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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The OTCs deny that they have any duty to collect or pay bed taxes to the Texas Cities under the ordinance applicable to each Texas City and, accordingly, deny that they have underpaid any.bed taxes. More specifically, the OTCs assert that they do not "control" hotels or hotel operations; therefore, they are not required by law to collect or remit hotel occupancy taxes. They also assert that only the amounts charged and paid "to hotels" are taxable. The OTCs also contend that the amounts. charged for their services are not taxable. The OTCs further claim that they cannot be taxed by cities with which they do not have a substantial nexus because it would violate their constitutional rights. R The Class Certification Proceedings And Class Certification Order. In preparation for the class certification hearing, the parties engaged in extensive discovery including more then 20 oral depositions as well as the exchange of a substantial vo lume of documents and electronic discovery. On May 16 and 17, 2007, the Court held an evidentiary hearing on the Plaintiffs motion for class certification. The Court heard evidence and legal arguments from all parties. On May 27,2008, the Court entered an Order on Class Certification and issued a Memorandum and Opinion on Class Certification (the "Class Certification Order") in which the Court granted the Plaintiffs motion for class certification and certified the following class. "T exas cities whose ordinances contain language that requires every person owning, operating, managing, or controlling any hotel to collect and remit hotel occupancy taxes and whose ordinances .do not contain administrative prerequisites to filing a lawsuit for the failure to collect or remit hotel occupancy taxes." The Plaintiff has identified by name 175 Texas Cities that fit within this class definition, and Your City is one of these 175 Texas Cities and, therefore, is part of the Class. Pursuant to the Class Certification Order, the City of San Antonio has been designated to serve as the representative for the Texas Cities (the "Class Representative"). The Court has further designated Steven D. Wolens and Gary Cruciani with the law firm of Diamond McCarthy to serve as lead attorneys for the Texas Cities ("Lead Class Counsel"). In addition, the law firm of Baron & Budd will serve as co-counsel, and Frank Herrera will serve as local counsel. (All the above attorneys are collectively referred to as the "Class Counsel"). C. The Right To Be Included In Or Excluded From The Class. Your City has a right to be included in or excluded from the Class. Either choice will have consequences, which Your City should understand before making a decision. 1. Your City May Do Nothing And Remain A Member Of The Class. If Your City wants to remain a member of the Class, it should DO NOTHING at this time. If Your City ~emains in the Class, it will be bound by any judgment entered in this case, whether favorable or unfavorable to it. By remaining in the Class, Your City will have no obligation to pay any of the costs or attorneys' fees involved inthis Lawsuit at this time. If the Class prevails in this Lawsuit, the Court may award attorneys' fees and nontaxable costs that are authorized by law. If Defendants prevail in this Lawsuit, all costs and attorneys' fees incurred by Plaintiffs and the Class will bepaid exclusively by Class Counsel. CLASS ACTION NOTICE - Page 3 140808vl