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Item P02 BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: 10/18/2006 Division: County Attorney Bulk Item: Y es ~ No Staff Contact Person: Bob Shillinger x3474 AGENDA ITEM WORDING: Authorization to retain the services of the Aronovitz firm to file suit against Hotels.com and similar entities to recoup unpaid bed taxes. ITEM BACKGROUND: Tod Aronovitz, Esq. has already filed suit on behalf of Leon County against internet hotel booking agents seeking to recoup unpaid bed taxes in the U. S. District Court for the Southern District of Florida. Mr. Aronovitz is seeking to represent other counties, including Monroe, and their respective tax collectors in either a class action or consolidated actions against the defendants. Mr. Aronovitz would represent the County on a contingency basis. In litigation of this type, the Court will often establish an award of attorney's fees. If the Court does not, Aronovitz proposes setting his fee at 1/3 of the monies collected; his fee would rise to 38% if this matter was appealed. He also proposes to advance the costs of the litigation which would be ultimately paid by the defendants. The County would only become liable for costs should the defendants prevail and the Courts make an award of costs. This litigation will likely extend over 2-3 years. PREVIOUS RELEVANT BOCC ACTION: On September 20, 2006, the BOCC deferred taking any action on this request until further information could be gathered on the potential cost to the County. CONTRACT/AGREEMENT CHANGES: No~. STAFF RECOMMENDATIONS: Approval. TOTAL COST: TBA if any BUDGETED: Yes ~ No COST TO COUNTY: TEA if any SOURCE OF FUNDS: Ad valorem REVENUE PRODUCING: Yes xx No AMOUNT TBA APPROVED BY: County Atty ~ DIVISION DIRECTOR APPROVAL: DOCUMENTA TION: Included xxx Not Required_ DISPOSITION: AGENDA ITEM # UNITED STATES DISTRICT COURT SOUTHER.~ DISTRICT OF FLORIDA LEON COUNTY and DORIS MALOY, ) LEON COUNTY TAX COLLECTOR, ) individually and on behalf of all other ) similarly situated counties in the State of Florida, ) ) Plaintiffs, ) v. ) ) HOTELS.COM, L.P., ) a Texas Limited Partnership; ) HOTWIRE, INC., ) a Delaware Corporation; ) CHEAP TICKETS, INC., ) a Delaware Corporation; ) CENDANT TRAVEL OlSTRIBlJTION ) SERVICES GROlJP, INC., a division of ) CENDANT CORPORATION, ) a Delaware Corporation; ) EXPEDlA, INC., ) a Washington Corporation; ) IN TERNETWORK PUBLISHING CORP. ) d/b/a LODGINO.COM, ) a Florida Corporation; ) LOWESTFARE.COM, INC., ) a Delaware Corporation; ) MAUPINTOUR, LLC, ) a Delaware Corporation; ) ORBITZ. INC., ) a Delaware Corporation; ) ORBITZ LLC, ) a Delaw'arc Corporation; ) PRICELINE.COM, INC., ) a Delaware Corporation; ) TRA VELOCITY.CO~I, INC., ) a Delaware Corporation; and ) TRAVELOClTY.CO!vL LP. , a Delaware Corporation. ) Defendants. ~Hf n vzW ~ ~~i 'r Case No. .~\R & 1"'1 Y<.<f...,...,y ~ 4' .'-<", i 1~'\ TT: JiTIT'lf"'':;; ~, '.., -..,'1' .:.:!-!-l;' JOR Y TRIAL DEMANDED ,~ .':0::; ) -) CLASS ACTiON CO~IPLAI2\T Pluimiffs sue Defendants for unpaid Tourist lkvdopment Taxes. and they alkge as follows: :\r~:,;{H<tz -1~~;.J! I..";'.....~.'~r~ \hj~(,.~;n'l l~;vli\.r_, ~ui:c }.?i:)(L i :.::0 \\"C"f Fbglc.'r Str<,ct, .\1iarr~i. i~l(}r~d~ 35130 T _;r:S.>;2~':7;2 ~ 305. }75Jj~..O PARTIES 1. Plaintiff Leon County is a body corporate and a political subdivision established by and authorized to bring suit under F.S. S 125.15, Article I, S I. I of the Leon County Florida Charter, and ~ 11-46 of the Code of Laws of Leon County. 2. Plaintiff Doris Maloy is the Leon County Tax Collector, an elected public official and constitutional officer and empo\vered b)' S 11-46 of the Leon County Code of Laws to collect and enforce payment of current and delinquent tourist development taxes. 3. Defendant HOTELS.COM, L.P. is a Texas limited partnership with its principal place of business in Dallas, Texas. 4. Defendant HOTWIRE, INC. is a Delaware corporation \\ith its principal place of business in San Francisco, California. 5. Defendant CHEAP TICKETS, INC. is a Delaware corporation with its principal place of business in New York, New York. 6. Defendant CENDA.'l\lT TRAVEL DlSTRffilrTION SERVICES GROUP, INC. is division of CENDANT CORPORATION, a Delaware corporation, \\ith its principal place of business in Parsippany, New Jersey. 7. Defendant EXPEDIA, INC. is a Washington corporation with its principal place of business in Belle\'ue, Washington. 8, Defendant lNTERi'iETWORK PUBLISHING CORP. d.b/a LODGING.COM is a Florida corporation with its principal place of business in Boca Raton, Florida. 9. Defendant LOWESTFARE.COM, INC. is a Delaware corporation with its principal place of business in Non\.'alk, Connt.'Cticut. " .\,on..):. itz T~j~ii L~i",-'VI:rs :-.luh'lID1 '[~'1\*)e7, ~"lite 27no> 15() \-Vt.!st r:tdglcf Stre~~::~ \-hall1j~ flortd~l ~~31.:.() T 305..;;1.277': f 5n5375.i':~.43 10. Defendant, I\'1ACpr~TOLR, LLC is a Dela\varc corporation with its principai place of business in Las Vegas. Nevada. Defendant ivtACPINfTOUR, LLC is wholly owned by Defendant MAlJPINTOUR HOLDING, LLC. 11. Defendant ORBITZ, INC. is a Delaware corporation with its principal place of business in Chicago. Illinois. 12, Defendant ORBITZ LLC is a Delaware corporation with its principal place of business in Chicago, Illinois. ] 3. Defendant PRICELlNE.COM, INC. is a Delaware corporation with its principal place of business in Norn-alk, Connecticut. 14. Defendant TRA VELOCITY.COM, INC. is a Delaware corporation with its principal place of business in Southlake, Texas. 15. Defendant TRA VELOCITY. COM, LP is a Delaware partnership \\ith its principal place of business in Southlake, Texas. JURISDICTION A.~D VENUE 20. This Court has subject matter jurisdiction of the claims asserted herein pursuant to 28 V.S.C. ~~ 1331 and 1 332(d){2)(A) in that the amount in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which members of the putative plaintitf class are citizens of States different from Defendants. 21. Venue is proper in this District pursuant to 28 U .S.c. S 1391 (a) in that a substantial part of the events or omissions giving rise to the claims alleged herein occurred, andor it is the judicial district in which at least one of the dcfcndants are subject to personal jurisdiction. 3 \r(\ni.;1':,!Z "fri.it 1....l\,1{'~...~!~ \iLl~;~urn 'l~)wer~ )4ite 27~){}, ~ Sf} \\~t'~il Fl.1gkr StrCr:r~ l\liarnL EoridJ. 3J i,.;~O f 505.5:-2,2771 F 3{j5.3;5.t)2..~3 COMMON ALLEGATIONS A. The Tourist Development Tax 22. Plaintiff Doris Maloy as the Leon County Tax Collector, is empowered to collect the Tourist Development Taxes as set forth in ~ 11-46, et. seq. of the Leon County Code of Laws pursuant to F,S. ~ 125.0 104. 23. ."Tourist' means a person who participates in trade or recreation activities outside the county of his or her permanent residence or who rents or leases transient accommodations as described in paragraph (3)(a)." F.S. ~ 125.0104(2)(b). 24. Florida Statute ~ 125.0104{3)(a) declares the following: It is declared to be the intent of the Legislature that every person who rents, leases, or lets for consideration any living quarters or accommodations in any hotel, apartment hotel, motel, resort motel, apartment, apartment motel, roominghouse. mobile home park, recreational vehicle park, or condominium for a term of 6 months or less is exercising a privilege which is subject to taxation under this section, unless such person rents, leases, or lets for consideration any living quarters or accommodations which are exempt according to the provisions ofchapter2t2. F.S. ~ 125.0104(3)(a) 25. Florida Statute 125,0104 permits the governing board ofa county to levy, impose, and set a tourist development tax at the rate of up to 4%. F.S. S 125.0 1 04(3)(c) and (d). 26. The tourist development tax shall be charged by the person receiving the consideration for the lease or rental, and it shall be collected from the lessee, tenant, or customer at the time ofpaymcnt of the consideration for such lease or rental. F.S. ~ 125.0104(3)(0. 27. The person receiving the consideration for such rental or lease shall recci"e, account for, and remit the tax to the Florida Department of Revenue, who then on a monthly basis, pays and fl;;tums that tax re'venue to the coumy that imposed the tax. F.S. S i 25.0 104(3)l g). 4 .~..t~Ji:C\ i;;.i-i'j,il k...\'~c:r~ \h;)~'~:n i~~w~(:. S~jite ':70i.Jl t~~~) "oYcst r~aglcr Stc('et. .\lialui. ,HoridJ 33 i :;(} T 3oS.j7':~2i7':: f ~;05.J7;;.0243 28, Leon County Code of Laws S 11~46 (hcrcinatlcr "* I 1-46" or "Section 11-46") imposes 411;0 Tourist Development Tax. 29. Section I] -46 provides that .'the wurist development tax shall be charged by the person receiving the consideration for the lease or rental and it shalf be collected from the lessee, tenant or customer at the time of payment of the consideration for such lease or rental." ~ 11- 46( c). 