponding duties.
Looking to agency principles, the court stated that 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.
The court continued by stating that Priceline’s actions are akin to those of an intermediary or middleman rifling through its inventory of discounted hotel rooms until it locates an item for which the customer has stated a willingness to pay a specified price. The fact that only Priceline has access to both its algorithm and its particular inventory of discounted hotel rooms does not create a fiduciary relationship with a customer where none otherwise exists.
Since there was no agency relationship, there was no fiduciary duty to breach.
William Shatner looking out for your best interests.
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Technical stuff. Points for staying awake.
The three elements necessary to an agency relationship are:
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a manifestation by the principal that the agent will act for him;
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acceptance by the agent of the undertaking; and
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an understanding between the parties that the principal will be in control of the undertaking.