R-1257 - 04/23/2013 - TAX - Resolutions RESOLUTION 2013-LEGAL-HM-TAX-LIT-EX'-R-1257
A RESOLUTION APPROVING A LEGAL SERVICES AGREEMENT
FOR THE RECOVERY OF UNREMITTED HOTEL TAX REVENUE
DUE AND OWING FROM ONLINE TRAVEL COMPANIES
WHEREAS, Article VII, Section 10 of the 1970 Illinois Constitution authorizes the Village to
contract with individuals, associations, and corporations in any manner not prohibited by law or
ordinance; and
WHEREAS, pursuant to Chapter 5 of Title 5 of the Village Code of the Village of Oak Brook,
Illinois("Village Code', the Village collects a tax from hotel and motel operators within the Village on the
basis of gross receipts from the renting of rooms("Hotel Tax"); and
WHEREAS, online travel companies ("OTCs") purchase the rental of hotel and motel rooms
from, and pay the Hotel Tax to, hotel and motel operators at wholesale rental rates; and
WHEREAS, the OTCs subsequently re-rent the hotel and motel rooms at retail rental rates
without remitting the Hotel Tax to the Village for the difference between the gross receipts paid for the
hotel and motel rooms at the wholesale rental rates and retail rental rates ("Unremitted Hotel Tax
Revenue'); and
WHEREAS, a class-action law suit filed against the OTCs by various municipalities within the
State of Illinois seeks to recover from the OTCs the Unremitted Hotel Tax Revenue due and owing to
such municipalities by the OTCs; and
WHEREAS, by joining the class-action law suit, the Village could recover from the OTCs the
Unremitted Hotel Tax Revenue due and owing to the Village; and
WHEREAS, the Village desires to enter into a Legal Services Agreement ("Legal Services
Agreement')with Robert K. Finnell, the Bird Law Group, P.C., the Crongeyer Law Firm, P.C., the Clifford
Law Offices, and Peterson, Johnson & Murray Chicago, LLC, (collectively, "Special Counsel") for the
performance of legal services in connection with the recovery of the Unremitted Hotel Tax Revenue from
the OTCs ("Legal Services'; and
WHEREAS, pursuant to the Legal Services Agreement, the Special Counsel shall perform the
Legal Services for the Village for a contingency fee of 25 percent if the Special Counsel obtain a
settlement agreement from the OTCs for the Unremitted Hotel Tax Revenue within 30 days after sending
an initial demand letter, and of 33 percent if the Special Counsel must file suit and obtain a judgment or
settlement for the Unremitted Hotel Tax Revenue, plus expenses; and
WHEREAS, pursuant Section 1-7-613 of the Village Code, professional service contracts for
certain types of professional services, including legal services, are exempt from the normal bidding
procedures under the Village Code; and j
WHEREAS, Village staff recommends that the Village enter into the Legal Services Agreement
with the Special Counsel to procure the Legal Services for the Village; and
WHEREAS, the Village Board has determined that it is in the best interest of the Village to enter
into the Legal Services Agreement with the Special Counsel for the performance of the Legal Services
and collection of unremitted Hotel Tax revenue due and owing to the Village by the OTCs;
NOW THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF
THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS as follows:
Resolution 2013-LEGAL-HM-TAX-LIT-EX-R-1257
Approving Professional Services Agreement for Recovery of Hotel Taxes
Page 2 of 3
Section 1: Recitals. The foregoing recitals are hereby incorporated into, and made a part
of, this Resolution as the findings of the President and Board of Trustees of the Village of Oak Brook.
Section 2: Approval of Legal Services Agreement. The President and Board of Trustees
hereby approve the Legal Services Agreement by and between the Village and Special Counsel.
Section 3: Authorization and Execution of Legal Services Agreement. The Village President
and Village Clerk shall be, and hereby are, authorized to execute the final Legal Services Agreement on
behalf of the Village after review and approval of the final form of the Legal Services Agreement by the
Village Manager and the Village Attorney.
Section 4: Effective Date. This Resolution shall be in full force and effect upon passage and
approval in the manner provided by law.
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APPROVED THIS 23rd day of April, 2013
Gopal G. Lalmalani
Village President
PASSED THIS 23rd day of April, 2013
Ayes: Trustees Aktipis, Manzo, Moy, Wolin, Yusuf, Zannis
Nays: None
Absent: None
ATTEST:
SIA
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Charlotte K. Pruss
; - Village Clerk
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Resolution 2013-LEGAL-HM-TAX-LIT-EX-R-1257
Approving Professional Services Agreement for Recovery of Hotel Taxes
Page 3 of 3
EXHIBIT A
AGREEMENT
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PLEASE NOTE: The Agreement, Resolution, or Ordinance is not a complete file,
due to the fact that a Signed Signature page was not returned to the Clerk's
Department.
LEGAL SERVICES AGREEMENT
THIS AGREEMENT (hereinafter referred to as the"Agreement")effective this day
of 2013, by and between the Village of Oak Brook, an Illinois municipal
corporation(hereinafter referred to as the"Village"),and Robert K.Finnell,the Bird Law Group,
P.C., the Crongeyer Law Firm, P. C., the Clifford Law Offices and the law firm of Peterson,
Johnson&Murray Chicago,.LLC(hereinafter referred to as the"Attorneys").
WHEREAS, the collection of unremitted taxes due and owing to the Village under the
Village's Hotel/Motel Room Tax, as amended; and all other applicable provisions relating to the
provision of hotel or lodging accommodations by corporations who offer and sell/rent such
accommodations over the internet require the services of additional attorneys to represent the
Village;
WHEREAS, the corporate authorities of the Village deem it desirable and in the best
interest of the Village to enter into this Agreement with the Attorneys to provide for the terms
and conditions of their employment;
NOW, THEREFORE, IT IS MUTUALLY AGREED between the Villagge and the
Attorneys, as follows:
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1, The Village employs the Attorneys to conduct and administer the following
services:
A. diligently pursue unremitted taxes due and owing to the Village under the j
Village's Hotel/Motel Room Tax, as amended and all other applicable provisions
relating to the provision of hotel or lodging accommodations by corporations who
offer and sell/rent such accommodations over the intereet; and j
B. assist the Village in pursuing non filing, audit, assessment or other
administrative processes, as needed, and in filing litigation pleadings including
appeals and representing the Village as necessary and as requested and approved
in connection with unpaid taxes and :seeking the recovery of past, present and
future taxes, interest and penalties against any parties responsible for filing,
remittance or payment of such taxes, including any intermediaries, agents or
clearing houses on behalf of the Village
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2. The Attorneys shall perform the services with reasonable care, in a manner
satisfactory to the Village and in accordance with all applicable laws and professional standards.
The Attorneys shall function hereunder as independent contractors and not as employees of the
Village,The Attorneys shall perform the services until such time as the services of the Attorneys
are terminated as provided herein. The responsibility to be assumed by each attorney is as
follows: j
A. Robert K. Finnell, shall have primary responsibility for representation of
the Village.
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B. the Bird Law Group, P.C., shall have primary responsibility for
representation of the Village.
C. the Crongeyer Law Firm, p .C., shall have primary responsibility for
representation of the Village.
D, the Clifford Law Offices,shall have responsibility as local counsel; and
E. Peterson, Johnson & Murray Chicago, LLC, shall have responsibility as
local counsel.
3. The Attorneys shall cooperate with the Village Board.members of the Village;its
staff and its consultants, and, subject to the general direction of the Village Board, shall
communicate and/or meet with staff members and consultants during normal business hours or j
otherwise, as shall be mutually convenient, whenever such communication and/or meetings are
necessary for the conduct of the Attorneys' services.
4, The Village shall assist and cooperate with the Attorneys and shall promptly
supply such information, documentation and persons as may'be requested by the Attorneys to
permit the Attorneys to effectively advocate the Village's interests. The Village shall provide the
Attorneys reasonable access, during the normal business hours,to all files, and other information
not privileged or confidential, necessary for the Attorneys to perform the services under this
Agreement; or the Village shall allow the Attorneys' personnel reasonable access, during the I
normal business hours, to the Village's records, files, properties for research and any other
information not privileged or confidential necessary for the Attorneys to perform the services set
forth in this Agreement.
5. Any documents, data, records, or other information relating to the legal
representation of the Village and all information secured by the Attorneys from the Village in
connection with the 'performance of legal services, unless in the public domain or unless j
disclosure is required by law, shall be considered attorney-client privileged, when applicable,
and kept confidential by the Attorneys. The information shall not be made available to third
parties without written consent of the Village, unless so required by valid court order. In
addition,the Attorneys' Privacy Notice is attached hereto as Exhibit"A"and made a part hereof.
6. The Attorneys shall maintain all records relating to the performance of its
services under this .Agreement which would be subject to inspection and copying under the
Freedom of Information Act (5 ILCS 140/1 et seq.) in compliance with the requirements of the I
Local Records Act(50 ILLS 205%1 et seq) and the Freedom of Information.Act(5 ILCS 140/1 et
seq.) until the conclusion of the services and the payment of the fee and costs hereunder or until
written approval for the disposal of such records is obtained from the Local Records j
Commission. The Attorneys shall make available to the Village such records and cooperate fully
with the Village with any request for public records made pursuant to the Freedom of
Information Act (5 ILCS 140/1 et seq.) by providing full access to and copying of all relevant
non-exempt records within a time period which allows the Village to timely comply with the
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time limits imposed by the Freedom of Information Act (5 ILLS 14011 et seq). .All reports,
a e material je lit Attorneys hereunder
shall become the property of the Villa e, subject o the a p pcableatt rney'sl en, Title thereto,
free of such lien, shall transfer to the Village following payment in full of any>sums due to the
Attorneys. The Attorneys, however, shall have the right to maintain for their own files and use
copies of such reports, documents; and other materials constituting the Attorneys'work product.
7. Current communication technology, including, but not limited to, cellular
telephones, electronic mail and facsimile transmission, contains certain inherent security risks
that the information will be intercepted by third parties with no right to hear or see it. Unless
otherwise notified by the Village,. the Attorneys will use current communication technology to
communicate with the Village with the understanding that by agreeing to the use of any means of
communication other than in-person private meeting or two-way (as opposed to multi-party) land
line telephone conversations, the Village will be giving its consent to, and accepting any risks of
disclosure of, confidential information to third parties that may be attendant upon the use of
those means of communication.
8. The Attorneys shall perform the legal services .and the Village shall compensate
the Attorneys for such legal services on a contingent fee basis as follows:
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A. If the Attorneys achieve a settlement agreement within thirty (30) days of an
initial demand letter, the Attorneys shall receive a contingent fee of twenty-five,percent
(25%)of the Gross Recovery, as defined below, plus the cash expenditures advanced and j
expenses incurred by the Attorneys on behalf of the Village. j
B. If settlement is not achieved within thirty (30) days of an initial demand letter the
Attorneys shall file suit and the Attorneys shall, upon final judgment after trial or any
ensuing appeals or settlement with respect to any defendant or group of defendants
obtained on behalf of and for the benefit of Village, receive a contingent fee equal to
thirty-three percent (33%) of the Gross Recovery, as defined below, plus the cash
expenditures advanced and expenses incurred by the Attorneys on behalf of the Village.