30, Plaintiffs and the Class bring one cause of action against each Defendants for Defendants' failure to remit to Plaintiffs and the Class (through the Florida Department of Revenue) the Tourist Development Taxes owed in violation of ~ 11-46 and other substantially similar ordinances of other counties in the State of Florida enacted pursuant to F,S. * 125,0104. B. Defendants' Unlawful Business Practices 31, At all relevant times, Defendants are/were travel agents engaged in the business of renting, leasing, or letting living quarters or accommodations (as described within F.S. ~ 125.0104(3)(a) and ~ 11-46} situated within Leon County and other counties in the State of Florida with substantially similar ordinances enacted pursuant to F.S. ~ 125.0104. 32. Defendants negotiate ""ith living quarters/accommodations a discounted rate for the purchase of room nights, and then Defendants rent, lease, or let them to their customers (generally on-line and over-the-phone) at a marked-up price. 33. Upon information and belief. Defendants fail(ed) to remit 10 Plaintifts and the Class all taxes due pursuant to S 1146 and other substantially similar ordinances of other coumics in the State of Florida enacted pursuant to F.S. ~ 125.0104. 34. Instead, Defendants only remit to Plaintiffs and the Class taxes on the room rales they negotiated separatcl)' with the Ji\ing quarters,accommodations at lower pric~s than those paid by the users ofrhe living quartcrsiaccommodations. 5 .lnini)\'jrl. Tfi.ll Ln'.\~r~ Shht.:um ';l.h\'Crc Suite 27"01), 1SC; \-Ve~{ Fbgh!;" ~1n,.et~ \Jklmi1 FlnridJ 33 L30 T j()S.j~2.':;7:-.; ~.; .7(}~..3;.5.n2.:t3 35. When Ddendants charge(d) cuslomers for renting, leasing, or letting these living quarters or accommodations, Defendants identify/identitied to customers the room rate charges. the specified living quarters/accommodations. and the applicable taxes to the customers. 36. Cpon completion of the electronic transaction, customers pay/paid Defendants for the room rates. taxes, and other charges indicated by Defendants. CLASS ACTION ALLEGATIONS 37. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs bring this action individually and on behalf of the following class (the "Class"): All counties within the State of Florida that (1) are empowered to receive or collect Tourist Development Taxes as set forth in a county ordinance enacted pursuant to F.S. ~ 125.0104 and (2) are not receiving or collecting the full amount due from Defendants' renting, leasing, or letting of accommodations in any hotel or motel. 38. Numerosity. The members of the Class are so numerous that separate joinder of each member is impracticable. On information and belief, the number of potential class member counties is at least fifty. 39. Common Questions of Law and Fact. Plaintiffs' claim raises questions of law or fact common to the questions of)aw or fact raised by the claim of each member of the class, including inler alia: la) Whether the substantially similar ordinances require Defendants to remit taxes based on the amount of money paid to Defendants by the customers for their rooms; (b) Whether Defendants collected the sufficient amount of TourJ$t Development Taxes from customers~ and (c) Whether Defendants remitted a sufficient amount of Tourist Development Taxes to the Plaintiffs and the Class. rh~sc .:ommon questions predominate over any individual questions or issues. 6 '\r<;r:u'.-1G' Tria! I .J~,,'-.('p; ;\!tkt"t.i.fO T<:t"l\,"f- Suit(,~ 2700.15<; \-Vesl Hagh:r Street. ~liami._ ff<)rida 331.30 T 3n5.~;;72.2.;'7:: F 3(5.37~.{j:43 40. Typicality. Plaintiffs' claims are typical of the claims of each member of the Class in that the central subject matter to claims of the Plaintiffs and the Class is that Defendants failed to comply ,,\'ith Ordinances requiring remittance of Tourist Development Taxes. 41. Adequacy of Representation. Plaintiffs can fairly and adequately protect and represent the interests of each member of the class, which are the following: (a) Plaintiffs' claims are substantially similar (if not identical to) those of absent Class members; (b) there are questions oflaw or fact that are common to the Class and that overwhelmingly predominate over any individual issues. such that by prevailing on its oVvn claims, Plaintiffs necessarily will establish Defendants' liability as to all Class members: (C) without the Class representation provided by Plaintiffs, virtually no Class members will receive legal representation or redress for their injuries; (d) Plaintiffs and their counsel have the necessary financial resources to adequately and vigorously litigate this class action; and (e) Plaintiffs and Class counsel are aware of their fiduciary responsibilities to the class members and are dctcnnined to diligently discharge those duties by vigorously seeking the maximum possible recovery for the Class. 42. Claim is Maintainable. The claims are maintainable as a class action because Defendants' failure to remit the proper amount of Tourist Development Taxes to the appropriate governmental entity!entities as describe, supra, is generally applicable to all the members of the Class, which thereby makes the final injunctive relicf or declaratory relief concerning the class as a v,,'hole appropriate. 7 .\r(':nf.::t,-~tl ':'n~i L~~;,...-;"l.:'i".$ \h.l~~'la1i T)...,'lrer, 'liiI..' }";'~-j(" j:5U \\'eM Fi.1glrr ~i'reet.;\,it:..:.n1L i:'{nriJa .:.:,:; 13{) '"f .~05.j7:::.2-:",; 2 F .j!)5..:::,7~:'.0143 43. Risks of Prosecuting Separate Actions. The pros~cution of separate adions by individual members of the class would create risk of. (a) inconsistent ur varying adjudications with respect to individual members of the class that would establish incompatible standards of conduct for Defendants; and/or (b) adjudications with respect to individual members of the class that would. as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. COUNT I VlOLA TION OF TOURIST DEVELOPMENT T AX ORDINA.~CES 44. Plaintiffs incorporate the allegations in paragraphs 1 through 43 by reference as if fully set forth herein. 45. Upon information and belief, from 1986 to present, Defendants charge(d) customers for renting. leasing. or letting living quarters and/or accommodations (as described within F .S. ~ 125.01 04(3)(a) and ~ 11-46) \\ithin the Leon County and other counties in the State of Florida with substantially similar ordinances enacted pursuant to F.S. g 125.0104. 46. Defendants charge(d) customers for renting, leasing, or letting these living quarters andlor accommodations. and it did not remit to the Florida Department of Revenue, on behalf of Plaintiffs and the Class, the Tourist Deyelopment Tax Defendants as set torth in county ordinances enacted pursuant to F.S. ~ 125.0104. 47. Detendants' failure to pa)' the Tourist Development Taxes to Plaintiffs and the Class is deemed a debt uwed by Defendants to Plaintitfs pursuant to ~ 11-46 and other counties in lh~ State of Florida"" ith substantially similar ordinances cnacted pursuant to F.S. S 125.0104. 8 ,-" ~on-:,'.,ill Tr:~11 r l\" ",~:r~- .\-L4."(.-;.)n'i '1~vt...t:r, ~;l,rrc 27:i.:), i:~O \\'c-~t FL.\~h:r Srri;~t, ~\liunL f!(~(i-da 3-';-130 'TO ...~05.3;2.2.;j2 r ,~o5.,:7;J}2..13 48. The exact amount of Tourist Development Taxes due trom Defendants to Plaintiffs is unknown without an accounting from Defendants. 49. As a direct and proximate result of Defendants' conduct described supra, Plaintiffs and the Class suffered and \l.ill continue to suffer damages in the form of \\1thheld Tourist Development Taxes in an amount to be determined at trial. WHEREFORE, Plaintiffs and the Class pray for a judgment in their favor and against Defendants as follows: (a) The Court enters a damage award in favor of Plaintiffs and against Defendants for such sum as is just and reasonable for the damages sustained; (b) The Court awards Plaintiffs and the Class penalties and interest; (C) The Court requires Defendants to allow Plaintiffs to audit the books, records, and other documents of Defendants in order to determine Dettmdants' compliance with tourist development tax ordinances; (d) The Court awards Plaintiffs their attorneys' fees and costs; and (e) The Court awards such other and further relief as the Court may deem just and appropriate under the premises. Plaintiffs demand Ii trial by jury on all issues so triable. 9 ~'\:'(Hl"~'''':~;; Tri~d LH""~'r~ :.,lu~-:~n\ TC~'\~~L S~ll:t." ,"7(10. ~;:\o \.\4!:st flagl~rSt:"("et. ~1i~rni, Fi(;rid~ 33L~d~ r .31'>5.372-.2;~..:2: f _1.fj,j.3-7:).024:j DATED: July 21_. 2006 Respectfully submitted. LEON COLNTY AND DORIS MALOY, LEON COUNTY TAX COLLECTOR B>" Scott Ma ox Florida B No. 65498 MADDOX HORi\'"E, P.L.L.C. P.O. Box 10768 Tallahassee. Florida 32302 (850) 222-6020 Telephone (850) 222-] 249 Facsimile T od Aronovitz Florida Bar No. 186430 Steven Jaffe Florida Bar No. 0390770 ARONOVITZ TRIAL LAWYERS Museum Tower, Suite 2700 150 West Flagler Street Miami, Florida 33130 (305) 372-2772 Telephone (305) 375-0243 Facsimile Of Counsel: Robert W. Schmieder II Richard J. Burke Dennis J. Barton III THE LAKIN LAW FIRLv1, P.C. 300 Evans A,,'cnue, P.O. Box 229 Wood River, Illinois 62095 (618) 254-1127 Telephone (618) 254-0193 Facsimile Paul M. Weiss Will iam M, S \\'cctnam FREED & \.VEISS L1.C III \Vest \Vashington St.re~t, Suttc 1331 Chicago, Illinois 60602 (3 i 2) 220-0000 T dephonc (3 j 2) 220-7777 Facsimile Pro hac vice \lolions fonhcoming. 10 \r'l.f1c.I\'~:l. rfi~i ,.i"'~..~'~.~: :.J;~;.~(.:':_;nl T;-lW("LS\~H\: .:,:-;~-{;~ -~,:'ti \Vt."~l H';l.gJ~r S.tr~~L ;\.~i~U~'1L HnriJ...i Y)i3~j r .~,')5~j; 2.':'7-::' r 5.jS3::'S.t)~~43 Page I of 1 Shillinger-Bob From: James T. Hendrick, Esq. Oth@morganandhendrick.com] Sent: Tuesday, September 19, 200611:46 AM To: Shillinger-Bob Subject: Class Action Lawsuit Bob, Attached is a copy of the Complaint filed in the Southern District on behalf of Leon County, et ai, as a class action. Tod Aronovitz and his co-counsel, Paul Weiss, are seeking Monroe County's joinder in the suit as a Plaintiff, seeking to recover unpaid hotel tax from Hotels.Com and the other defendants. Can with any questions (296-5676 or 304-7374). Jim 9/19/2006 Page 1 of I Shillinger-Bob From: James T. Hendrick, Esq. Uth@morganandhendrick.com] Sent: Tuesday, September 19, 2006 1 :48 PM To: Shillinger-Bob Subject: Class Action suit, Tourist tax Bob, What Tod Aronovitz proposes is to file a separate case against the same Defendants, solely on behalf of MoCo, and to have it consolidated with the Leon County case now pending before Judge Huck. This will give the County undiluted decision-making over terms of any settlement. He estimates the total discovery cost (of all the consolidated cases) to be in the $1-2 million range, all of which will be advanced by Plaintiffs' counsel. At the conclusion of the case, whether by settlement or Judgment, Plaintiffs' aUy fees and cost reimbursement will be set by the court and paid from the proceeds ofthe action. Accordingly, Monroe County will have not have to budget or pay those costs and fees. Too is requesting that the BOCC authorize, by letter addressed to him, the filing of the lawsuit by his firm, and his association of co-counsel to assist in the prosecution of the case, with all costs and fees of the action to be advanced by counsel and paid from proceeds of the action. Jim 9/19/2006 LEGAL SERVICES AGREEMENT This Agreement is entered into by and between Monroe Countv ("Client") and Aronovitz Trial Lawvers and Freed & Weiss. LLC ("Attorneys") (hereinafter collectively referred to as ''the Parties") on this _ day of , 2006. 1. Authorized Representative of Client. Client designates Esq., County Attorney for Monroe County, as the authorized representative to direct Attorneys and to be the primary individual to communicate with Attorneys regarding the subject matter of Attorney's representation of Client under this Agreement. This designation is intended to establish a clear line of authority and to minimize potential uncertainty, but not to preclude communication between Attorneys and other representatives of Client. 2. Legal Services to be Provided. Attorneys shall represent the Client in litigation (possibly join existing litigation or lead class action litigation) against internet travel companies who do not pay the proper amount of hotel/motel taxes under the applicable law. If Client wishes to retain Attorneys to provide any legal services not provided under this Agreement, then the Parties must execute a separate written agreement for those services. 3. Responsibilities of Parties. Attorneys will perform the legal services called for under this Agreement, keep Client informed of progress and developments, and respond to Client's inquiries and communications. Client will cooperate with Attorneys and kept Attorneys reasonably informed of any developments. Client will also make all necessary persons under its control available for consultation, depositions, hearing, and trial at no cost to Attorneys, Client will likewise make all documents, records, or other evidence under its control available to Attorneys for this case at no cost to Attorneys. 4. Suit as an Individual Case or a Class Action Case. Client may bring an action as an individual action or as a class action on behalf of itself and all other similarly situated governmental entities within the State of Florida (the "Class"). If this case proceeds as a class action, then Client bears the responsibilities associated with being ca class representative in a class action lawsuit. Thos responsibilities include, without limitation, that Client have a general understanding of the case, vigorously prosecute the litigation, and generally protect the rights and interests of absent class members. 5. Attorney's Fees. Attorneys will receive Attorney's fees for the legal services they provide under this Agreement on a contingent fee basis. A class action case requires the court to analyze and approve fees upon any successful recovery. The term "recovery" shall include, without limitation, the then present value of any monetary payments awarded by the court or agreed to by the adverse parties in this Action or their insurance carrieres). Absent either (a) a court order awarding Client attorney's fees in addition to the Class recovery, or (b) a settlement agreement whereby defendants agree to pay Attorney's fees, Client agrees to pay Attorney's fees of thirty-three percent (33%) of Client's gross recovery or, in the event that any party initiates an appeal, thirty-eight percent (38%) of the gross recovery. If either a court awards attorney's fees in addition to the Class award of attorney's fees are part of a settlement negotiated by the Parties, then Client understands that Attorneys' fees may be in excess of the Legal Services Agreement Page 2 percentages specified above. In no event, however, will.Client pay more than the percentages specified above out of its recovery. If payment or all or any part of the amount to be received will be deferred (such as in the case of an annuity, a structured settlement, or periodic payments), the gross recovery, for purposes of calculating Attorneys' fees, will be the initial lump-sum payment plus the present value as of the time of the settlement, the final arbitration or judgment, of the payments to be received thereafter. Attorneys' fees will be paid out of the initial lump-sum payment. If the payment is insufficient to pay the Attorneys' fees in full out of the initial lump sum, then the balance will be paid from subsequent payments on the recovery before any distribution to Client. Client understands that this fee agreement is not set by law but rather is negotiable between Attorneys and Client, determined by a court order, or negotiated as part of a settlement by the parties to the litigation. 6. Costs. Regardless of whether Client brings an individual or class action case, Attorneys will advance all reasonable costs of the Action. Costs include, but are not limited to, expert fees and expenses, investigation costs, deposition expenses, court costs, travel and lodging expenses, and Class notification expenses. In the event of any recovery by Client, Client agrees to reimburse Attorneys for all costs advanced by Attorneys. Absent a court order or settlement agreement to the contrary, Client agrees that costs will be deducted from the recovery after the contingent fee is deducted. 7. Division of Attorneys' Fees. Attorneys may divide the Attorneys' fees received for the legal services provided under this Agreement with additional attorney(s) or law firm(s) retained as associated counsel. Client must approve in writing of any associated counsel before associated counsel performs any work on behalf of Client. Attorneys shall disclose to Client in writing the terms of the attorneys' fee division and the responsibility for advancement of costs. Associated counsel shall have the rights and responsibilities of Attorneys under this Agreement. 8. Representation of Adverse Interests. Client understands that the Rules of Professional Conduct of The Florida Bar require Client's informed written consent before Attorneys may begin or continue to represent Client when the Attorneys have or had a relationship with another party adversely interested in the subject matter of the Attorneys' proposed representation of Client. Attorneys are not aware of any relationship with any other party adversely interested in the subject matter of Attorneys' services for Client under this Agreement. Attorneys shall have the right to represent individuals, other municipalities, governmental agencies, or gO'/ernmental subdivisions in other similar litigation without the consent of Client, subject to the Rules of Professional Conduct relating to conflicts of interest. 