IN RE TRANSIENT OCCUPANCY TAX CASESRespondents’ Answer to Petition for ReviewCal.May 28, 2014Case No. 218400 IN THE SUPREME COURT OF CALIFORNIA In Re TRANSIENT OCCUPANCY TAX CASES CITY OF SAN DIEGO, CALIFORNIA Petitioner, Vv HOTELS.COM,L.P., et al. Respondents. After an Opinion by the Court of Appeal, Second Appellate District, Division Two, Case No. B243800 On Appeal from the Superior Court of the State of California for the County of Los Angeles The Hon. Elihu M.Berle, Judge of the Superior Court, Department 323 Los Angeles County Superior Court Case No. JCCP 4472 ANSWERTO PETITION FOR REVIEW [Request To Take Judicial Notice, and Opposition to Petitioner’s Request To Take Judicial Notice, Filed Concurrently Herewith] Darrel J. Hieber (SBN 100857) Stacy R. Horth-Neubert (SBN 214565) SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 300 South Grand Ave., 34"Fl. Los Angeles, CA 90071 Telephone: (213) 687-5000 Facsimile: (213) 687-5600 Attorneysfor Respondents priceline.com Incorporated (n/k/a The Priceline Group Inc.), and Travelweb LLC Elwood Lui (SBN 45538) Brian D. Hershman (SBN 168175) Erica L. Reilley (SBN 211615) JONES DAY 555 South Flower Street, 50th Floor Los Angeles, CA 90071 Telephone: (213) 243-2445 Facsimile: (213) 243-2539 Attorneysfor Respondents Expedia,Inc., Hotwire, Inc.; Travelnow.com, Hotels.com, L.P., and Hotels.com GP, LLC [additional counsellisted on nextpage] Nathaniel S. Currall (SBN 210802) . K&L GATES LLP 1 Park Plaza, Twelfth Floor Irvine, California 92614 Telephone: (949) 623-3534 Facsimile: (949) 253-0902 Attorneyfor Respondents Travelocity.com, L.P. and Site59.com, LLC Jeffrey A. Rossman (SBN 189865) McDERMOTT WILL & EMERY LLP 227 West Monroe Street Chicago, IL 60606 Telephone: (312) 372-2000 Facsimile: (312) 984-7700 Attorneysfor Respondents Orbitz, LLC, Trip Network, Inc. (d/b/a Cheaptickets.com), incorrectly named as Cheaptickets, Inc., and Internetwork Publishing Corp. (d/b/a Lodging.com) Case No. 218400 IN THE SUPREME COURT OF CALIFORNIA In Re TRANSIENT OCCUPANCY TAX CASES CITY OF SAN DIEGO, CALIFORNIA Petitioner, Vv HOTELS.COM,L.P., et al. Respondents. After an Opinion by the Court of Appeal, Second Appellate District, Division Two, Case No. B243800 On Appeal from the Superior Court of the State of California for the County of Los Angeles The Hon. Elihu M.Berle, Judge of the Superior Court, Department 323 Los Angeles County Superior Court Case No. JCCP 4472 ANSWER TO PETITION FOR REVIEW [Request To Take Judicial Notice, and Opposition to Petitioner’s Request To Take Judicial Notice, Filed Concurrently Herewith] Darrel J. Hieber (SBN 100857) Stacy R. Horth-Neubert (SBN 214565) SKADDEN,ARPS, SLATE, MEAGHER & FLOM LLP 300 South Grand Ave., 34"Fl. Los Angeles, CA 90071 Telephone: (213) 687-5000 Facsimile: (213) 687-5600 Attorneysfor Respondents priceline.com Incorporated (n/k/a The Priceline Group Inc.), and Travelweb LLC Elwood Lui (SBN 45538) Brian D. Hershman (SBN 168175) Erica L. Reilley (SBN 211615) JONES DAY 555 South FlowerStreet, 50th Floor Los Angeles, CA 90071 Telephone: (213) 243-2445 Facsimile: (213) 243-2539 Attorneysfor Respondents Expedia,Inc., Hotwire, Inc.; Travelnow.com, Hotels.com, L.P., and Hotels.com GP, LLC [additional counsellisted on nextpage] Nathaniel S. Currall (SBN 210802) K&L GATES LLP 1 Park Plaza, Twelfth Floor Irvine, California 92614 Telephone: (949) 623-3534 Facsimile: (949) 253-0902 Attorneyfor Respondents Travelocity.com, L.P. and Site59.com, LLC Jeffrey A. Rossman (SBN 189865) McDERMOTT WILL & EMERY LLP 227 West MonroeStreet Chicago, IL 60606 Telephone: (312) 372-2000 Facsimile: (312) 984-7700 Attorneysfor Respondents Orbitz, LLC, Trip Network,Inc. (d/b/a Cheaptickets.com), incorrectly named as Cheaptickets, Inc., and Internetwork Publishing Corp. (d/b/a Lodging.com) Brian S. Stagner (admitted pro hac vice below) Chad Arnette (admitted pro hac vice below) KELLY HART & HALLMAN LLP 201 Main Street, Suite 2500 Fort Worth, TX 76102 Telephone: (817) 878-3567 Facsimile: (817) 878-9280 Attorneysfor Respondents, TRAVELOCITY.COM LP and SITE59.COM, LLC TABLE OF CONTENTS - Page TABLE OF AUTHORITIES....... cc ccscsscceessseeseesecsnceecesseecsesssessnessesatsaessesenessseeeas iii I, INTRODUCTIONoieecceccsesseeeseesseecssesessssnseatseseseeserseeseesssssnssases 1 Il. BACKGROUND 0. cececceecssesseecsneeseeessecesetsnseseessessacssrenssenesasenssases9 A. The Unopposed Coordination of Los Angeles and San Diego Actions, and The Addition Of Three Later Add-On ACTIONS ......cceessccreesteeecetseccesceenscnsasesnesseeseesssessessssensssneeatenteatens9 B. San Diego Assessed TOT Against The OTCs And The OTCs Administratively Appealed...........cccsessccseseeetesseeees 10 C. The Superior Court Vacated The San Diego Assessments....11 D. The Court of Appeal Affirmed The Order Vacating The San Diego Assessment.......:..ccsccsssecssessecsnsessecsseseessessesenensenes 12 il. THE CITY’S PETITION SHOULD BE DENIED BECAUSE NO GROUNDS FOR REVIEW EXISTIN THIS CASE........ccceeseeesees 13 A. The Court Of Appeal’s Plain Meaning Construction Of The City’s Transient Occupancy Tax Ordinance Does Not Provide A Ground For Review.........cccsssessccsresseeeeetseesnesesseens 14 1. The Court Correctly Construed the Phrase “Rent Charged By The Operator” To Include Only Amounts Charged By The Hotel Operator For The Room Rental. ......ccccescesecssesseeeecssessseseeeeesessssesensesenenss 14 2. The City’s Effort To Evade The Ordinance’s Express Terms Through Reliance On Supposed General “Agency Principles” Does Not Give Rise To An “Important Question Of Law.” .....cee:17 3. This Court Should Not Grant Review For The Purpose Of Relieving The City From The Obligations Imposed UponIt By The California Constitution Pursuant To Proposition 218.............0 18 B. Cases Nationwide Are In Accord With The Court Of Appeal’s Opinion. .......c ec eecessseeseesesseacensecessesessetssssnesnsesssnens20 C. Review Is Not Warranted By The Court Of Appeal’s Citation To The Decisions In The Coordinated Anaheim And Santa Monica Proceedings.........cscscsscescesssseseesscssenessers23 TV. CONCLUSION... ccccsccessstecssseeceeseessessseesesseseesassaecessseseeresessesees28 CERTIFICATE OF WORD COUNT... cccccssscestssesssereerenneneees sceesssesessssssiveessssseees30 ii TABLE OF AUTHORITIES Page Agnew v. State Board ofEqualization, 21 Cal. 4th 310 (1999)veecccessesseesseesceseressesseesseeeseesnesaeeeessseeeenseseve2 Alachua County v. Expedia, Inc., 110 So. 3d 941 (Fla. Dist. Ct. App. 2013)...ce ceesscscsessesetterseestsseesseeneens21 Bowling Green v. Hotels.com, L.P., 357 S.W.3d 531, 533 (Ky. Ct. App. 2011) nceeceeseesesetseerenseesseseteners21 City ofBirmingham y. Orbitz, LLC., 93 So. 2d 932 (Ala. 2012)... cecesscceessetesessseeeserseeseesaeceesseeeseesseeaseesseseees21 City ofColumbus vy. Hotels.com, L.P., 693 F.3d 642 (6th Cir. 2012) weeccsenenteereeeereeeersereeetstenseecesenenesses20 City ofGoodlettsville v. Priceline.com Inc., 844 F. Supp. 2d 897, 902 (M.D. Tenn. 2012)...i ceeeseneetseneresteeeeseseneeees21 City ofHouston v. Hotels.com, L.P., 357 S.W.3d 706 (Tex. App. 2011)... cee esceseecnesseeeeeseeerseresserseeeeseestents21 City ofOrange, TX v. Hotels.com, L.P., 1:06-CV-00413, 2007 WL 2787985,at *6 (E.D. Tex. Sept. 21, QOO7 ..eescesccsessccsccsssecscsesseeseesecsesenevsecnesseesasesesanensesesenesesessseaceresesseressessesateas21 Louisville/Jefferson County Metropolitan Government v. Hotels.com, L.P., 590 F.3d 381 (6th Cir. 2009) oo... eeceseeesecseeeseesseeesseesssseseseseensseserseeeees21 Lungren v. Deukmejian, AS Cal. 3d 727 (1988) oo. eccssesssseceesssssvscssesssssevsceussesesseeseseseseessesassees 12, 14 Norgart v. Upjohn Co., 21 Cal. 4th 383 (1999) ooeececsecsseseesrereeseecsstsecresssesssssssetesessusesesteasnenes24 People v. Davis, 147 Cal. 346 (1905) vce ecesccesccesececsesesescecseeensecevseseseeeenscnsssessssnepersertenesees 14 People v. Majors, 18 Cal. 4th 385 vo. escscsscscerssstecseeseeseeseceesenersessessnesenersesecsesseeeesessersesaess24 People v. Upshaw, 