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McKool Smith Secures $55 Million Judgment in Texas Hotel Tax Case

April 4, 2013

Dallas -- On April 4, 2013, Judge Orlando Garcia of the U.S. District Court for the Western District of Texas in San Antonio issued a final judgment awarding the City of San Antonio and 172 additional Texas cities approximately $55 million in delinquent hotel occupancy taxes from 11 Online Travel Companies (“OTCs”), including Expedia.com, Hotels.com, Hotwire.com, Priceline.com, Travelocity.com, Orbitz.com, and others. The final judgment includes penalties and interest owed from an earlier $20 million jury verdict that McKool Smith secured on behalf of the Texas cities in 2009.

Judge Garcia presided over the 2009 trial where McKool Smith’s attorneys successfully argued that the OTCs were not paying their appropriate share in hotel occupancy taxes. The verdict was named one of the “Top 100 Verdicts” of 2009 by the National Law Journal and VerdictSearch.  McKool Smith’s trial team included lead counsel Gary Cruciani and Steven Wolens, and fellow firm principals Tom GravesRosemary Snider, and Michael Fritz. Co-counsel for the cities included San Antonio attorneys Frank Herrera and Trey Martinez Fischer, and Dallas-based firms Baron & Budd and Diamond McCarthy.

McKool Smith represents multiple cities and state and local governments outside Texas in similar claims, including the State of Hawaii. On March 19, 2013, the office of the Attorney General of the State of Hawaii issued a press release announcing that Honolulu-based Tax Appeal Court Judge Gary W.B. Chang granted the State of Hawaii’s motion for summary judgment, finding that OTCs selling Hawaii hotel rooms over the Internet owe the State approximately $70 million in tax penalties, including interest, for failing to file or pay the Hawaii general excise tax over a period of eleven years. This ruling followed an earlier decision in January 2013, when Judge Chang ruled that the OTCs owed the State of Hawaii approximately $158 million in unpaid taxes.

With more than 175 trial lawyers across offices in Austin, Dallas, Houston, Los Angeles, Marshall, New York, Silicon Valley, and Washington, DC, McKool Smith has established a reputation as one of America’s leading trial firms. Over the past seven years, the firm has secured seven nine-figure jury verdicts, as well as seven eight-figure jury verdicts. The firm has also won more National Law Journal and VerdictSearch "Top 100 Verdicts" over the last five years than any other law firm in the country. Courtroom successes like these have earned McKool Smith critical acclaim and helped the firm become what The Wall Street Journal describes as “one of the biggest law firm success stories of the past decade.” McKool Smith represents leading clients in complex commercial litigation, intellectual property, bankruptcy, and white collar defense matters.

For additional information, please contact Michael R. Coston at 212-402-9450 or mcoston@mckoolsmith.com.