[00:00:02] Speaker 03:
Good morning, Your Honors.

[00:00:05] Speaker 03:
May it please the Court, my name is Mark Zarnowski.

[00:00:09] Speaker 03:
I'm with Clark Hill PLLC and I represent Clark County in connection with this matter.

[00:00:17] Speaker 03:
I would like to try and reserve approximately four minutes for rebuttal.

[00:00:22] Speaker 03:
This case, Your Honors, poses the following question.

[00:00:27] Speaker 03:
Pursuant to Nevada statutes and Clark County ordinances, may a private enterprise keep for its own profit transient lodging taxes that it has already charged and collected from its customers?

[00:00:47] Speaker 03:
The answer to this question and this case matter is a matter of first impression in the state of Nevada.

[00:00:56] Speaker 03:
Nevada Supreme Court has never addressed the transient lodging tax enabling statutes in connection with the county ordinances that it mandates the counties adopt.

[00:01:10] Speaker 03:
We urged this court and we urged the district court that rather than allow a U.S.

[00:01:18] Speaker 03:
district court judge sitting in a diversity jurisdiction case

[00:01:25] Speaker 03:
to make this decision that significantly impacts the taxing structure in the state of Nevada and involves hundreds of millions of dollars potentially of tax revenues that the Nevada Supreme Court should, you should defer

[00:01:46] Speaker 04:
to the Nevada Supreme Court to answer your question.

[00:02:04] Speaker 04:
I don't believe you can do that under the record that is here.

[00:02:09] Speaker 04:
But that's not my question.

[00:02:10] Speaker 04:
I understand and you'll get to that, but my question is if we were to determine as a matter of law based on what was presented below that the defendants are not managing agents, do you lose?

[00:02:24] Speaker 04:
I believe so, Your Honor.

[00:02:25] Speaker 04:
All right.

[00:02:26] Speaker 04:
And then, is there a reason why we should not apply what is in, and I apologize if I have the case name wrong, the Nitinger case, in looking to whether there is a triable issue of fact as to whether the defendants are managing agents?

[00:02:45] Speaker 04:
Isn't the test set out fairly clearly in the Nitinger case?

[00:02:49] Speaker 03:
Well, I believe, Your Honor, first you don't have a sufficient record to do so because we were denied the ability to conduct any discovery whatsoever into the issue of whether or not there was a managing agent.

[00:03:05] Speaker 03:
That was partly one of our objections to the summary judgment.

[00:03:09] Speaker 04:
But, Counsel, my question is, does the Nitinger case lay out Nevada governing law on whether the

[00:03:19] Speaker 04:
Putting aside the issue of whether the record is clear enough or whether you were denied discovery, would there be anything we would need to do on a complete record to determine if your clients were, if the defendants were managing agents?

[00:03:34] Speaker 04:
Doesn't the Nitinjur case give us Nevada law to apply?

[00:03:38] Speaker 04:
Well, I think you could.

[00:03:39] Speaker 03:
The question is, should you?

[00:03:42] Speaker 03:
Not necessarily could you?

[00:03:44] Speaker 03:
And I believe under the facts of this case, I think that would be a significant injustice to Clark County.

[00:03:51] Speaker 03:
It would be, I believe, based on the record and the problems associated with the district court's decision, I don't think it's something that you should do.

[00:04:02] Speaker 03:
I mean, frankly, you all can do almost anything you want to do.

[00:04:08] Speaker 04:
Yeah, but that's not my question.

[00:04:11] Speaker 04:
My questions were, the last question is, is there something that is in Nevada law that is materially different or in addition to what's in Nitinger in determining on an appropriate record whether the defendants were managing agents, and it sounds like

[00:04:29] Speaker 04:
You've said no, but you don't have enough in the record to make the determination.

[00:04:34] Speaker 04:
So you could apply, Nitinjur, if the record was complete enough, but it's not here, seems to me, what I've interpreted your answer to be.

[00:04:42] Speaker 03:
Yes, and I hope to be able, I'd rather not do it right this moment, to give you in the record some factual basis

[00:04:52] Speaker 03:
for which it creates a genuine issue of material fact as to whether or not there are managing agents involved.

[00:05:00] Speaker 03:
But the reality of this case is that the district court judge didn't decide whether there was managing agent status.