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C. To the extent that final judgment or settlement is obtained against defendants on
different dates the fee will be determined based upon the cumulative Gross Recovery
from all defendants.
D. the balance of the Gross Recovery shall be paid to the Village.
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E. "Gross Recovery" means damages,tax revenues, interest and penalties recovered
for the Village through the date of settlement or final judgment but not indefinite
prospective collections of tax revenues, interest or penalties that become due after the
date of final judgment or settlement. To the extent that the defendants pay a lump sum
settlement to resolve claims for both back taxes and to avoid.registering and paying taxes
for some number of specified years going forward, as they have done in other places,the
amount of the lump sum payment shall'be the Gross Recovery. If the defendants pay a
lump sum for taxes, penalties and interest<due as of the date of settlement and agree to
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register and start paying taxes prospectively, the Gross Recovery shall be the lump sum
payment and a sum equal to the annual amount of taxes actually paid by such companies
for the next four (4)years as compensation for bringing about the change and,leading to
permanently increased revenues.
9. The Attorneys shall divide the Attorneys' fee paid by the Village in proportion to
the services performed and the responsibility assumed by each lawyer on the following basis:
A, Robert K. Finnell,shall receive Twenty Percent(20%)of the Attorneys' fee;
B. the Bird Law Group,P.C., shall receive Twenty Percent(20%o) of the Attorneys'
fee;
C. the Crongeyer Law Firm,P.C.,,shall receive Twenty Percent(20%)of the
Attorneys' fee;
D. the Clifford Law Offices, shall receive Twenty Percent(20%)of the Attorneys'
fee;and
E. Peterson,Johnson&Murray Chicago,LLC, shall receive Twenty Percent(20%)
of the Attorneys' fee.
10. The Attorneys shall advance the expenses incurred to perform the legal services
for the Village and shall receive reimbursement of the cash expenditures advanced and expenses
incurred by the Attorneys on behalf of the Village.from any Gross Recovery which shall be
deducted after the contingent fee is calculated. if there is no Gross Recovery pursuant to a final
judgment or settlement in connection with this litigation matter, then no attorneys' fee or costs
shall be due to Attorneys hereunder.Upon conclusion of this matter,the Attorneys shall provide
the Village with a written statement stating the outcome of the matter, and if there is a recovery;
showing the Attorneys' fee, the cash expenditures advanced and expenses incurred by the
Attorneys on behalf of the Village that are being reimbursed and the balance being remitted to
the Village.
I t. The Attorneys shall maintain professional liability insurance applicable to the
services rendered to the Village.
12, The Attorneys shall submit to the Village a certification, attached hereto as
Exhibit"B,"that the Attorneys:
A. are not delinquent in the payment of taxes to the Illinois Department of
Revenue in accordance with 65 ILC.S 5/11-42.1-1;
B. are not barred from contracting as a result of a violation of either Section:3
.3 E-3 (bid-rigging) or 33E-4 (bidAotaling) of the Criminal Code of 1961 (720
ILCS 5/33E-3 and 5/33E-4);
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C. are incompliance with 775 ILLS 5/2-105(A)(4)requiring a written sexual
harassment policy;
D. are not in default, as defined in SILCS 385/2, on an educational loan, as
defined in 51LCS 385/1;
E. will provide a drug-free workplace by;
(1) Publishing a statement:
(a) Notifying employees that the unlawful manufacture,
distribution, dispensation; possession, or use of a controlled
substance, including cannabis; is prohibited in the Attorneys'
workplace;
(b) Specifying the actions that will be taken against employees
for violations of such prohibition;
(c) Notifying the employee that, as a condition of employment.
on such contract,the employee will:
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(i) abide by the terms of the statement; and
(ii) notify the employer of any criminal drug statute
conviction for a violation occurring in the workplace no
later than five(5)days after such conviction;
(2) establishing. a drug-free awareness program to inform employees
about.
(i) the dangers of drug abuse in the workplace;
(ii) Attorneys' policy of maintaining a drug-free workplace;
(iii) any available drug counseling,rehabilitation, and employee
assistance program; and
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(iv) the penalties that may be imposed upon employees for drug
violations;
(3) making it a requirement to give a copy of the statem ent required by
subparagraph 18(E)( 1) to each employee engaged in the performance of j
the Agreement and to post the statement in a prominent place in the j
workplace;
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(4) notifying the Village within ten (10) days after receiving notice
under subparagraph 18(E)(1 )( c )(ii) from an employee or otherwise
receiving actual notice of such conviction;
(5) imposing a sanction on or requiring the satisfactory participation in
a drug abuse assistance or rehabilitation program by any employee who is
so convicted,as required by 30 ILCS 58015;
(6) assisting employees in selecting a course of action in the event
drug counseling treatment and rehabilitation is required and indicating that
a trained referral team is in place;and
(7) making a good faith effort to continue to maintain a drug-free
workplace through implementation of this section.
F. provide equal employment opportunities in accordance with the Illinois
Human Rights Act (775 ILCS 58011 et seq.) and are in compliance with 775 ILCS 5/2.-
105(A)(4)requiring a written sexual harassment policy;
Ch certify that no officer or employee of the Village that has solicited any
gratuity, discount, entertainment, hospitality, loan, forbearance, or other tangible or
intangible item having monetary value including, but not limited to, cash, food and drink,
and honoraria for speaking engagements related to or attributable to the government
employment or the official position of the employee or officer from the Attorneys in
violation of the Code of Oak Brook, Illinois, adopted by the Village pursuant to the
requirements of the State Officials and Employees Ethics Act;
H. have not given to any officer or employee of the Village any gratuity,
discount entertainment, hospitality, loan,forbearance, or other tangible or intangible item j
having monetary value including, but not limited to, cash, food and drink, and honoraria
for speaking engagements related to or attributable to the government employment or the
official position of the employee or officer from the Attorneys in violation of the Code of
Oak Brook, Illinois, adopted by the Village pursuant to the requirements of the State
Officials and Employees Ethics Act;
I. are not a part of the immediate family of any officer or 'employee at or
above the level of department head of the Village;
J. certify that no Village officer, spouse or dependent child of a Village
officer, agent on behalf of any Village officer or trust in which a Village officer, the
spouse or dependent child of a Village officer or a beneficiary is a holder of any interest
in the Attorneys; or, if the Attorneys' stool-,is traded on a nationally recognized securities
market, that no Village officer, spouse or dependent child of a Village officer,agent on
behalf of any Village officer or trust in which a Village officer, the spouse or dependent
child of a Village officer or a beneficiary is a holder of more than one percent(1 0/6) of the
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Attorneys, but if any Village officer, spouse or dependent child of a Village officer, agent
on behalf of any Village officer or trust in which a Village officer, the spouse or
dependent child of a Village officer or a beneficiary is a holder of less than one percent
0%) of such Contractor,the Attorneys have disclosed to the Village in writing the
name(§)of the holder of such interest,
K. nor any of its principals, shareholders, members, partners, or affiliates, as
applicable, is a person or entity named as a Specially Designated National and Blocked
Person (as defined in Presidential Executive, Order 13224) and that it is not acting,
directly or indirectly, for or on behalf of a Specially Designated National and Blocked
Person;
L. and its principals, shareholders, members, partners, or affiliates, as
applicable, are not, directly or indirectly, engaged in, and are not facilitating, the
transactions contemplated by the Agreement on behalf of any person or entity named as a
Specially Designated National and Blocked Person;
M. are not acting, directly or indirectly, for or on behalf of any person, group,
entity, or nation named by the United State Treasury Department as .a Specially
Designated National and Blocked Person,or for or on behalf of any person, group, entity,
or nation designated in Presidential Executive Order 13224 as a person who commits,
threatens to commit, or supports terrorism; and that it is not engaged in this transaction
directly or indirectly on behalf of, or facilitating this transaction directly or indirectly on
behalf of,any such person, group, entity,or nation.
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13. In the event of the Attorneys' non-compliance with the provisions of this Equal
Employment Opportunity Clause, the Illinois Human Rights Act or the Rules and Regulations of
the Illinois Human Rights Commission, the Attorneys may be declared ineligible for future
contracts or subcontracts with the State of Illinois or any of its. political subdivisions or
municipal corporations; and this Agreement may be cancelled or voided in whole or in part, and
other sanctions or penalties may be imposed or remedies invoiced as provided by statute or
regulation.During the performance of this Agreement,the Attorneys shall:
A. not discriminate against any employee or applicant for employment
because of race, color, religion, sex, sexual orientation, marital status, national origin or
ancestry, citizenship status, age, physical or mental disability unrelated to ability, sexual
orientation, military status or an unfavorable discharge from military service; and,
further,that he or she will examine all job classifications to determine if minority persons
or women are underutilized and will take appropriate affirmative action to rectify any
underuitilization
B. if the Attorneys hire additional employees in order to perform this
Agreement or any portion of `this Agreement, the Attorneys will determine the
availability (in accordance with the Illinois Human Rights Commission's Rules and
Regulations) of minorities and women in the areas from which the Attorneys may
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reasonably recruit and the Attorneys will hire for each job classification for which
employees are hired in a way that minorities and women are not underutilized;
C. in all 'solicitations or advertisements for employees placed by the
Attorneys or on the Attorneys' behalf, the Attorneys will state that all applicants will be
afforded equal opportunity without discrimination because of race, color, religion, sex,
sexual orientation; marital status, national origin or ancestry, citizenship status, age,
physical or mental disability unrelated to ability, sexual orientation, military status or an
unfavorable discharge from military service;
D. wily send to each labor organization or representative of workers with
which the Attorneys has or is bound by a collective bargaining or other agreement or
understanding, a notice advising the labor organization or representative of the Attorneys'
obligations under the Illinois Human Rights Act, and the Illinois Human Rights
Commission's Rules and Regulations, If any labor organization or representative fails or
refuses to cooperate with the Attorneys in their efforts to comply with the Illinois Human
Rights Act and Illinois Human Rights Commission's Rules and Regulations, the
Attorneys will promptly notify the Illinois Human Rights Commission and the Village
and will recruit employees from other sources when necessary to fulfill its obligations
-under this Agreement;
E. submit reports as required by the Illinois Human Rights Commission's
Rules and Regulations, furnish all relevant information as may from time to time be
requested by the Illinois Human Rights Commission or the Village and in all respects
comply with the Illinois Human Rights Act and the Illinois Human Rights Commission's
Rules and Regulations;
F. permit access to all relevant books, records, accounts and work sites by
personnel of the Village and the Illinois Human Rights Commission for purposes of
investigation to ascertain compliance with the.Illinois Human Rights Act and the Illinois
Human Rights Commission's Rules and Regulations;
G. include verbatim or by reference the provisions of this clause in every
subcontract awarded under which any portion of this Agreement's obligations are
undertaken or assumed, so that the provisions will be binding upon the subcontractor. In
the same manner as with other provis ions of this Agreement, the Attorneys will be liable
for compliance with applicable provisions of this clause by subcontractors; and further
the Attorneys will promptly notify the Village and the Illinois Human Rights
Commission in the event any subcontractor fails or refuses to comply with the provisions.