13 Cal. 3d 29 (1974) ..ecicccccessccsccnecseseserseeesnecseeteseaesssersessesetseerscauseesaatens24 Pioneer Express v. Riley, 208 Cal. 677 (1930)......cccccsccssscetcsseesreceressseceascaeeeseessnessseseessesaseesentsarsneees 14 Pitt County v. Hotels.com, L.P., 553 F.3d 308 (4th Cir. 2009) 0.eseeeseeerscsereseseestessesnersesseseseneensen21 ili St. Louis County v. Prestige Travel, Inc., 344 S.W.3d 708 (Mo. 2011) we ceeeecssesssssecsesssecceseecsesssscessessscsasssseeensesesaes21 In re Transient Occupancy Tax Cases, Case No. B236166, 2012 WL 5360882 (Cal. Ct. App. Nov. 1, 2012)... ccsessecsesseeesseserereees6 In re Transient Occupancy Tax Cases, Case No. B230457, 2012 WL 5360907 (Cal. Ct. App. Nov. 1, 2012)... ececsesssnsetesseesreesseees 6 STATUTES AND RULES Cal. Civ. Proc. Code § 404 wceecceseeeerreee sesaecvesaeneessnssneesesansenesenenssenseanes 7,24 Cal. Civ. Proc. Code § 404.1 cccccscsseessscsssesssessessesssecsessessecsreseessesaneacsas 7, 24, 27 Cal. Civ. Proc. Code § 404.2iiieecsssssscccsnsersccnscsnestsessssrsrseseceesesseesetseneeeseneees27 Cal. Civ. Proc. Code § 404.7oesaseeneeeceececsaeeeeecesssecssaeeessesensesesessauesessanees24 Cal. Const. art. XILI C, § 2(b) cccccccscsssecsssesssecssecssssesssursessssecessssessssecessssessessneeen2,18 Cal. R. Ct. 3.504(a) & (D)ccsccscsssesscsssecscsssseessusesssessessssusecsasueseessseseceususeeseesssseseceseecs24 Cal. R. Ct. 8.500(b) ccscscsccssssesecccseccssvcesssuccssecesusessuvecersussessueccessuscsssuesessaetessssneeeseses 13 Cal. R. Ct, 8.504(0)(2) vvsscssssssscssssessccssssseessnscesersusvescenssnstescensssnsesesesseeeesesssasseseveen 13 OTHER AUTHORITIES Legis. Analyst’s Office, Understanding Proposition 218, ch. 1...ee18 State of California, Ballot Pamphlet, Gen.Elec. (1996) text of Prop. 218, § 2; reprinted as Historical Notes, 2A West’s Ann. Cal. Const. (2006 supp.) foll. art. XTIL Cy § 1.ecceeecssseseeseseecceeessseecseetessescseasaeseseseeeeetsteseeeeseeas 18, 20 iv TO THE HONORABLE CHIEF JUSTICE OF CALIFORNIA, AND THE HONORABLE ASSOCIATE JUSTICES OF THE CALIFORNIA SUPREME COURT: I. INTRODUCTION This is the third attempt by cities of California to seek redress from this Court to expand the scope oftheir transient occupancy tax (“TOT”) ordinances, rather than presenting the issue to the voters as required by the California Constitution. By its plain terms, the City of San Diego’s (the “City”) TOT ordinancelimits the imposition of tax to the “Rent charged by the Operator.” Underthe definitions provided in the ordinance, the “Rent charged by the Operator”is the amount charged by the proprietor of the hotel (the ““Operator”) for “occupancy”— i.e., the right to use or possess a hotel room. Respondentonline travel companies (“OTCs”) are not proprietors of hotels, as the City concedes, and thus the amounts they charge for their reservation services are not amounts charged by the “Operator” for “Occupancy.” Asthe trial court and a unanimous Court of Appeal determined, those amounts are not subject to tax under the plain language of the City’s ordinance. Nevertheless, unhappy with the Court of Appeal’s decision, and reluctant to undertake the “difficult and costly” process of amendingits tax lawsas required by the California Constitution, the City through this Petition is misusing California’s writ review procedure in an effort to reargue the merits of its TOT claims against the OTCs. In so doing, the City concocts an “important question of law” and a “change”in doctrine where noneexists. The City has not presented an issue appropriate for review by this Court. Its Petition for Review should be denied. San Diego Must Be Held To The Express Terms Of Its Ordinance Asthis Court repeatedly has madeclear, a taxing authority can only impose tax in accordance with the express termsof the tax statute it chose to enact. This fundamentalrule is in recognition ofthe reality that a government’s exercise of its sovereign taxing power imposes burdens on private citizens, takes their property, and has great potential for governmental abuse. Similar considerations led the voters of California to enact Proposition 218, which amendedthe California Constitution to further ensure that taxes — specifically including hotel taxes — cannot be expanded at the whim of the municipal government. Instead, under Proposition 218, local governments are prohibited from “impos[ing], extend[ing] or increas[ing] any general tax unless and until that tax is submitted to the electorate and approved by a majority vote.” Cal. Const. art. XIII C, § 2. In accordance with these principles, the City must be held to the express terms of its TOT ordinance (“Ordinance”) when seeking to impose TOTobligations andliability on the OTCs. The City enacted its Ordinance in 1964.' The Ordinance imposes tax obligations andliability only on the “transient” and hotel “operator,” and imposes tax only on the “Rent charged by the Operator.” (Ct. Appeal, 3/27/14 Op., (the “Opinion’”) at 2-3, quoting Ordinance.) “Rent” is defined -as “[t]he total consideration charged to a Transient as shown onthe guest receipt for the Occupancy of aroom ....” (/d. at 2.) In accordance with these express terms, since the Ordinance’s enactment, the City asserted ' The Ordinanceis codifiedat Chapter 3, Article 5, Division 1 of the San Diego Municipal Code. All emphasis in quotations herein is added, and internal citations omitted, unless otherwise indicated. TOTliability only against transients and hotel operators in the City, and imposed tax only on the amountcharged by, andpaid to, the hotel operator for a transient’s occupancy of aroom. Thus, whena reservation is booked through an OTC,the hotel operator remits TOT to the City on the amountit actually charges and receives as compensation for providing occupancy of a room to the transient. (/d. at 4.) The OTCs provide comparative information aboutairlines, hotels and rental car companies on their websites, and allow customers to book reservations with such travel providers. (Op. at 3.) OTCsare not hotel operators, as the City concedes. (/d. at3 & 18n.14.) Accordingly, the OTCsdo not have tax obligations andliability, and the amount they charge customers andretain for their online services is not “Rent charged by the Operator.” | Nevertheless, through this lawsuit, and the underlying assessments, the City sought to go beyond the Ordinance’s express termsto (1) impose tax obligations andliability on OTCsretroactively (id. at 5), even though they are not “Transients” or hotel “Operators;” and (ii) impose tax on the amount an OTC charges a customerandretains for using its online services to book a reservation for a hotel room, even though those amounts are not “Rent charged by the Operator”“for the Occupancy of a room.” (/d.) In responseto the City’s attempt to evade the plain meaningofits Ordinance, the OTCsfirst pursued an administrative appeal, and then petitioned the Superior Court for a writ of mandamus. (/d.) The Superior Court, the Hon. Elihu M.Berle presiding, issued a writ of mandate ordering that the administrative ruling upholding the assessments be vacated, and the assessments set aside. U/d.) The City appealed. (/d.) The Court of Appeal affirmed. Adhering to the express termsof the City’s Ordinance, the Court of Appeal unanimously upheldthetrial court’s conclusion that “under the plain language of the appellant City of San Diego’s (City) TOT ordinance, the OTCs have no TOTobligations or liability.” (Wd. at 2.) The Court Of Appeal Properly Held San Diego’s Ordinance Does Not Apply To The OTCs In its Opinion, the Court of Appeal recognized that the City “must be held to the express termsof[its] tax statute.” (Ud. at 7.) After performing its “first task” of ““examin[ing] the words of the ordinance,” the Court concluded“the words of ordinance do not reveal an intent to tax the service fees and markupscharged by the OTCs.” (Ud. at 7.) Under the “plain meaning”of the Ordinance’s express terms, the amount subjectto tax is limited to “rent charged by