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Paul R. Kiesel. Esq. (SBN 119854> Patrick DeBiase. £sq. <SBN 167138> Michael C. Eyerly. Esq. (SBN 178693> KIESEL. BOUCHER & LARSON. LLP 8648 Wilshire Boulevard
FILED LOS Ai'LJI:.LES SUPERIOJ< COURT
DEC 3 0 2004' Beverly Hills. California 902 1 1" !f"' �f'!:'- cov�· cc.�:: � .. JO� CLARKE, CLERK (310) 854-4444 ... '. ... -� Steven D. Wo1ens. Esq. (Texas Bar No. 2184760()) BY J� P.H��HTY Frank E. Goodrich. Esq. (Texas Bar No. 08 162050) BARON & BUDD. P.C. C ... 1 d f "' 3102 Oak Lawn Avenue. Suite 1100 . £1 ... 0 881 gne 01 Dallas. Texas 75� 19 .j��a• 1. ( • ( (214") 521-3605 ·c t\t:.!'\. ,.(·5� \.�. t--\c o'
Attorneys for Plaintiff. the City of Los An�eles. California. on behalf of itself and all others similarly sttmhed
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES. CENTRAL DISTRICT
CITY OF LOS ANGELES. CALIFORNIA. l on behalf of itself and a11 others similarly ) situated, )
CASE NUMBER: BC 326693
CLASS ACTION COMPLAINT FOR:
Plaintiff.
v.
) ) (1) ) ) )
HOTELS.COM, L.P.: HOTELS.COM GP. ) C2) LLC: HOTWIRE. INC.: CHEAP TICKETS. l INC.: CENDANT TRAVEL l DISTRIBUTION SERVICES GROUP. ) INC.: EXPEDIA, INC.: INTERNETWORK) PUBLISHING CORP. Cdlb/a ) LODGING.COM}: LOWEST FARE.COM. ) (3} INC.; MAUPINTOUR HOLDING. LLC: ) ORBITZ, INC.: ORBITZ. LLC: l (4) PRICELINE.COM. INC.: SITE 59.COM. ) LLC; TRA VELOCITY .COM. INC.: ) TRA VELOCITY.COM. LP: ) TRAVELWEB. LLC: l TRA VELNOW.COM. INC.: and DOES I l through I 000. inclusive. ) ·
Defendants. ) )
___________________________ )
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VIOLATIONS OF UNIFORM TRANSIENT OCCUPANCY TAX ORDINANCES .
UNFAIR BUSINESS PRACTICES IN VIOLATION OF CALIFORNIA BUSINESS & PROFESSIONS CODE. § 17200 et seq
CONVERSION
IMPOSITION OF A CONSTRUCTIVE TRUST
JURY TRIAL DEMANDED
CLASS ACTION COMPLAINT
1 Plaintiff City of Los Angeles. California, on behalf of itself and all others similarly
2 situated (i.e .• the "Plaintiff Class" or "Class" described and defined, i'lfra). complains of
3 Defendants and alleges as follows:
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1.
1. PARTIES
Plaintiff is the City of Los Angeles. California.
Defendant HOTELS.COM. L.P. is a Delaware limited pannership with its
7 principal place of business in Dallas. Texas.
8 3. Defendant HOTELS.COM GP. LLC is a Texas corporation with its principal
9 place of business in Da11as. Texas.
10 4. Defendant HOTWIRE. JNC. is a Delaware corporation with its principal
11 place of business in San Francisco. California.
12 5. Defendant CHEAP TICKETS. INC. is a Delaware corporation with its
13 principal place of business in Honolulu. Hawaii.
14 6. Defendant CENDANT TRAVEL DISTRIBUTION SERVICES GROUP.
15 INC. is a Delaware corporation with its principal place of business in Parsippany. New
16 Jersey.
17 7. Defendant EXPEDIA, INC. is a Washington corporation with its principal
18 place of business in Bellevue. Washington.
19 8. Defendant INTERNETWORK PUBLISHING CORP. d/b/a
20 LODGING.COMJ, a Florida corporation with its plincipal place of business in Boca
21 Raton. Florida.
22 9. Defendant LOWEST FARE.COM. INC. is a Delaware corporation with
23 its principal place of business in Norwalk. Connecticut.
24 10. Defendant MAUPINTOUR HOLDING. LLC is a Nevada corporation with
25 its principal place of business in Las Vegas, Nevada.
26 II. Defendant ORBITZ. INC. is a Delaware corporation with
;)27 its principal place of business in Chicago, Jllinois. it t�28 12. Defendant ORBITZ. LLC is a Delaware corporation with its principal place
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CLASS ACTION COMPLAINT
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1 of business in Chicago. Illinois.
2 13. Defendant PRICEUNE.COM. INC. is a Delaware corporation with its
3 principal place of business in Norwalk, Connecticut.
4 14. Defendant SITE59 . COM. LLC is a Delaware corporation with its
5 principal place of business in New York. New York.
6 15. Defendant TRAVELOCITY.COM. INC. is a Delaware corporation with its
7 principal place of business in Texas .
8 16. D ef endant TRA VELOCITY .COM. LP is a Delaware partnership
9 with its principal place of business in Texas.
1 0 17. Defendant TRAVEL WEB. LLC is a Delaware corporation with its principal
1 1 place of business in Dal la s. Texas .
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18. Defendant TRA VELNOW.COM. INC. is a Delaware corporation with its
principal place of business in Springfield. Missouri.
19. The true names and capacities. whether individual. corporate, associate or
otherwise, of each of the Defendants designated herein as a DOE are unknown to Plaintiff
at this time and therefore said Defendants are sued by such fictitious names. Plaintiff will
ask leave of Court to amend this Complaint to show their true names and capac ities when
the same have been ascertained. Plaintiff is informed and believes and thereon alleges that
each of the Defendants designated herein as a DOE is le gally responsible in some manner
and liable for the events and happenin gs herein alleged and in such manner, proximately
caused damages to Plainti ff as he reinafter further alleged.
20. Plaintiff is informed and believes and thereon alleges that each of the
Defendants, including all DOE defendants. at all times herein mentioned. was acting as t he
agent. servant and employee of each of the other Defendants and within the scope of said
agency and employment. Plaintiff is further informed and believes and thereon alleges
that at the time and place of the incident described, each of the Defendants. their agents.
servants and/or employees became lia ble to Plaintiff for one or more of the reasons
described herein.
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CLASS ACTION COMPLAINT
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2 . .JURISDICTION AND VENUE
2 21. This action is brough t to re medy violations of state law in connection w ith
3 Defendants' misconduct in the failure to remit taxes to the City of Los A ngeles. California
4 and others si milarl y situated. Defendants have failed to remit taxes owed under similar
5 tmiform transient occupancy taxes to the Plaintiff Class.
6 12. This Court has jurisdiction over this action pursuant to California Business
7 an d Professions Code § § 17202 and 17203 and California Code of Ci vil Procedure §
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410.10.
§
23. Venue is pr oper in this Court pursuant to California Code of Civil Procedu re
395.5.
3. COMMON ALLEGATIONS
24. Defendants. and each of them. are on-line sellers and/or on-line resellers
of hotel rooms to the general pu blic. Defendants have sold hotel rooms to the pu blic and
collected taxes on those rooms. but have failed' to pay the taxes due and owing to the
Plaintiff and Plaintiff Class members on these transactions.
25. Pl aintif f Los Angeles's Unifom1 Transient Occupancy Tax require s
Defendants to remit transient occupancy taxes collected ( currentl y 14%) to the city. See
Uniform Tra nsient Occupancy Tax Ordina nce of the City of Los A ngeles § 21.7 .1. et seq. Class members have si mil ar unifotm transient occupancy taxes requiring Defendants to
collect taxes on the s ale of hotel rooms and to remit same to the Plaintiff Class members.
26. Defendants are charging and collec ting ··taxes" from consumers that are
not bei ng remitted to the appropriate mun icipal class member s . In addi tion to the rental
price of the hotel rooms. all occupants are also required to pay a transient occupancy tax.
The tax is paid by the con sumer occupants and coiJected on behalf of Plaintiff Clas s
member s by the Defendants. who are the oper ators of the hotels at the time the r ent is p aid.
The amount of the transient occupancy tax is con·ectly calculated as a percentage of the
pr ice each consumer occupant pays each Defendant operator for a hotel room. That is the
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CLASS ACTION COMPLAINT
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1 a mo un t each Defendant is required to remit to Plaintiff Class members.
