Page 1 Slip Copy, 2007 WL 6887932 (N.D.Ga.) · 2019-05-29 · *2 For the above reasons, the Court does not con-sider Exhibits three, five, seven, and eight to De-fendants' Motion

Only the Westlaw citation is currently available.

United States District Court,N.D. Georgia,

Rome Division.CITY OF ROME, GEORGIA; et al., Plaintiffs,

v.HOTELS.COM, LP; et al., Defendants.

Civil Action File No. 4:05-CV-249-HLM.

May 10, 2007.

West KeySummaryInnkeepers 213 4

213 Innkeepers213k4 k. Licenses and Taxes. Most Cited Cases

A city was required to estimate, assess, and attemptto collect excise taxes from taxpayers before itcould proceed with its claim that the taxpayers viol-ated Georgia's Excise Tax Act. The city did not at-tempt to audit or assess the taxpayers because it be-lieved that the taxpayers would not permit the as-sessments or audits, but this belief, without an af-firmative refusal from the taxpayers, was insuffi-cient to allow the city to pursue its hotel excise taxcollection through litigation without exhausting itsadministrative remedies. West's Ga.Code Ann. §48-13-51; O.C.G .A. § 48-13-53.3(b).

Bryan Anthony Vroon, Law Offices of Bryan A.Vroon, LLC, David William Davenport, RobertClaiborne Lamar, Lamar, Archer & Cofrin, John W.Crongeyer, Vroon & Crongeyer, Kevin A. Ross,Kevin A. Ross, LLC, Atlanta, GA, David G. Archer, Office of David G. Archer, Cartersville, GA, JesseAnderson Davis, Robert Maddox Brinson, Brinson,Askew, Berry, Siegler, Richardson & Davis,Omberg House, Rome, GA, John T. Murray, Mur-ray & Murray, Sandusky, OH, Walter James Gor-don, Office of Walter James Gordon, Hartwell, GA,for Plaintiffs.

Deborah S. Sloan, James P. Karen, Robin A.

Schmahl, Jones Day, Dallas, TX, Edward Hine, Jr.,Law Offices of Edward Hine, Jr., Rome, GA, Ed-ward Kendrick Smith, Robin A. Schmahl, SeanPatrick Costello, James P. Karen, Jones Day, At-lanta, GA, Elizabeth B. Herrington, Jeffrey A.Rossman, Joshua G. Hermannam, Lazar P. Raynal,Paul E. Chronis, Purvi G. Patel, McDermott Will &Emery-Chicago, David J. Stagman, Katten MuchinRosenman, LLP, Chicago, IL, Celso M. Gonzalez-Falla, Skadden, Arps, Slate, Meagher & Flom,LLP-TX, Houston, TX, Karen L. Valihura, MichaelA. Barlow, Ralph K. Herndon, Sr., Skadden ArpsSlate Meagher & Flom-De, Wilmington, DE, DavidF. McDowell, Morrison & Foerster, Los Angeles,CA, Marcus G. Mungioli, Kelly Hart & Hallman,LP, Fort Worth, TX, for Defendants.

ORDER

HAROLD L. MURPHY, District Judge.

*1 This case is before the Court on Defendants'Motion for Summary Judgment Based on Plaintiffs'Failure to Exhaust Administrative Procedures[181], and Plaintiffs' Notice of Objection to, or inthe Alternative, Motion to Strike, the Affidavit andTestimony of J. Bryan Whitford [197].

I. Background

The Court adopts the lengthy background set forthin its Order of May 9, 2006. (Order of May 9,2006.) Additionally, the Court observes that, whendeciding a motion for summary judgment, the Courtmust view the evidence and all factual inferences inthe light most favorable to the party opposing themotion, the Court provides the following statementof facts. Harris v. Coweta County, Ga., 433 F.3d807, 811 (11th Cir.2005), rev'd on other grounds,550 U.S. 372, 127 S.Ct. 1769, 167 L.Ed.2d 686,2007 WL 1237851 (U.S. Apr. 30, 2007). This state-ment does not represent actual findings of fact.

Page 1Slip Copy, 2007 WL 6887932 (N.D.Ga.)(Cite as: 2007 WL 6887932 (N.D.Ga.))

© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.

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Jones v. Am. Gen. Life Ins. Co., 370 F.3d 1065,1069 n. 1 (11th Cir.2004) (citing Wooden v. Bd. ofRegents of Univ. Sys. of Ga., 247 F.3d 1262, 1271n. 9 (11th Cir.2001)). Instead, the Court hasprovided the statement simply to place the Court'slegal analysis in the context of this particular caseor controversy.

A. Material Facts

As an initial matter, for the reasons stated below,the Court does not consider Exhibits three, five,seven and eight to Defendants' Motion for Sum-mary Judgment in this Order. The Court observes,however, that the Court's consideration of those Ex-hibits would not change the outcome of this Order.

First, the Court does not consider Exhibits threeand five, the excise t ax ordinances of PlaintiffsCity of Cedartown and City of Alpharetta, respect-ively. The Court observes that the excise tax ordin-ance of Plaintiff City of Cedartown, Exhibit three,appears to be out of order, and that Plaintiff City ofAlpharetta's ordinance, Exhibit five, is incompletedue to a missing portion of text along the right-hand margin of each page. (Defs.' Mot. Summ. J.Exs. 3, 5 .) The Court therefore does not considerExhibits three and five in this Order.

Second, the Court does not consider Exhibit seven,the Georgia Department of Revenue Letter Ruling,dated April 13, 2004. The issue raised by Defend-ants' Motion is whether Plaintiffs must exhaust allavailable administrative remedies before filing suitfor allegedly owed excise taxes. The Court ob-serves that Exhibit seven does not discuss the aboveissue, but rather interprets the Excise Tax Act withregard to a specific set of facts presented to the De-partment of Revenue by an attorney from the lawfirm of Jones Day. Additionally, the Court observesthat the parties have not yet participated in fact dis-covery and the Court cannot simply assume that thefacts presented to the Georgia Department of Rev-enue and set forth in Exhibit seven are the samefacts governing this case.

Third, the Court does not consider Exhibit eight,the Affidavit of J. Bryan Whitford, dated October31, 2006. Like Exhibit seven, Exhibit eight does notaddress the issue raised by Defendants in the instantMotion for Summary Judgment-whether Plaintiffsmust exhaust all available administrative remediesprior to filing suit for allegedly owed excise taxes.Rather, Exhibit eight also addresses the applicabil-ity of the Excise Tax Act to Internet companies andassumes a certain set of facts not clearly present inthis case.

*2 For the above reasons, the Court does not con-sider Exhibits three, five, seven, and eight to De-fendants' Motion for Summary Judgment in this Or-der. The Court next examines the relevant evidencesubmitted by the parties regarding the instant Mo-tion for Summary Judgment.

1. Plaintiffs' Admissions

Plaintiffs admit that they have audit powers forhotel excise tax collection, as established by statuteand ordinance. (Defs.' Statement of Material Facts(“DSMF”) ¶ 10; Pls.' Resp. to Defs.' Statement ofMaterial Facts (“PRSMF”) ¶ 10.) Plaintiffs also ad-mit that they did not request or conduct an audit ormake an assessment of any Defendant before filingthis lawsuit. (DSMF ¶¶ 10, 13, 15; PRSMF ¶¶ 10,13, 15.) Plaintiffs, however, contend that such anaudit is not feasible and would be futile. (PRSMF ¶10.)

2. Plaintiffs' Interrogatory Responses

In response to Defendants' First Set of Interrogator-ies numbers three and ten, referenced by the partieswith regard to the instant Motion for SummaryJudgment, Plaintiffs responded as follows:

Interrogatory No. 3

Please identify all assessment notices, deficiencynotices, audit requests, audit findings, demands










for payments, certificates of authority or othersimilar documents sent by any of the Plaintiffs toany of the Defendants prior to November 18,2005, which relate to alleged liability for and/orunder-remittances of Hotel Excise Taxes.

Response to No. 3

None.

Interrogatory No. 10

Please describe the arrangements Plaintiffs havemade with the attorneys and law firms that havemade appearances on behalf of Plaintiffs in thisLawsuit regarding the manner and amounts ofcompensation such attorneys will receive as con-sideration for their services relating to this Law-suit.

Response to No. 10

Plaintiffs object to this request to the extent itseeks communications, information, and materialprotected by the attorney-client privilege andwork product doctrine. Notwithstanding this ob-jection and the general objection stated above,the compensation to Plaintiffs' counsel will bedetermined by the Court in accordance with thelaw of the Eleventh Circuit applicable to class ac-tions.(DSMF ¶ 16; PRSMF ¶ 16; Defs.' Mot. Summ. J.Ex. 2 Interrogs. Nos. 3, 10.)

3. Excise Tax Ordinances

Plaintiff City of Rockmart enacted the followingOrdinance, in relevant part, regarding excise taxes:

Section 19-61: Definitions.

The following words, terms, and phrases shall,for the purposes of this Chapter and except wherethe context clearly indicates a different meaning,

be defined as follows:

(a) “Person.” An individual, firm, partnership,joint venture, association, social club, fraternalorganization, joint stock company, corporation,nonprofit corporation or cooperative nonprofitmembership, estate, trust, business trust, receiver,trustee, syndicate, or any other ground or com-bination acting as a unit the plural as well as thesingular number, excepting the United States ofAmerica, the State of Georgia, and any of theirpolitical subdivisions upon which the City iswithout power to impose the tax herein provided.

*3 (b) “Operator.” Any person operating amotel in the city of Rockmart, Georgia, includ-ing, but not limited to, the owner or proprietor ofsuch premises, the lessee, sublessee, lender inpossession, licensee, or any other person other-wise operating such motel.

(c) “Occupant” or “Guest.” Any person who,for consideration, uses, possesses, or has the rightto use or possess any room in a motel under anylease, concession, permit, right of access, licenseto use, or other agreement, or otherwise.

(d) “Occupancy.” The use of possession of thefurnishings or to the services and accommoda-tions accompanying the use and possession of theroom.