In addition, the Attorneys will not utilize any subcontractor declared by the Illinois
Human Rights Commission to be ineligible for contracts or subcontracts with the State of
Illinois or any of its political subdivisions or municipal corporations;
H. will not maintain or provide for its employees any segregated facilities at
any of its establishments, and not permit its employees to perform their services at any
location, under its control,'where "segregated facilities" means any waiting rooms, work j
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areas, restrooms and washrooms, restaurants and other eating areas, time clocks, locker
rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or
entertainment areas, transportation and housing facilities provided for employees which
are segregated by explicit directive or are in fact segregated on the basis or race, creed,
color, or national origin because of habit, local custom, or otherwise. The Attorneys
(except where it has obtained identical certifications from proposed subcontractors and
material suppliers for specific time periods), obtain certifications in compliance with this
subparagraph from proposed subcontractors or material suppliers prior to the award of a
subcontract or the consummation of material supply agreements, exceeding $10,000.00
which are not exempt from the provisions of the Equal Employment Opportunity clause,
and that the Attorneys will retain such certifications in its files.
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14. The Attorneys do not know of any facts concerning the representation of the
Village or the services to be provided hereunder which the Attorneys believe would adversely
affect the relationship with another client, would materially limited by the Attorneys
responsibilities to another client, to a third person or to the Attorneys' own interests or would
otherwise constitute a conflict of interest. The Attorneys anticipate representing multiple local
governmental entities in pursuing unremitted taxes. The common representation of multiple local
governmental entities will benefit the Village by the sharing of the costs of litigation, the sharing
of research and knowledge of the various legal subject matters involved in pursuing unremitted
taxes and the sharing of information.
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15. The Attorneys shall not refuse or deny employment to any person in any capacity
on the;ground of unlawful discrimination, as that term is defined in the Illinois Human Rights.
Act, not shall any person be subjected to unlawful discrimination in any manner, in connection
with the contracting'for or the performance of any work or service of any kind, by,for, on behalf
o£, or for the benefit of the Village. The Attorneys, or any person on the Attorneys' behalf shall
not,in any manner,discriminate against or intimidate any employee hired for the performance of
work for the benefit of the Village on account of race, color, creed, sex, religion, physical or
mental handicap unrelated to ability, or national origin; and there may be deducted from the
amount payable to the Attorneys by the Village, under this contract, a penalty of five dollars for
each person for each calendar day during which such person was discriminated against or
intimidated in violation of the provisions of the Public Worlcs Employment Discrimination Act
(775ILCS 10/0/01).
16. The Village's financial obligations under this Agreement are specifically
contingent upon the recovery by the Attorneys of unremitted taxes. No annual appropriation of
hinds other than a general appropriation for legal services is required to authorize such financial.
obligation until,such recovery is made. This Agreement shall not constitute a debt or obligation
of the Village within any statutory or constitutional provision. In the fiscal year during which the
Village is to pay to the Attorneys the Attorneys'fee and reimbursement of expenses advanced to
which the Attorneys are entitled under this Agreement, if any, the Village shall include in the
budget presented to the Village Board a proposed appropriation for the payment of the
Attorneys' fee and reimbursement of the expenses.advanced.
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17. This Agreement contains all of the terms, provisions, agreements, conditions,and
covenants between the parties,represents the entire and integrated agreement between the parties
and supersedes all prior negotiations, representations or understandings, whether written or oral.
Changes and amendments to this Agreement shall only be made in writing and by amendment to
this Agreement. The amendment shall be in contract form and shall be approved by the Village.
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18. Any notice given hereunder shall be in writing and transmitted via the United
States mail, registered or certified, postage pre-paid, via overnight delivery (UPS or FedEx), or
via fax with confirmed receipt, or via email, with a confirming fax or overnight delivery
addressed to the proper party as follows:
A. If to the Village:
Village of Oak Brook
Attention: David Niemeyer,Village Manager
1200 Oak Brook Road
Oak,Brook, Illinois 60523
B. If to the Attorneys:
Robert K.Finnell
The Finnell Firm
1 West Fourth A venue
Suite 200
Rome, GA 30161
Mr. William Q.Bird
Bird Law Group,P.C.
2170 Defoor Hills Road
Atlanta,GA 30318
Mr. John W. Crongeyer
Crongeyer Law Firm,P.C.,
2170 Defoor Hills Road
Atlanta, GA 30318
Mr. Thomas K.Prindable
Clifford Law Offices
120 North LaSalle Street
Chicago, IL 60602
Mr, Paul O'Grady
Peterson,Johnson&Murray Chicago,LLC
223 South Wacker Drive, 84"'Floor
Chicago,IL 60606
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Either party may change. its mailing address or other contact information by giving
written notice to the'other party as provided above. Whenever this Agreement requires one party
to give the other notice, such notice shall be given only in the form, and to the addresses
described in this paragraph.
19. When this Agreement becomes effective, it will relate back to the day the
-appointment of the Attorneys for the Village became effective. This Agreement shall terminate
upon a final judicial determination or a final settlement. This Agreement may also be terminated
by the Village upon the expiration of the term of the mayor or upon written notice to the
Attorneys, subject to the payment of the reasonable value of the services rendered prior to the
date of termination. The Attorneys shall have the right, if in their sole judgment they believe
such action is necessary or appropriate, to withdraw as attorneys representing the Village,
without terminating this Agreement or may elect to terminate this Agreement,if the Village fails
to meet its obligations under this Agreement; refuses to cooperate with the Attorneys, refuses to
follow the legal advice provided by the Attorneys on a material matter or under any other
circumstances in which the Attorneys' professional or legal responsibilities or 'obligations
mandate or permit termination. The Attorneys shall give thirty (30) days' written notice to the
Village. The Village shall cooperate and facilitate the withdrawal by retaining a substitute
attorney. Provided that the Attorneys are ethically able to do so, at the sole option of the Village
Council, all obligations under this Agreement shall continue until a successor attorney is retained
but in no event more than sixty (60) days after the effective termination date as set forth in the
notice. If this Agreement is terminated for any reason,the termination shall be effective only to
terminate the Attorneys' services prospectively,and all other terms of this Agreement,including
the Village's obligation to compensate the Attorneys for legal services rendered and expenses
incurred prior to the termination shall survive the termination. Provided that the Agreement has
not been 'terminated upon a final judicial determination or a final settlement or otherwise
terminated by the Attorneys, this Agreement maybe renewed by the Village following the
expiration of the term of the mayor upon written notice to the Attorneys.
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20. This Agreement shall be deemed to be exclusive between the Village and the j
Attorneys. This Agreement shall not be assigned by either party without first obtaining
permission in writing from the other party.
21. This Agreement shall be governed by the laws of the State of Illinois.
22. The illegality or invalidity of any term or clause of this Agreement shall not affect
the validity of the remainder of this Agreement, and the Agreement shall remain in full force and
' effect as if such illegal or invalid term or clause were not contained herein.
23. The waiver by either party of any breach of this Agreement shall not constitute a
waiver as to any other breach.
24. The Attorneys are not advising the Village with respect to this Agreement because
the Attorneys would have a conflict of interest in doing so. If the Village desires advice
regarding this Agreement,it should seek independent counsel of its choice to do so.
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IN WITNESS WHEREOF the parties have executed this Agreement in Oak Brook,
.Illinois,the elate and year first above written.
ATTORNEYS: 'VIL AGE:
ROBERT K.FINNELL VI LADE OF OAK BROOK
n
By:
Robert K. Finnell a1 Lalmalani, Mayor
BIRD LAW GROUP,P.C. Attes . ;`
Charlotte Pruss,Village Clerk
By:
William Q.Bird,Managing Partner
CRONGEYER LAW FIRM,P.C.
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By:
John W. Crongeyer,President
CLIFFORD LAW OFFICES
By:
Thomas Prindable,Managing Partner j
PETERSON,JOHNSON&MURRAY CHICAGO,LLC
By:
Paul O'Grady,Managing Partner
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EXHIBIT"A"
ATTORNEYS
PRIVACY NOTICE
Attorneys, like other professionals who advise on financial matters, are required by
federal law to inform their clients of their policies regarding the privacy of client information.
Attorneys have been and continue to be bound by professional standards of confidentiality that
are even more stringent than those required by federal law.
Ill the course of providing our clients with certain advice, the Attorneys may receive
nonpublic financial information from our clients,their accountants and other representatives.All
nonpublic information we receive regarding our clients or former clients is held in strict
confidence in accordance with our professional obligations and is not released.to people outside
of our law firm, except with the client's consent or as required by law. We may share certain
information with third parties who assist us in providing our services to our clients,as permitted
by law, subject to the obligation that these third parties not use or disclose such information for
any other purpose.
We retain records relating to professional services that we provide so that we are better
able to assist you with your professional needs and, in some cases, to comply with professional
guidelines. In order to guard our client's nonpublic information from unauthorized disclosure,we
maintain physical, electronic and procedural safeguards that comply with our professional
standards.
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EXHIBIT"B"
ATTORNEYS' CERTIFICATION
The certifications hereinafter made by Robert K. Finnell, the Bird Law Group, P.C., the
Crongeyer Law Firm, P.C., the Clifford.Law Offices and Peterson., Johnson&Murray Chicago,
LLC (the "Attorneys") are each a material representation of fact upon which reliance is placed
by the Village of Oak Brook(the "Village") in entering into the Legal Services Agreement with
the Attorneys. The Village may terminate the Legal Services Agreement if it is later determined
that the Attorneys rendered a false or erroneous certification.
The undersigned hereby certify that the Attorneys hereby represent and warrant to the
Village that the Attorneys, and their shareholders or partners holding more than five percent
(5%)of the outstanding partnership interests and its associate attorneys are:
(A) not delinquent in the payment of taxes to the Illinois Department of Revenue in
accordance with 65 lLCS 5111-42.1-1;
(B) not barred from contracting as a result of a violation of either Section 33E-3 (bid
rigging) or 33E-4(bid-rotating)of the Criminal Code.of 1961 (720 ILCS 5/33E-3 and 5/33E 74);
(C) in compliance with 775 ILLS 5/2-105(A)(4)requiring a written sexual harassment
policy; and
(D) not in default, as defined in 51LCS 385/2, on an educational loan, as defined in.
51LCS 38511.
