S-1542 - 07/10/2018 - AGREEMENT - Ordinances Supporting DocumentsBOT AGENDA Page 1
BOARD OF TRUSTEES MEETING
SAMUEL E. DEAN BOARD ROOM
BUTLER GOVERNMENT CENTER
1200 OAK BROOK ROAD
OAK BROOK, ILLINOIS
630-368-5000
AGENDA ITEM
Regular Board of Trustees Meeting
of
July 10, 2018
SUBJECT: Settlement Agreement – On Line Hotel Tax Revenue
FROM: Riccardo F. Ginex, Village Manager
Greg Jones, Village Attorney
BUDGET SOURCE/BUDGET IMPACT: NA
RECOMMENDED MOTION: Motion to Approve Ordinance 2018-AG-HM-
TAX-EX-S1542, An Ordinance Approving and Authorizing the Execution of a
Settlement Agreement and Release By and Between Village of Oak Brook and the
On-Line Travel Companies.
Background/History:
For several years, the Village has been party to a lawsuit with the Village of Matteson
and the City of Bloomingdale in an attempt to recover hotel tax revenue from
bookings that have been done on-line. There has finally been a settlement reached
with all parties involved. As part of the settlement agreement, the Online Travel
Companies (OTCs) will make a one-time lump sum payment in the amount of
$10,000 to be shared evenly by each municipality. The payment will be due within
twenty business days of the execution of this Agreement. Matteson approved the
agreement on June 18th and Bloomingdale did so on June 25th.
Additionally, Oak Brook will amend our local hotel tax ordinance to specifically tax
the Online Travel Companies’ merchant-model compensation for hotel reservation
transactions and make the OTCs responsible for the collection and remittance of tax
on the amounts they earn for the online services that they provide.
Recommendation:
The Village Board approves the ordinance and executes the agreement.
ITEM 8.A.7
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 FOLLOW S]
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
2
APPROVED THIS _______ day of July, 2018
____________________________
Gopal G. Lalmalani
Village President
PASSED THIS __________ day of July, 2018
Ayes: ___________________________________________________________
Nays: ___________________________________________________________
Absent: __________________________________________________________
ATTEST:
_____________________________________
Charlotte K. Pruss
Village Clerk
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
3
EXHIBIT A
SETTLEMENT AGREEMENT AND RELEASE
[Attached]
4825-3952-9066, v. 1
DB1/ 97676366.1
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/k/a
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:
1. 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
2
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.1 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.
1 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
3
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
4
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
5
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
6
In Witness Whereof, the Parties have made, executed and delivered this Agreement as
of the date first above written.
The Village of Matteson:
By:
Enter Name and Title
The City of Bloomingdale:
By:
Enter Name and Title
The Village of Oak Brook:
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: