On May 9, 2001, a noted plaintiff's class action law firm filed a series of complaints against three major hotel chains claiming fraud in connection with energy surcharges added to customer bills.  We think it is likely that copycat lawsuits will be filed against other operators and owners. You can take steps which may prevent you from being sued - or at least improve your posture in any lawsuit filed against you.

Background.

During the past year, many hotels have added energy surcharges to their customers' bills.  While we believe that such surcharges can legally be imposed (i.e. they do not make the hotel operator a seller of electricity or utilities), the lawsuits emphasize that the surcharge should be properly documented both in advance of guest check in, and on the guest's statements.

Suits Filed.

The lawsuits filed in Los Angeles and San Francisco claim that guests are not told when they reserve a room that a surcharge will be added to the room rate and that the surcharge is not noted during customer check in when the customer initials the room rate.  While these particular suits are based upon a specific California statute, we believe that similar suits could be fashioned under similar laws and legal principles of many other states. 

Prevention. 

There seems to be little established law on whether a surcharge can be added to a bill without notice (or with only a general notice or sign posted at registration).  One way to avoid this problem would be for a hotel to give notice in writing during check in that an energy surcharge will be added to the room rate, and to have this notation initialed at the same time as the customer verifies the room rate.  This notice and approval might be implemented with a simple stamp from the stationery store with a space for the guest's initials.  Hotel operators should also consider advising potential guests during the reservation process that local taxes and an energy surcharge will be added to the bill.

Acknowledgement.

Thanks to Paul Warner in our San Francisco office for catching this development, alerting us and helping to prepare this Legal Alert.

If you have any questions concerning the pending lawsuits or protecting yourself from future lawsuits, please contact me at the address below, or Paul Warner in our San Francisco office at (415) 398-5584 or [email protected]).