Class Action: Sandals Resorts Charges Guests Local Taxes and Keeps the Money [UPDATE]
by Erin Shaak
Last Updated on February 28, 2020
McCoy v. Sandals Resorts International, Ltd. et al
Filed: June 13, 2019 ◆§ 1:19-cv-22462
Sandals Resorts International and its sales, marketing and public relations arm face a proposed class action lawsuit that alleges the vacation resort company charges visitors for local government taxes at its Caribbean resorts but then pockets the money.
Case Updates
Update - December 19, 2019 - Case Dismissed
The lawsuit detailed on this page was dismissed without prejudice by United States District Judge Beth Bloom. Judge Bloom determined on November 18 that the case would be best heard in the Turks and Caicos Islands, where the hotel at which the plaintiff stayed is physically located.
In granting the defendants’ motion to dismiss, Judge Bloom contends that the state of Florida, where the suit was initially filed, has “minimal interest” in the case since the events at issue occurred primarily in Turks and Caicos. With that in mind, Judge Bloom determined it would be unfair to burden a jury with potentially deciding a case for which they have little at stake.
“Turning to the local interest in having localized controversies decided at home and the unfairness of burdening citizens in an unrelated forum with jury duty, the Court concludes that these factors weigh in favor of dismissal,” court documents state.
Moreover, Judge Bloom found that Turks and Caicos has the stronger interest in the suit given the nation’s heavy dependence on tourism, which speaks to the necessity of adjudicating tourism-related claims on the islands themselves. Further still, the order points out that Sandals’ terms and conditions dictate that any legal action against the resort or its affiliates “shall be litigated solely and exclusively in the courts of the country in which the hotel is physically located.” The court found that the plaintiff had agreed to these terms when he signed an “on resort guest registration” form before his stay at the defendants’ hotel.
The court therefore determined that dismissal of the case was appropriate since the plaintiff would be able to refile his action in Turks and Caicos “without undue inconvenience or prejudice.” The order adds that the defendants have consented to the plaintiff’s exercise of jurisdiction in Turks and Caicos and would be willing to accept service there.
Judge Bloom’s dismissal order can be read here.
Sandals Resorts International and its sales, marketing and public relations arm face a proposed class action lawsuit that alleges the vacation resort company charges visitors for local government taxes at its Caribbean resorts but then pockets the money.
According to the lawsuit out of Florida, the defendants have reached agreements with local governments—particularly those of the Turks and Caicos, Antigua and Barbuda, and St. Lucia—that allow Sandals to retain part of the money collected from consumers as “taxes” for the governments. The case argues that because Sandals fails to itemize the amounts collected for taxes and instead includes them as part of the overall price of its all-inclusive vacation packages, guests are unaware that they are being overcharged.
“Defendants never disclose that they only remit a percentage of the amounts they collect as ‘taxes’ from the consumers to the government, illegally retaining the rest for themselves,” the lawsuit reads.
The complaint includes correspondence between the Ministry of Finance of Turks and Caicos and the founder and chairman of Sandals and Beaches resorts in which the parties referenced an agreement whereby Sandals would retain 40 percent of the 12 percent accommodation tax owed to the government. The lawsuit further points out that the Turks and Caicos, by law, does not collect accommodation tax for children under 12, yet Sandals allegedly charges this tax for all guests, including children under 12.
Further still, the case goes on to cite an agreement between Sandals and the government of Antigua and Barbuda whereby the nation agreed not to collect $37.5 million in unpaid taxes. The lawsuit argues that this money “came at the direct expense” of guests who stayed at a Sandals resort in the country and overpaid for purported government taxes that were deceptively retained by the defendants. From the complaint:
“At all material times, Sandals markets that its resorts are an all-inclusive package to its customers, including taxes, but conceals that a portion of the taxes is retained by Sandals, rather than being passed through to the government. Therefore, class members are paying inflated amounts for their vacations based upon Defendants’ material omissions.”
The lawsuit looks to cover:
“All persons and entities in the United States who, within the applicable limitations period, purchased a vacation package from a Sandals or Beaches Resort located in a country where Sandals has a Tax Retention Agreement. Excluded from this class are Sandals, Unique Vacations, their affiliates, subsidiaries, agents, board members, directors, officers, and/or employees, and the Court and its staff (the ‘Tax Retention Agreement Class’).”
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