Resolution calls for FH and 'similarly-situated' cities to press legal action

Ann Knef Sep. 14, 2007, 7:00am

Fairview Heights City Attorney Al Paulson said that a group of aldermen were wrong when they told a reporter they were unaware the city instigated a class action lawsuit against online travel agencies in 2005.

Paulson, whose law firm represents the city in a proposed class action against companies such as Orbitz, and Expedia, said the council in fact passed a resolution authorizing the city to file suit.

Last week three Fairview Heights city council members, Bonnie Crossley, Gil Klein and Pat Baeske, indicated they didn't know the city was being asked to get involved in a class action lawsuit when they were first approached about it by attorney Kevin Hoerner -- Paulson's law partner -- during an executive session meeting of the city council in 2005.

The Fairview Heights City Coucil unanimously passed a resolution on Oct. 4, 2005, directing the city's legal counsel, the law firm of Becker, Paulson, Hoerner & Thompson, P.C., to institute "any necessary legal action on behalf of itself and other similarly-situated Illinois taxing authorities to recover any and all unpaid taxes..."

Among the current councilmen who were in office at the time, Aldermen Carol Warner -- who voted for the resolution -- said she had "zero" comment. Aldermen Roger Lowery, who was not present for the vote, said he would not comment on a matter in litigation. Aldermen Norm Miller and Scott Rich could not be reached for comment.

The term "class action" is not used in the resolution.

The day after the resolution passed, Oct. 5, 2005, a class action suit was filed by Fairview Heights seeking to represent 50 Illinois cities in a claim that online travel agents have cheated on room taxes. The case was first brought in St. Clair County and later removed to federal court.

Crossley, who said "class action" was never mentioned when the matter was first presented to the council, maintained her position in a follow-up interview on Sept. 10.

She said the subject was presented in an executive session meeting sometime in the summer of 2005 as something relatively "benign."

"In no way did we know the lawsuit was a class action suit," Crossley told the Record last week.

Klein told the Record that "class action" was not mentioned until an executive session meeting on May 1 of this year. He said he walked out of the meeting over his objection to the city's role as class action plaintiff.

Baeske said the city council has not been kept informed about the suit.

Defense attorneys have subpoenaed current and former aldermen for discovery purposes, but attorneys for the city filed motions to quash their depositions.

In a court document filed Aug. 6, attorney Richard Burke, plaintiff's co-counsel, wrote that defendants' attempt to depose aldermen was an abuse of the discovery process.

"This is a simple tax case being made unnecessarily complex by the desire of the Defendants never to reach the merits of the claim," Burke wrote.

He wrote that defendants' assertion that plaintiff has "stonewalled" by denying access to discoverable information is "false."

"The Defendants have not been prevented from full and meaningful discovery of all the claims and defenses of the case," Burke wrote.

"They have deposed the Mayor, the City Treasurer, the City Clerk, Assistant City Clerk, Deputy City Clerk, and the City Manager. They have had complete access to all the records of the City relating to the imposition of the Hotel/Motel Tax. Now they claim the 'right' to depose the entire legislative body of the City of Fairview Heights...

"Defendants would have this court completely ignore the voluminous discovery already taken. There is nothing that any of the City Council members could testify to that would have any impact on this litigation.

"Defendants claim that the Aldermen have information 'regarding the circumstances surrounding the passage of the ordinance at issue in this lawsuit.'

"The ordinance 'at issue in this lawsuit' is the Hotel Tax Ordinance...not the ordinance authorizing collection efforts by the City Attorney. The Hotel Taxing Ordinance was enacted in 1985, when none of the subpoenaed Councilmen served in the body...

"The Defendants claim that prior deponents have been unable to 'articulate response to questions which directly relate to the core of their lawsuit' is false.

"The fact that Defendants may be dissatisfied with those answers hardly entitles them to depose others. The 'core of this lawsuit' is not what the City Council may know, candidly, on any subject.

"The 'core of the lawsuit' is on the judicial construction of the taxing ordinance and the fact regarding the of the (sic) business practices of the Defendants that may or may not bring them within the obligation to remit the tax."

On Sept. 11, defendants filed a motion for extension of time to file memorandum in opposition to plaintiff's motion for class certification.

On Sept. 12, U.S. District Judge David Herndon stayed defendants' response to plaintiff's class certification motion pending the court's order on defense motion for extension of time and invited plaintiff to respond "as soon as possible" to defense motion for extension.

On Sept. 13, Burke answered that the city has no objection to an extension.

"...Plaintiff does not waive any objection to Defendant's Motion for Additional Hearing on Motions to Quash and for Other Relief, nor does Plaintiff admit the merit of any claims asserted by Defendants' in their Motion for Extension," he wrote.

More News