the hotel operator.” (/d. at 8.) The Court held “the OTCs cannot be considered to be operators of[] hotels,” and “therefore the OTCs’ service charges and markupsare not within the scope of the City’s ordinance.” (Ud. at 9.) In so ruling, the Court explained the contrary constructions proffered by the City are “defeated by the plain languageof the ordinance,” which mandatesthat “TOT may only be collected on the rent charged by the operator.” (/d. at 15.) The City’s Petition reveals nothing more than dissatisfaction with the Court’s “plain meaning”construction of its Ordinance, whichit claims defeats the supposed intent of the Ordinance to tax all amounts paid by transients in a room reservation transaction. But the Court correctly rejected this assertion, noting that while the Ordinance’s “intent to impose a tax on transients,” “from the statute’s plain languagethat the tax is limited [to] the amount of rent charged by the hotel operator to the transient.” (Op. at 18.) Thus, the City is left to protest the Court’s refusal to go outside the Ordinance’s express terms to imposetax liability on the OTCs based on a theory that the OTCs are somehow “agents” of the hotels. This supposed ground for review is contrary to and untethered from the Ordinance’s express terms, and is based on the City’s rejected construction that tax is due on the “retail rate” the transient paid for the reservation booking. (/d. at 1.) As the Court of Appeal held, the City’s construction ignores, andis premised upon a fundamental misstatement of, the Ordinance’s express terms setting forth the tax base as solely “Rent charged by the Operator.” (Op.at 2.) In its effort to obtain review by this Court, the City is left where its Petition begins — appealing to the purse by asserting the transient occupancy tax is an important source of revenue. (Pet. at 3-4.) The City goes onestep further, and asserts that because other California cities have enacted similar tax ordinances, the decision “impacts the budgets of public entities across the State.” (/d. at 3.) This Court properly rejected the same arguments when it denied the petitions for review filed bythe cities of Anaheim and Santa Monica (see OTCs’ Request To Take Judicial Notice (“OTCs’ RJN”) Ex. 11); of course, the amount at issue alone does not create an “important question of law.” Nor does the City’s desire for additional tax revenue justify expanding the plain languageofa tax statute, contrary to * Further, the City’s wholesale/retail construct is disingenuous. The City does not seek to impose tax on the “retail rate” the OTC allegedly charges for the room as “agent” of the hotel. Instead, the City seeks to impose tax on both the “retail rate” — i.e., the room rate charged by the hotel plus the margin charged by the OTC forits services —plus the OTCs’ separately stated service fees. Nowhere does the City explain how imposing tax on those service fees is consistent with its argumentthatit seeks to impose tax on the “retail rate” charged for the room. the California Constitution and all canonsofstatutory construction. In Citing Its Prior Unpublished Decisions In These Coordinated Actions, The Court of Appeal Properly Relied Upon The “Lawofthe Case” Exception To Rule 8.1115(a) The City’s attempt to manufacture legal issues of statewide significance relating to the “law of the case” doctrine is a contrivance that also does not merit review. This argument takes two forms(see Pet. at 5-6), and both fail. First, the City argues that the Court of Appeal erred in referencing its own prior decisions in the Santa Monica and Anaheim actions’ as “law of the case,” and that hundreds of other California municipalities will be bound by the Court’s purported “law of the case” holding as to TOT ordinances. Instead, in response to the City’s petition for rehearing, the Court of Appeal added a footnote to its decision explaining that under the circumstances of these coordinated actions, citing those decisions was permissible under Rule of Court 8.1115(b)(1), the “law of the case” exemption to Rule of Court 8.1115(a), whichis the generalrule prohibiting citation of unpublished decisions. (Op. n.4.) > In re Transient Occupancy Tax Cases, Case No. B236166(Cal. App. 2 Dist. 2012) (Santa Monica)(OTCS" RJN Ex. 10); In re Transient Occupancy Tax Cases, Case No. B230457 (Cal. App. 2 Dist. 2012) (Anaheim) (OTCs’ RJN Ex. 9). This Court rejected both cities’ Petitions for Review. In re Transient Occupancy Tax Cases, No. $207192, review denied (CA. Sup.Ct., January 23, 2013) (OTCs’ RJN Ex. 11). “ The Court’s added footnote reads,in its entirety: Pursuant to California Rules of Court, rule 8.1115, subdivision (b), this court may cite and rely upon an unpublished case whenitis relevant as law of the case. The unpublished opinions that wecite in this opinion are part of the same single coordinated proceedings as this case, captioned “In re Transient Occupancy Tax Cases (No. JCCP 4472)”. The coordinated transient occupancytax cases necessarily share common questionsof fact and law. (Code Civ. Proc., § 404.) Under the circumstances, we cite these unpublished opinions as law of the case. (See Kowis v. Howard (1992) 3 Cal. 4m (cont'd) Although the City arguedin its petitions for rehearing that citation to the Anaheimand Santa Monica opinionsviolated Rule 8.1115(a), it does not make that argumentto this Court. As the City now appears to concede, the Court’s reference to the Anaheim and Santa Monica opinions was | consistent with the rules it cited governing coordinated proceedings, which | aim to prevent inconsistent orders and judgments in cases involving common questions of law and fact. (See Op. at 4 n.4 (citing Cal. Civ. Proc. Code §404)). See also Cal. Civ. Proc. Code §§ 404, 404.1. Further, the Court of Appeal’s analysis demonstratesthatit did not rely on the Anaheim and Santa Monica decisions as binding “law of the case.” Instead, the Court thoroughly examined the language of San Diego’s own Ordinance and held that it does not impose TOT obligations or liability on the OTCs. In so doing, it discussed the “logic” and reasoning of the Anaheim and Santa Monica decisions wherethe statutory provisions were “similar.” (See Op. at 9.) Butit did not bind San Diegoto those holdings as “law of the case.” The City’s speculation that the Court of Appeal will blindly apply its past decisions to these coordinated proceedingsas “law of the case” in any future appeals is belied by its track record of individually analyzing each of the three ordinancespresentedtoit to date. Second, the City exaggerates the nature of the Court’s reference to the “law of the case doctrine,” describing it as a “holding”in a published case that decisions in coordinated actions are binding law ofthe case in (cont’d from previous page) 888, 892-893 [‘“The law of the case doctrine states that when, in deciding an appeal, an appellate court ‘states in its opinion a principle or rule of law necessary to the decision, that principle or rule becomesthe law of the case and must be adhered to throughout its subsequent progress, both in the lower court and upon subsequent appeal.”’’]) other coordinated actions. From that fictitious holding, the City then posits dire consequences beyond the context of these TOT cases. The City’s straw man argumentdoesnotjustify review. As a threshold matter, the City cannot be heard to complain about the Court of Appeal publishing the Opinion and creating binding precedent, since the City itself — represented by outside counsel who purportto represent “numerous” California municipalities’ — requested publication for this precise purpose. (OTCs’ RJN Ex. 14 (Appellants’ Pet. for Rehearing & Request for Publication (March 20, 2014)), at 4.) More importantly, the City misstates the context and mannerin which the Court of Appeal mentioned the “law of the case” exemption to Rule 8.1115(a). The Court did not hold that the Santa Monica and Anaheim decisions were law ofthe case as to San Diego. Instead,it invoked the “law of the case” exception to the general rule prohibiting citation to unpublished decisions. It did not set forth a new or expanded application of the “law of the case” doctrine; it merely provided a rationale for citation to unpublished decisions under the unique circumstancesofthis case. And even if this Court were to disagree with this limited holding, the remedy would be to depublish the Opinion (or depublish footnote 4). The remedy is not review of the merits of the Opinion by this Court. The City’s Petition should be denied. > See Larson Albert LLP, http://www.lalitigationlawyers.com/lawyer-attorney-1364032.html (lasted visited May 21, 2014) (“Represented as co-counsel numerous California municipalities ....”). I. BACKGROUND A. The Unopposed Coordination of Los Angeles and San Diego Actions, and The Addition Of Three Later Add-On Actions On December30, 2004, the City of Los Angeles filed the first action in California seeking to hold the OTCsliable for hotel occupancy tax. (See OTCs’ RJN Ex. 1 (Los Angeles Class Action Complaint).) On February 9, 2006, the City of San Diego — represented by the same outside counsel as the City of Los Angeles — filed its action against the OTCs. (See OTCs’ RJN Ex. 2 (San Diego Complaint).) On April 19, 2006, the Chief Justice of California and Chair of the Judicial Council signed an Order Assigning Motion Judge and Setting Date for Hearing. (See Petitioner’s Request to Take Judicial Notice (‘“Petitioner’s RJN’’) Ex. A.) On July 3, 2006, the coordination motion judge signed its Recommendations Regarding Coordination and Order on Stay Request, in which it determined the Los Angeles and San Diego actions were complex and recommendedthe cases be coordinated before the Los Angeles Superior Court. Ud. Ex. C.) Coordination was not opposed by any party. (id. Ex.C 42.) The judge further designated the Court of Appeal, Second Appellate District, as the reviewing court. Ud. Ex. C43.) Thereafter, by order dated July 21, 2006, the Presiding Judge assigned a Los Angeles Superior Court judge as coordinationtrial judge for JCCP 4472. (Petitioner’s RJN Ex. D.) The OTCssuccessfully demurred to the complaints on the grounds that Los Angeles and San Diego failed to exhaust their administrative remedies. (See OTCs’ RJN Exs. 4 & 5.) The cases were stayed pending exhaustion. (/d.) In the meantime, actions involving the cities of Anaheim and Santa Monicawere coordinated as add-on cases to JCCP 4472 on May 4, 2009, and August 31, 2010 respectively. (See Petitioner’s RJN Exs. E & G.) Neither of those cities opposed coordination. (/d.) Over the objection of the City and County of San Francisco, the court ordered actions involving San Francisco coordinated into JCCP 4472. (Petitioner’s RJN Ex. F; OTCs’ RJN Ex.6.) Both Anaheim and Santa Monica wererepresented by the same outside counsel as San Diego here. In each of those actions, the coordinationtrial judge (Hon. Carolyn B. Kuhl) analyzedthecity’s respective TOT ordinance, and held that neither ordinance imposed tax obligationsorliability on the OTCs, and that the amounts the OTCs charge and retain for their services is not taxable. (OTCs’ RJN Exs. 7 & 8.) In separate unpublished decisions, the Court of Appeal analyzed each city’s ordinance and upheld the coordination trial judge’s rulings. (OTCs’ RJN Exs. 9 (Anaheim decision) & 10 (Santa Monica decision).) B. San Diego Assessed TOT Against The OTCs And The OTCs Administratively Appealed In October 2007, San Diego began TOT audits of the OTCsandlater issued TOT assessments against the OTCs, which each OTCtimely appealed. (JA2:412.)° The hearing was held in early 2010, and the hearing officer issued his decision in May 2010. Ud.) The hearing officer affirmed $21.264 million in assessments against the OTCs. (/d. at 222-223.) ° Citations to the Joint Appendix are designated “JA” followed by tab and page numbers. 10 C. The Superior Court Vacated The San Diego Assessments On September6, 2011, after extensive briefing and oral argument, the Superior Court granted the OTCs’ Motion for Judgment Granting Writ of Mandate, and denied San Diego’s cross motion. After noting the facts were essentially undisputed, the court described the OTCs’ business operations: (i) “the OTC contracts with hotels for the right to sell occupancyprivileges to the transients;(ii) the OTC books room reservations “through [its] Internet site” and “charges... a marked-upretail price for the room plus certain taxes and fees;” (iii) the OTCthen “remits to the hotel the wholesale price of the room and the [TOT], based on the wholesale price paid to the hotel.” (Ud. at 1200.) Thecourt, citing the City’s Ordinance, explained that tax is imposed “on transients for the privilege of occupancyin hotels,” and is a “percent of the ‘rent charged by the operator’ to the transient for the privilege of occupancy in hotel.” (Ud. at 1199.) The court ruled OTCsdo not have “control over the hotelor ... the right to run the businessofthe hotel,” and thus, are not hotel “operators.” (/d. at 1214.) Having ruled the OTCsare not “operators,” of hotels, the court concluded: The phrase ‘charged by the operator’ ... limits the tax base to those amounts that are charged by the operatorfor the privilege of occupancy. Since this court concludes that the OTCsare not operators of the hotels, the amountthat the OTCscharge for their reservation services [is] not part of the rent. (Id. at 1222.) The court issued a writ of mandate ordering the hearing officer to vacate his ruling in favor of San Diego, issue a new ruling that the OTCs are not liable for TOT, and set aside San Diego’s assessments. 11 D. The Court of Appeal Affirmed The Order Vacating The San Diego Assessments The Court of Appeal also accepted that the facts of the case were “essentially undisputed” and focused on the interpretation of the TOT ordinance. (Op. at 6.) The interpretation ofa tax statute is governed by well-settled rules of statutory construction that mandate (i) where “the language ofthe statute is clear and unambiguous,there is no need for statutory construction;” and(11) that a “taxing authority must be held to the | express terms ofa tax statute.” (/d. at 6-7, quoting Lungren v. Deukmejian, 45 Cal. 3d 727, 735 (1988) and Agnewv. State Bd. ofEqualization, 21 Cal. Ath 310, 327 (1999).) In accordance with those governing rules, the Court focused on the express terms of the City’s Ordinance, and held that “the words of the ordinance do not reveal an intent to impose a tax on the service fees and markupscharged by the OTCs.” (Op.at 7.) First, the Court looked to the Ordinance’s tax imposition provision, whichstates “For the privilege of Occupancy in any Hotel located in the City of San Diego, each Transientis subject to and shall pay a tax in the amountof six percent (6%) of the Rent charged by the Operator.” (Op.at 7, quoting Ord. § 35.0103.) The Court explained that “[t]here is no provision imposing any tax liability on any entity other than the hotel operator or the transient.” (Op. at 8.) Thus, the Court held that “from the statute’s plain language[,] the tax is limited. It may only be imposed on the amount of rent charged by the hotel operator to the transient.” (Op.at 18.) Asthe Court explained, “[t]he City concedes that OTCs are not transients, and that OTCs are not hotel operators.” (Op. at 18.) The Court held that “[b]ecause the City’s ordinance imposes tax only on rent charged 12 by the operator, it does not reach amounts charged by the OTCforits services.” (Op.at 9.) The Court then performed a detailed analysis of the statutory definition of“rent,” concluding “items are not taxable unless they are charged by the hotel operator. The OTC service fees are not charged by the hotel operator, therefore they are not taxable.” (Op. at 10.) Simply, as 99 66expressly defined in the Ordinance,“rent” “cannot be interpreted to include as part of the tax base any andall service charges imposed uponthe transient.” (Op.at 14.) The Court explained, its “plain