Johnson v. Priceline.com, Inc. - 711 F.3d 271 (2d Cir. 2013)

Rule:

In Connecticut, a failure to disclose can be deceptive only if, in light of all the circumstances, there is a duty to disclose. Accordingly, mere silence is not actionable in a transaction in which the parties deal at arm's length unless the circumstances or the existence of a confidential relationship gives rise to a duty to speak.

Facts:

Plaintiffs Lee Johnson and Joey Marie Kelly initiated a putative class action in the United States District Court for the District of Connecticut against defendant Priceline.com, Inc. ("Priceline"), alleging that the latter failed to disclose to users of its “Name Your Own Price” booking service that a successful bid for a hotel room would generally exceed the amount defendant itself compensated the hotel vendor, with defendant retaining the difference as profit. Plaintiffs sought compensatory, punitive, and equitable relief for alleged breaches of fiduciary duty and contract, as well as a violation of Connecticut's Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110b. In appealing from a judgment of dismissal, plaintiffs argued that the district court erred in concluding that, as a matter of law, defendant did not stand in a fiduciary relationship to users of its Name Your Own Price service, without which there was no obligation to make the disclosure.

Issue:

Did the defendant stand in a fiduciary relationship to the users of its booking service, thereby making the defendant obligated to disclose the information in question?

Answer:

No.

Conclusion:

Like the district court, the appellate court concluded plaintiffs failed as a matter of law to plead a fiduciary relationship. Because plaintiffs failed as a matter of law to allege an agency relationship between defendant and consumers who used its booking service to reserve hotel accommodations, they could not plausibly claim defendant breached an agent's fiduciary duty in failing to apprise consumers that it might have procured the accommodations at costs lower than their bids, retaining the difference as profit.