Booking.com B.V. v. Suganuma

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
07-MAY-2025
07:58 AM
Dkt. 105 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

BOOKING.COM B.V., Plaintiff-Appellant, v.
GARY S. SUGANUMA, in his official capacity as
Director of Taxation, and STATE OF HAWAII DEPARTMENT
OF TAXATION, Defendants-Appellees

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CASE NO. 1CC191000107)

SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)

Booking.com B.V.1 appeals from the January 24, 2023
Final Judgment for Gary S. Suganuma,2 in his official capacity as
Director of Taxation, and the State of Hawai#i Department of
Taxation (together, DOTax), entered by the Circuit Court of the
First Circuit.3 Booking.com challenges the circuit court's
June 13, 2022 "Order Granting Defendants . . . Motion to Dismiss
Complaint." We affirm.
Booking.com sued DOTax on January 18, 2019. The
complaint alleged: Booking.com is headquartered in Amsterdam,

1
B.V. stands for besloten vennootschap; it means private limited
company in Dutch.
2
Gary S. Suganuma, the current director of taxation, is substituted
for former directors Linda Chu Takayama and Isaac W. Choy, pursuant to Hawai#i
Rules of Appellate Procedure Rule 43(c)(1).
3
The Honorable Gary W.B. Chang presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

the Netherlands; it operates a website on which travelers can
make reservations for transient accommodations and travel-related
services; it receives a predetermined per-reservation commission
from the lodging and service providers; Hawaii Administrative
Rules (HAR) § 18-237-29.53-10(a)(3)4 imposed tax on electronic
commerce in a discriminatory manner, subjecting online merchants
to taxation that is not imposed on brick-and-mortar merchants
solely because the transient accommodations or travel-related
bookings are "sold, purchased, or arranged" online. Booking.com
sought a declaration under Hawaii Revised Statutes (HRS) § 91-7
that HAR § 18-237-29.53-10(a)(3) was invalid and void.
On November 10, 2021, DOTax issued a Notice of Final
Assessment of General Excise and/or Use Tax to Booking.com for
calendar years 2010 through 2020 totaling $19,737,315.28.
Booking.com filed an appeal in the Tax Appeal Court on
December 9, 2021. Judiciary Information Management Systems
No. 1CTX-XX-XXXXXXX. We take judicial notice under Rule 201,
Hawaii Rules of Evidence, Chapter 626 HRS (2016), that the tax
appeal is set for trial the week of June 15, 2026.
The State moved to dismiss the complaint below on
March 14, 2022. The motion was heard on May 10, 2022. The
circuit court entered an order granting the motion on June 13,
2022. This appeal followed. The Final Judgment was entered on
January 24, 2023, after a temporary remand.

4
HAR § 18-237-29.53-10 (2018) provides, in relevant part:

(a) Except as provided in section 18-237-29.53-04
[("Services related to real property")], services performed
by a commissioned agent are used or consumed where the agent
is located at the time the agent's services are performed;
provided that:

. . . .

(3) when transient accommodations or travel-related
bookings are sold, purchased, or arranged online
through a commissioned agent, the agent's service is
used or consumed where the transient accommodation or
travel-related booking is located.

2
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Booking.com states a single point of error: "The
circuit court erred in ruling that it lacks subject matter
jurisdiction to hear Booking's challenge to the validity of the
Department's Rule pursuant to HRS § 91-7."
The existence of subject matter jurisdiction is a
question of law we review de novo under the right/wrong standard.
Ocean Resort Villas Vacation Owners Ass'n v. Cnty. of Maui, 147
Hawai#i 544, 552, 465 P.3d 991, 999 (2020). Interpretation of a
statute is also a question of law we review de novo. Id.
We begin with the plain language of the statute. Ocean
Resort Villas, 147 Hawai#i at 553, 465 P.3d at 1000. HRS § 91-7
(2012 & Supp. 2018) provides:

Declaratory judgment on validity of rules. (a) Any
interested person may obtain a judicial declaration as to
the validity of an agency rule as provided in subsection (b)
by bringing an action against the agency in the circuit
court or, if applicable, the environmental court, of the
county in which the petitioner resides or has its principal
place of business. The action may be maintained whether or
not the petitioner has first requested the agency to pass
upon the validity of the rule in question.

(b) The court shall declare the rule invalid if it
finds that it violates constitutional or statutory
provisions, or exceeds the statutory authority of the
agency, or was adopted without compliance with statutory
rulemaking procedures.

The plain language of HRS § 91-7 supports Booking.com's
argument that the circuit court had subject matter jurisdiction
over its declaratory judgment action.
DOTax argued the circuit court lacked subject matter
jurisdiction because the Hawai#i declaratory judgment statute
provides:

In cases of actual controversy, courts of record, within the
scope of their respective jurisdictions, shall have power to
make binding adjudications of right, whether or not
consequential relief is, or at the time could be, claimed,
and no action or proceeding shall be open to objection on
the ground that a judgment or order merely declaratory of
right is prayed for; provided that declaratory relief may
not be obtained . . . in any controversy with respect to
taxes[.]