2 27. The Defe ndant s. however. have failed to remit the p roper tax amount s,
3 u nderpaying each Plaintiff Class member for the taxes due and owing. Defendants
4 c ontra ct with hotels for rooms at negotiated d isco un ted room rates. Defendants then mark
5 up their invento ry of rooms and sell the roo ms· to the members of the publ ic. who actually
6 occupy the rooms. Defendants charge and col lec t taxes from occupants based on the
7 marked up room rates. but o nly remit to Plaintiff Class members tax amounts b ase d on the
8 lower. negotiated room rates. Defendants, and each of them. then pocket the difference.
9 28. For example. if a consumer pays Hotels.com $100.00 for a room in a hotel
1 0 located in Los Ange le s. Hotels.com calculates the tax rate the consumer pays on tha t
1 1 .. gross" a moun t <$100.00). Hotels.com. however. obtains that room at a lowe r "net" rate.
12 for instance. $70.00. Because Hotels.com and other D ef end ant s act as retailers rather than
13 agents, the amount due to Plaint iff City of Los An g el es is $14. However. th e amount the
14 D efe nd ants have remitted to the C it y has been based on th e lower .. net'' rare. In this
15 i11ustration. Hotels.com would r emit $9.80 (14% of $70.00). in st ead of the $14.00 it
16 actually owed to the City ( 14% of $1 00.00).
17 29. Not only are D efendant s charging consumers for transi en t occupancy
18 taxes that are not being remitted to the munici pa li ty. in most instances Defendants are
19 charging mor e money in .. fees and taxes" than required by th e statutory occupancy tax
20 ra te. These .. fees and taxes" often exceed the 'appropriate statutory occupancy rax rate by
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1-3%.
30. Thus. in the above il Ju stra tion . the consumer will o ft en pay closer to
23 $16.00 in fees and taxes for a $100.00 room, in a location like Los Angele s where the tax
24 rate is 14%. The tax remitted will be based on th e $70.00 n et cost of the room to the
25 o nl ine retailer. in this case $9.80. The difference between the $16 collected and the $9.80 ] ;. 26 remitted is an additional. hidden and un law fu lly retained p ro fit of $6.20. '
:} 27 31. Defendants have failed to remit the transient occupancy taxes due and ij ; ;.]: ".J
28 owed to the Plaintiff and pu tat ive Class members.
CLASS ACTION COMPLAINT
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1 4. PLAINTIFF CLASS ALLEGATIONS
2 32. The City of Los Angeles. California, requests the Court certify its claims
3 as a class action. It seeks relief for ( 1 ) Violations of Uniform Transient Occupancy Tax
4 Ordinances: (2) Unfair Business Practices in Violation of California Business &
5 Professions Code§ 17200 et seq.: and (3) Conversion. Further. Plaintiff seeks the
6 imposition of a Constructive Tntst.
7 33. Plaintiff seeks to certify a state-wide class of all California cities and
8 counties who have enacted unifonn transient occupancy taxes with an effective date on or
9 after December 30. 1990.
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34. Plaintiff brings this action pursuant to California Code of Civil Procedure §
382.1 The Class meets the prerequisites for the maintenance of a class action in that:
(a) The Class is so numerous that joinder of all Class members is
impracticable. Plaintiff is informed and believes that the practices
complained of herein affected over a hundred cities and counties.
although the exact number and identities of the members of the Class
are currently unknown to Plaintiff.
(b) Nearly all factual. legal. and statutory relief issues that are raised in this Demand are common to each of the members of the Class and
will apply unifonnly to every member of the Class�
(c) The claims of the representative Plaintiff are typical of the claims of
each member of the Class. It. like all other members of the Class.
sustained damages arising from Defendants' violations of law.
including (I ) Violations of Unifonn Transient Occupancy Tax
Ordinances: (2) Unfair Business Practices in Violation of California
Business & Professions Code§ 17200 et seq.; and (3) Conversion.
The representative Plaintiff and the members of the Class were and
1The California couns have found that fed. R. Civ. P. 23 outlines prctCedures that are u�ful in all dass actions
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CLASS ACTION COMPLAINT
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are similarly or identically hatmed by the same unlawful. deceptive.
unfair. systematic and pervasive pattern of misconduct:
(d) The representative Plaintiff will fairly and adequately represent
and protect the interests o�'the Class.· There are no material
conflicts between the claitns of the representative Plaintiff and
the members of the Class that would make class certification
inappropriate:
{e) The counsel selected to represent the Class will fairly and adequately
protect the interests of th� Class. They are. experienced trial lawyers
who have experience in complex litigation and are competent counsel
for this class action litigation. Counsel for the Class will vigorously
assert the claims of all members of the Class:
13 35. This action is properly maintained as a class action in that common
14 questions of law and fact exist as to the members of the Class and predominate over any
15 questions affecting only individual members. and a class action is supe.rior to other
16 available methods of the fair and efficient adjudication of the controversy. including
17 consideration of:
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(a) The interests of the members of the Class in individually controlling
the prosecution or defense of separate actions:
(b) The extent and nature of any other proceedings concerning the
controversy already commenced by or against members of the Class;
(c) The desirability or undesirability of concentrating the claims in a
single forum: and I
(d) The difficulties likely tope encountered in the management of a class
action.
36. The members of the Class conttktplate the eventual issuance of notice to the
proposed Class members which would set forth the subject and nature of the instant action.
The Defendants' own business records and electronic media can be utilized for the
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CLASS ACTION COMPLAINT
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1 contemplated notices. To the extent that any further notices may be required. Plaintiff
2 would contemplate the use of additional media and/or mailings.
3 37. Among the numerous questions of law and fact common to the Class are:
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(a) Whether Defendants have committed violations of California
Business & Professions Code. § 17:!00 et seq.
(b) Whether Plaintiff and the Plaintiff Class are entitled to the imposition
of a constructive trust;
(c) Whether Defendants have committed acts of conversion:
(d) The appropriate remedy for the Plaintiff Class:
(e) Whether. and in what amount. the Plaintiff Class members are
entitled to recover court costs and attorneys· fees.
5. CAUSES OF ACTION
COUNT 1: VIOLATIONS OF UNIFORM
TRANSIENT OCCUPANCY TAX ORDINANCES
(As against all Defendants>
18 38. Plaintiff incorporates each of the above allegations by reference as if set
19 forth herein at length.
20 39. Plaintiff and Class members are cities and counties granted the
21 authority to collect transient occupancy taxes pursuant to the California Revenue and
22 Taxation Code § 7280 and the authority to pursue taxes owed under California Revenue
23 and Taxation Code § 7284.
24 40. Defendants have failed to coiJect and remit to Plaintiff and the Class the
25 amounts due and owing to them pursuan.t to the Uniform Transient Occupancy Tax
*6 Ordinance of the City of Los AngeJes. §§ 21.7 .2(f) and § 2 J. 7.3 and similar ordinances.
g7 Plaintiff and the Class are entitled to penalties and interest to be detennined by Uniform 1
$ Transient Occupancy Tax Ordinance of the City of Los Angeles§ 21.7.8 and similar
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CLASS ACTION COMPLAINT
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1 ordinances. Failure to remit these taxes to Plaintiff and the Class are deemed a debt owed
2 by the Defendants to the Plaintiff City of Los Angeles and the Class and are hereby sought
3 to be recovered pursuant to§ 21.7.13 of the Uniform Transient Occupancy Tax Ordinance
4 of the City of Los Angeles and similar ordinances.
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COUNT 11: VIOLATIQN OF CALIFORNIA
BUSINESS & PROFES$IONS CODE§ 17200 (As Against All Defendants)
9 41. Plaintiff incorporates each of the above allegations by reference as if set
1 0 forth herein at length.
11 42. Defendants have engaged in unfair. unlawful and fraudulent business acts
12 and practices. as follows: Defendants have failed to remit taxes to the City of Los Angeles
13 and the Class that are due and owing to the Plaintiff and the Class.
14 43. By engaging in the above-described acts and practices. Defendants have
15 conunitted one or more acts of unfair competition within the meaning of California
1 6 Business and Professions Code § 17200. et seq.
17 44. Plaintiff. individua1ly. on behalfof the Class. seeks restitution and all other
18 relief allowed under § 17200. el seq.
