IN RE TRANSIENT OCCUPANCY TAX CASESAppellant’s Letter BriefCal.November 24, 2014GMSR Greines, Martin, Stein & Richtand LLP Law Offices §900 Wilshire Boulevard, 12" Floor Los Angeles, California 90036 (310) 859-7811 Fax (310) 276-5261 www.gmsr.com PUBLIC — REDACTS MATERIAL FROM SEALED RECORD November 21, 2014 VIA FEDERAL EXPRESS SUPREME=. Honorable Tani Cantil-Sakauye, Chief Justice a Honorable Associate Justices NOV 94 2u%4 Supreme Court ofthe State of California a 350 McAllister Street San Francisco, CA 94102-4797 Frank A. MoGuire Clerk Deputy Re: Inre Transient Occupancy Tax Cases California Supreme Court Case No. 8218400 SecondDistrict Court of Appeal Case No. B243800 Dear Chief Justice Cantil-Sakauye and Associate Justices of the Supreme Court: The City of San Diego respectfully submits this letter in response to the Court’s November6, 2014 order requesting briefing on whetherit should unsealthe portions of the administrative record that do not revealthe identities of customers doing business with online travel companies (“OTCs”). The City urges that such an order should issue and that the parties should be allowed to file unredacted merits briefs as part of the public record.’ The City’s opposition to sealing is based on the following: ' The City’s application to file an unredacted version of its Opening Brief underseal doesnotreflect the City’s position on the merits of sealing. Instead, the City’s application was compelled by California Rules of Court, rule 8.46(f), a rule prohibiting parties from disclosing the contents of previously-sealed materials in this Court. (Cal. Rules of Court, rules 8.46(f)(1), 8.46(f)(2)(A) & 8.46(f)(2)(B).) The materials at issue here were orderedto be filed under seal bythetrial court. COPY Honorable Chief Justice Tani Cantil-Sakauye Honorable Associate Justices November 21, 2014 Page 2 1. Strong Public Policy Considerations, As Well As The First Amendment, Compel That Court Records And Proceedings Be Open AndAccessible. Public policy strongly favors open courts and open records. This policy compels that except in extraordinary circumstances, the public be given full accesstoall proceedings and records pendingin its court system. As this Court has said: “[T]he public has aninterest, in all civil cases, in observing and assessing the performanceofits public judicial system, and that interest strongly supports a general right of access” to court records “in ordinary civil cases.” (NBC Subsidiary (KNBC-TYV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1210; see also In re Marriage ofBurkle (2006) 135 Cal.App.4th 1045, 1054-1059 [financial privacy interests do not automatically trump the First Amendmentright of access to courts, and there is a “settled principle that substantive courtroom proceedings in ordinary civil cases are presumptively open”].) As multiple courts have uniformly held, “[t]he law favors maximum public access to judicial proceedings and court records. Judicial records are historically and presumptively open to the public and there is an important right of access which should not be closed except for compelling countervailing reasons.” (Champion v. Superior Court (1988) 201 Cal.App.3d 777, 788; Pantos v. City and County ofSan Francisco (1984) 151 Cal.App.3d 258, 262-263 [same]; see also Wilson v. Science Applications Internat. Corp. (1997) 52 Cal.App.4th 1025, 1030 [The substantive aspects of the law guaranteeing public access to court recordsare fairly well established. ‘To prevent secrecy in public affairs, public policy makes public records and documents available for public inspection by newsmen and membersofthe general public alike’”; “‘If public court business is conductedin private, it becomes impossible to expose corruption, incompetence, inefficiency, prejudice, and favoritism. For this reason traditional Anglo- Honorable Chief Justice Tani Cantil-Sakauye Honorable Associate Justices November 21, 2014 Page 3 American jurisprudence distrusts secrecy in judicial proceedings and favors a policy of maximum public accessto proceedings and recordsofjudicial tribunals,””internal citation omitted]; Estate ofHearst (1977) 67 Cal.App.3d 777, 785 [a trial court possesses “limited power, exercisable under exceptional circumstances and on a showing of good cause,to restrict public access to portions of court records on a temporary basis”].) In addition to the commonlaw right of access to court records, “[n]umerous reviewing courts likewise have found a First Amendmentright of accessto civil litigation documentsfiled in court as a basis for adjudication.” (Overstock.com, Inc. v. Goldman Sachs Group, Inc. (Nov. 13, 2014, A133487) _-Cal.App.4th —_—s«[2014 WL 6092152, p. *5]; see also In re Marriage ofNicholas (2010) 186 Cal.App.4th 1566, 1575 [sealing orders implicate public’s right of access under the First Amendment]; Savaglio v. Wal- Mart Stores, Inc. (2007) 149 Cal.App.4th 588, 596-597 [public has First Amendment right to accesscivil litigation documents filed in court and usedattrial or submitted as basis for adjudication].) Underthis right, “a court must not permit a record to be filed under seal based solely on the agreementor stipulation of the parties.” (Mercury Interactive Corp.v. Klein (2007) 158 Cal.App.4th 60, 105-108, internal quotation marks omitted [concluding discovery material was not protected by constitutional right of access and remanding for determination of whether documents should remain confidential under protective order].) Rather, “the California courts of appeal have regularly employed a constitutional analysis in resolving disputes over public access to court documents.” (Overstock.com, supra, __ Cal.App.4th— [2014 WL 6092152,at p. *6].) Thus, “[s]ubstantive courtroom proceedingsin ordinary civil cases, and the transcripts and recordspertaining to these proceedings, are ‘presumptively open,’” and in order for records to be sealed, there must be a showingthat “(1) there is an overriding interest supporting sealing of the records; (2) Honorable Chief Justice Tani Cantil-Sakauye Honorable Associate Justices November21, 2014 Page 4 there is a substantial probability that absent sealing, such interest will be prejudiced;(3) the sealing order is narrowlytailored to serve the overriding interest; and (4) a less restrictive means of meeting that interest is not available.” (Savaglio v. Wal-Mart Stores, Inc., supra, 149 Cal.App.4th at pp. 596-597.) 2. The Strong Public Policy Favoring Open Court Records And Proceedings Is Compelling Here Because This Case Involves The Public Interest And Broadly Impacts All California Municipalities, Counties And Their Residents. The public interest in favor of allowing broad public access to court proceedings and recordsis particularly compelling here. This case involves matters of great public interest impacting every California county, city and resident. The outcome will directly affect the amount of tax revenue each public entity has to fund andafford its residents with vital public services, including police, fire, paramedic, street maintenance,library, park, and homeless services, to namejust a few. Non-paymentofroom taxesfrustrates the ability of public entities to provide and their residents to receive these essential services. Accordingly, all public entities and their residents oughtto be able to accessthe court records so that they can meaningfully assess whether the room tax laws are being properly administered and enforced. Without full access to the underlying record, the public cannot make informed judgments about this matter. Nor can other municipalities with potential claims against the exact same OTCs adequately evaluate their own claims. And,ifthe record—and important portions ofthe merits briefs—are sealed, how do potential amici, who may be directly impacted by the decision, meaningfully participate when potentially decisive facts are hidden from their view? Honorable Chief Justice Tani Cantil-Sakauye Honorable Associate Justices November 21, 2014 Page 5 Withoutaccess to the unredacted briefs addressing the issues, the municipalities, the taxpayers andall other potential stakeholders cannot fully comprehendthe arguments that this Court is being asked to resolve. Continued sealing would force all interested parties to speculate as to whether they are impacted and then to guess as to how to respond,if at all. The important assistance that amicus briefs can offer in resolving the case will be unnecessarily restricted. The public has a right to access the record that will form the basis on whichthis Court decides this case. 5 (See Findings of Fact and Conclusions ofLaw, City of San Antonio v. Hotels.com (W.D.Tex. July 1, 2011, Civ. No. SA-06-CA-381-OG) 2011 WL 10970566, p. *6i“pervasive(ly)” use the merchant model, “a uniform, nationwide modelthat operates the same for all OTC(s) in all jurisdictions”); Memorandum ofOpinion on Class Certification, City ofSan Antonio v. Hotels.com (W.D.Tex. May 27, 2008, Civ. No. SA-06-CA-381-OG) 2008 WL 2486043,p. *6 & fn. 9 [City’s claims “arise from the same uniform businesspractice of selling roomsto hotel occupants as the merchant ofrecord, but failing to pay taxes on the amountpaid bythe Honorable Chief Justice Tani Cantil-Sakauye Honorable Associate Justices November 21, 2014 Page 6 ° “In mostof its contracts