9. Settlement Authority. Attorneys will not settle Client's claim without the approval of Client, who will have the absolute right to accept or reject any individual settlement offer. If this matter proceeds as a class action, then part of Client's responsibilities as a class Legal Services Agreement Page 3 representative is to participate in the analysis of any settlement offer. Ultimately, the court approves any class settlement. 10. Attorneys' Lien. Attorneys will have a lien for Attorneys' fees and costs advanced on all claims and causes of action that are the subject of their representation of Client under the Agreement and on all proceeds of any recovery obtained (whether by settlement, arbitration award, or court judgment). 11. Notices. All written notice and communications to Client relating to this Agreement shall be mailed to or personally delivered to , Monroe County Attorney, , and written notices and communications to Attorneys relating hereto shall be mailed to or personally delivered to Tod Aronovitz, Aronovitz Trial Lawyers, 150 W. Flagler Street, Suite 2700, Miami, Florida 33130. 12. Termination. In the event that this representation proceeds as a class action, Client cannot terminate Attorneys. Attorneys shall have the right to seek Class Counsel status from the court, and Client shall not interfere with that determination. If Client wishes to cease being a class representative and/or opt-out of the class and retain other counsel, then Client shall notify Attorneys and provide Attorneys with a reasonable opportunity to locate another suitable class representative. In the event that this case does not proceed as a class action, Client may terminate this Agreement at its discretion. If Client terminates this Agreement, then Client shall reimburse Attorneys for all costs upon any recovery by Client. Client also agrees to pay Attorneys' fees based upon the amount of time expended by Attorneys at their standard rates. 13. Entire Agreement. This Agreement contains the entire agreement of the parties. No other agreement, statement, or promise made on or before the effective date of this Agreement will be binding on the parties. 14. Severability in Event of Partial In Validity. If any provision of this Agreement is held in whole or in part to be unenforceable for any reason, then the remainder of that provision and of the entire Agreement will be severable and remain in effect. 15. Modification by Subsequent Agreement. This Agreement may be modified by subsequent agreement of the Parties only by an instrument in writing signed by both of them or an oral agreement to the extent that the Parties carry it out. Legal Services Agreement Page 4 The foregoing is agreed by: ATTESTED BY: , Clerk of the Court By: , Clerk APPROVED AS TO FORM: County Attorney's Office By: , County Attorney Date: Date: Client: MONROE COUNTY By: Date: Attorneys: ARONOVITZ TRIAL LA WYERS Museum Tower, Suite 2700 150 West Flagler Street Miami, Florida 33130 (305) 372-2772 Telephone (305) 375-0243 Facsimile By: Tod Aronovitz FREED & WEISS LLC 111 West Washington Street, Suite 1331 Chicago, Illinois 60602 (312) 220-0000 Telephone (312) 220-7777 Facsimile By: Paul Weiss STATEMENT OF CLIENT'S RIGHTS Re: Monroe County vs. Hotels.Com, et al. Before you, the prospective client, arrange a contingency fee agreement with a lawyer, you should understand this Statement of your rights as a client. This Statement is not a part of the actual contract between you and your lawyer, but as a prospective client, you should be aware of these rights: I. There is no legal requirement that a lawyer charge a client a set fee or a percentage of money recovered in a case. You, the client, have the right to talk with your lawyer about the proposed fee and to bargain about the rate of percentage as in any other contract. If you do not reach an agreement with one lawyer you may talk with other lawyers. 2. Any contingency fee contract must be in writing and you have three (3) business days to reconsider the contract. You may cancel the contract without any reason if you notify your lawyer in writing within three (3) business days of signing the contract. If you withdraw from the contract within the first three (3) business day, you do not owe the lawyer a fee although you may be responsible for the lawyer's actual costs during that time. If your lawyer begins to represent you, your lawyer may not withdraw from the case without giving you notice, delivering necessary papers to you, and allowing you time to employ another lawyer. Often, your lawyer must obtain court approval before withdrawing from a case. If you discharge your lawyer without good cause after the three day period, you may have to pay a fee for work the lawyer has done. 3. Before hiring a lawyer, you, the client, have the right to know about the lawyer's education, training and experience. If you ask, the lawyer should tell you specifically about his or her actual experience dealing with cases similar to yours. If you ask, the lawyer should provide information about special training or knowledge and give you this information in writing if you request it. 4. Before signing a contingency fee contract with you, a lawyer must advise you whether he or she intends to handle your case alone or whether other lawyers will be helping with the case. If your lawyer intends to refer the case to other lawyers he or she should tell you what kind of fee sharing arrangement will be made with the other lawyers. If lawyers from different law firms will represent you, at least one lawyer from each law firm must sign the contingency fee contract. 5. If your lawyer intends to refer your case to another lawyer or counsel with other lawyers, your lawyers should tell you about that at the beginning. If your lawyer takes the case and later decides to refer it to another lawyer or to associate with other lawyers, you should sign a new contract which includes the new lawyers. You, the client, also have the right to consult with each lawyer working on your case and each lawyer is legally responsible to represent your interests and is legally responsible for the acts of the other lawyers involved in the case. 6. You, the client, have the right to know in advance how you will need to pay the expenses and the legal fees at the end of the case. If you pay a deposit in advance for costs, you may ask reasonable questions about how the money will be or has been spent and how much of it remains unspent. Your lawyer should give a reasonable estimate about future necessary costs. If your lawyer agrees to lend or advance you money to prepare or research the case, you have the right to know periodically how much money your lawyer has spent on your behalf. You also have the right to decide, after consulting with your lawyer, how much money is to be spent to prepare a case. If you pay the expenses, you have the right to decide how much to spend. Your lawyer should also inform you whether the fee will be based on the gross amount recovered on or on the amount recovered minus the costs. 7. You, the client have the right to be told by your lawyer about possible adverse consequences if you lose the case. Those adverse consequences might include money which you might have to pay to your lawyer for costs, and liability you might have for attorney's fees to the other side. 8. You, the client, have the right to receive and approve a closing statement at the end of the case before you pay any money. The statement must list all of the financial details of the entire case, including the amount recovered, all expenses, and a precise statement of your lawyer's fee. Until you approve the closing statement you need not pay any money to anyone, including your lawyer. You also have the right to have every lawyer or law firm working on your case sign this closing statement. 9. You, the client, have the right to ask your lawyer at reasonable intervals how the case is progressing and to have these questions answered to the best of your lawyer's ability. 10. You, the client, have the right to make the final decision regarding settlement of a case. Your lawyer must notify you of all offers of settlement before and after the trial. Offers during the trial must be immediately communicated and you should consult with your lawyer regarding whether to accept a settlement. 11. If at any time, you, the client, believe that your lawyer has charged an excessive or illegal fee, you, the client, have a right to report the matter to The Florida Bar, the agency that oversees the practice and behavior of all lawyers in Florida. For information on how to reach The Florida Bar, call 800-342-8060, or contact the local bar association. Any disagreement between you and your lawyer about a fee can be taken to court and you may wish to hire another lawyer to help you resolve this disagreement. Usually fee disputes must be handled in a separate lawsuit. 