(e) “Motel.” Any structure or any portion of astructure, including any motel, lodging house,rooming house, dormitory, hotel, motor hotel,auto court, inn, bed and breakfast inn, publicclub, or private club, containing guest rooms andwhich is occupied, or is intended or designatedfor occupancy by guests, whether rent is paid inmoney, goods, labor, or otherwise....

(f) “Guest Room.” A room occupied, or inten-ded, arranged, or designed for occupancy, by oneor more occupants in a motel for the temporarypurposes of living quarters or residential use.

(g) “Rent.” The consideration received for oc-



cupancy, valued in money, whether received inmoney or otherwise, including all receipts, cash,credits, and property or service of any kind ornature, and also the amount for which credit is al-lowed by the operator to the occupant, withoutany deduction therefrom whatsoever.

(h) “Clerk.” The Clerk of the City Counsel ofthe City of Rockmart.

(j) “Return.” Any return filed or required to befiled as herein provided.

(k) “Tax.” The tax imposed by this Chapter.

(I) “Quarterly Period.” A period of three calen-dar months.

(m) “Due date.” The twentieth day after the endof the quarterly period for which tax is to becomputed.

Section 19-62: Imposition and Rate of Tax.

(a) There is hereby levied and imposed, andthere shall be paid to the Clerk of the City a taxof three (3%) percent of the rent for every occu-pancy of a guest room in a motel in the City.

...

Section 19-65: Registration of Operator.

(a) Every person engaging or about to engagein business as an operator of a motel in this Cityshall immediately register with the Clerk of theCity Council on a form provided by said Clerk.Persons engaging in such business must so re-gister not later than fifteen (15) days after thedate this Chapter becomes effective, but suchprivilege of registration after the imposition ofsuch tax shall not relieve any person from the ob-ligation of payment or collection of tax on andafter the date of imposition of payment or collec-tion of tax on and after the date of imposition

thereof....

...

Section 19-68: Returns and Time of Filing: Remit-tance of Tax.

(a) On or before the twentieth day of the monthfollowing each quarterly period, a return for thepreceding month period shall be filed with theClerk in such form as the Clerk may prescribe, byevery operator liable for the payment of tax here-under.

*4 (b) All returns shall show the gross rent, ex-empt rent, tax able rent, amount of tax collectedor otherwise due for the quarterly period forwhich filed, and such other information as maybe required by the Clerk, and shall be accompan-ied when filed by remittance of the net amount oftax due.

...

Section 19-70: Deficiency Determinations.

(a) Recomputation of Tax: Authority to Make:Basis of Recomputation. If the Clerk is not satis-fied with the return or returns of the tax or theamount of the tax required to be paid to the Cityby any operator, he or she may compute and de-termine the amount required to be paid upon thebasis of any information which is or may comeinto his or her possession. One or more than oneDeficiency Determination may be made of theamount due for one, or more than one, quarterlyperiod.

(b) Interest on Deficiency. The amount of theunpaid tax found to be due shall bear interest atthe rate of three-fourths (3/4) of one percent permonth from and after the twentieth day of themonth following the quarterly period for whichthe amount should have been returned until the



date of payment of such tax and interest.

...

(d) Notice of Determination; Service of. TheClerk or any other agent of the City shall give tothe operator written notice of any determinationof deficiency. The notice may be served person-ally or by mail, or both ....

(e) Time Within Which Notice of DeficiencyDetermination to be Mailed. Except in the case ofa failure to make a return, every notice of a defi-ciency determination shall be mailed within one(1) year after the twentieth day of the calendarmonth following the quarterly period for whichthe amount is proposed to be determined, or with-in one (1) year after the return is filed, whicheverperiod shall last expire.

Section 19-71: Determination if No Return Made.

(a) Estimate of Gross Receipt. If any operatorfails to make a return, the Clerk shall make an es-timate of the amount of the gross receipts of theoperator or, as the case may be, of the amount ofthe total rentals in this City which are subject tothe tax. The estimate shall be made for the periodor periods during which the person failed to makethe return and shall be based upon any informa-tion which is or may come into the possession ofthe Clerk. Upon the basis of this estimate, theClerk shall compute and determine the amountrequired to be paid the City, adding to the sumthis [sic] determined a penalty equal to fifteen(15%) percent thereof. One or more determina-tion may be made of the amount due for one ormore than one quarterly period.

...

(c) Interest on Amount Found Due. The amountof the unpaid tax found to be due shall bear in-terest at the rate of three-fourths of one percent

per month from and after the twentieth day of themonth following the quarterly period for whichthe amount should have been returned until thedate of payment of such tax, penalties, and in-terest.

*5 (d) Notice of Determination: Service of.Promptly after making [t]his determination, ser-vice of this notice shall be either by personal ser-vice or by mail, at the operator's address as it ap-pears in the records of the Clerk.

Section 19-72: Collection of Tax and Enforcement.

(a) Action for Tax: Time for. When it is determ-ined by a return filed, or by the Clerk havingmade a determination under the provisions of §19-71 of this Chapter, that tax is due and payableto the City of Rockmart under the provisions ofthis Chapter, the City Manager may at any timewithin three (3) years after determination thatsuch tax is due and payable bring an action in thecourt of this State, or any other state, or of theUnited States in the name of the City to collectthe amount of tax payable to the City togetherwith interest thereon and penalties, court costs,attorney's fees, and other legal fees incidents [sic]thereto. The bringing of such an action shall notbe a prerequisite for the issuance of a Fi.Fa. un-der the provisions of subparagraph (d) hereof.

...

(d) Issuance of Fi.Fa. Taxes payable on rentalfees for guest rooms hereunder shall constitute alien against the real property on which the hotelor motel is located. The Clerk is hereby author-ized to issue a Fi.Fa. for execution and levy tosatisfy the amount of any tax, penalty or interestdue but not paid under the provisions of thisChapter, whether as a result of a deficiency de-termination, failure to file returns, or any otherreasons.



Section 19-73: Administration of Chapter.

(a) Authority of the Clerk. The Clerk, under su-pervision of the City Manager, shall administerand enforce the provisions of this Chapter for thelevy and collection of the tax imposed by thisChapter.

...

(c) Examination of Records: Audits. The Clerkor any person authorized in writing by the City,may enter on the hotel/motel premises and exam-ine the books, papers, records, financial reports,equipment, and other facilities of any operator inorder to verify the accuracy of any return made,or if no return in made by the operator, to ascer-tain and determine the amount of tax required tobe paid.

(e) Authority to Require Reports: Contents. Inadministration of the provisions of this Chapter,the Clerk may require the filing of the report byany person or class of persons having in theirpossession or custody information relating torentals of guest rooms which are subject to thetax. The reports shall be filed with the Clerkwhen required by the Clerk and shall set forth therental charged for each occupancy, the date ordates of occupancy, and such other informationas the Clerk may require.

(f) Limitation on Disclosure of Business of Op-erators, etc. The Clerk or any person having anadministrative duty under this Chapter shall notmake known in any manner the business affairs,operations, or information obtained by an audit ofbooks, papers, records, financial reports, equip-ment and other facilities of any operator or anyother person visited or examined in the dischargeof official duty, or the amount or source of in-come, profits, losses, expenditures, or any partic-ular thereof, set forth or disclosed in any return,or permit any return or copy thereof to be seen orexamined by any person not having such admin-

istrative duty under this Chapter, except in caseof Judicial proceedings or other proceedings ne-cessary to collect tax hereby levied and assessed,or as required by the Georgia Open Records Act,O.C.GA § 50-18-70, et. seq., or any other laws ofthis State or United States. Successors, receivers,trustees, executors, administrators, assignees, andgrantors, if directly interested, may be given in-formation as to the items included in the measureand amount of unpaid tax or amounts of tax, in-terest and penalties required to be collected. Ifthe City or its agents are required to disclose anysuch information described in this paragraph pur-suant to Court Order or the Open Records Act ofany similar such legal compulsion, the City shallnot be liable to any operator or other person fordamages claimed to have arisen due to such dis-closure.

...

Section 19-75: Violation: Fines and Punishment.

*6 (a) Any person violating any of the provi-sions of this Chapter shall be deemed guilty of anoffense and upon conviction thereof shall be pun-ished as provided in Section 1-8 of the Code ofthe City of Rockmart. Each person shall be guiltyof a separate offense for each and every day orportion thereof during which any violation of anyprovision of this Chapter is committed, contin-ued, or permitted by such person, and shall bepunished accordingly.

(b) It shall be unlawful and a violation of thisCode Section for any operator or other person tofail to register as required herein, or [to fail] tofurnish any return required to be made, or to failor refuse to furnish a supplemental return or otherdate required by the Clerk, or to render a false orfraudulent return. It shall also be unlawful and aviolation of this Code Section for any person whois required to make, render, sign, or verify any re-port to make any false or fraudulent report, with




intent to defeat or evade the determination of anamount due required by this Chapter to be made.Anyone who violates the provision of thisChapter shall be deemed guilty of an offense andupon convictions thereof shall be punished asaforesaid.

Section 3: Effective Date.

This Chapter shall become effective and be inforce from and after the 1st day of October, 1999.

...

(Defs.' Mot. Summ. J. Ex. 4 (emphasis in original).)

Plaintiff City of Cartersviile enacted the followingOrdinance, in relevant part, regarding excise taxes:

Sec. 10-41. Definitions.

The following words, terms and phrases, whenused in this article, shall have the meaningsascribed to them in this section, except where thecontext clearly indicates a different meaning:

...

Guest room means a room occupied or inten-ded, arranged, or designed for occupancy, by one(1) or more occupants for the purpose of livingquarters or residential use.

Hotel or motel means any structure or any por-tion of a structure, including any lodginghouse,roominghouse, dormitory, Turkish bath, bachelorhotel, studio hotel, motor hotel, auto court, inn,public club, or private club, containing guestrooms and occupied, or intended or designed foroccupancy, by guests, whether rent is paid inmoney, goods, labor, or otherwise ....

...

Occupancy means the use or possession, or theright to use or possession, of any room, space, orapartment in a hotel, motel, or travel trailer part,and the right to the use or possession of the fur-nishings or to the services and accommodationsaccompanying the use and possession of the roomor travel trailer space.