language interpretation ... fully comports with the stated intent of the ordinance” to impose a tax on transients: “We understandthe statute’s intent to imposea tax ontransients; however, we also understand from the statute’s plain language that the tax is limited. It may only be imposed on the amountof the rent charged by the hotel operator to the transient. [Accordingly,] there is simply no basis for the imposition of TOTliability on the OTC.” (Op.at 18.) Til. THE CITY’S PETITION SHOULD BE DENIED BECAUSE NO GROUNDSFOR REVIEW EXIST IN THIS CASE. California Rule of Court 8.500(b) sets forth the limited grounds under which this Court may review a decision of a Court of Appeal: The Supreme Court may order review of a Court of Appeal decision: (1) Whennecessary to secure uniformity of decision orto settle an important question of law; (2) When the Court of Appeal lacked jurisdiction; (3) When the Court of Appeal decision lacked the concurrenceofsufficient qualified justices; or, (4) For the purpose of transferring the matter to the Court of Appeal for such proceedings as the Supreme Court may order. Cal. R. Ct. 8.500(b). “The petition must explain how the case presents a ground for review underrule 8.500(b).” Cal. R. Ct. 8.504(b)(2). 13 The City argues review should be granted as to “important questions of law,” because (i) “the TOT question presents a uniform issue of statewide importance,” and (ii) the Court of Appeal’s decision will “automatically constitute ‘law of the case’ as to the other coordinated actions.” (Pet. at 4, 5-6.) In so doing, the City seeks to manufacture grounds for review where none exist. Instead, each of the City’s purported issues presented underscoresthat its Petition is merely a continuation of its effort to impose tax in a mannercontrary to its Ordinance’s express terms. A. The Court Of Appeal’s Plain Meaning Construction Of The City’s Transient Occupancy Tax Ordinance Does Not Provide A Ground For Review. As shownabove, the Opinion adheres to the plain meaning of the terms of San Diego’s Ordinance. This plain meaning construction of the City’s Ordinance adheresto the rules governing statutory construction set forth by this Court in Lungren, Agnew, and Pioneer Express. (Supra at 12.) Asthe Court of Appeal held, this plain meaning constructionis fatal to the City’s tax claims.’ San Diego’s arguments otherwise simply rehash the merits arguments the Court considered and correctly rejected. And nonejustifies review by this Court. People v. Davis, 147 Cal. 346, 348 (1905)(holding that mereerroris insufficient to warrant review by this Court). 1. The Court Correctly Construed the Phrase “Rent Charged By The Operator” To Include Only Amounts Charged By The Hotel Operator For The Room Rental. ’ The rules governing statutory construction further mandatethat any doubts as to the meaning oftax statute “are construed most strongly against the government, and in favorofthe citizen.” (Op. at 7, quoting Pioneer Express, 208 Cal. at 687.) Thus, even if the City had proffered a contrary construction of its Ordinance that is reasonable(it did not), then,at best, this contrary construction would result in an ambiguity that must be resolved in the OTCs’ favor, thereby still defeating the City’s tax claims. 14 66The City argues the Court erred by reasoningthat “‘rent’ charged’ means‘rent received’ by hotels.” (Pet. at 23.) Of course, this argument ignores the key limiting language of the Ordinance, which only taxes the “Rent charged by the Operator.” Ord. at § 35.0103. In any event, the City misstates the Court of Appeal’s (and the trial court’s) construction. As the Court explained, “The hotels are not giving away the rooms for free. They are charging transients to occupy their hotel rooms.” (Op.at 10 n.10 (emphasis in original).) And further, “As the City admits, the hotel operators contractually allow the OTCsto collect the rent that the hotels charge for occupancy.” (/d. at 15 n.12.) “Whetherthat rent is charged directly by the hotel or indirectly through a third party — the OTC its numeric value does not change.” (/d. at 17.) Thus, the Court applied the plain meaning of the term “Rent charged by the Operator,” and concluded that in a merchant modeltransaction, the hotel charges the rent, which is collected by the OTC. (Ud. at 16-17.) Relatedly, the City argues the Court’s construction is erroneous because the customer cannot obtain the right to occupancy unless he pays the OTCs’ margin and service fees, and therefore the amounts charged by OTCsfor the services must be deemed “‘rent charged’ by the hotel” and included in the tax base. (Pet. at 24-25.) The Court of Appealalso correctly rejected this argument. To start, it is not true that customers must pay an OTCs’ margin and service fees in order to book a hotel room reservation. (See Pet. at 7.) Customers can always avoid an OTC’sfee by booking directly with the hotel, instead of using the OTC’s online services. In any event, it does not changethe result here. For a reservation booked through an OTC,“the Rent charged by the Operator”is the rate 15 charged by the hotel for “Occupancy,”i.e., for the “use or possession, or the right to the use or possession, of any room ... in any Hotel.” Ord. § 35.0102. The total amount charged by the “Operator”“for the privilege of Occupancy in any Hotel”is not the total amount paid by the Transient to anyone for anything, but rather is the amount charged by the hotel Operatoritself for “use or possession,or the right to the use or possession” of a room. Id. § 35.0103. The Ordinance’s express terms do not impose tax on the additional amount an OTC charges the customer andretains as compensation for its online facilitation services and the Court of Appeal correctly held as much: The provisions that actually impose the tax specifically limit the tax base to “Rent Charged by the Operator.” (§§ 35.0103, 35.0104; 35.0105; 35.0106; 35.0108.) The OTC service charges are not “charged by the Operator.” They are charged by the OTC. Therefore, those charges are not taxed .... (Op.at 14.) The City claims the margin collected and retained by the OTCsfor their online service can be deemed “Rent charged by the Operator”ofthe hotel because by contract, hotels will not allow OTCsto offer rooms for less than the hotel’s own best available price. (Pet. at 26-27.) The City misstates the uncontroverted evidenceassetforth in thehearing officer’s factual findings: As the hearing officer found, through their websites, the OTCsoffer available hotel roomsto the publicat the retail price,” which is set by the OTCsandis “greater than the wholesale price.” (JA4:199.) The contracts merely set a floor, but the OTCs generally can charge what they want for their margin, and any parity with the rates offered by the hotels is a result of market forces, not the hotel contracts. (JA1:199.) Moreover,to the extent hotel-OTC contracts contain a rate parity provision, such a contractual provision does not transform amounts charged 16 by OTCsinto amounts charged for Occupancy by the “Operator” of the hotel. Only the Operator possesses the physical space to be occupied, and thus only the rate charged by the Operator is the amount charged for Occupancy and subject to tax. The margin and service fee charged by the OTCsfor their services simply is not “Rent charged by the Operator” for Occupancy. Finally, the City brushes overthe fact that the OTCsalso charge service fees that are set entirely by the OTC. (See Pet. at 9; JA4:200.) Not even the City argues the hotel sets the amount of the OTCs’service fees. This concessionis fatal; if the City really believed that the reason it can tax the “retail rate” is because that rate is set by the hotel, the City would not also be seeking tax on the OTCs’service fees, which the hotel undisputedly does notset. 