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HomeMy WebLinkAboutItem A1* CLOSED SESSION 1:30 P.M. * BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY BOCC Special Meeting Meeting Date: 7/13/10 - KW Bulk Item: Yes _ No X Division: Co= Attorney Staff Contact Person: Bob Shillinger. #3470 AGENDA ITEM WORDING: An Attorney -Client Closed Session of the Board of County Commissioners in the matter of Monroe County v. Priceline.com, et al, 09-10004CV. ITEM BACKGROUND: While the County has reached preliminary settlements with Priceline, Travelocity, and Expedia, negotiations with Orbitz, the remaining defendant group, are ongoing. Trial is scheduled to start July 19. The closed session is being scheduled in the event the case is resolved prior to the trial date. Present at the meeting will be the Commissioners, County Administrator Roman Gastesi, County Attorney Suzanne Hutton, Chief Assistant County Attorney Bob Shillinger, special litigation counsel Jay Shapiro and Tod Aronovitz as well as a certified Court Reporter. PREVIOUS RELEVANT BOCC ACTION: 7/6/10 BOCC approved Closed Session for BOCC Special Meeting 7/13/10 @ 1:30 p.m. in Key West CONTRACT/AGREEMENT CHANGES: N/A STAFF RECOMMENDATIONS: Approval. TOTAL COST: Est. 200 INDIRECT COST: BUDGETED: Yes X No COST TO COUNTY: Est. $200 SOURCE OF FUNDS: REVENUE PRODUCING: Yes _ No X AMOUNT PER MONTH Year APPROVED BY: County Atty X OMB/Purchasing Risk Management DOCUMENTATION: Included Not Required X DISPOSITION: AGENDA ITEM 4- 1-7- Revised 2/05 County of Monroe The Florida Keys Robert B. Shillinger, County Attorney" Pedro J. Mercado, Assistant County Attorney ** Cynthia L. Hall, Assistant County Attorney ** Christine Limbert-Barrows, Assistant County Attorney ** Derek V. Howard, Assistant County Attorney** Steven T. Williams, Assistant County Attorney** Peter H. Morris, Assistant County Attorney Patricia Eables, Assistant County Attorney Chris Ambrosio, Assistant County Attorney ** Board Certified in City, County & Local Govt. Law May 25, 2017 Kevin Madok, Clerk of the Circuit Court Sixteenth Judicial Circuit, State of Florida Monroe County Courthouse 500 Whitehead Street Key West, FL 33040 -r BOARD OF COUNTY COMMISSIONERS Mayor George Neugent, District 2 Mayor Pro Tem David Rice, District 4 Danny L. Kolhage, District 1 Heather Carruthers, District 3 a ` - Sylvia J. Murphy, District 5 Office of the County Attorney 1111 121h Street, Suite 408 Key West, FL 33040 (305) 292-3470 - Phone (305) 292-3516 - Fax In Re: Monroe County v. Priceline.com, et al., Case No.: 09-cv-10004 U.S. District Court, Southern District of Florida Dear Mr. Madok: Please find enclosed herewith the transcript of the following closed attorney/client sessions of the Monroe County Board of County Commissioners regarding the above -referenced matter: June 29, 2010; and, July 13, 2010. Under F.S. 286.011(8), the transcript may be part of the public record because the litigation has concluded. Thank you for your assistance with this matter. Please contact me should you have any questions. Sincerely, Robert B. Shillinger Monroe County Attorney Enclosures 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY ATTORNEY -CLIENT CLOSED SESSION THURSDAY, JULY 13, 2010 1:30 - 2:10 PM RE: MONROE COUNTY v. PRICELINE.COM, ET AL. CASE NO. 09-1004CV L HELD AT Harvey Government Center 1200 Truman Avenue Key West, Florida 33040 COUNTY COMMISSIONERS: Sylvia J. Murphy, Mayor Mario De Gennaro, County Commissioner Heather Carruthers, County Commissioner George Neugent, County Commissioner Kim Wigington, County Commissioner STAFF: Suzanne A. Hutton, County Attorney Robert B. Shillinger, Chief Assistant County Attorney Roman Gastesi, County Administrator Jay Shapiro, Special Litigation Counsel (by telephone) All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O C E E D I N G S MAYOR MURPHY: BOCC is now called to order. And then I believe we have -- Do you make your announcement first, or after I close the session? MS. HUTTON: I say a little bit, and then you close the open session. MAYOR MURPHY: Okay. It's yours. MS. HUTTON: A closed attorney -client session pursuant to Section 286.011, Subsection 8, Florida Statutes, will now be held. It is estimated that this meeting will take approximately thirty minutes. The persons attending the meeting will be Mayor Sylvia Murphy, Mayor Pro Tem Heather Carruthers, Commissioner George Neugent, Commissioner Kim Wigington, and Commissioner Mario De Gennaro, County Administrator Roman Gastesi, County Attorney Suzanne Hutton, Chief Assistant Attorney Bob Shillinger, Special Litigation Counsel Jay Shapiro, and a certified court reporter. Since the law prohibits any other person from being present at the closed session, the commissioners, the attorneys for the county, and the court reporter will now remain in the meeting room, and all other persons are required to leave the All Keys Reporting - Court Reporters - (305) 289-1201 Locations in Key Largo, Marathon & Key West 31 LA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 