2 Client's Signature: MONROE COUNTY: By: Date: Attorneys'Signatures: ARONOVITZ TRIAL LA WYERS 150 W. Flagler Street Suite 2700, Museum Tower Miami, Florida 33130 (305) 372-2772 Telephone (305) 375-0243 Facsimile By: Tad Aronovitz: Date: FREED & WEISS LLC 111 West Washington Street, Suite 1331 Chicago, Illinois 60602 (312) 220-0000 Telephone (312) 220-7777 Facsimile By: Paul Weiss Date: 3 BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY v...(:,J. ~6o.J ~ Meeting Date: 10/18/2006 Division: County Attorney Bulk Item: Yes ~ No Staff Contact Person: Bob Shillinger x3474 AGENDA ITEM WORDING: Authorization to retain the services of the Aronovitz firm to file suit against Hotels.com and similar entities to recoup unpaid bed taxes. ITEM BACKGROUND: Tod Aronovitz, Esq. has already filed suit on behalf of Leon County against internet hotel booking agents seeking to recoup unpaid bed taxes in the U.S. District Court for the Southern District of Florida. Mr. Aronovitz is seeking to represent other counties, including Monroe, and their respective tax collectors in either a class action or consolidated actions against the defendants. Mr. Aronovitz would represent the County on a contingency basis. In litigation of this type, the Court will often establish an award of attorney's fees. If the Court does not, Aronovitz proposes setting his fee at 1/3 of the monies collected; his fee would rise to 38% if this matter was appealed. He also proposes to advance the costs of the litigation which would be ultimately paid by the defendants. The County would only become liable for costs should the defendants prevail and the Courts make an award of costs. This litigation will likely extend over 2-3 years. PREVIOUS RELEVANT BOCC ACTION: On September 20, 2006, the BOCC deferred taking any action on this request until further information could be gathered on the potential cost to the County. CONTRACT/AGREEMENT CIIANGES: None. STAFF RECOMMENDATIONS: Approval. TOTAL COST: TBA if any -J!UDGETED: Yes ~ No COST TO COUNTY: TBA if any SOlIRCE OF FUNDS: AMOUNT TBA Ad valorem REVENUE PRODUCING: Yes -1QL No APPROVED BY: County Atty ~ 4l/f#~ TY ATTORNEY DIVISION DIRECTOR APPROVAL: DOCUMENTATION: Included xxx Not Required_ DISPOSITION: AGENDA ITEM # ijJ-c? LEGAL SERVICES AGREEMENT This Agreement is entered into by and between Monroe County ("Client") and Aronoyitz Trial Lawyers and Freed & Weiss. LLC ("Attorneys") (hereinafter collectively referred to as "the Parties") on this _ day of October, 2006. 1. Authorized Representative of Client. Client designates Bob Shillin2er. Esa.. Assistant County Attorney for Monroe County, as the authorized representative to direct Attorneys and to be the primary individual to communicate with Attorneys regarding the subject matter of Attorney's representation of Client under this Agreement. This designation is intended to establish a clear line of authority and to minimize potential uncertainty, but not to preclude communication between Attorneys and other representatives of Client. 2. Legal Services to be Provided. Attorneys shall represent the Client in litigation (possibly join existing litigation or lead class action litigation) against internet travel companies who do not pay the proper amount of hotel/motel taxes under the applicable law. If Client wishes to retain Attorneys to provide any legal services not provided under this Agreement, then the Parties must execute a separate written agreement for those services. 3. Responsibilities of Parties. Attorneys will perform the legal services called for under this Agreement, keep Client informed of progress and developments, and respond to Client's inquiries and communications. Client will cooperate with Attorneys and kept Attorneys reasonably informed of any developments. Client will also make all necessary persons under its control available for consultation, depositions, hearing, and trial at no cost to Attorneys, Client will likewise make all documents, records, or other evidence under its control available to Attorneys for this case at no cost to Attorneys. 4. Suit as an Individual Case or a Class Act/on Case. Client may bring an action as an individual action or as a class action on behalf of itself and all other similarly situated governmental entities within the State of Florida (the "Class"). If this case proceeds as a class action, then Client bears the responsibilities associated with being a class representative in a class action lawsuit. Thos responsibilities include, without limitation, that Client have a general understanding of the case, vigorously prosecute the litigation, and generally protect the rights and interests of absent class members. 5. Attorney's Fees. Attorneys will receive Attorney's fees for the legal services they provide under this Agreement on a contingent fee basis. A class action case requires the court to analyze and approve fees upon any successful recovery. The term "recovery" shall include, without limitation, the then present value of any monetary payments awarded by the court or agreed to by the adverse parties in this Action or their insurance carrieres). Absent either (a) a court order awarding Client attorney's fees in addition to the Class recovery, or (b) a settlement agreement whereby defendants agree to pay Attorney's fees, Client agrees to pay Attorney's fees of thirty-three percent (33%) of Client's gross recovery or, in the event that any party initiates an appeal, thirty-eight percent (38%) of the gross recovery. If either a court awards attorney's fees in addition to the Class award of attorney's fees are part of a settlement negotiated by the Parties, then Client understands that Attorneys' fees may be in excess of the Legal Services Agreement Page 2 percentages specified above. In no event, however, will Client pay more than the percentages specified above out of its recovery. If payment or all or any part of the amount to bereceived will be deferred (such as in the case of an annuity, a structured settlement, or periodic payments), the gross recovery, for purposes of calculating Attorneys' fees, will be the initial lump-sum payment plus the present value as of the time of the settlement, the final arbitration or judgment, of the payments to be received thereafter. Attorneys' fees will be paid out of the initial lump-sum payment. If the payment is insufficient to pay the Attorneys' fees in full out of the initial lump sum, then the balance will be paid from subsequent payments on the recovery before any distribution to Client. Client understands that this fee agreement is not set by law but rather is negotiable between Attorneys and Client, determined by a court order, or negotiated as part of a settlement by the parties to the litigation. 6. Costs. Regardless of whether Client brings an individual or class action case, Attorneys will advance all reasonable costs of the Action. Costs include, but are not limited to, expert fees and expenses, investigation costs, deposition expenses, court costs, travel and lodging expenses, and Class notification expenses. In the event of any recovery by Client, Client agrees to reimburse Attorneys for all costs advanced by Attorneys. Absent a court order or settlement agreement to the contrary, Client agrees that costs will be deducted from the recovery after the contingent fee is deducted. 7. Division of Attorneys' Fees. Attorneys may divide the Attorneys' fees received for the legal services provided under this Agreement with additional attorney(s) or law firm(s) retained as associated counsel. Client must approve in writing of any associated counsel before associated counsel performs any work on behalf of Client. Attorneys shall disclose to Client in writing the terms of the attorneys' fee division and the responsibility for advancement of costs. Associated counsel shall have the rights and responsibilities of Attorneys under this Agreement. 8. Representation of Adverse Interests. Client understands that the Rules of Professional Conduct of The Florida Bar require Client's informed written consent before Attorneys may begin or continue to represent Client when the Attorneys have or had a relationship with another party adversely interested in the subject matter of the Attorneys' proposed representation of Client. Attorneys are not aware of any relationship with any other party adversely interested in the subject matter of Attorneys' services for Client under this Agreement. Attorneys shall have the right to represent individuals, other municipalities, governmental agencies, or governmental subdivisions in other similar litigation without the consent of Client, subject to the Rules of Professional Conduct relating to conflicts of interest. 