In addition,.the Attorneys hereby represent and warrant to the Village,that the Attorneys:
(A) will provide a drug-free workplace by:
(1) publishing a Statement:
(a) notifying employees that the unlawful manufacture, distribution,
dispensation, possession, or use of a controlled substance, including
cannabis,is prohibited in the Attorneys' workplace;
(b) specifying the actions that will be taken against employees for
violations of such prohibition;
(c) notifying the employee that, as a condition of employment on such
contract,the employee will:
(i) abide by the terms of the statement; and
15
(ii) notify the employer of any criminal drug.statute conviction
for a violation occurring in the workplace no later than five (5)
days after such conviction;
(2) establishing a drug-free awareness program to inform employees
about:
(1) the dangers of drug abuse in the workplace;
(ii) Attorneys' policy of maintaining a drug-free workplace;
(iii) any available drug counseling; rehabilitation,and employee
assistance program;and
(iv) the penalties that may be imposed upon employees for drug
violations;
(3) making it a.requirement to give a copy of the statement required by
subparagraph (A)(1) to each employee engaged in the performance of the
Agreement and to post the statement in a prominent place in the
workplace;
(4) notifying the Village within ten (10) days after receiving notice
under subparagraph (A)(1 )( c )(ii) from an employee or otherwise
receiving actual notice of such conviction;
(5) imposing a sanction on or requiring the satisfactory pal ticipatior in
a drug abuse assistance or rehabilitation program by any employee who is
so convicted, as required by 30 ILCS 580/5;
(6) assisting employees in selecting a course of action in the event
drug counseling treatment and rehabilitation is required and indicating that
a trained referral team is in place;
(7) making ,a good faith effort to continue to maintain a drug-free
workplace through implementation of this section.
(B) provide equal employment opportunities in accordance with the Illinois Human Rights j
Act (775 ILCS 580/1 et seq.) and are in compliance with 775 ILCS 5/2-105(A)(4) requiring a j
written sexual harassment policy;
(C) certify that no officer or employee of the Village that has solicited any gratuity, discount,
entertainment, hospitality, loan, forbearance; or other tangible or intangible item having
monetary value including, but not limited to, cash, food and drink, and honoraria for speaking
engagements related to or attributable to the government employment or the official position of
the employee or officer froin the Attorneys in violation of Sections 30.21 and 30.33 of the Code
16
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of Oak Brook, Illinois adopted by the Village pursuant to the requirements of the State Officials
and Employees Ethics Act.
(D) have not given to any officer or employee of the Village any gratuity; discount
entertainment, hospitality, loan, forbearance, or other tangible or intangible item having
monetary value including,but not limited to, cash, food and drink, and honoraria for speaking
engagements related to or attributable to the government employment or the official position of
the employee or officer from the Attorneys in violation of the Code of Oak Brook, Illinois
adopted by the Village pursuant to the requirements of the State Officials and Employees Ethics
Act.
(E) are not a part.of the immediate family of any officer or employee at or above the level of
department head of the Village.
(F) certify that no Village officer, spouse or dependent child of a Village officer, agent on
behalf of any Village officer or trust in which a Village officer.,the spouse or dependent child of
a Village officer or a beneficiary is a holder of any interest in the Attorneys; or, if the Attorneys'
stock is traded on a nationally recognized securities market, that no Village officer, spouse or
dependent child of a Village officer, agent on behalf of any Village officer or trust in which a
Village officer, the spouse or dependent child of a Village officer or a beneficiary is a holder of
more than one percent ( 1%) of the Attorneys, but if any Village officer, spouse or dependent
child of a Village officer, agent on behalf of any Village officer or trust in which'a Village
officer,the.spouse or dependent child of a Village officer or a beneficiary is a holder ofless than
one percent(1%) of such Contractor, the Attorneys have disclosed to the Village in writing the
name(s) of the holder of such interest.
(G) nor any of its principals,shareholders,members, partners, or affiliates, as applicable, is a
person or entity named as a Specially Designated National and Blocked Person (as defined in
Presidential Executive Order 13224) and that it is not acting, directly or indirectly, for or on
behalf of a Specially Designated National and Blocked Person.
(H) and its principals, shareholders, members, partners, or affiliates, as applicable, are not;
directly or indirectly, engaged in, and are not facilitating, the transactions contemplated by the
Agreement on behalf of any person or entity named as a Specially Designated National and
.Blocked Person.
(1) are not acting, directly or indirectly, for or on behalf of any person, group, entity, or
nation named by the United State Treasury Department as a Specially Designated National and
Blocked Person, or for or on behalf of any person, group, entity, or nation designated in j
Presidential Executive Order 13224 as a person who commits, threatens to commit, or supports
terrorism; and that it is not engaged in this transaction directly or indirectly on behalf of, or
facilitating this transaction directly or indirectly on behalf of, any such person, group, entity, or
nation.
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If any certification made by the Attorneys or term or condition in this contract changes,
the Attorneys shall notify the'Village in writing within seven(7)days.
Dated: ,2013
ROBERT K.FINNELL
By:
Robert K.Finnell
BIRD LAW GROUP;P.C.
By:
William.Q.Bird, Managing Partner
CRONGEYER LAW FIRM,P.C.
By:
John W.Crongeyer,President
CLIFFORD LAW OFFICES
f
By:
Thomas Prindable,Managing Partner
PETERSON,JOHNSON&MURRAY,LLC
- I
By:
Paul O'Grady,Managing Partner
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IN WITNESS WHEREOF the parties have executed this Agreement in Oak Brook,
Illinois,the date and year first above written.
ATT E VIL AGE:
ROB RT K FI VI LAGE OF OAK BROOK
By:
11
K.Prone al Lalmalani,Mayor
i
BIRD LAW GROUP,P.C. Attes
Charlotte Pruss,Village Clerk
By: '
William Q.Bird,Managing Partner
CRONGEYER LAW FIRM, P.C.
Sohn W. Crongeyer, President
CLIFFORD LAW OFFICES
By -
omas Prindable,Managing Partner
TERS N,JO N&MURRAY CHICAGO,LLC
By: ciao
Paul O'GrAf,Anaging Pa er
13
Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 1 of 33 PagelD#:1
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION
CITY OF WARRENVILLE,VILLAGE OF )
BEDFORD PARK, CITY OF OAKBROOK )
TERRACE,VILLAGE OF OAK LAWN, )
VILLAGE OF ORLAND HILLS, CITY OF )
ROCKFORD, and VILLAGE OF )
WILLOWBROOK, individually and on behalf )
of others similarly situated, )
File No.
Plaintiffs, )
JURY TRIAL DEMANDED
V. )
PRICELINE.COM, INCORPORATED, )
LOWESTFARE.COM, LLC (£k.a. )
LOWESTFARE.COM INC.),MAUPINTOUR )
HOLDING, LLC, TRAVELWEB,LLC, )
EXPEDIA, INC. (DE),EXPEDIA, INC. )
(WA),HOTELS.COM,LP,HOTELS.COM )
GP,LLC,HOTWIRE, INC., )
TRAVELSCAPE,LLC, EGENCIA,INC., )
SABRE HOLDINGS CORPORATION, )
TRAVELOCITY.COM,LLC(£k.a. )
TRAVELOCITY.COM, INC.), )
TRAVELOCITY.COM,LP, SITE59.COM, )
LLC,DOES 1 THROUGH 1000, )
INCLUSIVE, )
Defendants. )
CLASS ACTION COMPLAINT
NOW COME Plaintiffs, by and through their undersigned counsel and on behalf of
themselves and other similarly situated Illinois municipalities ("Class Members") and complain
of Defendants as follows:
I. PARTIES
1. Plaintiff City of Warrenville, Illinois ("Warrenville") is a municipality located in
DuPage County, Illinois.
2. Plaintiff Village of Bedford Park, Illinois ("Bedford Park") is a municipality
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 2 of 33 PagelD#:2
located in Cook County,Illinois.
3. Plaintiff City of Oakbrook Terrace, Illinois ("Oakbrook Terrace") is a
municipality located in DuPage County, Illinois.
4. Plaintiff Village of Oak Lawn, Illinois ("Oak Lawn") is a municipality located in
Cook County, Illinois.
5. Plaintiff City of Orland Hills, Illinois ("Orland Hills) is a municipality located in
Cook County, Illinois.
6. Plaintiff City of Rockford, Illinois ("Rockford") is a municipality located in
Winnebago County, Illinois.
7. Plaintiff Village of Willowbrook, Illinois ("Willowbrook") is a municipality
located in DuPage County, Illinois.
8. Defendants can be grouped into three distinct groups, as subsidiaries or indirect
subsidiaries of either: A) Priceline;B)Expedia; or D)Travelocity.
A. The Priceline Defendants
9. Defendant priceline.com, Incorporated ("Priceline") is a Delaware corporation
with its principal place of business in Norwalk, Connecticut.
10. Defendant Lowestfare.com, LLC (f.k.a. Lowestfare.com, Incorporated)
("Lowestfare") is a Delaware limited liability company with its principal place of business in
Norwalk, Connecticut. Defendant Lowestfare is a wholly-owned subsidiary of Defendant
Priceline.
11. Defendant Maupintour Holding, LLC ("Maupintour") is a Nevada corporation
with its principal place of business in Las Vegas,Nevada. In June 2002, Priceline purchased the
trademarks and registered Internet domain names of Lowestfare.com. Vacation products
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 3 of 33 PagelD #:3
previously marketed on the Lowestfare.com site began being sold under the Defendant
Maupintour brands at www.maupintour.com.
12. Defendant Travelweb, LLC ("Travelweb") is a Delaware limited liability
company with its principal place of business in Norwalk, Connecticut. Defendant Travelweb is a
wholly-owned subsidiary of Defendant Lowestfare.
B. The Expedia Defendants
13. Defendant Expedia, Inc. (DE) ("Expedia (DE)") is a Delaware corporation with
its principal place of business in Bellevue,Washington.
14. Defendant Expedia, Inc. (WA) ("Expedia (WA)") is a Washington corporation
with its principal place of business in Bellevue, Washington. Effective December 9, 2008,
Hotels.com, Inc., a Delaware corporation, merged into Expedia (WA). Effective January 1,
2009, TravelNow.com, Inc., a Delaware Corporation, merged into Expedia (WA). Defendant
Expedia(DE)is the parent corporation of Defendant Expedia(WA).
15. Defendant Hotels.com, LP is a Delaware limited partnership with its principal
place of business in Dallas, Texas. Defendant Hotels.com, LP is a wholly-owned subsidiary of
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Defendant Expedia(WA).
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16. Defendant Hotels.com GP, LLC is a Texas limited liability company with its
principal place of business in Dallas, Texas. Defendant Hotels.com, Gp,LLC is a wholly-owned
subsidiary of Defendant Expedia(WA).
17. Defendant Hotwire. Inc. ("Hotwire") is a Delaware corporation with its principal
place of business in San Francisco, California. Defendant Expedia (DE) is the parent company of
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Defendant Hotwire.
18. Defendant Travelscape, LLC ("Travelscape) is a Nevada limited liability
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 4 of 33 PagelD#:4
company with its principal place of business in Las Vegas,Nevada. Defendant Expedia (DE) is
the parent company of Travelscape.
19. Defendant Egencia, LLC ("Egencia") is a Nevada limited liability corporation
with its principal place of business in Denver, Colorado. Defendant Expedia (DE) is the parent
company of Egencia.
C. The Travelocity Defendants
20. Defendant Sabre Holdings Corporation ("Sabre") is a Delaware Corporation with
its principal place of business in Texas.