[00:05:08] Speaker 03:
He didn't decide whether Clark County ordinances imposed the tax against the defendants.

[00:05:16] Speaker 03:
What he said is, it doesn't matter one whit

[00:05:20] Speaker 03:
what the Clark County ordinance says because the enabling statute says that you must be a person who is in the business of providing lodging.

[00:05:33] Speaker 03:
And the district court judge ended up deciding, strictly using his own definitions, what it meant.

[00:05:41] Speaker 03:
to mean providing lodging without reference to the ordinance.

[00:05:44] Speaker 00:
Can we go back to the discovery because it seems like we're either interpreting a statute or a county ordinance and there are legal tools we can use to try to figure out what some of these things like a managing agent means.

[00:05:57] Speaker 00:
On the discovery, what do you claim that you didn't have the opportunity to do in the district court?

[00:06:04] Speaker 03:
We were not able to do in the district court any discovery that related to how the contracts themselves were performed between the parties to the extent that we could say, well, listen, how and where do you impose your taxes?

[00:06:26] Speaker 03:
How do you make the charges?

[00:06:27] Speaker 00:
How do you make- Didn't you get some limited discovery?

[00:06:29] Speaker 00:
Very, very limited on narrow issues.

[00:06:31] Speaker 00:
Did you seek review of the denial of that?

[00:06:34] Speaker 00:
It did.

[00:06:34] Speaker 00:
Did you make a motion to compel against the defendants?

[00:06:37] Speaker 03:
We filed a motion to compel in front of the magistrate.

[00:06:43] Speaker 03:
We then filed objections to the magistrate's report that imposed limitations

[00:06:49] Speaker 03:
And when the judge ultimately granted the summary judgment, he never even considered our objections to the limitation on discovery.

[00:06:57] Speaker 03:
He just said it is now moot because I've entered the order and summary judgment.

[00:07:04] Speaker 00:
What do you expect the discovery would show?

[00:07:06] Speaker 00:
Because we're talking about different types of entities.

[00:07:09] Speaker 00:
One is people, companies that provide actual lodging.

[00:07:13] Speaker 00:
The other is the companies we're talking about here, which are sort of online intermediaries, sellers of rooms through this electronic booking service.

[00:07:24] Speaker 00:
What makes you think those should be regarded as managing agents?

[00:07:30] Speaker 03:
Your Honor, the answer to that question isn't coming from me, it's coming from other district court judges throughout the land who have considered similar cases.

[00:07:41] Speaker 03:
It is laid out in our brief and in our various papers.

[00:07:45] Speaker 03:
exactly what facts, well first, what discovery was taken in other cases involving the OTCs that we felt was necessary.

[00:07:56] Speaker 03:
Millions of pages of documents, testimony from hundreds of agents who executed the contracts, and we laid out

[00:08:08] Speaker 03:
Just from the other cases, what judges said the discovery was, and we said, we believe we need this discovery to do this, we then didn't hypothesize as to what the discovery would show.

[00:08:21] Speaker 03:
We actually looked at what real judges looked at that discovery, made as their findings of fact in other cases.

[00:08:29] Speaker 03:
And we laid out and said, if you allow us to do discovery,

[00:08:32] Speaker 03:
We believe that we will be able to make the case that these are the factual findings and we're not guessing because other judges have made those findings.

[00:08:44] Speaker 00:
Sorry to interrupt you.

[00:08:45] Speaker 00:
Do any of the other statutes or ordinances from other states involve the term managing agent?

[00:08:51] Speaker 03:
There were none that involved managing agent.

[00:08:54] Speaker 03:
As the Nevada Supreme Court has said though, the issue of whether first of all there's an agency is generally, I'm not going to say always, but almost always a question of fact.

[00:09:06] Speaker 03:
And second, they've laid out that when you give certain amount of discretion and the agent is able to perform discretionary duties that lock in

[00:09:17] Speaker 03:
the principle, then those are performing a managing agent functions and that those are questions of fact that have to be determined by a fact finder.

[00:09:28] Speaker 00:
Are there any other cases that are pending?

[00:09:33] Speaker 00:
in the Nevada State Court system that raised these issues that you're aware of?