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HRS § 632-1(a) (2016) (emphasis added).5 The statute is
jurisdictional. Island Ins. Co. v. Perry, 94 Hawai#i 498, 502,
17 P.3d 847, 851 (App. 2000); Hawai#i Rules of Civil Procedure
Rule 57 ("declaratory relief may not be obtained in any
controversy with respect to taxes").
In Tax Found. of Haw. v. State, 144 Hawai#i 175, 439
P.3d 127 (2019), Tax Foundation filed a declaratory judgment
action challenging the State's calculation of its cost to
administer a City and County of Honolulu rail surcharge on
general excise and use taxes collected by DOTax. Tax Foundation
didn't dispute liability to pay general excise and use tax or the
rail surcharge itself; it challenged "only the 'administration
and allocation' of the Honolulu County surcharge after it is
assessed and collected." Id. at 188, 439 P.3d at 140. The
supreme court held, "this is not a 'controversy with respect to
taxes' and the exclusionary provision does not apply because only
suits that would restrain the assessment and collection of taxes
fall within the scope of HRS § 632-1."
Then, in Ocean Resort Villas, timeshare owners sought
declaratory relief over the constitutionality of the County of
Maui's timeshare real property tax classification, which imposed
a higher rate on timeshares compared to the "hotel and resort"
classification. 147 Hawai#i at 547, 465 P.3d at 994. The
supreme court noted that the complaint and two amendments all
"sought declaratory relief in the form of voiding the County's
real property timeshare tax, a result which would 'interfere with
the assessment or collection of taxes.'" Id. at 556, 465 P.3d at
1003. The court held that the lawsuit was "a 'controversy with
respect to taxes,' for which declaratory relief under HRS § 632-1

5
The prohibition against declaratory relief in controversies with
respect to taxes was added to HRS § 632–1 in 1972. 1972 Haw. Sess. Laws
Act 89, § 1(a). It was added "to mirror the tax exclusion in the federal
Declaratory Judgment Act," 28 U.S.C. § 2201, which "prohibits declaratory
relief in tax matters to permit the government to assess and collect taxes
alleged to be due it without judicial interference." Tax Found. of Haw. v.
State, 144 Hawai#i 175, 187, 439 P.3d 127, 139 (2019).

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is not allowed. For that reason, the circuit court lacked
jurisdiction over the Taxpayers' suit." Id.
Booking.com argues that HRS § 91-7 independently
creates jurisdiction in the circuit courts over declaratory
judgment actions about "the validity of an agency rule,"
including rules promulgated by DOTax. It contends that HRS
§ 632-1 applies only to "cases of actual controversy," and argues
— disingenuously — that

there was no "controversy" at all between [Booking.com] and
[DOTax] at the time this action was filed, and still today
there is no controversy between the parties that
[Booking.com] seeks to have resolved by this action.
Indeed, [Booking.com] does not seek any ruling regarding the
application of the Rule [HAR § 18-237-29.53-10(a)(3)] to
[Booking.com] in this action.

(Emphasis added.)
Booking.com, then, is not "[a]ny interested person"
entitled to seek relief under HRS § 91-7. "[A]ny interested
person is one who is, without restriction 'affected' by or
'involved' with the validity of an agency rule." Asato v.
Procurement Pol'y Bd., 132 Hawai#i 333, 343, 322 P.3d 228, 238
(2014) (cleaned up). If Booking.com doesn't seek a ruling that
HAR § 18-237-29.53-10(a)(3) does not apply to it, it is not "any
interested person" entitled to declaratory relief under HRS
§ 91-7.
Here, Booking.com's complaint alleges that HAR
§ 18-237-29.53-10(a)(3) is a discriminatory tax that violates the
Internet Tax Freedom Act, 47 U.S.C. § 151, and the Commerce and
Supremacy clauses of the United States Constitution. It requests
a declaration that HAR § 18-237-29.53-10(a)(3) "is invalid and
void." If successful, it would restrain and interfere with the
assessment or collection of taxes. Under Ocean Resort Villas,
the circuit court had no jurisdiction over Booking.com's suit.

5
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

147 Hawai#i at 556, 465 P.3d at 1003. The circuit court did not
err by granting DOTax's motion to dismiss.6
The Final Judgment entered by the circuit court on
January 24, 2023, is affirmed.
DATED: Honolulu, Hawai#i, May 7, 2025.

On the briefs:
/s/ Keith K. Hiraoka
Ray K. Kamikawa, Presiding Judge
Nathaniel A. Higa,
for Plaintiff-Appellant. /s/ Karen T. Nakasone
Associate Judge
Lauren K. Chun,
Deputy Solicitor General, /s/ Sonja M.P. McCullen
State of Hawai#i, Associate Judge
for Defendants-Appellees
Gary S. Suganuma, in his
official capacity as Director
of Taxation, and State of
Hawai#i Department of
Taxation.

6
Booking.com is not without a means to challenge HAR
§ 18-237-29.53-10(a)(3). Its recourse is through the tax appeal procedures of
HRS Chapter 232, something it is already pursuing. See Ocean Resort Villas,
147 Hawai#i at 556–57, 465 P.3d at 1003–04.

6