2. The City’s Effort To Evade The Ordinance’s Express Terms Through Reliance On Supposed General “Agency Principles” Does Not Give Rise To An “Important Question Of Law.” The City asserts the Court of Appeal erred in rejecting the City’s arguments that even if the OTCs cannotbe held liable for TOT underthe terms of the Ordinance, they can nonetheless be liable as “agents” (or “rental agents”) of the hotels. (See Pet. at 27-28.) Again, this argument fails to give rise to an “important question of law.” The Court of Appeal correctly adhered to the Ordinance’s plain terms, which limit the tax base to the “Rent charged by the Operator”: Wefind that we need not address the OTCs’ potentialliability for TOT underthe various labels listed by the City. Even if the OTCs wereliable for TOT underany of these labels, they would only be liable for TOT on the rent charged by the operator — not on the fees that the OTCs themselves charge. (Op.at 17.) 17 The City’s attempt to recast the OTCsas “rental agents” does not changethe definition of “Rent” or the amount taxed. Thus, the argument provides nobasis for review by this Court. 3. This Court Should Not Grant Review For The Purpose Of RelievingThe City From The Obligations Imposed Upon It By The California Constitution Pursuant To Proposition 218 The City complains that review is warranted so it and other California cities can avoid the “difficult and costly” process of submitting to the voters amendmentsto their ordinances aimed at reaching new taxpayers, as required by Proposition 218. This complaintis self-refuting; evasion of Proposition 218’s requirements is not a basis for review by this Court. By that Proposition, the California Constitution was amendedto prohibit a local government from “impos[ing], extend[ing] or increas[ing] any general tax unless and until that tax is submitted to the electorate and approved by a majority vote.” Cal. Const. art. XIII C, § 2. “In general, the intent of Proposition 218 [was] to ensure that all taxes ... are subject to voter approval.” Legis. Analyst’s Office, Understanding Proposition 218, ch. 1. (‘LAO Analysis’’). In approving Proposition 218, the voters declared that local governments have subjected taxpayers to excessive tax, assessment, ... increases that ... frustrate the purposes of voter approvalfor tax increases [in Proposition 13].... This measure protects taxpayers by limiting the methods by whichlocal governments exact revenue from taxpayers without their consent. State of California, Ballot Pamphlet, Gen. Elec. (1996) text of Prop. 218, § 2; reprinted as Historical Notes, 2A West’s Ann. Cal. Const. (2006 supp.) foll. art. XIII C, § 1, at p. 73. The local “general purpose”taxes that 18 Proposition 218 was intended to curtail include “most notably ... hotel, business license, and utility user taxes.””» LAO Analysis, supra, ch. 1. Throughits new, expanded constructions, the City seeks to “impose” and “increase”its tax to apply to new and different entities and revenue amounts. After years of collecting the TOT only on the “Rent charged by the Operator” for “Occupancy,” the City now reinterprets its Ordinance to expand those express terms to capture new revenue — the amount OTCs charge a customerandretain as compensation for their online services. This reinterpretation would “impose”or “increase”the tax by applyingit to additional businesses anda “larger tax base” of revenues. However, instead of submitting to the voters amendmentstoits Ordinance to cover OTCsandotherthird party intermediaries, the City asks this Court to accept review andrelieveit from the “difficult and costly process of amending”its Ordinance as required by the California Constitution. (Pet. at 21.) This motivation for seeking review by this Court is made even moreclear by the California League of Cities’ amicusbrief, whichsaysthat if the Court of Appeal decision holding OTCs do not owe the TOT“is correct, it is no answerto say that cities and counties may simply amendtheir ordinances ...” because Proposition 218 and other amendments impose “difficult” requirements for expanding taxes. In other words, the cities would have this Court overturn a correct decision so that they may circumventthe voter approval that Proposition 218 was specifically intended to ensure. 19 Compliance with the California Constitution may be burdensome, but the voters of California expressly imposed this burden on California’s local governments because they were frustrated by “the methods by which local governments exact revenue from taxpayers without their consent.” State of California, Ballot Pamphlet, Gen. Elec. (1996) text of Prop. 218, § 2; reprinted as Historical Notes, 2A West’s Ann. Cal. Const. (2006 supp.) foll. art. XIII C, § 1, at p. 73. This Court should decline the City’s request to “impose, extend and increase” the TOT through judicial activism rather than voter approval. B. Cases Nationwide Are In Accord With The Court Of Appeal’s Opinion. Having conceded the Court’s ruling is “consistent” with relevant California authority (Pet. at 15), the City asserts review is appropriate because the “TOT issue”is of “national importance.” (Ud. at 32.) However, the City does not and cannot show thatthe fact that other state courts are considering the OTCs’liability for tax under their own particular local hotel ordinances meansthat review ofthis case involving San Diego’s Ordinance would settle an “important question of law.” Further, while the City asserts the issue is “being litigated in cases across the country,”it is able to cite to only a handful of cases in which tax obligations actually were imposed on OTCs. That is because the courts nationwide that have examined whether the OTCsare subject to liability under a TOTstatute or ordinancethat limitsliability to hotels, hotel “operators” or hotel “vendors,” have overwhelmingly concludedthat the OTCsare notliable for hotel taxes because they do not “operate” hotels. See, e.g., City ofColumbus v. Hotels.com, L.P., 693 F.3d 642, 649 (6th Cir. 2012) (OTCsdo not “perform the functions of an operator or proprietor’’); 20 Pitt County v. Hotels.com, L.P., 553 F.3d 308, 313 (4th Cir. 2009) (OTCs “are not operators of the hotels whose roomsthey offer to the public on the internet”).2 Other courts have similarly ruled the OTCsare notliable for tax because they lack “sufficient control of the property to be entitled to grant possessoryor use rights” and “do not grant possessory oruserights in hotel properties ownedor operated by third-party hoteliers.” Alachua Cnty. v. Expedia, Inc., 110 So. 3d 941, 946 (Fla. Dist. Ct. App. 2013); City of Houston v. Hotels.com, L.P., 357 8.W.3d 706, 714-15 (Tex. App. 2011) (OTCs, unlike hotels, do “not have rooms or occupancy”as evencity conceded “the OTCs do not havethe right to use or possess hotel rooms”); City ofBirmingham v. Orbitz, LLC, 93 So. 2d 932, 935-36 (Ala. 2012) (upholdingtrial court’s ruling that “the [OTCs] are not engaged in the business of renting or furnishing any room or roomsin any hotel”); S¢. Louis Cnty. v. Prestige Travel, Inc., 344 §.W.3d 708, 714 (Mo. 2011) (OTCs “not liable” because they do “not provide sleeping rooms”); Louisville/Jefferson County Metro. Gov’t v. Hotels.com, L.P., 590 F.3d 381 (6th Cir. 2009) (“[T]he [OTCs] in the present case do not physically control or furnish the rooms they advertise.”’). Simply, the weight of authority is overwhelmingly in favor of the OTCs, not the taxing authorities. However, in every case, it is the express 8 See also Bowling Green v. Hotels.com, L.P., 357 S.W.3d 531, 533 (Ky.Ct. App. 2011) (“The OTCsd[o] not provide physical accommodations....”); City ofGoodlettsville v. Priceline.com Inc., 844 F. Supp. 2d 897, 902 (M.D. Tenn. 2012) (“The OTCs ... do not physically provide possession of any hotel rooms to consumers; and they do not assign the particular room in which a consumer may stay for a given booking.”’); City ofOrange, TX v. Hotels.com, L.P., 1:06-CV-00413, 2007 WL 2787985, at *6 (E.D. Tex. Sept. 21, 2007) (OTCs are “web-based providers,[] not buildings in which a member or membersofthe public may,for consideration, obtain sleeping accommodations.”). 