21. Defendant Travelocity.com, LLC (formerly known as Travelocity.com, Inc.) is a
Delaware corporation with its principal place of business in Texas. Defendant Travelocity.com,
LLC is an indirect subsidiary of Sabre Holdings Corporation.
22. Defendant Travelocity.com, LP is a Delaware limited partnership with its
principal place of business in Texas.
23. Defendant Site59.com LLC ("Site59.com") is a Delaware limited liability
company with its principal place of business in Texas. Defendant Site59.com is an indirect
subsidiary of Sabre Holdings Corporation, a Delaware Corporation.
24. The true names and capacities, whether individual, corporate, associate or
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otherwise, of each of the Defendants designated herein as a DOE are unknown to Plaintiffs at
this time and therefore said Defendants are sued by such fictitious names. Plaintiffs will ask
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leave of the Court to amend this Complaint to show their true names and capacities when the
same have been ascertained. Plaintiffs are informed and believe, and allege, that each of the
Defendants designated herein as a DOE is legally responsible in some manner (including under
the laws of agency) and liable for the events and practices herein alleged and, as such,
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 5 of 33 PagelD #:5
proximately caused damages to the Plaintiffs as hereinafter further alleged.
25. Upon information and belief, some of the Defendants, including some or all DOE
defendants, at all times herein mentioned, were acting as the agent, servant and employee of
some or all of the other Defendants and within the scope of said agency and employment
(collectively the"Agent Defendants"). Upon information and belief, at the time and place of the
matters described, each of the Agent Defendants,their agents, servants and/or employees became
liable to Plaintiff for one or more of the reasons described herein.
II. VENUE AND NATURE OF CLAIMS
26. All Defendants regularly transact business within the State of Illinois and the
claims asserted herein arise from their business conducted within the State of Illinois.
Defendants are,thus, subject to the jurisdiction of this Court.
27. This Court possesses subject matter jurisdiction of the claims asserted herein
pursuant to 28 U.S.C. § 1332 in that there is complete diversity of citizenship between Plaintiffs
and Defendants and the amount in controversy exceeds the sum of $75,000.00 exclusive of
interest and costs.
28. Venue is proper in this Court pursuant to 28 U.S.C. § 1391.
HI. INTRODUCTION
29. This action is brought to remedy violations of state law in connection with
Defendants' misconduct in the failure to remit taxes to the named Plaintiffs and Class Members.
Defendants failed to remit taxes due and owing under similar transient accommodations taxes to
the Plaintiffs and Class Members.
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IV. INTRODUCTION TO PLAINTIFFS' AND THE CLASS MEMBER
ORDINANCES
30. Warrenville levies and imposes a tax "upon all persons engaged in the city in the
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 6 of 33 PagelD #:6
business of renting, leasing, or letting rooms in a hotel, at the rate of five percent (5%) of the
gross rental receipts from such renting, leasing or letting, excluding, however, from gross rental
receipts, the proceeds of such renting, leasing or letting to permanent residents of that hotel"
(hereinafter "Warrenville Hotel Operator's Tax"). See Warrenville, Illinois City Code
("Warrenville Code") § 3-1-5(B)(1).
31. Bedford Park levies and imposes a tax "in the amount of ten and one-half percent
(10.5%) of the one night room charge for the use and privilege of a room at any hotel, motel or
other similar lodging facility operating within the corporate geographical limits of the village"
(hereinafter "Bedford Park Hotel/Motel Room Tax"). See Bedford Park, Illinois Village Code
("Bedford Park Code") § 5-19-1.
32. Oakbrook Terrace levies and imposes a tax"upon the use and privilege of renting,
leasing or letting of rooms in a hotel in the city at a rate of 6% of the gross rental receipts from
such rental, leasing or letting" (hereinafter "Oakbrook Terrace Hotel-Motel Room Tax"). See
City of Oakbrook Terrace, Illinois Code of Ordinances ("Oakbrook Terrace Code") Title III, §
35.021.
33. Oak Lawn levies and imposes a tax "upon the use and privilege of being a
transient guest or lodger in a "hotel" or "motel", as defined in this section, in the village, a tax
equal to eight percent (8 1/o) of the cost or charge on the gross room rental made by the hotel or
motel for every twenty four (24) hour period or any fraction thereof' (hereinafter "Oak Lawn
Hotel and Motel Occupancy Tax"). -See Oak Lawn, Illinois Village Code ("Oak Lawn Code") §
3-2-6(B). "HOTEL, MOTEL: Includes every building or structure kept, used, maintained,
advertised and held out to the public to be a place where lodging, or lodging and food, or
apartments, suites or other accommodations are offered for a consideration of guests in which ten
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 7 of 33 PagelD#:7
(10) or more rooms, apartments or suites, or other accommodations are used for the lodging, or
lodging and food, for such guests." Id. at § 3-2-6(A).
34. Orland Hills levies and imposes a tax "upon the rental and leasing of any hotel
accommodations in the village at the following rates:
EFFECTIVE DATE RATE
April 27, 1 993 2-'/2%
April 27, 1994 3%
April 27, 1995 3-%2%
EFFECTIVE DATE RATE
April 27, 1996 4%
April 27, 1997 4-1/2%
April 27, 1998 5%"
(hereinafter "Orland Hills Hotel Accommodations Tax"). See Village of Orland Hills, Illinois
Code of Ordinances("Orland Hills Code") Title III, § 33.067.
35. Rockford levies and imposes a tax "upon all persons engaged in the city in the
business of renting, leasing, or letting rooms in a hotel as defined in the hotel operator's
occupation tax act (35 ILCS 145/1 et seq.), at a rate of five percent of the gross rental receipt
from such renting, leasing or letting of rooms" (hereinafter "Rockford Hotel/Motel Tourism
Tax"). See Code of Ordinances of the City of Rockford,Illinois ("Rockford Code")Pt. I, § 5-70.
According to 35 ILCS 145/2(1) "'[h]otel' means any building or buildings in which the public
may, for a consideration, obtain living quarters, sleeping or housekeeping accommodations",
including "inns, motels, tourist homes or course, lodging houses, rooming houses and apartment
houses."
36. Willowbrook levies and imposes a tax "at a rate of one percent (1%) of the gross
rental receipts "upon all persons engaged in the village in the business of renting, leasing or
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letting rooms in a hotel on the gross rental receipts from such renting, leasing or letting,
excluding, however, from gross rental receipts,the proceeds of such renting, leasing or letting to
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permanent residents of that hotel" (hereinafter "Willowbrook Municipal Hotel Tax"). See
Willowbrook, Illinois City Code("Willowbrook Code") § 11-3-1.
37. Class Members similarly levy and collect taxes and on lodging or overnight
accommodations. This tax may be denominated in different ways including, but not limited to,
as an occupancy tax, a hotel or motel room tax, a use tax, a privilege tax, a hotel or motel tax, a
licensing tax, an accommodations tax, a rental receipts tax, a hotel operator's tax, a hotel
operator's occupation tax, or a room rental, lease or letting tax. These taxes, the Warrenville
Hotel Operator's Tax, Bedford Park Hotel/Motel Room Tax, Oakbrook Terrace Hotel-Motel
Room Tax, Oak Lawn Hotel and Motel Occupancy Tax, Orland Hills Hotel Accommodations
Tax, Rockford Hotel/Motel Tourism Tax, and Willowbrook Municipal Hotel Tax are hereinafter
collectively referred to as "Accommodations Tax" or "Accommodations Taxes". Regardless of
how the tax is titled, it is correctly calculated as a percentage of the retail rate that each consumer
occupant pays for lodging ("Retail Rate"), including service costs (the "Accommodations Tax
Amount").
V. COMMON ALLEGATIONS
38. Defendants are online travel companies and their affiliates or related companies
("OTCs"). Specifically, they are online sellers and/or online resellers of hotel rooms or other
accommodations ("Lodging") to the general public (the "Consumers Occupants" or
"Consumers").
39. OTCs, like Defendants, transact business under two models: the "agency model"
and the "merchant model."
40. Under the "agency model" the OTCs act as traditional travel agents, facilitating
reservations on behalf of a hotel and passing the reservation on to the hotel. The OTC will
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receive a commission as an agent under this model.
41. Under the "agency model," the transaction is between the hotel and the
Consumer.
42. Accommodations Taxes are calculated and collected by the hotel ("Hotel") on the
Retail Rate charged to the Consumer.
43. The Consumers are the taxpayers, and the hotels are the tax collectors. The
agency model is not at issue in this Complaint.
44. More than a dozen years ago, one or more OTCs began a pervasive use of the
"merchant model."It is the"merchant model"that is the subject of this Complaint.
45. The "merchant model" adopted by Defendants is a uniform, nationwide model
that operates the same for all OTCs in all jurisdictions, including Illinois.
46. Under this "merchant model," the Defendants/OTCs are the merchants of record
in their transactions with the Consumers.
47. Under the "merchant model," OTCs enter into contracts with individual Hotels
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wherein the parties agree on a wholesale price ("Wholesale Rate") for the Hotel rooms and the
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OTCs acquire the right to display, offer and facilitate reservations of the rooms to the public at a
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higher retail price ("Retail Rate").
48. While the Wholesale Rate is negotiated between the Hotels and the OTCs, the
OTCs generally have broad discretion in establishing and changing the Retail Rate they charge to
customers.
49. Stated simply, the OTCs profit by contracting with Consumers for Lodging at the
Retail Rate,which is higher than the Wholesale Rate paid by the OTCs to Hotels.
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50. When a customer purchases a Hotel reservation through an OTC, the customer is
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Case: 1:13-cv-02586 Document#: 1 Filed: 04105/13 Page 10 of 33 PagelD#:10
charged a single amount comprised of: (1) the Retail Rate, which includes (a) the Wholesale
Rate" and (b) an amount retained by the Defendant for travel-related services it provided to the
traveler (sometimes referred to as the "facilitation fee") and (2) "Taxes & Services," which
consists of (a) an estimated amount to cover the state and local occupancy taxes on the
Wholesale Rate and (b) additional amounts retained by the OTCs as compensation for its travel
services.
51. Although the OTCs state on their websites that the Retail Rate is a combination of
the Wholesale Rate and their facilitation fee,they do not disclose the dollar amount of either.
52. Therefore, at the end of the OTC transaction, the customer sees only three line
items: "Wholesale Rate", "Taxes& Services" and"Total".
53. The OTC and the customer strike a bargain for the payment of money for access
to a Hotel room.
54. When a customer reserves a Hotel room with an OTC, the OTC verifies with the
Hotel that the room is available, charges the customer's credit card and issues a room
confirmation to the customer.
55. The OTCs themselves do not obtain the right to occupy any room at any time
during a transaction.
56. The OTCs charge the customer's credit card for the Retail Rate, which includes
fees for their services.
57. The customer cannot occupy the Hotel room unless he or she pays the fees and
mark-ups the OTCs include in the Retail Rate (i.e., the difference between the Wholesale Rate
the OTCs pay to the Hotel and the amount they charge to the customer).