with hotels . . . there is ‘rate parity’ language which prohibits Expedia from charging a room rate thatis less than the rate the hotel would charge the consumerdirectly for occupancy of the room.” (Expedia, Inc. v. City of Columbus (2009) 285 Ga. 684, 684, fn. 1 [681 S.E.2d 122, 124, fn.1]; see also Memorandum ofOpinion on Class Certification, City ofSan Antonio v. Hotels.com (W.D.Tex. May 27, 2008, Civ. No. SA-06-CA-381-OG) 2008 WL 2486043 p. *10, fn. 20 <1css than the rate(s) being offered by the hotel”); ibid. [“The same consistency (| BD)is seen with room rates. Almost without exception,the net rate andsell rate for a given room on given day are the same among the OTC’s because the (OTCs’) agreements with the hotels all contain ‘parity’ or ‘Most Favored Nation’ clauses” Jj “the same”); Findings of Fact and Conclusionsof Law, City ofSan Antonio v. Hotels.com (W.D.Tex.July 1, 2011, Civ. No. SA-06-CA- 381-OG) 2011 WL 10970566,p. *7 [Although the hotels and OTC’s claim thattheir occupant,” citing “deposition testimony of corporate representatives, describing their nationwide merchant model business in remarkably similarfashion,” emphasis added]; id. at p. *10 & fn. 17 [“it is clear that (the OTCs) not only engage in a commoncourse of conduct, but that manyoftheir business practices are virtually identical”; “These practices include butare not limited to the mannerin which they contract with the hotels”); id. at p. *10 [“The deposition testimony of the corporate representatives, standing alone, reflects an amazing similarity in practice, procedure and corporate methodology amongall of the OTC’s. Moreover, the business practices that are relevant to the issuesin this lawsuit have remained essentially unchanged overthe years, even though their description of same may have changed”); ibid. [““while every hotel contract may not contain the same terms, the material aspects of the agreements andthe practical implications thereof are the sameor substantially similar”; ibid. [“As Defendants’ corporate representatives have confirmed, the amount of tax may differ between the cities, but the manner in which the Defendants otherwise conduct business (including the mannerin which they calculate, assess and collect tax) does not changefrom city to city, nor has it changed in any material way over time”’].) Honorable Chief Justice Tani Cantil-Sakauye Honorable Associate Justices November 21, 2014 Page 7 negotiated rate is confidential, the contracts between them (with rare exception) contain parity and ‘most favored nation’ clauses and the various OTCshave the same wholesale or ‘net’ rate with the hotels and/or hotel chains”].) ° “[T]he OTC[s] are responsible for assessing and collecting the occupancy taxes just as the hotel would be responsible if the occupant was bookinga reservation directly through the hotel. [{] The OTCs have clearly and unequivocally assumedthis duty in their contracts with the hotels.” (/d. at p. *10.) (Summary Judgment Order, City ofColumbus v. Expedia, Inc. (Ga. Super. Ct. Muscogee County, Sept. 22, 2008, Civ. Action No. SU-06-CV-1794-7, pp. 6-7, record citation omitted [“Someofthe contracts between Defendant Expedia and the hotels” have “set out the conflicting views of Defendant Expedia and the hotels concerning the amount on which applicable hotel occupancyor excise taxes should be based. Plaintiff Columbus’ position is similar to that expressed by someofthehotels”;Po “(‘)Web Service Provider acknowledges that [Hotel] and Participating Hotels believe that Occupancy Tax may be due and payable on the Gross margin portion of the Gross Rate in someorall jurisdictions, and [Hotel] and each Participating Hotel acknowledgesthat WebService Provider believes that Occupancy Taxes will not be due or payable on the Gross Margin portion of the Gross Rate in someorall jurisdictions(’)’”’].) ee(MemorandumofOpinion onClass Certification, City Honorable Chief Justice Tani Cantil-Sakauye Honorable Associate Justices November 21, 2014 Page 8 ofSan Antonio v. Hotels.com (W.D.Tex. May 27, 2008, Civ. No. SA-06-CA-381-OG) 2008 WL 2486043, p. *10 [“With manyofthe contracts,i!have simply added indemnification language to protect the hotels from liability for bed taxes on the OTC’s margin”]; Summary Judgment Order and Opinion, City ofChicago v. Hotels.com,etal. (Ill. Cir. Ct. Cook County, June 21, 2013, Case No. 2005 L 051003),p. 4, fn. 31 EE“(1)n no eventshall Hyatt ... be liable for Travelocity’s failure to collect, remit and/or pay taxes... applicable to the sales ofRooms her(e)under’”].) ° “The consumer almost always pays more for hotel occupancy when transacting business with the OTC[s] as