Occupant means any person who for a consid-eration uses, possesses, or has the right to use orpossess any room or travel trailer space in ahotel, motel, or travel trailer park under anylease, concession, permit, right of access, licenseto use or other agreement, or otherwise.

Operator means any person operating a hotel,motel or travel trailer park in the city, including,but not limited to, the owner, proprietor, lessee,sublessee, lender in possession, licensee, or anyother person otherwise operating such hotel ortravel trailer park.

...

*7 Person means an individual, firm, partner-ship, joint venture, association, social club,fraternal organization, joint stock company, cor-poration, nonprofit corporation or cooperativenonprofit membership, estate, trust, businesstrust, receiver, trustee, syndicate, or any othergroup or combination acting as a unit, the pluralas well as the singular number, excepting theUnited States of America, the state, and anypolitical subdivision of either thereof upon whichthe city is without power to impose the taxprovided for in this article.

Rent means the consideration received for oc-cupancy, valued in money whether received inmoney or otherwise, including all receipts, cash,credits, and property or services of any kind ornature, and also the amount for which credit is al-lowed by the operator to the occupant, withoutany deduction therefrom whatsoever.

Return means any return filed or required to be



filed as provided in this article.

Tax means tax imposed by this article.

...

Sec. 10-42. Intent.

The intent of this article is to impose a tax pur-suant to authority granted by the general as-sembly of this state ....

Sec. 10-43. Imposition and rate of tax.

(a) There shall be paid a tax of five (5) percentfor the rent for every occupancy of a guest roomin a hotel or motel, or occupancy of accommoda-tions for value including, but not limited to,travel trailer spaces in the city. The tax imposedby this article shall be paid upon any occupancyon and after December 1, 1999, although such oc-cupancy is had pursuant to a contract, lease orother arrangement made prior to such date.

...

Sec. 10-44 Collection of tax by operator.

Every operator maintaining a place of businessin this city and renting guest rooms or travel trail-er space in this city, not exempted, shall collect atax of five (5) percent on the amount of rent fromthe occupant.

...

Sec. 10-46. Registration of operator; certificationof authority .

Every person engaging or about to engage inbusiness as an operator of a hotel, motel, or traveltrailer park in this city shall immediately registerwith the city clerk on a form provided by the city

clerk. Such registration shall set forth the nameunder which such person transacts business or in-tends to transact business, the location of hisplace or places of business, and such other in-formation which would facilitate the collection ofthe tax as the city clerk may require. The registra-tion shall be signed by the owner if a natural per-son; in case of ownership by an association orpartnership, by a member or partner; and in caseof ownership by a corporation, by an officer. Thecity clerk shall, after such registration, issuewithout charge a certificate of authority to eachoperator to collect the tax from the occupant. Aseparate registration shall be required for eachplace of business of an operator. Each certificateshall state the name and location of the businessto which it is applicable.

Sec. 10-47. Determination, returns and pay-ments.

*8 (a) Due date of taxes. The tax imposed inthis article shall be due and payable to the citymonthly on the twentieth day of the month nextsucceeding the monthly period in which it ac-crued.

(b) Return; time of filing; persons required tofile contents. On or before the twentieth day ofeach month, a return for the preceding monthlyperiod shall be filed with the city clerk showingthe gross rent, rent from permanent residents, taxable rent, amount of tax collected or otherwisedue, and such other information as may be re-quired by the city clerk.

...

Sec. 10-48. Deficiency determinations.

(a) Recomputation of tax; authority to makebasis of recomputation. If the city clerk is not sat-isfied with the return filed by any person pursu-ant to this article, he may compute and determine



the amount required to be paid upon the basis ofany information available to him. One (1) ormore deficiency determinations may be made ofthe amount due for one (1) or more monthly peri-ods.

(b) Interest on deficiency. The amount of anydeficiency determination shall bear interest at therate of three-fourths of one (1) percent per monthor fraction thereof from the due date of the taxes.

(c) Service of notice ofdetermination. The cityclerk or his designated representative shall giveto the operator written notice of any deficiencydetermination. The notice may be served person-ally or by certified mail; if by certified mail suchservice shall be addressed to the operator at hisaddress as it appears in the records of the cityclerk. Service by certified mail is complete uponthe signing by the addressee of the return receiptacknowledging delivery. Except in the case offailure to make a return, every notice of a defi-ciency determination shall be mailed within three(3) years after the twentieth day of the calendarmonth following the monthly period for whichthe amount is proposed to be determined, or with-in three (3) years after the return is filed,whichever is later.

Sec. 10-49. Determination if no return made.

(a) Estimate of gross receipts. If any personfails to make a return, the city clerk shall makean estimate of the amount of the gross receipts ofthe person, or as the case may be, of the amountof the total rentals of such person that are subjectto the tax. The estimate shall be made for theperiod or periods in respect to which the personfailed to make the return and shall be based uponany information which is or may come into thepossession of the city. Written notice shall begiven in the manner prescribed in section 10-48.

...

Sec. 10-50. Miscellaneous administrative provi-sions.

(a) Authority of city clerk. The city clerk shalladminister and enforce the provisions of this art-icle relating to the collection of the tax imposedby this article.

(b) Records required from operators, etc.;form. Every operator renting guest rooms ortravel trailer spaces in this city to persons shallkeep such records, receipts, invoices, and otherpertinent papers, and in such form, as the cityclerk may require.

*9 (c) Examinations of records. The city clerkor any person authorized in writing by the cityclerk may examine the books, papers, records,financial reports, equipment and other facilitiesof any operator renting guest rooms or traveltrailer space to persons and any operator liablefor the tax, in order to verify the accuracy of anyreturn made, or if no return is made by the oper-ator, to ascertain and determine the amount re-quired to be paid.

(d) Authority to require reports. In the admin-istration of the provisions of this article, the cityclerk may require the filing of records by anyperson having in his possession or custody in-formation relating to rentals of guest rooms ortravel trailer space subject to the tax. The reportsshall be filed with the city clerk when required bythe city clerk and shall set forth the rentalcharged for each occupancy, the dates of occu-pancy, and such other information as the cityclerk may require.

Sec. 10-51. Violations.

Any person violating any of the provisions ofthis article shall be deemed guilty of an offenseand upon conviction thereof shall be punished asprovided in the ordinances of the city. Each suchperson shall be guilty of a separate offense foreach day during any portion of which any viola-



tion of any provision of this section is committed,continued, or permitted by such person, and shallbe punished accordingly. Any operator or anyother person who fails to register as required inths article, or to furnish any return required to bemade, or who fails or refuses to furnish a supple-mental return or other data required by the cityclerk or who renders a false or fraudulent returnshall be deemed guilty of an offense.

Sec. 10-52. Collection of tax.

(a) Action for tax. At any time within three (3)years after any t ax or any amount of tax requiredto be collected under this article becomes due andpayable and at any time within three (3) yearsafter the delinquency of any tax or any amount oftax required to be collected, the city clerk maybring an action in a court of competent jurisdic-tion in the name of the city to collect the amountdelinquent together with interest, court fees, fil-ing fees, attorney's fees and other legal fees in-cident thereto.

...

(Defs.' Mot. Summ. J. Ex. 6 (emphasis in originaland citations omitted).)

4. Plaintiffs' Affidavits

Plaintiffs have submitted seven affidavits from em-ployees responsible for collecting excise taxes fortheir respective governmental authorities. The rel-evant portions of those affidavits are set forth be-low.

Plaintiffs have submitted the affidavit of MichaelBell, Director of the Finance Department forPlaintiff Dekalb County. (Aff. of Michael Bell ¶¶1-2.) Mr. Bell testifies, in relevant part, that:

As far as I know and believe, none of the abovenamed Defendants have ever corresponded orcommunicated with Dekalb County regarding the

imposition, collection or payment of the hotel/motel tax to Dekalb County.

4.

*10 None of the above named Defendant com-panies have ever made or tendered any paymentof money or other funds as hotel/motel taxes toDekalb County. Further, none of the Defendantcompanies have ever disclosed to the County thatthey are collecting hotel/motel excise taxes fromoccupants of hotel/motel rooms or other lodginglocated within Dekalb County.

5.

Of the various lodging establishments whichcollect hotel/motel excise t ax revenue for DekalbCounty, none have ever disclosed the fact that theabove named Defendant companies were collect-ing hotel/motel excise taxes from the occupants,either as taxes or fees and that were in excess ofthe amounts remitted to Dekalb County by saidhotel/motels, for rooms located within theCounty.

6.

The above-named Defendants have never in-formed Dekalb County that monies were beingcollected by them either as “taxes or fees” (orother designations) in excess of the amounts be-ing paid to hotels and remitted to Dekalb Countyfor hotel/motel rooms located within DekalbCounty.

7.

Prior to the receipt of information obtainedthrough discovery in this case, no informationwas ever provided to Dekalb County for lodgingand hotel rooms located within Dekalb County.



8.

Prior to the receipt of information obtainedthrough discovery in this case, no informationwas provided by the above-named Defendants toDekalb County that would have enabled theCounty to determine the amounts paid by occu-pants for hotel rooms located within DekalbCounty and upon which taxes are and were due.

9.

Prior to the receipt of information obtainedthrough discovery in this case, no informationwas provided by the above-named Defendants tothe County that would have enabled the Countyto determine the difference or “spread” betweenmoney remitted as hotel/motel excise taxes andthe money that was actually collected or shouldhave been collected as hotel/motel excise taxesby Defendants from individual occupants forhotel/motel rooms located in Dekalb County.

10.

Prior to the receipt of information obtainedthrough discovery in this case, no informationwas ever provided to Dekalb County that wouldhave enabled the County to determine the totaldifference or “spread” between money remittedas hotel/motel excise taxes and the money thatwas actually collected or should have been col-lected by the above-named Defendants as hotel/motel excise taxes from all occupants for hotel/motel rooms located within Dekalb County, theCounty had no ability to know of or know of [sic]or confirm a deficiency, to determine the amountof that deficiency, or to make an assessmentagainst the Defendant Companies for that portionof the tax collected from the occupant but notpaid to the County.

11.

Without obtaining the documents that havenow been received in litigation discovery, itwould have been impossible for Dekalb Countyto confirm a deficiency, to determine the amountof that deficiency, or to make an assessmentagainst the Defendant Companies for that portionof the tax collected from the occupant but notpaid to the County.

12.

*11 Neither the above-named Defendants norour hotels and motels have furnished the Countywith contracts which concern or otherwise ad-dress the collection and/or payment of hotel/motel taxes.

13.

The above-named Defendants have neither ini-tiated nor participated in administrative proceed-ings in the County regarding hotel/motel excisetaxes, and none have requested guidance or ad-vise [sic] from the County concerning their dutyto collect and remit such taxes to the Countybased upon the total amount paid by the occu-pant.

14.

The Defendants have never notified DekalbCounty that they were collecting “taxes and fees”from occupants for hotel rooms located withinDekalb County.

(Bell Aff. ffll 3-14.)

Plaintiffs have submitted the affidavit of SandraCline, City Clerk for Plaintiff City of Cartersville.(Aff. of Sandra Cline ¶¶ 1-2.) Portions of Ms.Cline's testimony are substantially similar to Mr.Bell's affidavit above. The Court therefore only in-cludes those portions of Ms. Cline's affidavit thatmarkedly differ from that of Mr. Bell. Ms. Clinetestifies, in relevant part, that:



3.

I have no experience in auditing tax payers ortax collectors, and I depend upon the honesty oftax payers and tax collectors in the administrationof the City of Cartersville hotel/motel tax ordin-ance.

4.

Without tax returns and other informationtruthfully provided by tax payers and tax collect-ors, efficient administration of the City ofCartersville tax ordinance is at least hindered, ifnot impossible.

...

15.

To my knowledge there is no state administrat-ive agency, and there is no local administrativeagency, such as a “tax review board,” having jur-isdiction, exclusive or otherwise, to make de-terminations of tax ability, or to review other taxor tax ation issues.

16.

Because of the complete absence of returns andinformation from the above-named Defendants,any procedure, administrative or otherwise, stateor local, would have been, and is, futile.

...

(Id. ¶¶ 3-4, 15-16.)

Plaintiffs also have submitted the affidavits of LisaY. Gordon, City Manager for Plaintiff City of EastPoint; Robert L. Hosack, Director of the Com-munity Development Agency for Plaintiff CobbCounty; Joan Hughes, City Finance Officer for

Plaintiff City of Hartwell; Barbara Ludwig, Occu-pation Tax Clerk for Plaintiff City of College Park;and Joseph F. Smith. City Clerk for Plaintiff City ofRome. (Aff. of Lisa Y. Gordon ¶¶ 1-2; Aff. ofRobert L. Hosack ¶¶ 1-2; Aff. of Joan Hughes ¶¶1-2; Aff. of Barbara Ludwig ¶¶ 1-2; Aff. of JosephF. Smith ¶¶ 1-2.) The testimony of those affiants issubstantially similar to that of Mr. Bell and Ms.Cline, as set forth above, with the exception of thefollowing statement by Mr. Smith:

19.

On November 21, 2006, the City of [sic] Com-mission of the City of Rome provided the mannerof collection of the tax by authorizing the filingof a class action lawsuit against the abovenamedDefendants, as evidenced by the minutes of theCommission meeting, a certified copy of which isattached hereto as Exhibit “A”.

*12 (Smith Aff. ¶ 19.) The relevant portion ofExhibit A to Mr. Smith's affidavit, the minutes ofthe November 21, 2005, Rome City Commissionmeeting, states as follows:

Hotel/Motel Tax-Class Action Lawsuit

Commissioner Canada moved for the City Com-mission to ratify and authorize the filing of aclass action lawsuit by the City of Rome against anumber of internet travel agencies such as Ho-tels.com, Priceline.com, and Expedia.com forshortchanging the City of Rome and other simil-arly situated municipalities on the Hotel Occu-pancy Tax. Commissioner Wachsteter secondedthe motion and the vote was unanimously in fa-vor.(Id. Ex. A at 5.)

B. Procedural Background

On May 8, 2006, the Court granted Defendants'Motion to Dismiss with regard to Plaintiffs' salesand use tax claim and denied that Motion with re-



gard to Plaintiffs' excise tax claim. (Order of May8, 2006.) Defendants did not directly opposePlaintiffs' claims for conversion and unjust enrich-ment, or Plaintiffs' claims under Georgia's UniformDeceptive and Unfair Trade Practices Act, in De-fendants' Motion to Dismiss. (Id.)

On June 8, 2006, Plaintiffs filed their Amended andRecast Class Action Complaint asserting the fol-lowing causes of action: (1) Violation of Georgia'sExcise Tax on Rooms, Lodgings, and Accommoda-tions (O.C.G.A. § 48-13-50 etseq.); (2) Violationsof Georgia's Uniform Deceptive and Unfair TradePractices Act; (3) Conversion; (4) Count IV: UnjustEnrichment; (5) Imposition of a Constructive Trust;and (6) Declaratory Judgment. (Docket Entry No.88.) Plaintiffs also request damages and injunctiverelief. (Id.)

On February 9, 2007, Defendants filed their Motionfor Summary Judgment Based on Plaintiffs' Failureto Exhaust Mandatory Administrative Remedies,and request oral argument on that Motion. (DocketEntry No. 181.) FN1

FN1. The Court observes that Defendantsrequest oral argument associated with theinstant Motion simply by including thephrase “Oral Argument Requested” in thetitle of their Motion. The Court observesthat, pursuant to Local Rule 7.1E.,“[m]otions will be decided by the courtwithout oral hearing, unless a hearing isordered by the court.” N.D. Ga. R. 7.1E.The Court finds that a hearing would notmaterially assist the Court in resolving theinstant Motion for Summary Judgment.The Court cautions the parties that, in thefuture, the Court will not rule on requestsfor oral hearings that are not presented asmotions or do not comport with Local Rule7.1A.(1), regarding the filing of motions.

On March 3, 2007, Plaintiffs filed their Notice ofObjection to or in the Alternative, Motion to Strike,the Affidavit and Testimony of J. Bryan Whitford.

(Docket Entry No. 197.)

On April 5, 2007, the Court denied without preju-dice Defendants' Motion for Rule 16 Conferenceand denied as moot Defendants' Motion for Protect-ive Order. (Order of Apr. 5, 2007.) The Court alsostated that, in the event that the Court denied De-fendants' instant Motion for Summary Judgment,the Court would schedule a Rule 16 conferencewith counsel. (Id.)

The briefing periods for Defendants' Motion forSummary Judgment and Plaintiffs' Motion to Strikeare complete. The Court therefore finds that thoseMotions are ripe for resolution by the Court.

II. Summary Judgment Standard

Federal Rule of Civil Procedure 56 © authorizessummary judgment when “there is no genuine issueas to any material fact” and “the moving party isentitled to a judgment as a matter of law.”Fed.R.Civ.P. 56 ©. The party seeking summaryjudgment bears “the burden of demonstrating thesatisfaction of this standard, by presenting‘pleadings, depositions, answers to interrogatories,and admissions on file, together with the affidavits,if any’ that establish the absence of any genuine,material factual dispute.” Bochese v. Town ofPonce Inlet, 405 F.3d 964, 975 (11th Cir.2005)(quoting Fed.R.Civ.P. 56©), cert. denied, 546 U.S.872, 126 S.Ct. 377, 163 L.Ed.2d 164. Once themoving party has supported its motion adequately,the non-movant has the burden of showing sum-mary judgment is improper by coming forward withspecific facts that demonstrate the existence of agenuine issue for trial. Castleberry v. GoldomeCredit Corp., 408 F.3d 773, 786 (11th Cir.2005).

*13 When evaluating a motion for summary judg-ment, the Court must view the evidence and all fac-tual inferences in the light most favorable to theparty opposing the motion. Harris, 433 F.3d at 811.The Court also must “construe ‘all reasonabledoubts about the facts in favor of the nonmovant.’ “




http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1004365&DocName=USFRCPR56&FindType=L













Michael Linet, Inc. v. Vill. of Wellington, Fla., 408F.3d 757, 761 (11th Cir.2005) (quoting Browning v.Peyton, 918 F.2d 1516, 1520 (11th Cir.1990)). Fur-ther, “[i]ssues of credibility and the weight affordedto certain evidence are determinations appropriatelymade by a finder of fact and not a court decidingsummary judgment.” McCormick v. City of FortLauderdale, 333 F.3d 1234, 1240 n. 7 (11thCir.2003). Finally, the Court does not make factualdeterminations. Jones, 370 F.3d at 1069 n. 1 (citingWooden, 247 F.3d at 271 n. 9).

Using this standard, the Court evaluates Defend-ants' Motion for Summary Judgment.

III. Discussion

Defendants argue that the Court must dismiss thiscase in its entirety for lack of subject matter juris-diction due to Plaintiffs' failure to exhaust mandat-ory administrative procedures. Defendants also ar-gue that the separation of powers doctrine andGeorgia public policy prohibit Plaintiffs from bur-dening the Court with tax collection functions, andthat Georgia public policy prohibits Plaintiffs fromabdicating Plaintiffs' tax ing and assessment author-ity to contingent-fee contractors. The Court ad-dresses those issues in turn below.

As an initial matter, the Court observes thatPlaintiffs' response to Defendants' Motion for Sum-mary Judgment is very broad. The Court has re-viewed Plaintiffs' response in its entirety, but onlyspecifically discusses certain cases cited byPlaintiffs' that are relevant to the instant Motion.The Court expresses no opinion concerning the re-maining cases.

A. Plaintiffs Must Estimate, Assess, and Attemptto Collect Excise Taxes

Defendants argue that the Excise Tax Act expresslyrequires Plaintiffs, before pursuing litigation, to de-termine whether any of the Defendants are“innkeepers” doing business in Plaintiffs' respective

jurisdictions, to estimate the amount of taxes al-legedly due, and then to make and serve written as-sessments. Defendants also argue that Plaintiffshave failed to exhaust the above administrativesteps. Defendants contend that Plaintiffs have left itup to the Court to perform Plaintiffs' executivebranch duties of determining how Defendants con-duct their businesses and whether Defendants arehotel operators that are required to file tax returnsand collect and remit the excise taxes at issue. De-fendants also contend that they did not receive writ-ten notices of assessments and thus were deprivedof the opportunity to challenge those assessmentsand explain Defendants' respective business modelsto Plaintiffs. According to Defendants, the abovesteps likely would have resolved the instant disputeentirely or, at the least, would have narrowed the is-sues for the Court's consideration.

*14 Plaintiffs argue that the exhaustion of adminis-trative remedies doctrine is not applicable toPlaintiffs and does not limit the use of judicial re-view, that the development of an administrative re-cord will not be helpful to the Court, that the doc-trine does not apply when no administrative remed-ies are available for exhaustion, and that exceptionsto the doctrine apply in this case. Plaintiffs contendthat, in most situations, the decision to require ex-haustion comes after careful analysis and balancingof the interests for and against exhaustion.

Plaintiffs also argue that state law may not controlor limit the diversity jurisdiction of the federalcourts. Plaintiffs contend that the interpretation of astatute is a question of law reserved for the courts,that the heart of this case is based on statutory con-struction, and that Defendants cannot prove a com-plete absence of jurisdiction over any claim.

1. O.C.G.A. § 48-13-50, et seq., and Cited CaseLaw

O.C.G.A. § 48-13-50, Excise Tax on Rooms,Lodgings, and Accommodations (the “Excise TaxAct”), authorizes each county and municipality in


















Georgia to levy excise taxes for the purposes ofpromoting, attracting, stimulating, and developingconventions and tourism in counties and municipal-ities. O.C.G.A. § 48-13-50. O.C.G.A. § 48-13-50.2defines an “innkeeper” as “any person who is sub-ject to tax ation under this article for furnishing forvalue to the public any rooms, lodgings, or accom-modations.” O.C.G A § 48-13-50.2.

Under O.C.G.A. § 48-13-51, municipalities maylevy and collect an excise tax upon the furnishingfor value to the public of any room or rooms fur-nished by any person or legal entity licensed by, orrequired to pay business or occupation taxes to, themunicipality for operating a hotel or similar facil-ity. O.C.G.A. § 48-13-51(a) (1)(A). Every person orentity subject to a tax levied as provided aboveshall be liable for the tax at the applicable rate onthe lodging charges actually collected or, “if theamount of taxes collected from the hotel or motelguest is in excess of the total amount that shouldhave been collected, the total amount actually col-lected must be remitted.” O.C.G.A. § 48-13-51(a)(1)(B)(I).

The excise tax levied is also imposed upon everyperson or entity who is a hotel or motel guest andwho received a room, lodging, or accommodationthat is subject to the tax. O.C.G.A. § 48-13-51(a)(1)(B)(ii). “The person or entity collecting the taxfrom the hotel or motel guest shall remit the tax tothe governing authority imposing the tax, and thetax remitted shall be a credit against the tax im-posed by [O.C.GA § 48-13-51(a)(1)(B)(I) ] on theperson or entity providing the room, lodging, or ac-commodation.” O.C.G.A. § 48-13-51(a)(1)(B)(ii).

O.C.G.A. § 48-13-53, regarding procedures, statesthat, “[e]xcept as otherwise specifically provided inthis article, the rate of tax ation, the manner of im-position, payment, and collection of the tax, and allother procedures relating to the tax shall be asprovided by each county and municipality electingto exercise the powers conferred by this article.”O.C.G.A. § 48-13-53. However, O .C.G.A. §48-13-53.3, regarding the failure of an innkeeper to

make a return, states that,

*15 in the event any innkeeper fails to make a re-turn and pay the taxas provided by this article ormakes a grossly incorrect return or a return that isfalse or fraudulent, the governing authority im-posing a tax under this article shall make an es-timate for the tax able period of tax able chargesof the innkeeper. Based upon its estimate, thegoverning authority shall assess and collect thetaxes, interest, and penalties, as accrued, on thebasis of the assessments.

O.C.G.A. § 48-13-53.3(b).

Additionally, O.C.G.A. § 48-13-57 adoptsO.C.G.A. § 48-2-49 with regard to periods of limit-ations for assessment of excise taxes and, as a res-ult, the excise tax may be assessed at any timewhere a return or report is not filed, or where afalse or fraudulent return was filed. O.C.G.A. §48-13-57; O.C.G.A. § 48-2-49. O.C.G.A. §§48-13-57 through -63 provide various penalties forfailure to file required returns, collect, and pay ex-cise taxes, and for failure to keep records or openthose records for inspection. O.C.G.A. §§ 48-13-57to-63.

Defendants cite City of Atlanta v. Hotels.com, L.P.,No.2006-CV-114732, 2006 WL 3728957(Ga.Super.Dec.11, 2006), and City of Philadelphiav. Hotels.com, No. 000860, 2006 WL 1520749(Pa.Comm.PI. May 25, 2006), as examples ofcourts that have declined to assume tax assessmentand collection duties. Those cases were filed by thecities of Atlanta and Philadelphia, respectively,against online travel companies, alleging that thecompanies were withholding hotel excise taxes.City of Atlanta, 2006 WL 3728957, at *1; City ofPhiladelphia, 2006 WL 1520749, at *1.

The City of Atlanta court found that, before a suitcould be filed, Georgia's Excise tax Act requires theCity of Atlanta to estimate the appropriate amountof taxes allegedly due and owing by the defendantsprior to filing suit, and that the City of Atlanta's or-








































dinances also require certain administrative pro-cesses and procedures to be carried out prior to fil-ing suit, even in situations where no return has beenfiled or taxes have not been paid. 2006 WL3728957, at * 2. The City of Atlanta court also con-cluded that tax assessment and collection are exec-utive branch functions and thus the public policyand the separation of powers doctrine requires taxquestions to be resolved first through the appropri-ate administrative process before a court may ob-tain subject matter jurisdiction over the issue. (Id.)

Likewise, the City of Philadelphia court found thatPennsylvania's Hotel Tax Enabling Act sets forthhow such taxes shall be imposed, collected and cal-culated and that the Philadelphia Tax Review Boardhas exclusive jurisdiction over disputes concerninglocal tax liability. 2006 WL 1520749, at * 1-2. TheCity of Philadelphia court was troubled by the lackof an audit upon the defendants prior to the lawsuit,and concluded that the court's function was to re-solve legal disputes, not to levy or collect taxes. Id.at * 2. The court also determined that the case didnot present a conversion tort claim because therewas no determination that the t ax was actuallyowed by the defendants. Id.

*16 Plaintiffs cite multiple cases in support of theirposition that the doctrine of exhaustion of adminis-trative remedies does not apply here, includingMcKart v. United States, 395 U.S. 185, 89 S.Ct.1657, 23 L.Ed.2d 194 (1969); Provident IndemnityLife Insurance v. James, 234 Ga.App. 403, 506S.E.2d 892 (1998); Hunnicutt v. Georgia PowerCo., 168 Ga.App. 525, 309 S.E.2d 862 (1983); Ald-ridge v. Georgia Hospitality and Travel Assoc., 251Ga. 234, 304 S.E.2d 708 (1983); Department of Hu-man Resources v. Carlton, 174 Ga.App. 30, 329S.E.2d 181 (1985); and Patsy v. Florida Interna-tional University, 634 F.2d 900 (5th Cir.1981).FN2

FN2. Opinions of the Fifth Circuit issuedprior to October 1, 1981, the date markingthe creation of the Eleventh Circuit, arebinding precedent on this Court. See Bon-ner v. City of Prichard, 661 F.2d 1206,

1209-11 (11th Cir.1981) (en banc).

Plaintiffs cite McKart for the proposition that ap-plication of the doctrine of exhaustion of adminis-trative remedies “to specific cases requires an un-derstanding of its purposes and of the particular ad-ministrative scheme involved.” 395 U.S. at 193. InMcKart. the United States Supreme Court discussedthe doctrine as follows:

Perhaps the most common application of theexhaustion doctrine is in cases where the relevantstatute provides that certain administrative pro-cedures shall be exclusive. The reasons for mak-ing such procedures exclusive, and for the judi-cial application of the exhaustion doctrine incases where the statutory requirement of exclus-ivity is not so explicit, are not difficult to under-stand. A primary purpose is, of course, the avoid-ance of premature interruption of the administrat-ive process. The agency, like a trial court, is cre-ated for the purpose of applying a statute in thefirst instance. Accordingly, it is normally desir-able to let the agency develop the necessary fac-tual background upon which decisions should bebased. And since agency decisions are frequentlyof a discretionary nature or frequently require ex-pertise, the agency should be given the firstchance to exercise that discretion or to apply thatexpertise. And of course it is generally more effi-cient for the administrative process to go forwardwithout interruption than it is to permit theparties to seek aid from the courts at various in-termediate stages.

Id. at 193-94 (citation omitted).

Plaintiffs cite Provident Indemnity Life Insurance,and Hunnicutt, respectively, for the propositionsthat whether a claims first must be brought throughadministrative channels depends upon the nature ofthe claim and requested relief, and that the exist-ence of an administrative remedy alone does not af-ford a defendant an absolute defense to a legal ac-tion. The Provident Indemnity Life Insurance courtquotes the following passage from Hunnicutt:































The mere existence of an ... administrative rem-edy does not, standing alone, afford a defendantan absolute defense to the institution of a legalaction. Decisions to the effect that a failure to in-voke administrative remedies precludes orrenders premature a resort to the courts are basedupon statutes which by express terms or neces-sary implication give to the administrative[agency] exclusive jurisdiction or which make the[pursuit or] exhaustion of administrative remed-ies a condition precedent to judicial action. A lit-igant is not required to [pursue] an optional ad-ministrative process before seeking redress to thecourts.

*17 Provident Indem. Life Ins., 234 Ga.App. at 407,506 S.E.2d at 895 (citations and punctuation omit-ted, emphasis in original) (quoting Hunnicutt, 168Ga.App. at 526, 309 S.E.2d at 864).