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58. The customer does not pay the Hotel anything to get the key to the OTC-booked
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room.
59. No money changes hands between an OTC consumer and the Hotel unless the
customer incurs charges for incidental like paring, laundry or food.
60. Thus, the customer does not pay the Hotel for the room or taxes, but only for
incidentals and other non-room related services the customer purchases at the Hotel.
61. After the customer has completed their stay, the Hotel sends an invoice to the
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OTC for the Wholesale Rate and the Accommodation Tax based on the Wholesale Rate.
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62. Upon receipt, the OTC pays this amount to the Hotel, and the Hotel remits the
taxes to Plaintiffs and the Class Members.
63. No tax is paid on the difference between the amount charged to the customer and
the Wholesale Rate.
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64. The OTC retains whatever it has collected over the amount remitted to the Hotel.
65. Under the "merchant model," Defendants determine the Retail Rate that the
Consumer pays. Defendants have control over the price they offer to the Consumer and,
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therefore, control the profit they make from the markup.
66. The "merchant model" is a prepaid model in which Defendants collect all monies
up front from the Consumer at the time the on-line reservation is made and the Consumer's
credit card is charged.
67. Under the "merchant model," the taxable transaction is between the Consumer
and the Defendants for the purchase of Lodging.
68. There is no taxable transaction between the Hotel and the Consumer for the
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purchase of Lodging.
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69. Under the "merchant model,"the only contract or agreement at the time the taxes
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at issue are being assessed and collected is between the Defendants and the Consumer.
70. Defendants sell rooms to Consumers and collect payments, including taxes from
the Consumer at the time of booking. Under the"merchant model,"the Defendants have been or
are currently controlling Hotels.
71. ' Defendants are charging and collecting amounts as Accommodations Taxes and
fees from Consumers in the State of Illinois, but are not remitting the Accommodations Tax
Amounts to the appropriate Class Members.
72. Instead, Plaintiffs and the Class Members only receive tax amounts based upon
the lower, Wholesale Rate (the "Wholesale Tax Amount"). Each Defendant then retains for its
own use and benefit the difference between the correct Accommodations Tax Amount and the
incorrect Wholesale Tax Amount(the"Tax Monies Due and Owing").
73. For example, Expedia negotiates with a Hotel for rooms at the lower Wholesale
Rate and pays the Hotel a flat rate for each room sold, for instance $60.00 for a room in
Oakbrook Terrace, Illinois. Under the "merchant model," Expedia then controls the price
offered to the Consumer. Expedia then sells the same room to the Consumer for a marked up
price, for example $100. Expedia charges taxes and fees that would approximately cover the
taxes owed, which should be based upon the Retail Rate of$100. The amount of tax due in this
example is 6%of$100 or$6.00. See Oakbrook Terrace Code Title III, § 35.021.
74. However, the amount of Accommodations Taxes remitted to Plaintiffs and other
Class Members has been based on the lower Wholesale Rate. In this example, Oakbrook Terrace
would only receive $3.60 (6%of$60.00), an underpayment of the tax liability by$2.40. Thus, in
this single example transaction, Oakbrook Terrace's collected tax would be 40% less than the
collected and the proper Accommodations Tax Amount of$6.00.
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75. In this manner, Defendants fail to remit the Accommodations Tax due and owing
to Plaintiffs and Class Members.
76. Upon information and belief, there are also occasions where Defendants
unlawfully retain all monies charged to and collected from consumers as revenue without
remitting any taxes to Plaintiffs or the Class Members. Known in the industry as "breakage", the
situation arises when a consumer books and prepays a Defendant for a hotel room and all monies
(including Accommodations Tax) are collected, but the Defendant never remits any tax monies
to the Plaintiff or Class Member.
77. For example, in a no-show scenario, where a consumer books and prepays
directly for the room rental but neither shows up nor timely cancels, the hotel retains the room
rate but still remits the applicable Accommodations Tax to the Plaintiff or Class Member.
However, if a consumer books and prepays with an OTC Defendant, and neither shows up nor
timely cancels, the OTC Defendant retains all monies paid by the consumer, including the
Accommodations Taxes and other taxes charged to and collected from the consumer. In both of
these scenarios the Plaintiff or Class Member is entitled to the full amount of taxes collected
from the consumer at the time the transaction occurs, as the Defendants have a duty to remit the
taxes regardless of any invoicing irregularities that may occur in a no-show scenario.l
78. Defendants have also failed to properly file required regular, periodic tax
returns/reports. See Warrenville, Illinois City Code § 3-1-5(13)(4)(a); Bedford Park Code § 5-19-
3; Oakbrook Terrace Code Title III, § 35.023(B); Oak Lawn Code § 3-2-6(E)(3); Orland Hills
Code Title III, § 33.070(A); Rockford Code Pt. 1, § 5-73(a);Willowbrook Code § 11-3-4 (A).
79. The Class Members also have similar periodic tax return/reporting requirements.
' A Texas jury deemed the Defendants' practices illegal, including their "breakage" activities, and
awarded more than $20 million in total to Texas local governments. Penalties and interest will be added
to that total.
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80. Defendants are collecting taxes from Consumers but, upon information and belief,
not reporting such taxes to Plaintiffs or any Class Members.
81. As stated, Defendants' business practices include charging Consumers un-
itemized taxes and fees on each sale of Lodging. The Consumer is led to believe Defendants are
remitting the correct amount of Accommodations Tax to Plaintiffs. Defendants, however, are
calculating the tax liability of the general public (and Defendants) based upon the Wholesale
Rate Defendants paid the Hotel for the room, not upon the Retail Rate that the Consumer paid
Defendants. As a result, the Accommodations Tax liabilities paid by the general public and
owed to Plaintiffs are underpaid/unpaid by the Defendants who unlawfully retain the difference.
These practices deprive Plaintiffs and the Class the full amounts due and owing to them from
each sale of Lodging.
82. Also, as stated, in addition to failing to properly pay collected taxes, Defendants
do not disclose to the general public the amounts being paid for each specific tax and the
amounts, if any, being paid separately as "service fees." Defendants bundle the taxes and
"service fees" as a way to keep the Wholesale Rate of the Lodging opaque.
83. Defendants will not disclose the amount of Accommodations Tax being assessed
even if the Consumer asks them.
84. Defendants require that the Hotels not reveal to the Consumer what Defendants
paid for the Lodging. Likewise,the Hotels do not know what the Consumer paid Defendants for
the Lodging.
85. Only Defendants collect taxes from the Consumer in the "merchant model." The
Consumer is the taxpayer who ultimately pays the taxes.
86. Under the "merchant model," the Hotels never collect the required
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Accommodations Tax from the Consumer.
87. Under the "merchant model" and contained in the language of the contract
between the Defendants and the Hotels, it is Defendants' responsibility to calculate the taxes and
collect all monies, including tax monies, from the Consumer at the time of booking.
88. The only way for the Hotel to pay the correct Accommodations Tax to the
Plaintiffs is if Defendants remit the additional tax owed (and which was actually paid by the
Consumer to Defendants)to the Class Members.
89. The Defendants' failure to itemize taxes violates basic principles of tax
transparency and further supports Plaintiffs' claims of Defendants' tax liability, and specifically
violates express code provisions of many of the Class Members.
90. Due to the contractual or factual relationship between Defendants and the Hotels,
Defendants and the Hotels act on behalf of each other to provide/sell customers Lodging, and are
thus agents of one another. As such, they operate as joint enterprise members and have joint
enterprise membership liability.
91. Defendants have a physical presence in the State of Illinois, including within the
Class Member municipalities. Such presence includes, but is not limited to, providing and/or
selling rooms in Hotels, serving as agents for Hotels for purposes of selling or providing rooms
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in those Hotels and, upon information and belief, by having employees or agents travel to Class
Member municipalities within the State of Illinois to negotiate and enter into contracts with
Hotels to review and rate those Hotels.
92. Upon information and belief, the "merchant model" represents a majority of the
Defendants' total online bookings.
93. Defendant Priceline has explained its "merchant model" business practices in
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Securities Exchange Commission("SEC") filings as follows:
For most of these transactions, we establish the price we will accept, have total
discretion in supplier selection, purchase and take title to the particular
product and are the merchant of record. Consumers agree to hold their offers
open for a specified period of time to enable us to fulfill their offers from
inventory provided by participating sellers. Once fulfilled, offers generally
cannot be canceled.
See Priceline Annual Report(Form 10-K) (Mar. 15, 2003)at 29 (emphasis added).
94. Expedia (DE) has similarly described its "merchant model" business practices in
public filings as follows:
Under the merchant model, we receive inventory (hotel rooms, airline seats, car
rentals, destination services) from suppliers at negotiated rates. We determine
the retail price paid by the customer and we then process the transactions as
the merchant of record for the transaction. Acting as a merchant enables us
to achieve a higher level of gross profit per transaction compared to the
agency model and allows us to provide better prices to customers compared to
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agency transactions. Merchant transactions comprised 58% of our total revenues
in 2002 and are derived from the difference between what we pay for the j
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inventory and what we charge the customer.
See Expedia(DE)Annual Report(Form 10-K) (March 31, 2003) at F-3 (emphasis added). j
95. Hotels.com has also identified itself as a "reseller" of hotel rooms obtained from
hotels in SEC filings:
We contract with hotels and other lodging properties in advance for volume
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purchases and guaranteed availability of rooms at wholesale prices and resell
these rooms to consumers through our websites, third-party affiliated websites
and our toll-free call centers.
See Hotel Reservations Network, Inc. Annual Report (Form 10-K) (Apr. 2, 2001) at 3, 18
(emphasis added).
96. Likewise, Travelocity.com, Inc. distinguished its purchase and re-sale transactions
under the"merchant model" from those where it merely provided a service:
In order to increase it sales of higher margin products, Travelocity's business plan
calls for it to increase merchant model sales pursuant to which Travelocity
serves as the merchant of record in the transaction rather than as the sales
agent. In the merchant business, suppliers make inventory, such as airline seats,
hotel rooms, car rentals, cruises, and vacation packages, available to Travelocity
at wholesale or "net" rates. The merchant of record then sets the retail price that
the customer pays and then processes the transaction. The merchant business
generally delivers higher revenue per transaction than comparable sales
under the agency model, in which Travelocity acts as an agent in the
transaction, passing a customer's reservation to the travel supplier and
receiving a commission from the supplier for its services.
See Travelocity.com, Inc.Annual Report(Form I O-K) (March 26, 2002) at 7 (emphasis added).
A. Many Defendants Are Affiliated As Wholly Or Partially Owned Subsidiaries
Of Each Other
97. Defendants Expedia (WA), Hotels.com, LP, Hotels.com GP, LLC, Hotwire, Inc.,
Travelscape and Egencia are affiliated business entities, related through a common corporate
parent, Expedia(DE).
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98. Defendants Site59.com and Travelocity.com, LP are affiliated business entities in
that they are both subsidiaries of Sabre Holdings Corporation.