opposedto the hotels directly as a result of the mark up and fees charged by the OTC.” (Findings ofFact and Conclusions of Law, City ofSan Antonio v. Hotels.com (W.D.Tex. July 1, 2011, Civ. No. SA-06-CA-381-OG) 2011 WL 10970566,p. *12.) * * * & * Strong public policy supports transparency in court proceedings and recordsto assure the public has access to those proceedings and records. This is especially true here, where all California cities and counties and their residents have a keeninterest in making sure that those involved in renting hotel rooms collect and remit all room taxes that are due and needed to fund important public services. Not only does the public have a strong interest in knowing the facts underlying the proceedingsin its courts, it has an equally compelling interest in knowing the basis upon which courts decide pendingcases. This case involves matters ofwidespread and fundamental public interest, an interest that involves the means by which essential public services are funded, and the extent to which taxes are administered and enforced. Public policy demandsthat the administrative record in this case andthe briefs that form the issues to be decided be ordered unsealed, except to the limited extent that continued sealing is required to protect Honorable Chief Justice Tani Cantil-Sakauye Honorable Associate Justices November21, 2014 Page 9 the identities of individual customers. The public should havefull accessto the administrative and court records, as well as the briefs that will form the basis on which this Court decides the case. Respectfully submitted, CITY OF SAN DIEGO CITY ATTORNEY’S OFFICE Daniel F. Bamberg, Esq. Jon E. Taylor, Esq. McKOOL SMITH HENNIGAN Steven D. Wolens, Esq. Gary Cruciani, Esq. KIESEL BOUCHER LARSON LLP William L. Larson, Esq. Paul L. Kiesel, Esq. BARON & BUDD,P.C. Laura Baughman,Esq. Thomas M.Sims, Esq. GREINES, MARTIN, STEIN & RICHLAND LLP Irving H. Greines, Esq. Kent L. Richland, Esq. Cynthia E. TobiSinan, Esq. David E. Hagketf, Esq. pale.tiga Attorneys for Petitioner CITY OF SAN DIEGO, CALIFORNIA By: DEH:cll cc: See Attached Service List PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES Tam employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action; my business address is 5900 Wilshire Boulevard, 12th Floor, Los Angeles, California 90036. On November21, 2014, I served the foregoing document described as: PUBLIC VERSION OF PETITIONER’S LETTER BRIEFontheparties in this action by serving: SEE ATTACHED SERVICE LIST (X) By Envelope:by placing a true copy thereof enclosed in sealed envelopes addressed as above and delivering such envelopes: (X) By Mail: As follows: I am "readily familiar" with this firm's practice of collection and processing correspondence for mailing. Under that practice, it would be deposited with United States Postal Service on that same day with postage thereon fully prepaid at Los Angeles, California in the ordinary course of business. I am aware that on motion of party served, service is presumedinvalid if postal cancellation date or postage meter date is more than | day after date of deposit for mailing in affidavit. Executed on November 21, 2014, at Los Angeles, California. (X) (State) I declare under penalty of perjury under the laws ofthe State of California that the foregoingis true and correct. Charice L. Lawrie 2d Civ. No. B243800 In Re Coordinated Proceeding Special Title (Rule 3.550(c)) TRANSIENT OCCUPANCY TAX CASES SERVICE LIST Darrel J. Hieber Nathaniel Sadler Currall Daniel Martin Rygorsky K & L Gates Stacy R. Horth-Neubert Skadden, Arps, Slate Meagher & Flom 300 S. Grand Avenue, Suite 3400 Los Angeles, CA 90071 [Attorneys for Defendants and Respondents: Priceline.Com,Inc.; Travelweb, LLC; Lowestfare.com, LLC] Brian D. Hershman James P. Karen Jones Day 555 S. Flower Street, 50th Floor Santa Monica, CA 90071-2300 [Attorneys for Defendants and 1 Park Plaza, 12th Floor Irvine, CA 92614 Brian S. Stagner J. Chad Arnette Kelly Hart & Hallman LLP 201 Main Street, Suite 2500 Fort Worth, TX 76102 William Bryan Grenner K&L Gates LLP 1900 Main Street, Suite 600 Irvine, CA 92614 [Attorneys for Defendants and Respondents: Travelocity.com LP Respondents: Expedia, Inc.; Hotwire, Inc.; and Site59.com LLC] Hotels.com L.P.; Travelnow.com; Hotels.com GP, LLC] Matthew X. Oster Jeffrey Alan Rossman McDermott, Will & Emery LLP McDermott Will & Emery 2049 Century Park East, Suite 3800 227 W Monroe St Los Angeles, CA 90067-3218 {Attorneys for Defendants and Respondents: Orbitz, LLC; Trip Network, Inc.; Internetwork Publishing Corporation] Chicago, IL 60606-5096[Attorneys for Defendant andRespondent: Orbitz, Inc.]}