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S-1542 - 07/10/2018 - AGREEMENT - Ordinances (2)ORDINANCE 2018 -AG -HM -TAX -EX -S1542 AN ORDINANCE APPROVING AND AUTHORIZING THE EXECUTION OF A SETTLEMENT AGREEMENT AND RELEASE BETWEEN THE VILLAGE OF OAK BROOK AND CERTAIN ONLINE TRAVEL COMPANIES WHEREAS, the Village of Oak Brook, Illinois, ("Village') is an Illinois municipal corporation organized and operating pursuant to the Illinois Municipal Code (65 ILCS 5/1-1-1, et seq.) and the State of Illinois Constitution; and WHEREAS, the Village is one of several municipalities that filed suit in 2015 against the following online travel companies: (i) Expedia, including Expedia, Inc. (WA); Hotels.com, LP; Hotwire, Inc.; Egencia, LLC; Trip Network, Inc. (d/b/a Cheaptickets.com); Orbitz, LLC; and Internetwork Publishing Corp. (d/b/a Lodging.com); (ii) "Priceline" including priceline.com Incorporated (n/k/a Booking Holdings Inc.), priceline.com LLC and Travelweb LLC; and (iii) "Travelocity" including TVL LP (f/k/a Travelocity.com LP) and Site59.com, LLC (collectively, "Online Travel Companies"); and WHEREAS, the lawsuit was filed as Case Number 2015 CH 17598 in the Circuit Court of Cook County, Illinois, and concerned the Online Travel Companies' purported violations of local tax ordinances (the "Lawsuit'); and WHEREAS, the Village and the Online Travel Companies wish to settle and dispose of the Lawsuit in accordance with the terms set forth in the Settlement Agreement and Release attached to this Ordinance as Exhibit A (the "Agreement'). NOW THEREFORE, BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS as follows: Section 1: The foregoing recitals are incorporated as though fully set forth in this Section 1. Section 2: The Village President and Board of Trustees hereby approve the Agreement attached hereto as Exhibit A. Section 3: The Village President and the Village Clerk are authorized to execute the Agreement, and the Village Manager is authorized to take all steps necessary to enforce the Agreement's terms. Section 4: This Ordinance shall be in full force and effect upon the: (i) Village's passage and approval in the manner provided by law; and (ii) passage and approval in the manner provided by law by the Village of Matteson and the City of Bloomingdale. [SIGNATURE PAGE FOLLOWS] Ayes: Ordinance 2018- AG -HM -TAX -EX -S1542 Approving and Authorizing the Execution of a Settlement Agreement and Release with Certain Online Travel Companies Page 2 of 3 APPROVED THIS 10th day of July, 2018 Gopa G. Lalmalani Village President PASSED THIS 10th day of July, 2018 Trustees Baar, Cuevas, Manzo, Saiyed, Tiesenga, Yusuf Nays: None Absent: None J�I umTq ATTEST: Charlotte K. Pruss Village Clerk 2 Ordinance 2018- AG -HM -TAX -EX -S1542 Approving and Authorizing the Execution of a Settlement Agreement and Release with Certain Online Travel Companies Page 3 of 3 EXHIBIT A SETTLEMENT AGREEMENT AND RELEASE [Attached] 4825-3952-9066, v. 1 SETTLEMENT AGREEMENT AND RELEASE This Settlement Agreement and Release ("Agreement") is made and entered into as of the 10th day of July, 2018 by and between The Village of Matteson, The City of Bloomingdale, and the Village of Oak Brook, Illinois (collectively, "Cities") and (i) "Expedia" including Expedia, Inc. (WA), Hotels.com, LP, Hotwire, Inc., Egencia, LLC, Trip Network, Inc. (d/b/a Cheaptickets.com), Orbitz, LLC, and Internetwork Publishing Corp. (d/b/a Lodging.com); (ii) "Priceline" including priceline.com Incorporated (n/k/a Booking Holdings Inc.), priceline.com LLC and Travelweb LLC; and (iii) "Travelocity" including TVL LP (f/Wa Travelocity.com LP) and Site59.com, LLC. Expedia, Priceline, and Travelocity are referred to herein together as the "Online Travel Companies" or "OTCs," and the Online Travel Companies and the Cities are collectively referred to herein together as "Parties." Whereas, on December 3, 2015, the Cities filed a lawsuit against the Online Travel Companies in the Circuit Court of Cook County, Illinois, Case No. 2015 CH 17598 ("Lawsuit"), alleging in 11 causes of action violations of certain of the Cities' local hotel tax ordinances in connection with the OTCs' alleged failure to remit certain taxes to the Cities; Whereas, the Online Travel Companies timely filed a motion to dismiss all but 2 of the claims in the Cities' Lawsuit, which was granted on July 29, 2016; Whereas, to avoid the risks, inconvenience, and costs of ongoing litigation, the Parties desire and agree to resolve the Lawsuit, under the terms set forth herein. NOW THEREFORE, in consideration of the mutual representations, benefits and covenants contained herein, the receipt and sufficiency of which is hereby irrevocably acknowledged, Cities and the Online Travel Companies hereby agree as follows: Payment to the Cities. The Online Travel Companies will make a one-time lump sum payment in the amount of $10,000 to be shared by the Cities ("Settlement Payment"). The payment will be due within twenty business days of the execution of this Agreement, and the Cities shall provide the OTCs with W -9s and wire transfer instructions prior to the execution of this Agreement. The Cities acknowledge that this sum is the only consideration to be paid by the Online Travel Companies to the Cities in connection with this settlement and that this consideration fully satisfies any alleged obligations of the Online Travel Companies relating in any manner to the "Release by the Cities" defined in paragraph 3. The Cities acknowledge that the Settlement Payment is a combined sum consisting of different amounts to be paid by different Online Travel Companies, and that no Online Travel Company shall be liable for any other Online Travel Companies' portion of the Settlement Payment. Further, the Cities acknowledge that the Online Travel Companies have no responsibility for the distribution of the Settlement Payment among the Cities and that responsibility falls solely on the Cities and their counsel. 2. Cities' Hotel Tax Ordinances and Online Travel Companies Compliance. The Cities intend to amend their respective local hotel tax ordinances in a fashion similar to Willowbrook, Illinois' local hotel tax ordinance in effect as of July 25, 2016. If the Cities' DB1/ 97676366.1 properly amend their respective local hotel tax ordinances by municipal authorities to specifically tax the OTCs' merchant -model compensation for hotel reservation transactions and to make the OTCs responsible for the collection and remittance of tax on the amounts they earn for the online services that they provide, as the Willowbrook ordinance does, then on or after the effective date of the amended local hotel tax ordinances, the OTCs will comply with such amended local hotel tax ordinances.' Thereafter, if the Cities further amend their respective local hotel tax ordinances, a material change in the applicable facts occurs, or a material change in the relevant state or federal law occurs, the Online Travel Companies reserve all rights, both legal and equitable, to cease complying with the amended local hotel tax ordinances and to challenge the applicability of the amended local hotel tax ordinances to the Online Travel Companies and to any transactions into which they enter. 3. Release by the Cities. Effective upon the date of the Agreement, the Cities completely and irrevocably release and forever discharge the Online Travel Companies (and their present or former, direct or indirect, successors, parents, subsidiaries, affiliates, agents, legal representatives, insurers, employees, officers, directors and shareholders) of and from any and all past, present or future causes of action, claims, demands, expenses, losses or damages, of whatever kind or nature, known or unknown, asserted or unasserted, in law or equity, which existed, accrued, or arose prior to and through the date of this Agreement relating in any way to the Lawsuit or any other statutory or common law claim asserted, or that could have been asserted, in the Lawsuit, in law or equity, or elsewhere, including by audit or assessment, related in any way to the Online Travel Companies' alleged failure to collect, pay and/or remit the taxes alleged to be at issue in the Lawsuit pursuant to any statute, ordinance, resolution, or provision that were, are or could have been at issue in the Lawsuit, and any and all interest, penalties, costs, and fees (including attorneys' fees) thereon (without limitation by audit or assessment) and any other claims remaining that have or could have been asserted by the Cities against the Online Travel Companies pertaining or relating to the allegations set forth in the Lawsuit. 