99. Defendants Priceline, Lowestfare, and Travelweb are all affiliated business
entities in that Defendant Lowestfare is a wholly-owned subsidiary of Defendant Priceline and
Defendant Travelweb is a wholly-owned subsidiary of Defendant Lowestfare.
100. Defendants, in public communications, and through the media, have taken the
position that they are not liable for hotel Accommodations Taxes on the retail amount of their
sales of hotel room occupancy. There is, therefore, an actual and live controversy between the
parties.
B. Defendants Have Entered Into Agreements With Each Other To Market And
Sell Hotel Room Inventory
101. Defendants, at all times mentioned herein, were acting under common plans,
schemes or methodologies, and from time to time entered into agreements and ventures for the
common marketing, distribution and sale or resale of Lodging throughout the State of Illinois.
102. Upon information and belief,Defendants have shared products and customers and
have entered into agreements and co-ventures for the sale or resale of hotel room inventory by
cross-listing available hotel rooms on their respective Internet portals. Examples are listed in the
following paragraphs.
103. Upon information and belief, sometime between 1990 and the present,
Hotels.com, LP and/or Hotels.com, GP, LLC contracted with Expedia (DE) and/or Expedia
(WA) and Travelocity.com, LP and/or Travelocity.com, LLC to implement and maintain
cooperative ventures including certain cross-selling initiatives. Specifically, these agreements
provided that the lodging inventory of Expedia (DE) and/or Expedia (WA) and Hotels.com, LP
and/or Hotels.com, GP, LLC would be listed on Travelocity.com, LP and/or Travelocity.com,
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LLC's website.
104. Prior to its acquisition by Travelocity.com, LP, Site59 had written agreements
with Priceline. Prior to and after its acquisition by Travelocity.com, LP, Site59 had written
agreements with Travelocity, LP. These agreements created cooperative ventures including
certain cross-selling initiatives.
105. Upon information and belief, sometime in 2000 or thereafter Site59.com entered
into marketing agreements with other entities, including Travelocity, LP and Priceline affiliated
companies (whose subsidiaries include Defendants Lowestfare and Travelweb).
106. Upon information and belief, sometime prior to the institution of this suit,
Expedia (DE) and/or Expedia (WA) entered into a partnership agreement with Hotels.com, L.P.
and/or Hotels.com, GP, LLC and Hotwire regarding its online hotel room booking business.
107. Upon information and belief, sometime prior to the institution of this suit,
Hotels.com. L.P.and/or Hotels.com, GP, LLC entered into a partnership agreement with Hotwire
and TravelNow.com, Inc. regarding its online hotel room booking business.
108. Upon information and belief, sometime prior to the institution of this suit,
Hotwire entered into a partnership agreement with Expedia (DE) and/or (WA) and Hotels.com,
LP and/or Hotels.com GP,LLC regarding its online hotel room booking business.
109. Upon information and belief, sometime prior to the institution of this suit,
Defendants Hotels.com, LP and/or Hotels.com GP, LLC and Lowestfare entered into an
agreement related to the sale or resale of hotel room inventory.
110. On information and belief, there are many other such marketing, distribution and
partnership agreements between and among Defendants.
C. Defendants' Conduct Arises Out Of The Same Series Of Transactions Or
Occurrences And Involves Common Questions Of Law And Fact
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111. Defendants' conduct arises out of the same series of transactions or occurrences
and involves common questions of law and fact. The parties are all interested in the principal
questions raised by this Complaint. Moreover, Defendants' affiliations with each other and their
agreements to market, sell and distribute each other's hotel room inventory logically connect
their respective conduct. As detailed above, Defendants have engaged and presently engage in a
common practice and scheme of selling Lodging to Consumers at Retail Rates but remitting
taxes based on their lower, negotiated Wholesale Rates.
112. Further, the memberships of multiple Defendants in The Travel Technology
Association ("Travel Tech") (formerly Interactive Travel Services Association or "ITSA")
further demonstrates the interrelatedness among Defendants and confirm common practices of
Defendants in booking hotel rooms. According to Travel Tech's website, the following
Defendants are members of the organization: Expedia, Priceline, Sabre, and Travelocity. The
Travel Tech website makes numerous representations regarding the manner in which online
travel companies do business, the manner in which rooms are booked, and Defendants' tax
liabilities as a whole.
113. Plaintiffs and Class Members have suffered damages in an amount to be proven at
trial. The amount in controversy is greater than$75,000.
VI. CLASS ALLEGATIONS
114. Plaintiffs respectfully request that the Court certify this case as a class action.
115. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the Class is defined
as follows:
All Illinois municipalities that have enacted and collect a tax on the percentage of
the retail rate that each consumer occupant pays for lodging, including service
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costs, denominated in any manner, including but not limited to, occupancy tax, a
hotel or motel room tax, a use tax, a privilege tax, a hotel or motel tax, a licensing
tax, an accommodations tax, a rental receipts tax, a hotel operator's tax, a hotel
operator's occupation tax, or a room rental, lease or letting tax.
116. This Class can be separated into four subclasses, including the following:
a) Illinois municipalities such as Bedford Park, Oakbrook Terrace and Oak Lawn
that have enacted and collected a tax upon the use and privilege of a motel or
hotel room described in ways including but not limited to the use and privilege of
the room itself,the use and privilege of being a transient guest or lodger in a hotel
or motel, or the use and privilege of renting, leasing or letting the rooms in a hotel
or motel (hereinafter referred to as"Use and Privilege Subclass");
b) Illinois municipalities such as Orland Hills that have enacted and collected a tax
upon the rental, leasing or letting of hotel or motel accommodations (hereinafter
"Hotel Accommodations Subclass");
c) Illinois municipalities such as Warrenville, Rockford, and Willowbrook that have
enacted and collected a tax upon all persons engaged in the municipality in the
business of renting, leasing, or letting rooms in a hotel (hereinafter "Business of
Rental Subclass"); and
d) Illinois municipalities such as Class Member City of Aurora, Illinois that have
enacted and collected a tax on the gross receipts, rental rate or consideration paid
for the privilege of renting, leasing or letting a hotel room that is due from the
"owner" of the hotel as defined in each ordinance (hereinafter "Consideration
Subclass").
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117. The Class, including the four subclasses, meets the prerequisites for the
maintenance of a class action in that:
a) the Class is so numerous that joinder of all members is impracticable;
b) there are questions of fact and law common to the Class;
c) the claims of the representative parties are typical of the claims of the Class; and
d) the representative parties will fairly and adequately protect the interest of the
Class.
118. This action is properly maintained as a class action pursuant to Rule 23 of the
Federal Rules of Civil Procedure in that the Defendants have acted or refused to act on grounds
generally applicable to the Class, thus making appropriate declaratory relief with respect to the
class as a whole.
119. Plaintiff Class Members contemplate the eventual issuance of notice to the
proposed Class Members, which would set forth the subject and nature of the instant action.
Defendants' own business records and electronic media can be utilized for the contemplated
notices.
120. Among the numerous questions of fact and law common to the Class are:
a) whether Defendants use the "merchant model" for buying and selling Lodging in
the State of Illinois;
b) whether under the "merchant model" Defendants mark up the price from the
Wholesale Rate (paid to the Hotel)to the Retail Rate(paid by the Consumer);
C) whether Defendants are the "merchant of record" in their transactions with the
Consumer;
d) whether Defendants generally use the same basic charges, policies, and computer
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systems together nationwide and including in the State of Illinois;
e) whether Defendants have a legal duty to collect Accommodations Taxes from the
Consumers who purchase from Defendants the right to occupy Lodging in the
State of Illinois;
f) whether Defendants have a legal duty to remit these Accommodations Taxes to
Plaintiffs and/or other Class Members;
g) whether Defendants have collected the at-issue tax, in the form of a tax, from the
Consumers,but failed to remit the same to the Class Members;
h) whether Defendants have failed to remit the taxes at issue based on the full and
proper rates;
i) whether, under the appropriate municipal ordinance and/or rule in effect at the
time of each transaction, the amount of tax due and owing to Plaintiffs and the
Class Members is to be calculated as a percentage of the Wholesale Rate or the
Retail Rate, including any service fees charged by the OTCs;
j) whether by voluntarily inserting themselves into the taxing scheme, the
Defendants have the legal duty to calculate, collect and remit the taxes upon the
Retail Rate, including any service fees charged by the OTCs;
k) whether Defendants have committed acts of conversion;
1) whether Defendants have been unjustly enriched; and
m) whether, and in what amount, the Plaintiffs and the Class Members are entitled to
recover court costs and attorneys' fees.
VII. CAUSES OF ACTION
A. First Claim for Relief. Declaratory Judgment Pursuant to § 23 U.S.C. § 2201
(Against All Defendants)
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121. Plaintiffs incorporate each of the above allegations by reference as if fully
rewritten herein.
122. Plaintiffs seek a declaration of rights and/or duties with respect to all Defendants.
An actual controversy exists between Plaintiffs and these Defendants as to:
a) whether Defendants have a duty, under law, to collect Accommodations Taxes
from Consumers who purchase from Defendants the right to occupy Lodging in
the municipalities that comprise the Plaintiff Class;
b) whether the Accommodations Taxes are based on the Retail Rate, including any
service fees charged by the OTCs;
c) whether Defendants have a duty to remit these taxes to Plaintiffs and the Class;
d) whether Defendants have failed to fulfill their duty under law to remit these taxes
to Plaintiffs and the Class; and
e) whether, under the appropriate ordinance and/or rule,the amount of tax due and
owing to Plaintiffs and the Class is to be calculated as a percentage of the Retail
Rate,without regard to service fees, operating expenses and other amounts
currently deducted by Defendants.
B. Second Claim for Relief: Violations of Municipal Ordinances (Against All
Defendants)
123. Plaintiffs incorporate the allegations in the paragraphs within Sections I through
VI by reference as if fully rewritten herein.
124. Plaintiffs and Class Members are municipalities that are authorized to levy and
collect certain Accommodations Taxes.
125. At all times herein, Defendants acted individually or in concert to provide/sell
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Lodging to Consumers.
126. Defendants are obligated under the municipal ordinances of the Class, including
the four subclasses, to collect Accommodations Taxes on Lodging and to remit such taxes to
remit to Plaintiffs and the Class Members.
127. Defendants are acting as retailers,vendors, lessors, and/or renters.
128. Defendants have failed to collect and remit to Plaintiffs and the Class Members
the Tax Monies Due and Owing.
129. Defendants have failed to report taxes collected on Lodging to Plaintiff and Class
Members.
130. As a result of their shared efforts, Defendants have a joint interest in the business
of providing/selling Lodging to Consumers.
131. Upon information and belief, Defendants have either express or implied
agreements to share in the profits and losses of such an enterprise and joint venture.
Accordingly, at all times herein, a joint venture and joint enterprise existed between one or more
Defendants.
132. Defendants are legally and constitutionally liable for the Tax Monies Due and
Owing to Plaintiffs and the Class Members under their respective municipal ordinances.
Defendants are liable individually and also as joint venturers.
133. Defendants are also liable for penalties and interest under the municipal
ordinances, which may include, but are not limited to, enhanced penalties for Defendants'
negligent and/or fraudulent conduct.
