O-2008-3092 CLP electing to be included in class action lawsuit for collection of Hotel-Motel taxes from Online Travel Companies

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This notice explains: A. The Nature and History ofthe Lawsuit. B. The Class Certificatlon Proceedings and Class Certification Order. C. The Right to be Included in, or Excluded from, the Class. D. Additional Information. A. The Nature And History Of The Lawsuit. This lawsuit was filed by the City of San Antonio on May 8,2006, on behalf of itself and other allegedly similarly situated cities throughout the State of Texas. The defendants are online travel companies ("OTCs" or "Defendants") or their affiliates and include the following: Hotels.com, L.P.; Hotels.com GP, LLC; Hotwire, Inc.; Trip Network, Inc. (d/b/a CheapTickets); Expedia, Inc;; Internetwork Publishing Corp. (d/b/a Lodging.co:m); Lowestfare.com, Incorporated; Orbitz; Inc.; Orbitz, LLC; priceline.com, mcorporated; Site59.com, LLC; Travelocity.com Inc.; Travelocity.com LP; Travelweb LLC; and Travelnow.com, Inc. Members of the public, either through the internet or by phone, can use the OTCs' services to make hotel reservations. The Plaintiff alleges that, under the OTCs' merchant model, the OTCs enter into a contract with the hotel to obtain an inventory of rooms at negotiated wholesale rates, determine the mark up, set the retail rate that the consumer will pay, and sell the room to the consumer. It is undisputed that the OTCs have paid ''tax recovery charges" to the hotels on the wholesale price of the rooms, but have never paid taxes on the retail price that the consumer pays when he books a room through the OTCs; As a result, the Plaintiff alleges that a certain amount of hotel occupancy or "bed" taxes are being lost on every hotel room in each of the Texas Cities that is booked and paid for through the OTCs. The Plaintiff claims that the OICs should pay hotel occupancy taxes ou the difference between the retail price of the hotel rooms, which the occupants pay, and the wholesale price that the OTCs pay the hotels. . The OTCs contend that the hotel occupancy tax ordinances do not impose a tax on them or the amounts they charge a customer and retain for their services. Each City in the Class imposes a "hotel occupancy tax" or "bed tax" on consumers who stay in a hotel room in that City. Each City has enacted a hotel occupancy tax ordinance mandating that every person "owning, operating, managing, or controlling" a hotel shall collect the tax and remit the tax to the City. In this Lawsuit, the Plaintiff has asserted claims on behalf of itself and each ofthe Texas Cities for violation of their respective hotel tax ordinances. The Plaintiff) on behalf of the Class, claims that the OICs "control" the hotels and, therefore, (a) the OICs have a duty to collect bed taxes from the consumers, and (b) regardless of their duty to do so, the OTCs are, in fact, collecting the bed tax. The Plaintiff also brings, on behalf of itself and each of the Texas Cities, a common law claim for conversion, alleging that the OTCs must submit to each Texas City any taxes that they have collected. The Plaintiff seeks to recover . damages for the amount of taxes that it alleges that it and each of the other Texas Cities have been underpaid in the past and further seeks an order from the Court that would prohibit the OICs from allegedly underpaying bed taxes in the future. The Plaintiff also seeks, on behalf of itself and the Texas Cities, attorneys' fees, costs, penalties, and/or interest. CLASS ACTION NOTICE - Page 2 140808v I