21 terms of the TOTstatute or ordinanceat issue that is controlling. Thus, while the TOT “issue” may be important in various jurisdictions throughout the nation, that is not a reason for this Court to review the Court of Appeal’s decision as to San Diego’s TOT Ordinance. In citing to a handful of cases, the City makes no attempt to establish how or whythoserulings are relevant to resolving the issue of statutory construction presented here. Indeed, the City concedes the express terms of the ordinancesat issue in those cases are “different from thoseat issue here.” (Pet. at 33.) None ofthe cases cited by the City involved ordinances that include the “operator” limitation, and thus, none is relevant to, much less informative of, how to construe the phrase “Rent charged by the Operator”at issue here. While other jurisdictions may have enacted ordinances that impose tax on “the bargain struck” by the customer or otherwise on the total amount paid by the customer, the City did not. Rather, as held by the Court below,“[t]he provisions that actually impose the tax limit the tax base to ‘Rent charged by the Operator.’” (Op. at 14.) The City nevertheless asserts the “logic” reflected in those ordinances should be imported into its own Ordinance to impose tax on the total amount a customerpays. (Pet. at 33.) But the City cannot impose tax by proxy, substituting “logic” from other out-of-state ordinancesin place of the taxing schemereflected by the express terms of the Ordinanceit enacted. As the Court of Appeal madeclear, under California’s long- established rules of statutory construction, the City “must be held to the express terms of”its Ordinance. (Op.at 7.) 22 C. Review Is Not Warranted By The Court Of Appeal’s Citation To The Decisions In The Coordinated Anaheim And Santa Monica Proceedings. Finally, the City argues that this Court should grant review because in responseto the City’s petition for rehearing, the Court of Appeal added footnote 4 to the Opinion, which explained it was permissible to reference two ofits prior decisions in the same coordinated proceedings under the “law of the case” exception to the general rule prohibiting citation to unpublished decisions, Rule of Court 8.1115(a). (Pet. at 35-40.) The City’s arguments fail because (a) the Court of Appealdid noterr in referencing those twoprior decisions, in Anaheim and Santa Monica; (b) as shown above, the Court of Appeal did not apply those decisions to San Diego as binding “law of the case.” Nor does the Court’s inclusion of footnote 4 in a published decision mark a changein law of the case doctrine. Theinclusion of footnote 4 in the Opinion does not merit review bythis Court. First, under the unique circumstances of these coordinated proceedings, the Court of Appeal was permitted to cite to the Anaheim and Santa Monica decisions. In its petition for rehearing, the City had argued. the Court violated Rule 81115(a) by citing the unpublished Anaheim and Santa Monica decisions. (See Pet. at 16-17.) But the City itselfcited and extensively discussed the Anaheim and Santa Monica decisions in its own briefing to the Court ofAppeal (see OTCs’ RJN Exs. 9 & 10), and now (rightly) seems to have dropped the argumentthatthose citations were erroneous. Rather, as San Diego now appears to concede, the Court of Appeal’s reference to the Anaheim and Santa Monica opinions wasconsistent with rules governing coordinated proceedings, which the Court of Appeal cited. 23 (See Op.at 4 n.4 (citing Cal. Civ. Proc. Code §404).) Thoserules specify that coordination is appropriate to “promote the ends ofjustice” where “the common question of fact or law is predominating and significant to the litigation” considering, among otherthings, “the disadvantages of duplicative and inconsistent rulings, orders, or judgments ....” Cal. Civ. Proc. Code § 404.1. It is self-evident that a court cannot avoid inconsistent orders and judgmentsif it is prohibited from referring to its own prior decisions in the same coordinated proceedings.’ The City itself previously recognized the propriety ofciting the Anaheim and Santa Monica decisions in these coordinated proceedings whenit repeatedly cited and discussed them in its own Opening and Reply Briefs submitted to the Court of Appeal. (OTCs’ RJN Ex. 12 (Appellant’s Opening Brief) at 15, 16, 17, 25, 36 and 37; id. Ex. 13 (Appellant’s Reply Briefat 1, 2, 5, 12, 14, 15, 23, 30, 31, 32, 34, 36, 44).'° Indeed,the City ? To the extent the coordination rules — aimed at avoiding inconsistent rulings — could be read as inconsistent with Rule 8.1115(a), the coordination rules prevail. The Code of Civil Procedure authorizes the Judicial Council to “provide by rule the practice and procedure for coordination ofcivil actions in convenient courts,” “[nJotwithstanding any other provision of law.” Cal. Civ. Proc. Code § 404.7. The Judicial Council, in turn, has specified in the California Rules of Court that the rules governing coordinated proceedingsprevail over other inconsistent rules of general applicability. See Cal. R. Ct. 3.504(a) & (b) (these rules “prevail over conflicting general provisions of law. To the extentthat the rules in this chapter conflict with provisions of law applicable to civil actions generally, the rules in this chapter prevail, as provided by Code of Civil Procedure section 404.7”). '° Under the doctrine of invited error, “where a party by his conduct induces the commissionoferror, he is estopped from assertingit as a groundsfor reversal on appeal.” Norgart v. Upjohn Co., 21 Cal. 4th 383, 403 (1999). “The doctrine rests on the purposeofthe principle, which prevents a party from misleading the trial court and then profiting therefrom in the appellate court.” People v. Upshaw, 13 Cal. 3d 29, 34 (1974). The doctrine requires “affirmative conduct demonstrating a deliberate tactical choice on the part of the challenging party.” People v. Majors, 18 Cal. 4th 385, 408-09 (1998). Here, the City strategically chose (cont'd) 24 strategically elected to embrace those decisions, arguing they supported its construction of the TOT Ordinance. (See e.g., OTCs’ RJN Ex. 12 (Appellant’s Brief) at 37.) For example, in its Reply, the City noted the Court of Appeal “correctly and succinctly [stated the rule] in the Anaheim decision” and requested that the Court use the same reasoning and applyit to San Diego. (OTCs’ RJN Ex. 13 (Appellant’s Reply Brief) at 44.) The City cannotinvite the Court of Appeal to rely upon and reacha result consistent with an unpublished decision but then fault the Court whenit accepts that invitation. Equally disingenuousis the City’s argument that the Court of Appeal’s decision to publish the Opinionis a reason for this Court to take review, because San Diegoitselfrequestedpublication. The City argued “this Court’s reasoning and analysis should be published to allow all similarly situated California municipalities to evaluate their TOT ordinances and claims and to advance arguments to this Court based on citable authority.” (OTCs’ RJN Ex. 14 (Appellants’ Pet. for Rehearing & Request for Publication (March 20, 2014)), at 4.) The Court did exactly as the City requested. The City arguesat great length why the procedural postureof this case renders application of the law ofthe case doctrine inappropriate. (Pet. at 35-40) (arguing inter alia that there was no “merger” of the coordinated cases.) This is a red herring. Although the Court of Appeal cited the “law of the case” exemption to the generalrule prohibiting citation of unpublished decision, the analysis in the decision demonstrates the Court of (cont’d from previous page) to cite to theunpublished decisions to bolster its own argument; it cannot now assert citation of those decisions was reversible error. 