9. Settlement Authority. Attorneys will not settle Client's claim without the approval of Client, who will have the absolute right to accept or reject any individual settlement offer. If this matter proceeds as a class action, then part of Client's responsibilities as a class Legal Services Agreement Page 3 representative is to participate in the analysis of any settlement offer. Ultimately, the court approves any class settlement. 10. Attorneys' Lien. Attorneys will have a lien for Attorneys' fees and costs advanced on all claims and causes of action that are the subject of their representation of Client under the Agreement and on all proceeds of any recovery obtained (whether by settlement, arbitration award, or court judgment). 11. Notices. All written notice and communications to Client relating to this Agreement shall be mailed to or personally delivered to Bob Shillineer. Esa.. Assistant County Attorney for Monroe County, 502 Whitehead Street. 3rd Floor Rear, Key West, FL 33040, and written notices and communications to Attorneys relating hereto shall be mailed to or personally delivered to Tod Aronoyitz. Aronoyitz Trial Lawyers. 150 W. Flaeler Street. Suite 2700, Miami. FL 33130. 12. Termination. In the event that this representation proceeds as a class action, Client cannot terminate Attorneys. Attorneys shall have the right to seek Class Counsel status from the court, and Client shall not interfere with that determination. If Client wishes to cease being a class representative and/or opt-out of the class and retain other counsel, then Client shall notify Attorneys and provide Attorneys with a reasonable opportunity to locate another suitable class representative. 13. Entire Agreement. This Agreement contains the entire agreement of the parties. No other agreement, statement, or promise made on or before the effective date of this Agreement will be binding on the parties. 14. Severability in Event of Partial In Validity. If any provision of this Agreement is held in whole or in part to be unenforceable for any reason, then the remainder of that provision and of the entire Agreement will be severable and remain in effect. 15. Modification by Subsequent Agreement. This Agreement may be modified by subsequent agreement of the Parties only by an instrument in writing signed by both of them or an oral agreement to the extent that the Parties carry it out. 16. Monroe County's performance and obligation to pay under this contract IS contingent upon an annual appropriation by the BOCC Legal Services Agreement Page 4 16. The foregoing is agreed by: ATTESTED BY: , Clerk of the Court By: , Clerk APPROVED AS TO FORM: County Attorney's Office By: , County Attorney Date: 7/~/-~ / Date: /i/~f Client: MONROE COUNTY By: Date: Attorneys: ARONOVITZ TRIAL LA WYERS Museum Tower, Suite 2700 150 West Flagler Street Miami, Florida 33130 (305) 372-2772 Telephone (305) 375-0243 Facsimile FREED WEISS LLC III West Washington Street, Suite 1331 Chicago, Illinois 60602 (312) 220-0000 Telephone (312) 220-7777 F~ By: f~ A/ Paul Weiss MONROE COUNTY ATTORNEY APPROVED AS T~RM:;1 ~~b~.. ~)Gla..~d1// NA ILEENE W. CASSEL ASSISTANT COUNTY ATTORNEY Data It) - /L - nt:. STATEMENT OF CLIENT'S RIGHTS Re: Monroe County vs. Hotels.Com. et al. Before you, the prospective client, arrange a contingency fee agreement with a lawyer, you should understand this Statement of your rights as a client. This Statement is not a part of the actual contract between you and your lawyer, but as a prospective client, you should be aware of these rights: I. There is no legal requirement that a lawyer charge a client a set fee or a percentage of money recovered in a case. You, the client, have the right to talk with your lawyer about the proposed fee and to bargain about the rate of percentage as in any other contract. If you do not reach an agreement with one lawyer you may talk with other lawyers. 2. Any contingency fee contract must be in writing and you have three (3) business days to reconsider the contract. You may cancel the contract without any reason if you notifY your lawyer in writing within three (3) business days of signing the contract. If you withdraw from the contract within the first three (3) business day, you do not owe the lawyer a fee although you may be responsible for the lawyer's actual costs during that time. If your lawyer begins to represent you, your lawyer may not withdraw from the case without giving you notice, delivering necessary papers to you, and allowing you time to employ another lawyer. Often, your lawyer must obtain court approval before withdrawing from a case. If you discharge your lawyer without good cause after the three day period, you may have to pay a fee for work the lawyer has done. 3. Before hiring a lawyer, you, the client, have the right to know about the lawyer's education, training and experience. If you ask, the lawyer should tell you specifically about his or her actual experience dealing with cases similar to yours. If you ask, the lawyer should provide information about special training or knowledge and give you this information in writing if you request it. 4. Before signing a contingency fee contract with you, a lawyer must advise you whether he or she intends to handle your case alone or whether other lawyers will be helping with the case. If your lawyer intends to refer the case to other lawyers he or she should tell you what kind of fee sharing arrangement will be made with the other lawyers. If lawyers from different law firms will represent you, at least one lawyer from each law firm must sign the contingency fee contract. 5. If your lawyer intends to refer your case to another lawyer or counsel with other lawyers, your lawyers should tell you about that at the beginning. If your lawyer takes the case and later decides to refer it to another lawyer or to associate with other lawyers, you should sign a new contract which includes the new lawyers. You, the client, also have the right to consult with each lawyer working on your case and each lawyer is legally responsible to represent your interests and is legally responsible for the acts of the other lawyers involved in the case. 6. You, the client, have the right to know in advance how you will need to pay the expenses and the legal fees at the end of the case. If you pay a deposit in advance for costs, you may ask reasonable questions about how the money will be or has been spent and how much of it remains unspent. Your lawyer should give a reasonable estimate about future necessary costs. If your lawyer agrees to lend or advance you money to prepare or research the case, you have the right to know periodically how much money your lawyer has spent on your behalf. You also have the right to decide, after consulting with your lawyer, how much money is to be spent to prepare a case. If you pay the expenses, you have the right to decide how much to spend. Your lawyer should also inform you whether the fee will be based on the gross amount recovered on or on the amount recovered minus the costs. 7. You, the client have the right to be told by your lawyer about possible adverse consequences if you lose the case. Those adverse consequences might include money which you might have to pay to your lawyer for costs, and liability you might have for attorney's fees to the other side. 8. You, the client, have the right to receive and approve a closing statement at the end of the case before you pay any money. The statement must list all of the financial details of the entire case, including the amount recovered, all expenses, and a precise statement of your lawyer's fee. Until you approve the closing statement you need not pay any money to anyone, including your lawyer. You also have the right to have every lawyer or law firm working on your case sign this closing statement. 9. You, the client, have the right to ask your lawyer at reasonable intervals how the case is progressing and to have these questions answered to the best of your lawyer's ability. 10. You, the client, have the right to make the final decision regarding settlement of a case. Your lawyer must notifY you of all offers of settlement before and after the trial. Offers during the trial must be immediately communicated and you should consult with your lawyer regarding whether to accept a settlement. 11. If at any time, you, the client, believe that your lawyer has charged an excessive or illegal fee, you, the client, have a right to report the matter to The Florida Bar, the agency that oversees the practice and behavior of all lawyers in Florida. For information on how to reach The Florida Bar, call 800-342-8060, or contact the local bar association. Any disagreement between you and your lawyer about a fee can be taken to court and you may wish to hire another lawyer to help you resolve this disagreement. Usually fee disputes must be handled in a separate lawsuit. 