room. When the closed session is over, we will re -convene and re -open the public meeting. Now, Mayor, if you will close the open session. MAYOR MURPHY: The open session is closed. We will now open the closed session. (Pause in the record.) MS. HUTTON: All right. The Mayor already called the closed session to order, so the rest of this meeting is being held upon the request of the County Attorney Suzanne Hutton, who announced at a prior public special meeting held on July 6 that I needed advice concerning the pending matter of Priceline.com, et al., 09-10004CV. At that meeting, the Board approved holding a closed session at the July 13, 2010 BOCC Special Meeting and through publication of the agenda for the July 13, 2010 BOCC Special Meeting and public notice was given at the July 6, 2010 BOCC Special Meeting and through publication of the agenda for the July 13, 2010 BOCC Special Meeting and on the County's website and channel 76. For the record, and the benefit of the court reporter, each of us will state our name and position starting with the commissioners. Commissioner Di Gennaro, do you want to start? All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 41 COMMISSIONER DI GENNARO: Here. MS. HUTTON: You need to state your name, please. COMMISSIONER DI GENNARO: Suzanne, you don't know my name by now? Okay. Mario Di Gennaro, Monroe County Commissioner, District 4. COMMISSIONER CARRUTHERS: Heather Carruthers, Monroe County Commissioner, District 3. MAYOR MURPHY: Mayor Sylvia Murphy, Commissioner, District 5. COMMISSIONER NEUGENT: County Commissioner George Murphy, District 2. COMMISSIONER WIGINGTON: County Commissioner Kim Wigington, District 1. MS. HUTTON: Suzanne Hutton, County Attorney. MR. GASTESI: Roman Gastesi, County Administrator. MR. SHILLINGER: Robert Shillinger, County Attorney. Appearing by telephone? MR. SHAPIRO: This is Jay Shapiro of the law firm, on the phone. MS. HUTTON: Just as a reminder, we are only going to be discussing settlement negotiations and All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 51 V L A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 strategy relating to litigation expenditures. You cannot take any decisive action at this meeting. We can only provide information and you can provide direction to the attorneys. Any decisions the Board makes must be done in a meeting open to the public. And I'm going to turn this over to Mr. Shillinger and Mr. Shapiro. MR. SHILLINGER: Good afternoon. We're back again on the Priceline case, Monroe County v. Priceline, et al. We had met previously, on June 29th, to discuss a proposed settlement with three of the four defendant groups, that was Priceline, Travelocity and Expedia. We finally reached the agreement with Orbitz, the last remaining defendant group. And before I turn it over to Mr. Shapiro, who will kind of explain what we have going on, in front of you, you have an agenda item summary. In the event that you're comfortable with the terms of the settlement that we're about to present to you, we would have to, when we come back to open session, open the agenda, add this on by unanimous consent, and give us the authority to execute the settlement terms. So this is background just in the event we get there. All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 1 2 3 C! 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So with no further ado let me turn it over to Jay Shapiro from the firm of Stearns Weaver, who has been representing the County along with several other lawyers in this matter for the last couple of years. Jay? MR. SHAPIRO: Yes. Thank you, Bob. And good afternoon, everyone. I'm pleased to report that we've reached an agreement in principle, subject, of course, to your approval, with the last defendant group. We had reached previously settlements with the major defendant, which is Expedia and its subsidiaries, and also with some of the minor defendants, Travelocity and Priceline. The last minor defendant remaining who would not settle was the Orbitz group, and we've now reached an agreement in principle with them for the amount of $325,000. If you were to approve that last settlement, that would bring the settlement total for the entire class to six and a half million dollars. And just to put that in perspective, if you recall when we met last time, the settlement we had with the three other defendant groups brought the settlement to a few hundred thousand dollars over the total amount of taxes that All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we believed were owed. Based on the defendants' outlined hotel reservations at six and a half million total, that still brings us ahead by approximately a hundred and fifty to $200,000 over and above the total taxes which we've calculated that all of these defendant groups owed. So we recommend this settlement to you. As class representative on behalf of the clients, we think it is a very good settlement. Given all of the risks and uncertainties that we discussed at our last meeting, none