Plaintiffs cite Aldridge for the proposition that thedoctrine of administrative remedies does not applyhere. In Aldridge, the Georgia Supreme Court heldthat no administrative remedies or appeals wereavailable to a hotel associate complaining of hotelinspection fees charged by county boards of health,where there were no proceedings or hearing con-ducted by such a board to which the associationcould have been a party and thus could have ap-pealed. 251 Ga. at 237, 304 S.E.2d at 711. The Ald-ridge court concluded that because there were noadministrative appeal procedures available to theassociation, the doctrine of exhaustion of adminis-trative remedies did not apply. Id.

Plaintiffs cite Carlton for the proposition that thegovernment may choose to bypass administrativeprocedures in favor of a lawsuit against a privateparty. In Carlton, the Georgia Court of Appealsheld that the Georgia Department of Human Re-sources could bypass administrative paternity pro-ceedings set forth in the Child Support RecoveryAct because that Act specifically provides that itsprocedures are not exclusive but are in addition toall other proceedings provided by law. 174 Ga.App.at 30-31, 329 S.E.2d at 181-82.

Finally, Plaintiffs cite Patsy for the following tradi-tional exceptions to the exhaustion doctrine, asstated by the United States Court of Appeals for theFifth Circuit: (1) when the proscribed administrat-ive remedy is plainly inadequate because no rem-edy is available, the available remedy will not giverelief commensurate with the claim, or the remedywould be so unreasonably delayed as to create aserious risk of irreparable injury; (2) when theclaimant seeks to have a legislative act declared un-constitutional and, even after administrative action,that constitutional question will remain; (3) whenthe question of adequacy of the administrative rem-edy is coextensive with the merit s of the claim; or(4) when the administrative procedures would befutile because it is clear that the claim will be rejec-ted. 634 F.2d at 903-04.

2. Analysis

For the following reasons, the Court finds thatPlaintiffs must estimate, assess, and attempt to col-lect the excise taxes at issue from Defendants be-fore proceeding further with their claims allegingviolations of Georgia's Excise Tax Act.

First, Plaintiffs must comport with the Excise TaxAct's procedures regarding the failure to file returnsor pay excise taxes. The Supreme Court's discus-sion of the exhaustion doctrine in McKart is relev-ant here because the power to impose the excise taxat issue was expressly granted by O.C.G.A. §48-13-51, and O.C.G .A. § 48-13-53.3(b) specific-ally states that cities and counties levying the taxmust estimate, assess, and collect tax es when re-turns are not filed and taxes are not paid. Althoughthe Court recognizes that Plaintiffs are not agen-cies, the Court concludes that the Supreme Court'srationale in McKart is instructive in this case. Sim-ilar to the statute and agency discussed in McKart.the Excise Tax Act enables Georgia cities andcounties to levy an excise tax on accommodations,and also sets forth specific procedures to be carriedout by those governing authorities under the instantfacts alleged by Plaintiffs-failure to make returns or
















to pay excise taxes. Indeed, O.C.GA § 48-13-53.3(b) states that, “[i]n the event any innkeeper fails tomake a return and pay the tax ... or makes a grosslyincorrect return or a return that is false or fraudu-lent, the governing authority imposing a tax ... shallmake an estimate for the tax able period of tax ablecharges of the innkeeper.” O.C.GA § 48-13-53.3(b)(emphasis added).

*18 Plaintiffs have submitted affidavits stating thatDefendants failed to file tax returns and paid notaxes to Plaintiffs. In Aldridge, the governmentboards of health failed to initiate administrativeproceedings from which the private plaintiffs couldappeal, leaving those plaintiffs with no avenue foradministrative remedies or appeals. Here, however,the Excise Tax Act, and specifically O.C.G.A. §48-13-53.3(b), regarding the failure to file a returnor remit taxes, sets forth administrative proceduresthat Plaintiffs must initiate. The Court thereforeconcludes that Aldridge is not applicable to thiscase because Plaintiffs have statutory administrat-ive remedies for Defendants' alleged failure to filereturns or pay excise taxes.

Additionally, unlike the Child Support RecoveryAct at issue in Carlton, the Excise Tax Act does notinclude a provision stating that the procedures setforth in O.C.G.A. § 48-13-53.3(b) are not exclusiveor are in addition to all other procedures providedby law. Rather, O.C.G.A. § 43-13-53 grantsPlaintiffs the authority to establish the manner inwhich Plaintiffs may collect the allegedly owedtaxes, “[e]xcept as otherwise specificallyprovided” in Georgia's Excise Tax Act. O.C.G.A. §43-13-53 (emphasis added). The Court is not per-suaded that the above administrative process is op-tional. Instead, the Court finds that the administrat-ive process is expressly required, and, under Hunni-cutt, therefore may be a condition precedent toPlaintiffs' excise tax claim regardless of Plaintiffs'contentions that interpretation of the Excise TaxAct lies at the heart of this case. Likewise, theCourt is not convinced that the lack of internalauditing capabilities by some Plaintiffs would ex-

cuse those Plaintiffs from the above requirementsor similar requirements set forth in Plaintiffs' ordin-ances. The Court observes that Plaintiffs may hirepersons able to complete such work.

The Court therefore is not convinced that Plaintiffshave no available administrative remedies with re-gard to their excise tax claims, that Plaintiffs areexempt from O.C.G.A. § 48-13-53.3(b)'s require-ments, or that Plaintiffs may choose to collect theallegedly owed excise taxes via litigation only. Thisfactor weighs in favor of requiring Plaintiffs to ex-haust the above administrative remedies.

Second, although Plaintiffs contend that they onlyreceived information from Defendants as a result ofthis lawsuit and that there are no available adminis-trative remedies, Plaintiffs' contention ignores theauthority granted to Plaintiffs pursuant to O.C.G.A. § 48-13-53.4 to examine innkeepers' books,invoices, and other records. Additionally, O.C.G.A.§§ 48-12-58 through-63 provide penalties and sanc-tions for innkeepers that fail to file the required re-turns, collect taxes, or open their records for legallyauthorized inspection.

Plaintiffs admit that they have not attempted to as-sess or audit Defendants, but apparently contendthat Defendants likely will not permit such assess-ments or audits. In the event that Defendants refusePlaintiffs access to the information necessary forPlaintiffs to estimate, assess, and collect taxes, orrefuse to pay properly assessed taxes, Plaintiffsmay then have exhausted their administrative rem-edies and probably may return to the Court for re-course. This factor weighs in favor of requiringPlaintiffs to exhaust the above administrative rem-edies.

*19 Third, by assessing Defendants with regard tothe allegedly owed taxes, Plaintiffs may narrow theissues before the Court. As discussed in McKart,where an entity is given an administrative processto carry out, as is the case here, it is desirable andefficient to allow that process to go forward withoutinterruption. The Court observes that if Plaintiffs











assess Defendants, Plaintiffs may find that one ormore Defendants actually remitted all collectedtaxes to Plaintiffs through the contracting hotelsand Plaintiffs therefore may determine that suchDefendants may properly be dismissed from thiscase. Likewise, Defendants may find that they col-lected excise taxes that were not remitted and maychoose to work with Plaintiffs to remit such taxesand resolve any associated issues. Plaintiffs mayalso determine that one or more Defendants simplyare providing a service to customers when reservingand booking accommodations. Plaintiffs may findthat such Defendants actually remitted the appropri-ate tax through the contracting hotel and thus maydetermine that those Defendants are not liable foradditional excise tax. See 5 Walter Hellerstein,State Tax ation ¶¶ 19.03, 19.03 n. 246.23 (3rded.2007) (discussing Internet travel company busi-ness models and key issues in determining whethersuch companies will be subject to room occupancytax, and noting that “[t]ypically, to avoid windfallto the seller, any amounts collected as ‘tax’ must beremitted to the tax ing authority, even if improperlycalculated”).

To the extent that Plaintiffs and Defendants cooper-ate with each other to resolve issues such as thosediscussed above, the parties can then return to theCourt with a more focused set of issues for resolu-tion by the Court. The Court therefore concludesthat, contrary to Plaintiffs' assertion, an assessmentof Defendants and the corresponding possibilitythat the parties may be able to resolve their excisetax dispute, would be helpful to the Court. Thisfactor weighs in favor of requiring Plaintiffs to ex-haust the above administrative remedies.

Fourth, for the reasons set forth above, the Court isnot convinced that the traditional exceptions to theexhaustion doctrine apply in this case. Given thesections of the Excise Tax Act discussed above, theCourt is not convinced that no adequate remedy isavailable to Plaintiffs, that an attempt by Plaintiffsto assess Defendants will cause irreparable injury toPlaintiffs or unduly delay any potential recovery, or

that Plaintiffs may simply announce that such aprocess would be futile or inadequate and turn im-mediately to litigation. Rather, the administrativeprocedures and remedies available may a help re-solve the parties' excise tax dispute. Additionally,while Defendants may argue that the Excise TaxAct is not applicable to their businesses, Defend-ants do not seek to have that legislation declaredunconstitutional. Rather, Defendants simply dis-agree with Plaintiffs' interpretation of the Excisetax Act.

*20 For the reasons stated above, the above factorsweigh in favor of requiring Plaintiffs to exhaust theadministrative procedures and remedies set forth inthe Excise Tax Act. The Court therefore holds thatPlaintiffs must estimate, assess, and attempt to col-lect the excise taxes at issue from Defendants be-fore proceeding further with their claims allegingviolations of Georgia's Excise Tax Act.

The Court next examines Defendants' contentionsthat dismissal of this case is appropriate.

B. Dismissal of Plaintiffs Additional Claims isnot Appropriate

Defendants do not specifically address Plaintiffs'common law claims or claims asserted under theGeorgia Uniform Deceptive and Unfair Trade Prac-tices Act, except to assert that, regardless of howPlaintiffs posture their claims, Plaintiffs are seekingto recover hotel excise tax. Defendants argue thatthe separation of powers doctrine prohibits the judi-ciary from encroaching on or usurping executivebranch functions, such as tax assessment. Defend-ants also assert that Plaintiffs may not burden theCourt with such non-judicial functions or delegateto the Court the burden of investigating, administer-ing, and enforcing tax assessment and collection.