25 Appealdid notin fact rely on the Anaheim and Santa Monica decisions as binding “law of the case.” Instead, as shown above, the Court of Appeal thoroughly examined the language of San Diego’s own Ordinanceand held that it does not impose TOTobligationsorliability on the OTCs. Here, the Court of Appeal began its opinion by analyzing the Ordinanceindividually, holding that the language of the statute did not impose a tax on the OTCs. (Op. at 2.) The Court then notedthat in some instances, it had applied the same reasoning in the preceding Anaheim and Santa Monica opinions as it was employing in San Diego. For example, as the Court explainedits analysis with respect to the San Diego Ordinance,it described the Anaheim case and the plain meaning of the Anaheim ordinance, and noted “[t]he same logic applies here.... We therefore hold, as we did with the similar Anaheim ordinance, that the OTCs’ service charges and markupsare not within the scope of the City’s ordinance.” (Op. at 9.) Thus, while the Court noted the language and logic in each case was “similar,” it analyzed the San Diego Ordinance on its own terms. The crux of the City’s argument is that many otherjurisdictions have ordinancesthat are similar to San Diego’s. The City’s purported analysis of these provisions is inappropriate for judicial notice, for the reasons set forth in the OTCs’ separately filed Opposition to the City’s Request for Judicial Notice. Further, it shows at most that the ordinances may have one or another similar term, but not that the entire ordinanceis identical. Thereality is that a total of five California jurisdictions have assessed the OTCs for TOT,andthoseare the five jurisdictions that have cases coordinated into this JCCP action (Anaheim, Santa Monica, San Diego, Los Angeles, and San Francisco). About 40 morejurisdictions initiated audits of the OTCs, but those audits have been dormantfor several 26 years. See Priceline Group Form 10-Kfor fiscal year ending December31, 2013, found at http://ir.pricelinegroup.com/secfiling.cfm?filingID= 1075531-14-7&CIK=1075531 (last visited May 21, 2014). This is hardly the parade ofcases the City speculates will be impacted by the Opinion. But assuming the City is correct that many other jurisdictions use the same key language as San Diego, the City has offered no reason to believe the Court of Appeal would blindly apply the doctrine of law of the case to any future appeals presented. To the contrary, the Court of Appeal has in each ofthe three decisionsit has rendered, analyzed the ordinanceat issue on its own terms, whether similar or different from the ordinancesat issue in prior decisions. Similarly unavailing is the City’s argument that review is warranted becauseall future cases may end up with the same appellate panel and may be decided in a similar manner. (See Pet. at 22, 28-29.) Such result is precisely the point of the coordination rules. See Cal. Civ. Proc $404.1, §404.2. By the City’s logic, this Court would be compelled to hear appeals from every JCCP action because by definition they will impact multiple . parties and the result could be the same for each of them. This position is untenable. Underthe unique circumstances presented here, citation to previous appellate decisions in these coordinated proceedings wasnot only permissible but proper. Second, contrary to the City’s contention, the Court did not hold that the decision in one coordinated proceeding is “automatically” “law ofthe case”in other coordinated proceedings. Rather, the Court merely held that underthe circumstances of these coordinated proceedings, it was appropriate to invoke the “law of the case” exception to the genera!rule 27 724448-LACSROIA - MSW prohibiting citation to unpublished decisions. This is a much morelimited holding than the City argues, and does not change the “law of the case” doctrine. However,if this Court were to disagree, the remedy is not review of the merits of the substantive decision. Rather, this Court may deny the petition and order depublication (perhaps only of footnote 4). See Supreme Court of California Internal Operating Practices and Procedures § IV. IV. CONCLUSION For the foregoing reasons, the City’s Petition for Review should be denied. Dated: May 27, 2014 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP % . By: QanawMiolbor (Suite Darrel J. Hieber ™~ Attorneys for Respondents, PRICELINE.COM INC.(n/k/a The Priceline Group Inc.) and TRAVELWEB LLC Dated: May 27, 2014 JONES DAY ey Out Dre Ad eae isn ehrian D. Hers d; Attorneys for Respondents, EXPEDIA,por We INC., HOTWIRE,INC., TRAVELNOW.COM, HOTELS.COM, L.P., and HOTELS.COM GP, LLC 28 Dated: May 27, 2014 Dated: May 27, 2014 McDERMOTT WILL & EMERY LLP By: eteay (QV bh STL IO roy Rossman ’ 2AYk C, Attorneys for Respondents, ORBITZ, pe doe . LLC, TRIP NETWORK,INC. (d/b/a CHEAPTICKETS.COM), and INTERNETWORK PUBLISHING CORP.(d/b/a LODGING.COM) K&L GATES LLP By. Python) A. (dal? [seit Nathaniel S. Currall Attorneys for Respondents, D4Qe TRAVELOCITY.COM LP weeh pew SITES9.COM, LLC 29 CERTIFICATE OF WORD COUNT Pursuant to California Rules of Court, Rule 8.504(d)(1), the attached brief, including footnotes, consists of 8393 words as counted by the Microsoft Word word-processing program used to generate the brief. The brief was typed using Times New Romanproportionally spaced font in 13- point typeface. Dated: May 27, 2014 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP By: Jd hrpuba Stacy R\Horth-Neubert 30 PROOF OF SERVICE I am employedin the county of Los Angeles, State of California. | am overthe age of 18 and not a party to the within action; my business address is 300 South Grand Avenue, Suite 3300, Los Angeles, California 90071. On May27, 2014, I served the foregoing documentdescribedas: ANSWERTO PETITION FOR REVIEW on the interested parties in this action addressed as follows: SEE ATTACHED SERVICE LIST ><] (BY US MAIL) | am readily familiar with the firms' practice for the collection and processing of correspondence for mailing with the United States Postal Service and the fact that the correspondence would be deposited with the United States Postal Service that same day in the ordinary course of business; on this date, the above-referenced correspondence wasplaced for deposit at Los Angeles, California and placed for collection and mailing following ordinary businesspractices. I declare under penalty of perjury under the laws of the State of California that the aboveis true and correct. Executed on May 27, 2014, at Los Angeles, Calj Jon E. Powell Type or Print Name Signature / William L. Larson, Esq. Kiesel, Boucher & Larson, LLP 8648 Wilshire Boulevard Beverly Hills, CA 90211 Tel.: (310) 854-4444 Fax: (310) 854-0812 Email: larson@kbla.com Irving H.Greines, Esq. Cynthia E. Tobisman,Esq. MeehanRasch,Esq. Greines, Martin, Stein & Richland LLP 5900 Wilshire Blvd., 12" Fl. Los Angeles, CA 90036 Tel.: (310) 859-7811 Fax: (310) 276-5261 Email: ctobisman@gmsr.com Laura J. Baughman Thomas M.Sims, Esq. Baron & Budd, PC 1999 Avenueofthe Stars, Suite 3450 Los Angeles, CA 90067 Tel: (310) 860-0476 Fax: (310) 860-0480 Email: lbaughman@baronbudd.com Daniel F. Bamberg Jon E. Taylor City of San Diego Office of the City Attorney 1200 Third Avenue, Suite 1100 San Diego, CA 92101 Tel.: (619) 533-5800 Fax: (619) 533-5856 Counsel for City of San Diego Brian D. Hershman,Esq.Jones Day555 South Flower StreetFiftieth FloorLos Angeles, CA 90071-2300Tel.: (213) 489-3939Fax: (213) 243-2539Email: bhershman@jonesday.com Counsel for Expedia Group Brian S. Stagner, Esq. J. Chad Arnette Kelly Hart & Hallman LLP 201 MainStreet, Suite 2500 Fort Worth, TX 76102 Tel.: (817) 332-2500 Fax.: (817) 878-9280 Email: brian.stagner@khh.com chad.arnette@khh.com Nathaniel S. Currall K&L Gates 1 Park Plaza, 12" Floor Irvine, CA 92614 Email: nathaniel.currall@klgates.com Counsel for Travelocity Group Jeffrey Rossman, Esq. McDermott Will & Emery LLP 227 West MonroeStreet Chicago, IL 60606 Tel.: (312) 372-2000 Fax.: (312) 984-7700 Email:jrossman@mwe.com Counsel for Orbitz Group The Hon. Elihu M. Berle Los Angeles Superior Court Central Civil West Division 600 South Commonwealth Ave., Dept. 323 Los Angeles, CA 90005 California Courts of AppealSecond Appellate District300 S. Spring St.Los Angeles, CA 90013