134. Failure to remit these taxes to Plaintiffs and the Class Members is deemed a debt
owed by Defendants individually and also as members of the joint venture to Plaintiffs and the
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Class Members in an amount to be determined at trial. The taxes owed and penalties and interest
hereby sought to be recovered is to be determined by and in accordance with these municipal
ordinances.
C. Third Claim For Relief: Conversion (Against All Defendants)
135. Plaintiffs incorporate the allegations in the paragraphs within Sections I through
VI by reference as if fully rewritten herein.
136. Plaintiffs and the Class Members had a right to the specifically identifiable Tax
Monies Due and Owing to them, had an absolute and unconditional right to the immediate
possession of such tax monies, made a demand for possession of such tax monies, and
Defendants wrongfully and without authorization assumed control, dominion or ownership over
such tax monies.
137. In converting the Tax Monies Due and Owing, Defendants acted with deliberate
oppression, willfulness and with such gross negligence as to indicate a wanton disregard of the
rights of Plaintiffs and the Class Members.
138. As a direct and proximate result of Defendants' conversion, Plaintiffs and the
Class Members have suffered and will continue to suffer damage in an amount to be proven at
trial.
139. Because Defendants' conversion was accomplished with deliberate oppression,
willfulness and with such gross negligence as to indicate a wanton disregard of the rights of
Plaintiffs and the Class Members, Plaintiffs seeks punitive damages to punish Defendants and
deter them and others from committing similar acts of wrongdoing in the future.
140. Defendants are liable for the acts of conversion individually and as members of a
joint venture.
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D. Fourth Claim for Relief: Civil Conspiracy(Against All Defendants)
141. Plaintiffs incorporate the allegations in the paragraphs within Sections I through
VI by reference as if fully rewritten herein.
142. Defendants worked concertedly together for the unlawful purpose and/or the
lawful purpose accomplished by unlawful means of depriving Plaintiffs and the Class Members
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of the Tax Monies Due and Owing. j
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143. Defendants knowingly and voluntarily participated in the common scheme to
deprive Plaintiffs and the Class Members of the Tax Monies Due and Owing.
144. Defendants agreed by words and/or conduct to accomplish the unlawful goal
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including, but not limited to, of depriving Plaintiffs and the Class Members of the Tax Monies
Due and Owing and Defendants performed one of more tortious and/or unlawful acts to
accomplish that unlawful agreement.
145. In addition or in the alternative, Defendants agreed by words or conduct to
accomplish a lawful goal through unlawful means including, but not limited to, depriving
Plaintiffs and Class Members of the Tax Monies Due and Owing and Defendants performed one
or more unlawful and/or tortious acts to accomplish that goal.
146. In their civil conspiracy, Defendants acted with deliberate oppression, willfulness
and with such gross negligence as to indicate a wanton disregard of the rights of Plaintiffs and
the Class.
147. As a direct and proximate cause of Defendants' civil conspiracy,Plaintiffs and the
Class have suffered and will continue to suffer damages in an amount to be proven at trial.
148. Because Defendants' civil conspiracy was accomplished with deliberate
oppression, willfulness and with such gross negligence as to indicate a wanton disregard of the
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rights of Plaintiffs and the Class Members, Plaintiffs seeks punitive damages to punish
Defendants and to deter them and others from committing similar acts of wrongdoing in the
future.
149. Defendants are liable for the acts of civil conspiracy individually and as members
of a joint venture.
E. Fifth Claim For Relief: Unjust Enrichment(Against All Defendants)
150. Plaintiffs incorporate the allegations in the paragraphs within Sections I through
VI by reference as if fully rewritten herein.
151. Defendants have been enriched by retaining the Tax Monies Due and Owing
without justification, which retention has caused Plaintiffs and the Plaintiff Class Members to
become impoverished for which there is an absence of a remedy provided by law.
152. Secondary to Defendants' unjust enrichment, Plaintiffs and Class Members are
entitled to judgment against Defendants in an amount to be proven at trial, including but not
limited to interest, costs, and pre- and post judgment interest.
153. Defendants are liable for the acts of unjust enrichment individually and as
members of a joint venture.
F. Sixth Claim for Relief: Imposition of Constructive Trust (Against All
Defendants)
154. Plaintiffs incorporate the allegations in the paragraphs within Sections I through
VI by reference as if fully rewritten herein.
155. At all times alleged herein, the specifically identifiable Tax Monies Due and
Owing were in the possession and under the control of Defendants. Defendants have taken this
identifiable money to which they are not entitled under such circumstances that in equity and
good conscience they ought not retain.
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156. By virtue of Defendants' actions, Defendants hold the Tax Monies Due and
Owing as constructive trustee for the benefit of Plaintiffs and the Class Members. Plaintiffs
request an order that Defendants be directed to give possession thereof to Plaintiffs and the Class
Members to avoid unjust enrichment.
G. Seventh Claim for Relief. Damages (Against all Defendants)
157. Plaintiffs incorporate the allegations in the paragraphs within Sections I through
VI by reference as if fully rewritten herein.
158. Plaintiffs request that the Court order Defendants to provide restitution to it and to
disgorge the Tax Monies Due and Owing to Plaintiffs and the Plaintiff Class.
159. Plaintiffs are entitled to interest and penalties on the unpaid Tax Monies Due and
Owing.
160. Plaintiffs request that they recover all penalties, interest, and reasonable and
necessary attorneys' fees it is entitled to under the law and in equity.
161. Plaintiffs request both pre- and post judgment interest at the maximum rate
allowed by law.
H. Eighth Claim for Relief. Punitive Damages(Against All Defendants)
162. Plaintiffs incorporate the allegations in the paragraphs within Sections I through
VI by reference as if fully rewritten herein.
163. As stated above in Plaintiffs' THIRD and FOURTH CLAIMs, Defendants have
committed the intentional torts of conversion and civil conspiracy.
164. Defendants' conduct in committing such conversion and civil conspiracy was
with deliberate oppression, willfulness and with such gross negligence as to indicate a wanton
disregard of the rights of Plaintiffs and the Class in that Defendants knowingly remitting only
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part of the Accommodations Tax Amounts due and deceptively hiding illegal profit streams
under labels such as"taxes,"or"taxes or fees"or"tax recovery charges."
165. As such,Plaintiffs request that the trier of fact, in the exercise of sound discretion,
award Plaintiffs and the Class Members additional damages to punish and deter Defendants from
committing similar acts of wrongdoing in the future.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs request, on behalf of itself and the Class Members, that this
Court certify this suit under Rule 23 of the Federal Rules of Civil Procedure, appoint Plaintiffs as
Class representative, and appoint the below-named attorneys as counsel for the Class. Plaintiffs
further request that, upon a final trial of this matter,judgment be entered in favor of Plaintiffs
and the Class Members on all causes of action against the Defendants, including, without
limitation,the following:
i. An order certifying this case be maintained as a class action;
ii. An order declaring the Defendants liable to Plaintiffs and the Class Members for
the wrongful acts, omissions,practices, and schemes described herein;
iii. Pursuant to 28 U.S.C. § 2201, a declaratory judgment determining that:
Defendants have a duty to collect Accommodations Taxes from Consumers who
purchase from Defendants the right to occupy Lodging in the municipalities that
comprise the Plaintiff Class; that the Accommodations Taxes are based on the
Retail Rate; that Defendants have a duty to remit these taxes to Plaintiffs and the
Class; that Defendants have failed to fulfill their duty under law to remit these
taxes to Plaintiffs and the Class; and that, under the appropriate hotel
Accommodations Tax statute, ordinance, and/or rule, the amount of tax due and
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 31 of 33 PagelD#:31
owing to Plaintiffs and the Class is to be calculated as a percentage of the Retail
Rate;
iv. An order imposing a constructive trust on all property in the possession of
Defendants that in equity and good conscience belongs to Plaintiffs and the Class
Members and does not belong to Defendants;
V. Damages in an amount to be proven at trial;
vi. Pre- and post judgment interest, applicable fines, penalties and costs allowed by
law;
vii. For punitive damages in a sufficient amount to punish Defendant and deter them
from committing similar acts of wrongdoing in the future; and
viii. For any and all other relief allowed by law or equity, including such other and
further relief as this Court may deem appropriate.
DEMAND FOR JURY TRIAL
Plaintiffs hereby demand a trial by jury on all issues so triable.
Respectfully submitted this 5th day of April, 2013.
s/Paul O'Grady
PAULA.O'GRADY
Illinois Bar No. 6271373
DOMINICK L.LANZITO
Illinois Bar No. 6277856
PETERSON,JOHNSON&MURRAY CHICAGO,LLC
233 South Wacker Drive, Floor 84
Chicago, IL 60606
Phone: 312-782-7150
Facsimile: 312-896-9318
dlanzito@pjmlaw.com
poprady@pjmlaw.com
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 32 of 33 PagelD #:32
s/Thomas K. Prindable
THOMAS K.PRINDABLE
Illinois Bar No. 2255340
MICHAEL S.KRZAK
Illinois Bar No. 6243295
CLIFFORD LAW OFFICES,P.C.
120 N. LaSalle Street, Suite 3100
Chicago,IL 60605
Phone: 312-899-9090
Facsimile: 312-251-1150
tkpkcliffordlaw.com
s/Donald J. Storino
DONALD J.STORING
Illinois Bar No. 2747936
RICHARD J.RAMELLO
Illinois Bar No. 3124818
STORING RAMELLO&DURKIN
9501 W. Devon Av.
8t'Floor
Rosemont, IL 60018
Phone: 847-318-9500
Facsimile: 847-318-9509
dstorino@srd-law.com
rramello@srd-law.com
s/John W. Crongeyer
JOHN W.CRONGEYER
Georgia Bar No. 196264
CRONGEYER LAW FIRM,P.C.
2170 Defoor Hills Road,NW
Atlanta, GA 30318
Phone: (404) 542-6205
Facsimile: (404) 872-3745
jwcgbirdlawgrroup.com
(Application for Admission Pro Hac Vice to be
submitted)
s/William Q.Bird
WILLIAM Q.BIRD
Georgia Bar No. 057900
KRISTEN L.BEIGHTOL
Georgia Bar No. 425814
BIRD LAW GROUP,P.C.
2170 Defoor Hills Road,NW
Atlanta, GA 30318
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Case: 1:13-cv-02586 Document#: 1 Filed: 04/05/13 Page 33 of 33 PagelD#:33
Phone: (404) 873-4696
Fax: (404) 872-3745
wqb@birdlawgroup.com
klb@birdlawgroup.com
(Applications for Admission Pro Hac Vice to be
submitted)
s/Robert K.Finnell
ROBERT K.FINNELL
Georgia State Bar No. 261575
THE FINNELL FIRM
One West Fourth Avenue, Suite 200
Post Office Box 63
Rome, Georgia 30162
Phone: (706)235-7272
Facsimile: (706) 235-9461
bob@finnellfirm.com
(Application for Admission Pro Hac Vice
to be submitted)
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