of which have changed, that completes our report, and subject to your approval, we've got the last piece in place, and we think that it's a very good settlement. MR. SHILLINGER: The County's total percentage on this with this additional settlement amount would bring our take to roughly two million dollars in Tourist Development tax dollars. So for the benefit of the two commissioners who weren't here last time, some of the risks that we have in going forward are efforts by the online companies to get a legislative solution, they got a bill through the house in Tallahassee last time, it's been stopped on the senate floor, that would exempt the online companies from paying these taxes. There's an ongoing effort All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in Washington led by the majority leader, Harry Reid, in the Senate, to get federal legislation through that would give the online companies a legislative fix. The prospects of taking this case to trial, while we thought were pretty good, if we still win and they were going to fight us on appeal, that's going to take us a couple of years to get through that. This settlement would get us money now, would get us an equivalent of all of the past taxes and, in fact, the past due taxes and a little bit going forward, and we've agreed not to sue them for a couple of years to give them some measure of peace and quiet. When we're dealing with talking to the media, and we had this discussion last time we were there, first of all, we suggested that you refer any inquiries to me, just so we don't misspeak. They're very, the online companies are very nervous about what comments are being made and specifically what, any comments that we are going to make, we would say that they're settling a disputed claim. They're not admitting that they owe taxes, they're not admitting that they're paying taxes. They're paying us money to go away. It just coincidentally happens to be just over a hundred percent of the taxes plus a All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 81 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 little bit for going forward. Yes, Mr. Di Gennaro, question? COMMISSIONER DI GENNARO: How much will they be paying in taxes? MR. SHILLINGER: The agreement doesn't require them to pay taxes in the future. They're buying a couple of years peace by paying a little bit more than a hundred percent. That will leave us the ability to go back in a couple of years if it hasn't been resolved legislatively or through one of the other lawsuits that's going forward. Right now, the Attorney General and the, I think the CFO, are involved jointly in a suit -- And, Jay, I think you can speak to it, probably, with more clarity than I. -- in which they're trying to clarify the legal issue of whether or not they owe the taxes or not. And so in two years it may be a moot point. COMMISSIONER DI GENNARO: When you say a couple of years, is there a deadline? Is it two years? MR. SHILLINGER: Two years from the date of the settlement. Right, Jay? MR. SHAPIRO: Yes, with the exception of the Priceline defendants. They paid a little bit more All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 1 on a pro rata basis than the other defendants, and we've agreed to give them a three-year hiatus instead of a two-year. But with the rest of the defendants it's a two-year. And Mr. Shillinger is correct. There are ongoing other lawsuits that should, by the time this two years is over, either the legislature is going to wipe out the taxes altogether or a court is going to decide whether they're owed. But even if a court decides that they're owed, the legislature can still take it away. And certainly the legislation that's pending in Washington, if that were to pass, and based on what Robert Gibbs said on the Sunday talk shows, he's expecting that there may be a change in control in the House come November, the likelihood, I think, of Washington dealing with it, I think, has gone up, and I don't think the prospects for the government amenities will be as good if the Republicans take control of the house this fall. So, as Mr. Shillinger said, there is all of this uncertainty out there which irrespective of the lawsuit could potentially wipe out the County's recovery in this matter, even if it were to prevail at trial and get all of the taxes and interest and everything under the sun that we would ask to get All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West LA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 11 1 awarded, that could get taken away through efforts outside the litigation process. So as we discussed, I believe, with some of the commissioners last time, those risks make, in our mind, this settlement where we're getting the equivalent of a hundred percent of the taxes plus a little on top going back ten years, and for purposes of this closed session there's some argument about whether we could even go back beyond a five years statute of limitations, as part of the settlement we're going