Judge weighs discovery motion in lawsuit alleging travel sites owe Nevada millions in taxes

A long-running lawsuit alleging major online travel companies underpaid Nevada hotel room taxes returned to Clark County District Court on Thursday, where attorneys focused on how broadly plaintiffs can pursue evidence under the False Claims Act.

Judge Mark Denton took arguments under submission following a procedural dispute over a motion to compel discovery responses tied to companies including Expedia, Orbitz, Travelocity, Priceline and Hotels.com.

The case, filed in 2020 by communications consultants Sig Rogich and Mark Fierro on behalf of the state, alleges the companies used a pricing structure that allowed them to charge consumers taxes based on retail room rates while remitting taxes to Nevada based on lower wholesale hotel rates, and, allegedly, retaining the difference.

Thursday morning’s hearing did not produce a ruling. A trial has been scheduled for 2027, according to the court’s website.

Plaintiff’s attorney Dominic Gentile argued the state’s False Claims Act allows liability where a party knowingly causes false or incomplete information to be submitted to the government, even indirectly. He said the defense improperly attempts to narrow the case by conflating legal “theories” of liability with the single statutory “claim” at issue.

Defense attorneys countered that plaintiffs were attempting to expand the scope of the case beyond what was authorized and beyond what was disclosed to the Nevada Attorney General when the action was allowed to proceed. They also argued discovery should be limited to the relevant statutory period, generally beginning in 2015, and should not include older or out-of-state materials.

A key point of contention Thursday was whether plaintiffs can obtain broad “discovery sharing” materials from related litigation in other jurisdictions involving similar allegations and business models. Plaintiffs argue those materials are necessary to understand how the companies structure transactions nationally and whether those practices affected Nevada tax remittances.

Defense attorneys argued that those materials are not automatically relevant in Nevada and would impose significant burdens to collect and review.

At stake in the broader litigation are allegations that could involve more than $1 billion in disputed tax revenue, according to plaintiffs’ estimates. Those funds would primarily flow to state and local programs funded by hotel room taxes, including education, tourism promotion through the Las Vegas Convention and Visitors Authority, and other public services.