2 Client's Signature: MONROE COUNTY: By: Date: Attorneys' Signatures: ARONOVITZ TRIAL LA WYERS 150 W. Flagler Street Suite 2700, Museum Tower Miami, Florida 33130 (305) 372-2772 Telephone (305) 375-0243 Facsimile FREED & WEISS LLC 111 West Washington Street, Suite 1331 Chicago, Illinois 60602 (312) 220-0000 Telephone (312) 220-7777 Facsimile By: -faJ- ~ paulW~ Date: /0 .1010 f I / MONROE COUNTY ATTORNEY .1ROVED AS TO FOI}M7 /J / / :;6~';--1 pJ (-~ (NATILEENE W CASSEL ASSISTANT COUNTY ATTORNEY Data /0- Iv .a. 3 VNITED STATES DISTRICT COURT SOlTHER;~ DISTRICT OF FLORIDA LEON COUNTY and DORIS MALOY, I LEOl\' COL1'iTY TAX COLLECTOR, ) individually and on behalf of all other ) similarly situated counties in the State of Florida. I ) P laimitTs, ) v. HOTELS.COM, L.P., a Texas Limited Partnership! HOTWIRE, INC., a Delaware Corporation; CHEAP TICKETS, INC., a Delaware Corporation; CENDANT TRAVEL DISTRIBUTION SERVICES GROUP, INC., a division of CENDANT CORPORATION, a Delaware Corporation; EXPEDlA, INC., a Washington Corporation; INTERNETWORK PUBLISHING CORP. dib/a LODGING. COM, a Florida Corporation; LOWESTFARE.COM, INC., a Delaware Corporation; MAUPINTOUR, LLC, a Delaware Corporation; ORBITZ, INC., a Delaware Corporation; ORBITZ LLC, a Delaware Corporation; PRICELINE.COM, INC., a Delaware Corporation; TRA VELOCITY.CO:-'!, INC., a Delaware Corporation; and TRA VELOCITY.em,l, LP, a Oelaware Corporation. Defendants. I ) ) ) J ) ) ) ) I ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) .j ) , / >L k7~J!~K- Case No. jUTW'ff{ JURY TRIAL DEMANDED ..... ,~ ~-'-~<"--~~-~..--- ) _____J CLASS ACTION CO:l-'PLAJNT PlaimiiTs sue Deiendants tor unpaid Tourisl Dc,,~lopment Tilxes. and they allege as t()J!ows: ',"': ,~\ .L" i :"'-" '...' ':t' \L';~'-_,n: J::\~...'I', -';\;i~t;" :,'.-cil! L~'i \Y, ,;,. ,~L:~kt "L'.~:d, \iLmi. ~;k-t'.~i;;. ;;313ii ";- _J~.;;;':;.::'~~~ f- ~'.(l~}. <":~":J.~-i:. PARTIES I. Plaintiff Leon C otlnty is a body corporat;: and a political subdivision established by and authorized to bring suit under 1'.5. S 125.15. Article l. S 1.1 of the Leon County Florida Charter. and S 11-46 of the Code of Laws of Leon County. ... Plaintiff Doris Maloy is the Leon COWlty Tax Collector. an elected public otlicial and constitutional ollicer and empowered by S 11.46 of th;: Leon Cowuy Code of La\\s to collect and enlorce payment of current and delinquent tourist development ta.....es. 3. Defendant HOTELS.COM, L.P. is a Texas limited partnership with its principal place of business in Dallas, Texas. 4. Defendant HOTWIRE. INC. is a Delaware corporation with its principal place of business in San Francisco, California. 5. Defendant CHEAP TICKETS, INC. is a Delaware corporation \\ith its principal place of business in Xcw York, New York. 6. Defendant CENDA.."lT TRAVEL D1STRffiUTlON SERVICES GROUP, INC. is division of CENDANT CORPORATION, a Delaware corporation, \\ith its principal place of business in Parsippany. New Jersey. 7. Defendant EXPEDlA, INe. is a Washington corporation with its principal place of business in Bcllevue, Washington. 8. Defendant INTERNET\VORK PUBLISHING CORP. dbja LODGING. COM is a Florida corporation with its principal place of business in Boca Raton, Florida. 9. Detimdant LOWESTFARE.COM. INC. is a Delaware corporation wid1 its principal place of business in Nomalk. Connecticut. ... '-;"-'''' ' iL~ T~j.il ;".J\- ',;(" :.,U~,:.'U~l ~~7,',("j- -,,- lire ::~~:';i; l. ~!J ."~I;'~:j cl"t'kl' Sm.:,,-"~. \r.~I'l.i. ;:lm.:~-:.. ,) :.:'(} "f .';('5,_:'7:::'.~:::-;: F ~11~,. ~-:'.i(:-43 10. Defendant, :VIAL I'I:-;TOLR. LtC is a Delaware co'-por:lt;on "jih its ,xincip:ii place Gfbusiness in Las Vcgas. Ncvada. Defcndant ;>,IAlPIMTOI'R, LLC is wholly O\\Ocd by Ddendam MAUPINTOUR HOLDING, LLC. 1 L Defendant ORBITZ, fNC. is a Delaware corporation with its principal plaee of business in Chicago. flIinois. 12. Defendant ORBlTZ LLC is a Delaware corporation with its principal place of business in Chicago, Illinois. 13. Defendant PRICELlNE.COM, We. is a Delaware corporation with its principal place ofbusincss in Norwalk, Connecticut. 14. Defendant TRA VELOCITY.COM, fNe. is a Delaware corporation with its pri ncipal place of business in South1ake, Texas. 15. Defendant TRAVELOCITY.COM, LP is a Delaware partnership \\ith its principal place of business in Soulhlake, Texas. JURISDICTION AND VENUE 20. This Court has subject matter jurisdiction of the claims asserted herein pursuant to 28 V.S.C. ~~ 1331 and I 332(d)(2)(A) in that the amount in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which members of the putative plaintiff class are citizens of States different from Defendants. 21. Venue is proper in this District pursuant to 28 l.S.c. S 1391(a) in that a substantial part ,)1' the c\Cnts or omissions giving risc to the daims aHeged herein occum:d. "ndor it is (he judicial districl in which at least one of the defendants are subjecI 10 personai jurisdiction. 3 \"\:1'-' '. ,:.; "f;,;...; 1 ,_:~"",,~';:; -\Lr;~".j:O) -i~.,.,",;r. -":;.:if~ .:::.)f; j 51} ~;\~:ii ,:;Lfll..'C :-jUt",; . ;\l..i;l.ml_ f>:riJ., 5., L Ij : >i/~_j;'::.~::-;'2 :: ,"i:f ;::-::./i.>;':' COMl\IOl'l ALLEGATiONS A. The Tourist Development Tax '}1 Plaintiff Doris Maloy as the Leon County Tax Collector, is empowered to collect the Tourist Development Taxes as set forth in S 11-46. el. seq. of the Leon County Code of Laws pursuant to F.S. S 125.0104. 23. "'Tourist' means a person who participates in trade or recreation activities outside the county of his or her permanent residence or who rents or leases transient accommodations as described in paragraph (3)(a)." F.S. S 125.0104(2)(b). 24. Florida Statute ~ 125.0104(3)(a) declares the following: It is declared to be the intent of the Legislature that evcl')' person who rents, leases, or lets for consideration any living quarters or accommodations in any hotel, apartment hotel, motel, resort motel, apartment, apartment motel. roominghouse, mobile home park, recreational vehicle park, or condominium for a term of 6 months or less is exercising a privilege which is subject to taxation under this section, unless such person rents, leases, or lets for consideration any living quarters or accommodations which are exempt according to the proviSions of chapter 212. F.s. ~ 125.0104(3)(a) 25. Florida Statute 125.0104 permits the governing board of a county to levy, impose, and set a tourist development tax at the rate of up to 4%. F.S. S 125.0104(3)(c) and (d). 26. nle tourist development tax shall be charged by the person receiving the consideration for the lease or rental, and it shall be collected from the lessee, tenant. or customer at the time of payment of the consideration for such lease or rental. F.S. S 125.0104(3)(1). 27. rhe person receiving the consideratiGn lor such rental or lease shall reeehe, account for. and remit the tax to the Florida Department of Revenue. who then on a monthly basis, pays and rt:.:lurns tMal tax re'.....;I1ue to the c(.unty that imposed the tax. F .S. ~ i25.UIG.+i3Hg). >I ,',;,.;,;,:, .,;.,":.d i.~,_;...:,. :"';, l~'(~~.. k-.h>r_",,;;~(, ':',;~;. t~,.j ~.-'..::'.:: .r;.l~ii.'_~ :-,(,"~'.:i. .\!i<J.mi_ H~-,;:;.j-.' ;,] i"ll ::l/5..'~':':.::77:: f ~:Ij:,.~;';.k_'< 28. L.:on Count~ C"d.: of Laws * 11--16 Ih.:rcinaller ..~ 11--16" or "Scction i 1--16") impos.:s -1% Tourist Dewlopmem Tax. 29. Section 11--16 provides that ..the wurist de\dopment tax shall be charged b} the person receiving the consideration for the lease ,)r rental and it shall be collected Irom the lessee, t,mant or customer at the time of payment of the consideration lor such lease or rental." S 11_ 46(cj. 30. Plaintiffs and the Class bring one cause of action against each Defendants lor Defendants' failure to remit to Plaintiffs and the Class (through the Florida Department of Revenue) the Tourist Development Taxes owed in violation of ~ 11-46 and other substantially similar ordinances of other counties in the State of Florida enacted pursuant to FS. S 125.0104. B. Defendants' Unlawful Business Practices 31. At all relevant times, Defendants are/were travel agents engaged in the business of renting, leasing, or letting living quarters or accommodations (as described within F.S. ~ 125.0I04(3)(a) and ~ 11-46) situated within Leon County and other counties in the State of Florida with substantially similar ordinances cnacted pursuant to F.S. ~ 125.0104. 32. Defendants negotiate with living quarters/accommodations a discounted rate for the purchase of room nights, and then Defendants rent, lease, or let them to their customers (generally on-line and over-the-phone) at a marked-up price. 