back beyond that, the trade-off for being able to go back further than what could possibly be an argument under the statute of limitations in exchange for a two-year hiatus seemed to us to be a pretty fair trade-off, given the ability to get the money to the County to use it right away. MR. SHILLINGER: Another question? COMMISSIONER DI GENNARO: I see 33 of 59 counties elected not to settle and stay in the class suit, number one. Number two, for the people who are staying in the class suit, if they do prevail will they be in a position to also get triple damages, punitive damages? MR. SHILLINGER: No. All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER DI GENNARO: No triple damages? MR. SHILLINGER: Right. This is a total settlement. We're saying -- COMMISSIONER DI GENNARO: No. I'm saying if we stay in the suit. MR. SHILLINGER: Right. We are the lead plaintiff in the suit, so we're definitely in the suit. The other class members who would join with us, they would get a pro rata share of the six million dollars, and that pro rata calculation is based on the financial data based on the number of percentages of transactions they've had vis a vis their own tourist development ordinance rate. MR. SHAPIRO: I believe the commissioner's question was what are the total outside damages if we were to go and get everything we wanted, whether it be punitives or penalties or things like that. I think that was your question, right? COMMISSIONER DI GENNARO: That was my question. If we stayed in the lawsuit, would we be eligible for punitive damages and what would that be, number one. And number two is that I notice that 50 percent of the people in this lawsuit decided to stay in; is that correct? MR. SHILLINGER: Correct. All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 12 13 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER DI GENNARO: Why? I mean, why would they and us not, more than 50 percent, were their numbers not as good? MR. SHAPIRO: I can address that, Bob, if you'd like. MR. SHILLINGER: Go ahead. MR. SHAPIRO: Most of the counties that opted out of the class once the class notice went out, the ones that opted out were already represented by outside counsel, and I think that their outside counsel prevailed upon them to stay with the existing cases that they already had. Now, there were a number that stayed in. My prediction at the last meeting, which I think is coming to pass, is that once these other counties find out that we are getting what is the equivalent of a hundred percent of the taxes, they're going to be seriously questioning their lawyers about why they were convinced to opt out of the case, given that we're about to get paid now and they're looking at years and years of litigation. And we're trying to prevail on them to stay in the case because we have a quick trial date and we have a judge that appeared to like our view of the case and that's why we got the settlement that we did, is because I believe the All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 14 defendant OTCs were very concerned about the result that was going to happen in this case much more than in these other cases that are pending in state court. So my prediction is, and I've already been contacted by Orlando, they want to know exactly what our settlement is and how we got it and they want to see all of our trial exhibits, and we're having discussions about whether we want to share that information with them. But I believe that the reason why a number of these counties opted out is because, quite frankly, they got bad counsel from their outside lawyers. They would have been much better off staying in the case. With respect to the commissioner's question about if we were to not take the settlement and stay in the case, there were certainly interest and penalties that we could seek on top of the taxes that we were claiming there was going to be a very big fight about the amount of penalties that we can achieve. There's a statute that says we can get 50 percent of the taxes as penalties. There's a very good argument that the defendants were going to make that that could be limited to ten percent of the All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 taxes. If we could argue that it was willful in nature we could ask for, theoretically, a hundred percent of the taxes as an additional penalty. But all of that was very much up in the air about whether we'd be entitled to get that. And, you know, like any settlement, you don't always get everything that you want and there was a compromise involved, but given at the end of the day that we're getting these folks to pay us over a hundred percent of the actual taxes and we're able to go back beyond five years, the view of the, certainly the counsel and, I think, of the commissioners that were present at the last meeting, was that that's a pretty good deal. COMMISSIONER DI GENNARO: Is the hundred percent that we're getting, is that the net? MR. SHAPIRO: The gross number is over a hundred percent. There's certainly