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COUNT III: CONVERSION
(As Against All Defendants)
22 45. Plaintiff restates and incorporates by this reference each and every
23 preceding paragraph in this complaint as though fully set forth at this point.
24 46. At all times herein mentioned. Plaintiff and the Class were. and are. the
25 sole rightful owners of the taxes due and owing to them.
26 47. At a11 times herein mentioned. the monies due and owing to the Plaintiff !
�; 27 and Class were in the possession and under the control of Defendants. Defendants have .... ·
f!, 28 taken these monies for their own use and benefit. thereby pennanently depriving Plaintiff
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CLASS ACTION COMPlAINT
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1 and the Class of the use and benefit thereof.
2 48. At all times herein alleged. Defe ndants acted wilfully. wantonly. with
3 oppression. and with a conscious d isregard of the rights of Plaintiff and the C lass. such
4 that Plai ntif f requests that the trier of fact. in the exercise of sound discretion. award
5 Plaintiff and the Class additional damages for the sake of exan1ple and in sufficient
6 amo unt to punish defe ndants for their conduct.
7 49. As a dir ect a nd proxi mate result of defendants· conduct, Plaintiff and the
8 Class have. and will continue to. suffer damage in an amount to be detennined acco rd ing
9 to proof at the time of trial.
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COUNT IV: IMPOSITION OF A CONSTRUCTIVE TRUST
<As Against All Defendants)
50. Pla int iff restates and incorporates by this reference each and every preceding
paragraph in this compl ai nt as though fully set forth at this point.
51. At all times herein mentioned. Plai ntiff' s and the Class' monies were in the
posse ssio n and under the control of Defendants. Defend ant s have taken this properly for
their own use and benefit. thereby depriving Plaintiff and the Class of the use and benefit
thereof. Plaintiff and the Class have been damaged by their f aiJure to receive the monies.
52. By virtue of Defendants' actions. Defendants hold these fu nds as
constructive trustee for the benet1t of Plaintiff and the Class. Plaintiff requests an order
that Defendants be directed to give pos se ss io n thereof to Plaintiff and the Class.
6. DAMAGES 53. Plaintiff requests that the Court order Defendants to p rov ide restitution to the
Class and to disgorge the monies due and owing to the Plaintiff an d the Plaintiff Class.
54. Plaintiff requests on behalf of itself and the Class that it recover all penalties.
'} 27 interest. and reasonable and necessary att orne ys · fees it is e nt itle d to under the Jaw. t.:
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J 28 55. Plaintiff and the Plaintiff Class request both prej udg me nt and post-judgment
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CLASS ACTION COMPLAINT
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1 interest at the maximum rate allowed by law.
2 3 7. PRAYER FQR RELIEf
4 WHEREFORE, PREMISES CONSIDE�ED. Plaintiff prays for the foJlowing
5 judgment in her favor against Defendants:
6 1. An order certifying this case as a class action against the Defen(lants and
1 appointing Plaintiff and her counsel as Representative of the Plaintiff Class;
8 ii. For judgment against Defendant$ and in favor of Plaintiff and the Class on
9 all claims asserted in this Complaint;
10 m. For disgorgement and restitution plus interest due thereon at the legal rate
11 and/or as established by each Class Members· transient occupancy taxes:
12 tv. For costs of suit incurred herein:
13 v. For prejudgment interest to the extent allowed by law:
14 vi. For penalties as aHowed by Jaw;, and
1S vii. For such other and further relief as this Court may deem just and proper.
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17 Dated: December 30. 2004
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By: Paul R. Kiesel. E�q. Patrick DeBiase. Esq. Michael C. Eyerly. Esq_., KIESEL BOUCHER & LARSON. LLP 8648 Wilshire Boulevard BeVerly Hills. California 90211 (3){)) 854-4444 Steve.n D. WoJens. Esq. Frank E. Goodrich. Esq. BARON & BUDD. P.C. 3102 Oak Lawn A venue. Suite II 00 Dat,as. Texas 75219 (2J4) 521-3605 Attorneys for the City of Los Angeles and the putative class.
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CLASS ACTION COMPLAINT
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e SHORT TJTU:: CASE NUMBER
CITY OF LOS ANGELES v. HOTELS.COM. L.P .• et al.