33. Upon inHmnation and belief. Defendants fail(edj to remit to Plaimit1S and the Cla:;s all taxes due pursuant to g 11-46 and other substantially similar ordinances of other eoumies in the State ofFJorida enacted pursuant to F.S. S 125.010-1. 34. Instead, Defendants only remit to Plaintiffs and the Class taxes on the room rates Ih~y negotiated st:parutcl) \-vith the h\ing quarters,accomnlodatjons at ll1\\Cr priCeS than ihos~ paid by the usc:rs ofth~ liVIng ql.iart~rs.:accommodatiG1'ls. ~ . ~{'~';,v;;i:': {t'.,; i.:".' ,,'f :'-h-;...-UI-;, '.~'<H:r. :-;.t.i;tl.: .::";"(/j i ~~!~ ',....~", :;bd~': .~, rt..... \Zbal.l, j:'::!)riJ.-, ::.? 12'1 .~. .:IIS.:w .:,":-':":-'2 ~; .~,)~ ._,-;- 5.:1::: :~1 " J. . \Vh~n D~fcndunts chargc(d'~ custom.:rs t~lr renting. [c~sing. or letting these Ih"ing quarters ,)I" accommodations, Defendants identify/identitied to customers the room rme charges, the specified living quarters/accommodations, and the applicable taxes to the customers. 36. Cpon completion of the ekctronic transaction, customers pay. paid Defendants lor the room rates, taxes, and other charges indicated by Defendants. CLASS ACTIOS ALLEGATIONS 37. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs bring this action individually and on behalf of the following class (the "Class"): All counties within the State of Florida that (I) are empowered to recdve or collect Tourist Development Taxes as set forth in a county ordinance enacted pursuant to F.S. ~ 125.0104 and (2) are not receiving or collecting the full amount due from Defendants' renting, leasing, or letting of accommodations in any hotel or motel. 38. Numerosity. The members of the Class are so numerous that separate joinder of each member is impracticable. On information and belief, the number of potential class member counties is at least fifty. 39. Common Questions of Law and Fact. Plaintiffs' claim raises questions of law or fact common to the questions oflaw or fact raised by the claim of each member of the class, including inter alia: la) Whether the substantially similar ordinances require Defendants to remit taxes based on the amount of money paid to Dctcndanis by the customers for their rooms; (h, Whether Defendants collected th" sufticient amount of Tounst Devdopment Taxes frOm customers; and (c) Whether Defendants remitted a sufficient amount of Tourist DeVt:topment Taxes to the Plaintiffs and the Class. l'h~sc ....()fnmOn qtu::StknlS pr~ddmjn.atc OYJ.:::f an) ;ndJ"idual questiun~ or l..;sues. 6 u ,~(,',i;.' Y:'!;,! '''"',',~.,:'i"~ > !tl. '~'~,Jn 'f,.',., ','l'. -:i.,it.., .;7cn_ l ;-ii '.'.,..:.~j E~.~j..:r '\\r-xt \IIJrni. [:;o;;.{" .-i.': ~::, [ .';i~..';, ,N', F lS.,;~ ;..,;;~~:- 4/). Typicality. Plaintiffs' claims arc t)pical of [he claims of eaeh member of the Class in that the central subject matter to claims of the Plaintiffs and the Class is that Defendants tilil<:d to comply with Ordinances requiring remittance of Tourist Development Taxes. 41. Adequacy of Representation. Plaimiffs can fairly and adequately protect and represent the interests of each member of the class, which are the following: (a) Plaintiffs' claims are substantially similar (if not identical to) those of absent Class members; (b) there are questions of law or fact that are common to the Class and that overwhelmingly' predominate over any individual issues, such that by prevailing on its O\\in claims, Plaintiffs necessarily will establish Detendants' liability as to all Class members; (c) without the Class representation provided by Plaintiffs, virtually no Class members will receive legal representation or redress for their injuries; (d) Plaintiffs and their counsel have the necessary financial resources to adequately and vigorously litigate this class action; and (e) Plaintiffs and Class counsel are aware of their fiduciary responsibilities to the elass members and are determined to diligently discharge those duties by vigorously seeking the maximum possible recovery for the Class. 42. Claim is Maintainable. The claims are maintainable as a class action because Defendants' failure to remit the proper amount of Tourist Development Taxes to the appropriate governmental entity/entities as describe, supra, is generally applicable to all the members of the Class. which thereby makes the linal injunctive relief or declaratory relief concerning the class as a whole appropriate. 7 ,,'.', ". .'; .; ,-" ".,~',' '- ", \lLi!<('l,T, T-"t.'iu. ";-Lh.,"~;",il, ; ;";,; \\-(.':',!: fL,,~:e. :'~,f{'~". :'.!:~,m; ,~;i.i':L::J. .;.~: .:t .'>..:, ".... _. f.. ~:1;:-:..',::/i.:.L~ 43. Risk.~ of Prosecuting Separate Actions. The pl"o)s~clltiolJ of scparat~ acti"ns by indh-idual members of the class would create risk of: (a) inconsistent or varying adjudications with respect to individual members vf the class that would establish incompatible standards of conduct for Defendants; and'vr (bl adjudications with respect to individual members of the class that would. as a practical matter. be dispositive of the imerests of the l)ther m~mbcf$ not parties to the adjudications or substantially impair or impede their ability to protect their interests. COliNT I VIOLATION OF TOURIST DEVELOPMENT TAX ORDINAl'iCES 44. Plaintiffs incorporate the allegations in paragraphs I through 43 by reference as if fully set forth herein. 45. Upon information and belief, from 1986 to present, Defendants charge(d) customers for renting. leasing. or letting living quarters andior accommodations (as described within F.S. ~ 125.0104(3)(a) and ~ 11-46) within the Leon County and other counties in the State of Florida with substantially similar ordinances enacted pursuant to F.S. ~ 125.0104. 46. Defendants charge(d) customers for renting, leasing, or letting these living quarters andlor accommodations, and it did not remit to the Florida Department of Revenue. on behalf of Plaintiffs and the Class, the Tourist Development TllK Defendants as set torth in county ordinances enacted pursuant to F.S. ~ 125.0104. 47. Defendants' failure to pay the Tourist Devdopment Taxes to Plaintiffs and the Class is d~'CI1l"J a debt ,-,wed by DClimdants to Plaintills pursuant to ~ 11-46 and other counties in th.: State of Florida ",ith substuntiaUy similar ordinan.:es enacted pursuant to r: .S. ~ 125.0 I 04. " " . ,.-~ :'. i -;.:1:" ~< ,,'; :":~i","-j;,', 'h,~,,:'_ ~,<": ,',_ c,j; ;, ',t....l: i';,I,::.l<:r "'\'~';'.:t .\-i~.;mj :;'j~~:;.';,: ~.~ i :'i,i ':' ~,t;~.5::':.'::: -': :. :u~';..' > .<:.~ -: 48. The exact amount of Tourist Development Taxe:s due from Defendants to Plaintiffs is unknown without an accounting lrom Defendants. 49. As a direct and proximate result of Defendants' conduct describt:d supra. Plaintiffs and the Class suffered and will continue to suffer damages in the: form of withheld Tourist Development Taxes in an amount to be detennined at trial. WHEREFORE, Plaintiffs and the Class pray lor a judgment in their favor and against Detendants as follows: (a) The Court enters a damage award in favor of Plaintiffs and against Defendants for such sum as is just and reasonable tor the damages sustained; (b) The Court awards Plaintiffs and the Class penalties and interest; (C) The Court requires Defendants to allow Plaintiffs to audit the books, records. and other documents of Defendants in order to detcnnine Defendants' compliance with tourist development tax ordinances; (d) The Court awards Plaintiffs their attorneys' fees and costs; and (e) The Court awards such other and further relief as the Court may deem just and appropriate under the premises. Plaintiffs demand a trial by jury on all issues so triable. ') ,', ;,~':; ) - .;.~ j t~ I "_., ,0, . ,,;Li~":L;";l "'_l'c,,-.~., ~~.J.i;(< ,~:'::n. :~"{; '~h'.'i FJ:.;dt'l SI.:....::'~. .\L':lr.r _.. .. .. h,'_'i"i.d~, :~',:.-:., ::'.>::.~:::: '::.1:: :-:: F _~'.I~~'..,-S.,_:..::-L "..,~ ., +1 ".nL 0..\ 1 t:U: JUI);~, t_ .' ..:..1.11'\1 "~':,l' ". :.'. ';f);';> -.',-, .-~, .' ;:..'L- .;'" I.: ,.~'('f >,;;,_ R"sr"ctfun~ submined. LEON COLNTY AND DORIS MALOY. LEON COl'NTY TAX COLLECTOR By' Scott Ma ox Florida B r No. 65498 MADDOX HORN"E, P.L.LC. P.O. Box 10768 Tallahassee, Florida 32302 (850) 222-6020 Telephone (850) 222-1249 Facsimile Tod Aronovitz Florida Bar No. 18M30 Steven Jaffe Florida Bar No. 0390770 ARONOVITZ TRIAL LAWYERS Museum Tower, Suite 2700 150 West Flagler Street Miami, Florida 33130 (305) 372-2772 Telephone (305) 375-0243 Facsimile Of Counsel: Robert W. Schmieder II Richard J. Burke Dennis J. Barton III THE LAKIN LAW FllL\'t, P .C. 300 Evans Avenue, P.O. Box 229 Wood River, Illinois 62095 (618) 254-1127 Telephone (618) 254-0193 Facsimile Paul M. Weiss William \<1 S\\cetnam FREED & \\'ElSS LLC 111 \Vest \\:ashington Slrc~l~ Su;i:e i 331 Chicago, Illinois 60602 (312) 220-0000 T dephone {_312) 220-7777 Fac~hnih: 1)1'0 hac \ice .\loLllHls IClrrhcOHjing. 10 \" ,_', .:,;;',; ;-j;:~~].:;- $"..:,,;, \:i:,. j ril."';'}..~',' j _:" { .- "-',~ ,,._., ,,-~- .--'. ...-. . .: i~ .:';:_\.3.-~.tJ-::.<.