fees and expenses. MR. SHILLINGER: That would be roughly a third, based on the retainer agreement we signed with Tod Aronovitz and his firm back in 2007. That will, actually, be adjusted by the court on how they can go above the third. COMMISSIONER DI GENNARO: But we would not ask All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to go above the third under any circumstances? MR. SHILLINGER: Right. And the court, actually, needs to approve it, since it is a class. COMMISSIONER DI GENNARO: But the question is also, if they're not, with their outside counsel if their outside counsel tried to negotiate ahead of time before and if we're assuming we're trying to settle the case, maybe we should try to work out with them -- MR. SHAPIRO: Commissioner, if it makes you feel any better, there certainly will be no windfall for the outside counsel. The amount of attorney's fees that my firm and my co -counsel firms have spent to get to this point do not even approximate what we're going to get in returns if we get 33 percent of the recovery. We expect much more than that in getting this case to this point. So there will certainly be no windfall for the lawyers. They're taking a cut, too. COMMISSIONER DI GENNARO: All right. You know what, I won't get into this debate, because I've been here and done it many times. MR. SHILLINGER: Of the two million, our percentage should be about 1.25. 1.3, roughly. COMMISSIONER NEUGENT: Take it. All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 16 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MAYOR MURPHY: Be done with it. COMMISSIONER NEUGENT: Be done with it. COMMISSIONER DI GENNARO: Be done with it. MR. SHILLINGER: All right. Before we go back to the open session where we can actually take affirmative action to vote on that, are there any questions before we close the closed session regarding this matter? COMMISSIONER DI GENNARO: Just one. MR. SHILLINGER: Okay. COMMISSIONER DI GENNARO: Can we speak about this in the public session, about what happened in the closed session? MR. SHILLINGER: You shouldn't speak about what happened in the closed session. I would ask you to refer any questions to me, just so have one unified message. MAYOR MURPHY: That's what we did last time. MR. SHAPIRO: Ladies and gentlemen, one last point before we break. Now that the commission has approved the settlement, we now have to go back to Judge Moore, present it to him on behalf of the class, he has to preliminarily approve the sending of notice to the other class members, and then there'll be a final hearing. So it's not done, but All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 17 I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there is a process that needs to be followed where we have to get the court's preliminary and final approval. My assumption is that he will have absolutely zero hesitation in preliminarily approving the settlement, and once notice goes out to the class we'll have a hearing on final approval, which I do not expect will be much of a problem. You never know in cases like this. But getting preliminary approval from the court I do not think is going to be much of an issue, and there will be a final approval hearing sometime in the fall. The second point is, and this goes to what you should be saying publicly, after the last meeting there were some articles written in the press about characterizing the settlement that were, although favorable and not exactly inaccurate, it caused a lot of problems with the defendants, came close to cratering, quite frankly, because they were very concerned about what the reporter has written. And while we have no control over what any reporter writes, we have reached an agreement with the defendants about what can be said about any settlement, and that's what's listed on, the language that Mr. Shillinger put on the agenda accurately describes what we've agreed to say All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 18 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 19 publicly about the settlement, and that is that it's a compromise of disputed claims. There's no admission of liability by the defendants. They're not agreeing to pay any taxes that they say they're owed. It's just a compromise. And that's really all we're allowed to say. MAYOR MURPHY: Okay. Thank you very much. We can now close the closed session, and we can re -open the regular session. (Proceedings concluded at 2:07 p.m.) All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 20 1 C E R T I F I C A T E STATE OF FLORIDA ) COUNTY OF MONROE ) I, Susan L. McTaggart, Court Reporter and Notary Public, State of Florida at Large, do hereby certify that I was authorized to and did report by stenotype the proceedings in the above -entitled matter, and that the transcript is a true record of said proceedings. Dated this 25th day of July, 2010. ----------------- Susan L. McTaggart, Court Reporter All Keys Reporting — Court Reporters — (305) 289-1201 Locations in Key Largo, Marathon & Key West