Plaintiffs argue that, at most, a stay or dismissalwithout prejudice is warranted and that the separa-tion of powers doctrine does not apply to municipalcorporations and counties. Plaintiffs assert that they



are simply exercising their right of access to thecourts and that it is possible for Plaintiffs to lose ontheir argument that the occupancy tax code sectionsrequire Defendants to collect taxes, but forPlaintiffs to prevail on their conversion claim.Plaintiffs contend that Plaintiffs have conversion,unjust enrichment, and deceptive trade practicesclaims against Defendants because Defendants al-legedly over-collected millions of dollars fromhotel occupants as “tax” charges and retained thosemonies as Defendants' own, ratherthan remittingthose taxes to Plaintiffs.

Defendants cite Chatham County Board of Tax As-sessors v. Jepson, 261 Ga.App. 771, 584 S.E.2d 22(2003), for the proposition that the separation ofpowers doctrine, public policy, and judicial eco-nomy mandate that “tax questions should be re-solved first at the local level” through proceduresspecifically created for that purpose. 261 Ga.App.at 772, 523 S.E.2d at 23. The Jepson Court heldthat an appeal before the board of equalizationprovided an adequate remedy at law for tax payersalleging that the county board of assessors failed toprovide a simple, nontechnical description of thebasis for a property reassessment. 261 Ga.App. at771-72, 523 S.E.2d at 23. The Jepson Court there-fore found that the validity of a reassessment mustbe raised within the statutory scheme for tax ap-peals and that the tax payers were required to ex-haust available administrative remedies before fil-ing a lawsuit. 261 Ga.App. at 771-72, 523 S.E.2d at23.

Defendants cite M.T.V. v. Dekalb County SchoolDistrict, 446 F.3d 1153 (11th Cir.2006), for theproposition that litigants may not bypass statutoryadministrative procedures simply by labeling theirclaims as “common law.” 446 F.3d at 1157-58. InM.T.V., a disabled student's parents asserted claimsunder the Individuals with Disabilities EducationAct (“IDEA”), the American with Disabilities Act,the Rehabilitation Act, the First Amendment, and42 U.S.C.A. § 1983. Id. The Eleventh Circuit ob-served that the “IDEA allows plaintiffs to seek

‘remedies available under the Constitution, [theADA ... ], or other Federal laws protecting therights of children with disabilities,’ ” but also sub-jects such claims to an exhaustion requirement be-fore the filing of a civil action. Id. (citing 20U.S.C.A § 1415(I).) The United States Court of Ap-peals for the Eleventh Circuit held that the M.T.V.plaintiffs were seeking relief available under theIDEA and therefore were required to exhaust stateadministrative proceedings before resorting to thecourts for relief, even if the plaintiffs invoked a dif-ferent statute. Id.

*21 Plaintiffs cite Hansen v. Norfolk and WesternRailway Co., 689 F.2d 707 (7th Cir.1982), in whichthe plaintiff alleged violations of the InterstateCommerce Act and thus could choose to complainto the Interstate Commerce Commission (“ICC”) orfile suit, for the proposition that a stay of court pro-ceedings is more consonant with the exhaustiondoctrine than is a dismissal of a complaint. 689F.2d at 709-14. In Hansen, the United States Courtof Appeals for the Seventh Circuit discusses thedoctrine of primary jurisdiction as follows:

The doctrine of primary jurisdiction is a reflec-tion of the fact that when a court is confrontedwith a claim as to which it shares concurrent jur-isdiction with an administrative agency, theremay be sound reasons for the court to stay itshand until the agency has applied its expertise tothe salient questions. The doctrine comes intoplay when a claim is cognizable in a court but ad-judication of the claim “requires the resolution ofissues which, under a regulatory scheme havebeen placed within the special competence of anadministrative body; in such a case the judicialprocess is suspended pending referral of such is-sues to the administrative body for its views.”

...

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courts and agencies, a stay of court proceedingsis often more consonant with the doctrine than isa dismissal of a complaint. Dismissal of the com-plaint may be appropriate when all of the reliefthat is sought in court can be obtained in an ad-ministrative forum or in an easily initiated suitsubsequent to the administrative proceeding. Astay of the court action pending administrativedeterminations, however, is in order when thereis reason to believe that a party may be preju-diced by a dismissal.

Id. at 710, 714 (citations omitted). The Hansencourt determined that the ICC had primary juris-diction over the case and that ICC disposition ofthe issues within its jurisdiction would aid thecourt in subsequently entertaining the plaintiff'santitrust claims. Id. at 713-14. The Seventh Cir-cuit declined to dismiss the case, however, be-cause the ICC might not have authority to enter-tain all of the issues regarding the plaintiff'sclaims and the statute of limitations for thoseclaim might run by the time the ICC acted. Id.

The Court observes that the City of Atlanta courtdismissed the City of Atlanta's complaint in its en-tirety, including a claim that “Defendants, regard-less of whether they are sellers, resellers, or agents,are collecting taxes that should be remitted to theCity of Atlanta.” 2006 WL 3728957, at *1. TheCity of Philadelphia court dismissed a claim forconversion, stating as follows:

The case is not an appeal from a tax assessment,nor can it be, as there has been no formal determ-ination by the Tax Review Board or any other ad-ministrative body from which the Defendants canappeal. Nor is this case a tort claim, as the Citycontends. Conversion is [”]the deprivation of an-other's right of property in, or use or possessionof, chattel, or other interference therewith,without the owner's consent and without lawfuljustification.” McKeeman v. Corestates Bank,N.A., 2000 Pa.Super. 117, 751 A.2d 655, 659 n. 3(2000). Here, there has been no determination theTax is actually owed by the Defendants and this

court lacks jurisdiction to make such a pro-nouncement. Despite the artful pleading, what theCity is actually seeking here is a declaration fromthis court that Defendants owe the Tax. Such anaction is not permissible under Pennsylvania law,as it concerns a matter solely within the jurisdic-tion of the Tax Review Board. See 42 Pa.C.S. §7541 (precludes declaratory judgment actionswhere the proceeding is within the exclusive jur-isdiction of a tribunal other than a court).

*22 2006 WL 1520749, at *2 (emphasis in origin-al).

For the following reasons, the Court declines to dis-miss this case, including Plaintiffs' common lawclaims and claims asserted under the Georgia Uni-form Deceptive and Unfair Trade Practices Act.

First, Defendants' instant Motion and associatedbrief fail to address Plaintiffs' claim that Defend-ants violated Georgia's Uniform Deceptive and Un-fair Trade Practices Act and Plaintiffs' common lawclaims of conversion and unjust enrichment. View-ing the evidence in a light most favorable toPlaintiffs, as the Court must, there is a genuine fac-tual issue as to whether Defendants collected mon-ies as “taxes” and did not remit those “taxes” to theproper governing authorities. If Georgia's ExciseTax Act is not applicable to Defendants, as Defend-ants contend, then, unlike the plaintiffs in Jepsonand M.T.V., and unlike the defendants in City ofPhiladelphia, administrative procedures and thePhiladelphia Tax Review Board, respectively, arenot available to provide Plaintiffs with relief or toresolve the instant dispute. Without an administrat-ive forum, proceedings, or exclusive tribunal withjurisdiction over the tax dispute, Plaintiffs may beable to seek recourse in the Court through theircommon law and statutory claims for recoupmentof monies improperly collected as “taxes” and nev-er remitted. Indeed, in Hotels.com, L.P., v. Canales,195 S.W.3d 147, 151-52 (Tex.App.2006), the TexasCourt of Appeals held that a customer who claimedthat Hotels.com misled her with regard to theamount of money collected as “taxes” on her hotel








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room could maintain an action against Hotels.comto recover charges for “tax es” that were neverowed or remitted to any taxing authority; becausethat money was not actually a tax. 195 S.W.3d at151-52.

Additionally, it is not clear what information orevidence was presented to the City of Atlanta andCity of Philadelphia courts. Plaintiffs have com-plained that Defendants freely cite the City of At-lanta case, in which the filings are sealed, but se-lectively submit portions of the record to the Courtand refuse to permit Plaintiffs' counsel to examinethe briefs and evidence upon which the City of At-lanta court acted. (Pls.' Resp. Mot. Rule 16 Confer-ence at 2, 2 n. 1.) Plaintiffs also point out that onlyclass action discovery has been conducted in thislawsuit.

The Court concludes that it does not have enoughinformation to rule on or dismiss Plaintiffs' conver-sion, unjust enrichment and Georgia Uniform De-ceptive and Unfair Trade Practices Act claims atthis time. Consequently, the Court is not convincedthat, under the above circumstances, the separationof powers doctrine prohibits the Court from rulingon those claims, that subject matter jurisdictiondoes not exist, or that Plaintiffs are improperly at-tempting to burden the Court with Plaintiffs' tax as-sessment and collection duties.

Second, diversity jurisdiction pursuant to 28U.S.C.A. 1332 exists between Plaintiffs and De-fendants regarding Plaintiffs' common law claimsand Georgia's Uniform Deceptive and Unfair TradePractices Act claim. The parties do not contend thatthey are not diverse or that the amount in contro-versy is insufficient. Consequently, even if theCourt dismissed Plaintiffs' claims under the ExciseTax Act, the above claims could remain pendingunder this Court's diversity and subject matter juris-diction.

*23 Third, the Court is not convinced that the con-tinuation of this lawsuit is a waste of judicial re-sources. The Court observes, and Defendants are

well aware, that only discovery regarding class cer-tification has been conducted in this case. TheCourt notes that Plaintiffs contend that Defendantsare not likely to cooperate with any assessment andcollection efforts by Plaintiffs. Although the Courtdoes not agree that futility excuses Plaintiffs fromcomporting with the Excise Tax Act provisions dis-cussed supra Part III.A., the Court recognizes that,throughout this litigation, Defendants have main-tained that they are not innkeepers or operators andare not subject to the excise tax at issue. To the ex-tent that Defendants maintain that position, and re-fuse to open their records for auditing as requiredby the Excise Tax Act or Plaintiffs' ordinances,after Plaintiffs approach Defendants for an audit orwith an assessment, Plaintiffs may then have ex-hausted their administrative remedies regardingtheir excise tax claim and the parties may then needto return to this litigation in order for the Court todetermine whether the excise tax at issue is applic-able to any given Defendant. The Court thereforehas no facts before it with which to make a determ-ination regarding Defendants' alleged liability inthis case or to determine that a dismissal on themerit s of Plaintiffs' common law and Georgia Uni-form Deceptive Practices Act claims is appropriate.

