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<br />... <br />-. <br />- <br /> <br />- <br />- <br />T <br /> <br />DIAMOND McCARTHY LLP <br /> <br />Attorneys & Counselors <br /> <br />Renaissance Tower 11201 Elm Street, 34th Floor I Dollos, TX 75270 I Phone: 214.389.5300 I Fox: 214.389.5399 <br /> <br />June 25, 2008 <br /> <br />Mr. KnoxW. Askins <br />City Attorney <br />P.O. Box 1218 <br />La Porte, TX 77572-1218 <br /> <br />Re: City of San Antonio, Texas, on Behalf of Itself and All Other Similarly Situated <br />Texas Cities v. Hotels.com, et a!., Case No. SA06CA0381 OG <br /> <br />Dear Mr. Askins: <br /> <br />On May 27,2008, the Federal District Court for the Western District of Texas certified a <br />class of 175 Texas cities (including your City) in a suit for damages against certain online travel <br />companies ("OTCs") - like Hotels.com, Travelocity, Expedia, Priceline.com, Orbitz, and others. <br />The suit, originally filed May 8, 2006, alleges that the OTCs collect the hotel occupancy tax <br />from customers at the retail price they charge the customer for the room, but remit the tax based <br />on the wholesale price they paid the hotel for the room, keeping the difference. <br /> <br />By way of example, an OTC sells a room to a customer for $200.00 and charges a 15% <br />bed tax or $30.00. It remits the tax based on the $150.00 wholesale price it pays the hotel for the <br />room - or $22.50 ($150 x 15%), keeping the difference - or $7.50. <br /> <br />A two-day class certification hearing was held on May 16 and May 17,2007. This letter is an <br />informal notice of the certification order, a copy of which is enclosed, along with the 32-page detailed <br />OpInIOn. <br /> <br />One of the most significant findings of the Court is on page 4 where the Court writes: "It <br />is undisputed that Defendants have paid bed taxes to the hotels on the wholesale price of <br />. the rooms, but they have never paid taxes on the retail price that the consumer pays when <br />he books a room through a web-based company." That finding is important because it is <br />contrary to the ordinances of the cities in the class (including your ordinance). Weare in the <br />process of calculating damages for each city in the class. <br /> <br />As lead counsel for the Plaintiffs, we will mail a formal notice to you and the other class <br />members shortly. <br /> <br />Please let me know if you have any questions. <br /> <br />With kind regards, <br /> <br />)~Lv~ <br /> <br />Steven D. Wolens <br /> <br />Jur~ 2 7 LUlJO <br /> <br />SDW!cs <br /> <br />Enclosures Diamond McCarthy LLP <br />Austin 16504 Bridgepoint Porkwoy I Suite 400 I Austin, TX 78730 I Phone: 512.617.5200 I Fax: 512.617.5299 <br />Houston I Two Houston Center I 909 Fannin, Suite 1500 I Houston, TX 7701 0 I Phone: 713.333.5100 I Fox: 713333.5199 <br />New York /620 Eighth Avenue, 39th Floor / New York, NY 10018 I Phone: 212.430.5400 I Fax: 212.430.5499 <br />www.diamondmccarthy.com <br /> <br />-~----'---'----_._~--~---~_.- <br />