4. Fees and Costs. The Parties shall be solely responsible for payment of their own costs, expenses, attorneys' fees, accounting fees, auditor's fees and consultant's fees incurred and the Parties shall not bear any responsibility for the other party's costs, expenses, attorneys' fees, accounting fees, auditor fees, expert fees and consultant fees associated with the Lawsuit. TVL LP (f/k/a Travelocity.com LP) represents that it ceased engaging in the types of transactions at issue in the Lawsuit as of late-2013/early 2014, and that Site59.com LLC ceased operations altogether in July 2011, and, accordingly, they will not be registering, filing returns, or remitting amounts under the anticipated, amended local hotel tax ordinances described in paragraph 2. Similarly, priceline.com LLC represents that effective April 1, 2014 it assumed the former operations of priceline.com incorporated (n/k/a Booking Holdings Inc.) as they relate to the transactions at issue in the Lawsuit. Additionally, Travelweb LLC was purchased in 2004 and integrated into the business operations of priceline.com Incorporated (n/k/a Booking Holdings Inc.) in 2005. Therefore, Booking Holdings Inc. and Travelweb LLC will not be registering, filing returns, or remitting amounts under the anticipated, amended local hotel tax ordinances described in paragraph 2. Similarly, Internetwork Publishing Corporation (d/b/a Lodging.com) ("Internetwork") represents that it ceased operations of a website in April 2006, and with the discontinuance of its affiliate program in October 2008, it no longer engages in transactions involving online travel reservations. Accordingly, Internetwork will not be registering, filing returns, or remitting amounts under the anticipated, amended local hotel tax ordinances described in paragraph 2. DB1/ 97676366.1 2 5. Agreed Order. Within 5 business days of the Agreement being fully executed, the Cities shall file with the Circuit Court of Cook County a dismissal with prejudice of the Lawsuit. 6. Consultation with Legal Counsel Etc. Each of the Online Travel Companies and the Cities acknowledge the following: (i) they have consulted with legal counsel about this Agreement; (ii) they are entering into this Agreement voluntarily; (iii) they have the authority to enter into this Agreement; (iv) the person executing the agreement has any and all necessary authority to make, execute and deliver this Agreement, (v) no other persons or entities have or have had any interest in the claims that are now being released; and (vi) they have not sold, transferred or assigned their claims to any other person or entity prior to entering into this Agreement. 7. Differing Views. The Parties acknowledge this Agreement does not constitute an admission that taxes are owed or not owed. The Parties acknowledge that each side takes a different view of the issues in the Lawsuit. The Parties agree that this Agreement is based on their mutual desire to compromise this dispute on a fair and equitable basis, taking into consideration the hazards of litigation, and is not an indication that either side agrees with the other side's view. Each of the Parties' obligations specified herein is made solely for the purposes of terminating and completely resolving all claims between the Parties concerning the Lawsuit. The Parties acknowledge that this settlement fully and completely resolves the dispute between the Parties. Nothing in this Agreement is intended or should be construed as an admission that the Online Travel Companies or any of their current and former officers, employees or agents are liable for any act or inaction, or violated any law or any liability to collect and remit taxes whatsoever. 