Fourth, the Court concludes that a stay of this ac-tion pending Plaintiffs' assessment of Defendants'tax liability, if any, is warranted under the abovecircumstances. For the reasons stated supra PartIII.A.2., the Court recognizes that here, unlike theplaintiffs in Hansen, Plaintiffs may not simply electto collect excise taxes by filing a lawsuit in lieu ofassessing Defendants. However, viewing the factsin a light most favorable to Plaintiffs, as the Courtmust, if the Excise Tax Act is not applicable to De-fendants, as Defendants contend, then the ExciseTax Act may not provide Plaintiffs with relief re-garding Defendants' alleged collection of monies as“taxes,” and Plaintiffs may not be required to com-port with the Excise Tax Act before seeking re-course in the courts. Additionally, Defendants as-sert the defenses of statute of limitations and lachesin their Answers. Under the above circumstances,







Plaintiffs may not be able to reinstate their commonlaw and Georgia Uniform Deceptive Practices Actclaims if Plaintiffs must refile this action at a latertime. The Court therefore concludes that Plaintiffsmay not be able to obtain all the relief they seeksimply by assessing Defendants, and that there isreason to believe that Plaintiffs may be prejudicedby a dismissal.

The Court therefore finds that a genuine factual is-sue remains as to whether Defendants collectedmonies as “taxes” and did not remit those “taxes” tothe proper governing authorities, and also con-cludes that diversity and subject matter jurisdictionexist between the parties regarding the aboveclaims. For the reasons stated above, the Court con-cludes that Plaintiffs' assessment of Defendantsmay not provide Plaintiffs with all the reliefPlaintiffs seek, and that this assessment may aid theCourt in resolving Plaintiffs' common law andGeorgia Uniform Deceptive Practices Act claims.Consequently, given the dual nature of Plaintiffs'claims and the overlap of information necessary toresolve those claims, the Court concludes that it isappropriate to stay the lawsuit at this time.

*24 The Court next addresses Defendants' concernas to Plaintiffs' use of counsel with regard to theirexcise tax claims.

C. The Court Will Not Prohibit Plaintiffs' Use ofCounsel

Defendants argue that Georgia's public policy andthe separation of powers doctrine prohibit Plaintiffsfrom abdicating tax assessment and collection func-tions to contingent-fee contractors. Defendants as-sert that “a handful of private law firms-who, al-though not accountable to the public, are neverthe-less impermissibly armed with governmental powerto administer and enforce tax ordinances on behalfof 19 Georgia counties and municipalities-will getpaid if, but only if, they can force the Defendants topay Hotel Excise Taxes, without regard to whetherDefendants are actually subject to the tax.” (Defs.'

Mot. Summ. J. at 19.) Defendants contend thatPlaintiffs' counsel are contingent-fee tax “bountyhunters,” and assert that Georgia public policy andcase law does not allow tax ing authorities to enterinto contingent-fee contracts for private auditingand tax recoupment services.

Plaintiffs argue that any award of attorneys' fees ina class action is a matter for the Court's determina-tion. Plaintiffs also assert that some of the attorneysappearing for Plaintiffs in this action are county ormunicipal officials and that the Court or jury mayfashion remedies whereby Plaintiff counties andmunicipalities are awarded compensatory damagesand penalties and separately awarded attorneys'fees.

Defendants cite Sears, Roebuck & Co. v. Parsons,260 Ga. 824, 402 S.E.2d 4 (1991), to support theirargument. In Sears, Roebuck & Co., the ChathamCounty Board of Tax Assessors entered into a con-tract with a private auditing corporation wherebythe private corporation would audit personal prop-erty returns and the private corporation would re-ceive thirty-five percent of any resulting increasedvaluation plus all first-year penalties collected. 260Ga. at 824, 402 S.E.2d at 4. The Supreme Court ofGeorgia held that Georgia law allowed the Board tocontract with entities for appraisal services, but thatpublic policy prohibited a contingency compensa-tion scheme for those services. Id., 402 S.E.2d at 4. The Supreme Court of Georgia concluded that“[f]airness and impartiality are threatened where aprivate organization has a financial stake in theamount of tax collected as a result of the assess-ment it recommends.” ld., 402 S.E.2d at 5.

For the following reasons, the Court is not con-vinced that summary judgment is warranted as aresult of Plaintiffs' retention of counsel in this litig-ation.

First, the Court observes that the instant case differsfrom the contingency-fee assessment contract inSears, Roebuck & Co. Unlike the above case,Plaintiffs have not hired counsel to reassess De-










fendants and profit as a result of a higher reassess-ment. Here, the parties agree that Defendants havenot been audited and assessed, and Plaintiffs simplystate that “the compensation to Plaintiffs' counselwill be determined by the Court in accordance withthe law of the Eleventh Circuit applicable to classactions.” (Defs.' Mot. Summ. J. Ex. 2 Interrog.Resp. No. 10.) The Court observes that Defendants'comparison of Plaintiffs' contract with counsel tothe contract in Sears, Roebuck & Co. is not suppor-ted by the above interrogatory response and is pre-mature at this point.

*25 Second, the Court observes that it is commonin Georgia for counties and municipalities to con-tract with private attorneys and law firms for legalservices. Defendants fail to recognize that suchprivate attorneys and law firms actually serve as thecity or county attorneys and that some of Plaintiffs'counsel may be acting in that capacity in this case.

Third, the Court is not persuaded that the holding inSears, Roebuck & Co. would prevent Plaintiffsfrom retaining counsel to assist with enforcementefforts if Defendants refuse to be audited regardingthe allegedly owed excise taxes at issue, or are as-sessed and refuse to pay those alleged owed taxes.Once Defendants refuse to be audited or refuse topay assessed excise taxes, it would be reasonablefor Plaintiffs to retain counsel to assist in resolvingthose disputes.

For the above reasons, the Court is not persuadedthat Plaintiffs are prohibited from retaining counselto assist Plaintiffs in this case. The Court thereforedeclines to grant Defendants' summary judgment asa result of Plaintiffs' retention of counsel in this lit-igation.

D. Summary

In sum, for the reasons set forth supra Part III.A.2.,the Court concludes that Plaintiffs must at leastcomport with the estimation, assessment, and col-lection requirements of O.C.G.A. § 48-13-53.3(b)

before continuing to litigate their claims assertedunder Georgia's Excise Tax Act. The Court ob-serves that Defendants have failed to addressPlaintiffs' common law claims and claims assertedunder Georgia's Uniform Deceptive and UnfairTrade Practices Act and, for the reasons set forthsupra Part III.B., the Court therefore declines todismiss those claims at this time. The Court,however, recognizes that there likely may be anoverlap in the information necessary to estimateand assess Defendants' alleged excise tax liabilitiesand the information necessary to determine theamount of monies allegedly collected by Defend-ants as “taxes” and not remitted to the appropriategoverning authority. The Court therefore concludesthat it is appropriate to stay this litigation, with theexception of a Rule 16 conference, which is neces-sary to address the above issues and to determinethe best way to proceed in this litigation. Con-sequently, the Court denies Defendants' Motion forSummary Judgment without prejudice, and staysthis litigation, with the exception of a Rule 16 con-ference to be conducted between the Court and theparties' counsel in the near future.

IV. Plaintiffs' Motion to Strike Affidavit

Plaintiffs object to the affidavit of J. Bryan Whit-ford, which was submitted by Defendants in sup-port of the instant Motion for Summary Judgment.Plaintiffs argue that Defendants did not identify Mr.Whitford as an expert and that the affidavit containshearsay, refers to evidence which is not in the re-cord or otherwise identified or attached to the affi-davit, and does not establish that Mr. Whitford iscompetent to testify on the matters discussed.Plaintiffs also argue that Mr. Whitford improperlyoffers legal conclusions regarding the applicabilityand legal interpretations of statutes and local ordin-ances.

*26 Defendants argue that Mr. Whitford's affidavitwas not offered as an expert report or affidavit, butrather to demonstrate the information that was read-ily available to Plaintiffs if Plaintiffs had complied




with the Excise T ax Act's administrative process.Defendants contend that, if Plaintiffs' had conduc-ted any due diligence, Plaintiffs would have dis-covered at least two independent professionals inGeorgia, Mr. Whitford and the Georgia Departmentof Revenue, that would have informed Plaintiffsthat their intended claims against Defendants mightbe legally and factually unjustified. Defendants as-sert that Plaintiffs have no factual basis or personalknowledge for asserting the instant allegations, oth-er than the fact that other local governments havefiled suit.

For the reasons set forth supra Part I.A, the Courtdoes not consider Mr. Whitford's affidavit in thisOrder. The Court therefore finds Plaintiffs' Motionto Strike moot at this point in the litigation. Con-sequently, the Court denies as moot and withoutprejudice Plaintiffs' Notice of Objection to, or inthe Alterative, Motion to Strike, the Affidavit andTestimony of J. Bryan Whitford.

V. Conclusion

ACCORDINGLY, the Court DENIES WITHOUTPREJUDICE Defendants' Motion for SummaryJudgment Based on Plaintiffs' Failure to ExhaustAdministrative Procedures [181]. The CourtSTAYS this case, with the exception of a Rule 16conference to be conducted between the Court andparties in the near future. The Court also DENIESDefendants' request for oral argument associatedwith Defendants' Motion for Summary Judgment.

The Court also DENIES AS MOOT ANDWITHOUT PREJUDICE Plaintiffs' Notice of Ob-jection to, or in the Alternative, Motion to Strike,the Affidavit and Testimony of J. Bryan Whitford[197].

IT IS SO ORDERED.

N.D.Ga.,2007.City of Rome, Ga. v. Hotels.com, LPSlip Copy, 2007 WL 6887932 (N.D.Ga.)

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Documents

Page 1 Slip Copy, 2007 WL 6887932 (N.D.Ga.) · 2019-05-29 · *2 For the above reasons, the Court does not con-sider Exhibits three, five, seven, and eight to De-fendants' Motion