CIVIL CASE COVER SHEET ADDENDUM AND STATEMENT OF LOCATION CERTIACATE OF GROUNDS FOR ASSIGNMENT TO COURTHOUSE LOCATION
This form Is required pursuant to LASC Local Rule 2.0 In all new civil case filings In the Los Angeles Superior Court.
Item I. Check the types of hearing and fill in the estimated length of hearing expected for this case:
JURY TRIAL? UiYES CLASS ACTION? Uj YES LIMITED CASE?0YES TIME ESTIMATED FOR TRIAL_lQ_0HOURs,ijjDAYS. Item II. Select the correct district and courthouse location (4 steps- If you checked "Umited Case", skip to Item Ill, Pg. 4): Step 1: After first completing the Civil Case Cover Sheet Form. find the main civil case cover sheet heading for your case in
the left margin below, and. to the right In Column A, the Civil Case Cover Sheet case type you selected.
Step 2: Check� Superior Court type of action in Column B below which best describes the nature of this case.
Step 3: In Column C, circle the reason for the court location choice that applies to the type of action you have checked. For any exception to the court location. see Los Angeles Superior Court Local Rule 2.0.
Ste
Applicable Reasons for Choosing Courthouse Location (see Column C below)
1. Class ActiOns must be filed In the County Courthouse, Central District. 2. May be flied In Central (Other county. or no Bodily Injury/Property Damage).
6. Location of property or permanenUy garaged vehicle.
7. Location where pe6Uoner resides. 3. Location where cause or action arose. 8. Location wherein defendant/respondent functions wholly. 4. Location where bodily injury. death or damage occurred. 5. Location where performance required or defendant reSides.
9. Location where one or more of the parties reside. 10. Location of Labor Commissioner Office.
p 4FII' th 'f . d 4' 1 . I 1n e 1n ormatron requeste on PI'!Qe rn . tern Ill I t It IV s· h d I ; como1e e em ,1gn t e ec aratron. .
A Civil case Cover Sheet
Category No.
Auto (22)
Uninsured Motorist (46)
Asbestos (04)
Product Uability (24)
Medical Malpractice (45)
Other Personal Injury
Property Damage Wrongful Death
(23)
Business Tort (07)
Civil Rights (08) •,
.· Defamation (13) C,
I
·' Fraud (16)
;.f .lnteUectual Property (19) ' ..
CIV 109 3·04 LASC Approved
B c Type of Action Applicable Reasons •
(Check only one) See Step 3 Above
0 A7100 Motor Vehicle ·Personal Injury/Property Damage/Wrongful Death 1 .. 2 .. 4.
r::l A7110 Personal Injury/Property Damage/Wrongful Death- Uninsured Motorist 1., 2., 4.
a A6070 Asbestos Property Damage 2.
Q A7221 Asbestos - Personal lnjurytWrongful Death 2.
Q A7260 Product Liability (not asbestos or toxic/environmental) 1 .. 2 .• 3 .. 4., 8.
0 A7210 Medical Malpractice- Physlctans& Surgeons 1 .. 2 .• 4. CJ A7240 Other Professional Health care Malpractice 1 •• 2 .. 4 .
0 A7250 Premises Uability (e.g .. slip and fall) 1., 2 .• 4. Q A7230 Intentional Bodily Injury/Property Damage/Wrongful Death (e.g ..
asseult, vandalism. etc.) 1 .• 2 .• 4.
CJ A7270 Intentional Infliction of Emotional Distress 1., 2 .• 3.
Q A7220 Other Personal Injury/Property DamagetWrongful Death 1 .• 2 .• 4.
ij A6029 Other Commercial/Business Tort (not fraudlbreach of contract) (!)2 .. 3.
a A6oos Civil RightsJDiscrimination 1 .• 2 .• 3.
0 A6010 Defamation (slandernibel) 1 .• 2 .. 3.
0 A6013 Fraud (no contract) 1 .• 2 .• 3.
CJ A6016 Intellectual Property 2 .. 3.
CIVIL CASE COVER SHEET ADDENDUM LASC, rule 2.0 AND STATEMENT OF LOCATION Page 1 of 4
lx•i•Nt".'.,AIIIOII.Utd Calilixnlll Cmuy Foxm'
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