8. Confidentiality. The Parties agree this Agreement shall be confidential between the Parties, their successors and agents. The Parties will not disclose the existence of this Agreement or its terms, or provide copies to any third -party except as necessary to enforce this Agreement. Taxpayer confidentiality, as defined by Illinois law, applies in full to this Agreement and any documents related to the settlement. The Parties also agree that how this Agreement is described and communicated is of importance. The Cities agree that they will refrain from issuing any press releases and/or any public statements and from holding any press conferences regarding the settlement or this Agreement, unless the Parties can agree upon a mutually acceptable release or statement. Further, the Cities and their attorneys will not disclose the terms of the Agreement, unless legally required or compelled to do so and if/when such a potential requirement arises, the Cities will notify the Online Travel Companies within ten business days so that they have an opportunity to intervene or otherwise act as they deem appropriate. The Cities agree not to object to any filings by the Online Travel Companies opposing production or disclosure. Nothing herein shall be construed to prevent the parties or their representatives from communicating with accountants, auditors or other advisors regarding the settlement. DB1/ 97676366.1 3 9. Notices. Any notices required hereunder, or any allegations of breach hereof, shall be made via U.S. Certified Mail, return receipt requested, delivered as follows: If to the Cities: Charlotte Pruss Village Clerk Village of Oak Brook 1200 Oak Brook Road Oak Brook, Illinois 60523 If to the Online Travel Companies: Elizabeth B. Herrington Mark J. Altschul Morgan, Lewis & Bockius LLP 77 W. Wacker Dr. Suite 500 Chicago, IL 60601 Counsel for Expedia Anne Marie Seibel Jennifer McGahey Bradley Arant Boult Cummings LLP One Federal Place 1819 5th Avenue N Birmingham, AL 35203 Counsel for Priceline Marcus Mungioli Kelly Hart & Hallman LLP 201 Main Street, Suite 2500 Fort Worth, TX 76102 Counsel for Travelocity 10. Applicable Law. This Agreement shall in all respects be interpreted, enforced and governed by and under the laws of Illinois and enforceable only in the Circuit Court of Cook County, Illinois. 11. Admissibility of Settlement Agreement in Litigation. The Parties and their counsel acknowledge that this Agreement, as well as any draft, discussion, negotiation, documentation or other aspect of the Parties' settlement negotiations, shall not be admissible in evidence in any forum except to enforce the terms of this Agreement. The Parties will not use this Agreement or the fact of settlement for any other purpose not referenced in this Agreement, including in connection with other enforcement efforts or to advocate the interests of other tax authorities. DB1/ 97676366.1 4 12. Amendment, Counterparts, Etc. This Agreement shall not be amended or revised except in writing signed by all Parties. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. A signature page to this Agreement delivered by PDF or facsimile shall be considered an original signature page. 13. Successors and Assigns. This Agreement shall be binding on the parties hereto and on any successors in interest and/or assigns. 14. Complete Agreement. This Agreement constitutes the complete understanding between the Parties. No other promises or agreements, either expressed or implied, shall be binding unless signed in writing by all Parties to this Agreement. 15. Mutual Efforts in Drafting. The Parties have cooperated in drafting and preparing this Agreement, and it shall be construed according to the plain meaning of its language and not for or against any party. 16. Captions. The paragraph titles and captions used in this Agreement are inserted only as, and intended solely for, the convenience of reference, and shall in no manner modify, expand, limit, constrain, or describe the scope or intent, or in any other way affect the terms or conditions, of this Agreement. DB1/ 97676366.1 In Witness Whereof, the Parties have made, executed and delivered this Agreement as of the date first above written. The Village of Matteson: Enter Name and Title The City of Bloomingdale: LIN Enter Name and Title The Village eo ak Bro ' By: Enter Name and Title Expedia Expedia, Inc. (WA), Hotels.com, LP., Hotwire, Inc. Trip Network, Inc., Internetwork Publishing Corp. (d/b/a Lodging.com), Egencia, LLC, and Orbitz, LLC By: Title: Priceline priceline.com Incorporated (n/k/a Booking Holdings Inc.), priceline.com LLC and Travelweb LLC By:_ Title: Travelocity TVL LP (n/k/a Travelocity.com LP) and Site59.com By:_ Title: DBI/ 97676366.1