[00:09:38] Speaker 03:
Yes, Your Honor.

[00:09:38] Speaker 03:
We happen to be counsel for the state of Nevada.

[00:09:42] Speaker 03:
The state of Nevada is suing these same defendants in the state court of Nevada.

[00:09:49] Speaker 03:
We've been through multiple proceedings there, been to the Nevada Supreme Court once on the matter, are currently in front of the Nevada Supreme Court again, where the defendants herein are claiming that the decision of the district court judge has collateral estoppel effect against the state of Nevada.

[00:10:09] Speaker 00:
What's the status of the Nevada Supreme Court proceedings?

[00:10:13] Speaker 00:
Have you argued that or briefed it?

[00:10:15] Speaker 00:
When do you expect a decision?

[00:10:16] Speaker 03:
It's fully briefed at this point on the second writ of the petition for writ of mandamus on the issue of collateral estoppel.

[00:10:25] Speaker 04:
I'm sorry, tell me, I don't mean to interrupt your answer to Judge Brez, what is the collateral estoppel issue?

[00:10:32] Speaker 03:
The collateral estoppel issue is that the OTCs, the defendants, are arguing that the state of Nevada is collaterally stopped from arguing that the transient lodging tax applies to their businesses because of the decision of the district court judge herein that the enabling legislation or that the OTCs are not engaged in the business of providing lodging.

[00:11:02] Speaker 04:
And I assume that you have responded since all in these types of diversity cases where there is an undecided issue all the federal courts are doing is predicting that if the Supreme Court says the federal courts were wrong, by definition, they can't be collaterally stopped from changing Nevada law because all we're doing is predicting.

[00:11:29] Speaker 04:
I assume you've made some variant of that argument.

[00:11:31] Speaker 03:
Your assumption would be correct.

[00:11:34] Speaker 03:
However, the specific issue before the Nevada Supreme Court is not managing agent.

[00:11:41] Speaker 03:
The specific issue before the Supreme Court is collateral estoppel.

[00:11:44] Speaker 03:
And so they don't get to look necessarily at the underlying decision of the federal judge in the petition that is before the Supreme Court.

[00:11:57] Speaker 04:
Does Nevada generally apply the restatement of judgments in determining collateral estoppel issues?

[00:12:04] Speaker 04:
Yes, sir.

[00:12:06] Speaker 00:
So when do you expect a decision in that matter?

[00:12:13] Speaker 03:
The Nevada Supreme Court takes a long time on some matters, a short time on others.

[00:12:19] Speaker 03:
I would not even hazard a guess.

[00:12:22] Speaker 00:
Putting aside the collateral estoppel issue, does that case present the same two questions we have here in terms of the meaning of the Clark County ordinance and the statutory language that is the backdrop for this?

[00:12:34] Speaker 03:
At the Clark County District Court level, the answer is yes.

[00:12:38] Speaker 03:
At the Nevada Supreme Court level, currently the answer is no.

[00:12:41] Speaker 03:
It's strictly collateral estoppel.

[00:12:44] Speaker 00:
What did the Clark County District Court find then in that case?

[00:12:49] Speaker 03:
The issue of managing agent has, on a motion to dismiss, we prevailed.

[00:12:57] Speaker 03:
On multiple motions to dismiss, we prevailed.

[00:13:00] Speaker 03:
We're now in a position where we are stayed, pending whether or not the collateral estoppel applies.

[00:13:07] Speaker 03:
So the Clark County District Court has not had the opportunity yet to decide that.

[00:13:14] Speaker 01:
I want to come back to the district court's reasoning.

[00:13:18] Speaker 01:
So the statute clearly gives the counties the ability to define what transient lodging is, so what kinds of lodging trigger the tax.

[00:13:26] Speaker 01:
What I don't see in the statute is a provision authorizing counties to define who is liable for the tax, which is what Clark County did.

[00:13:34] Speaker 03:
Well, Clark County defined transient.

[00:13:39] Speaker 03:
County did multiple things, I grant you that.

[00:13:42] Speaker 01:
But in terms of the definition, they did impose a definition of transient lodging in... Well, you would agree with me, Ray, that in defining the managing agent and these categories of entities that are going to be responsible for paying the tax, that's outside of defining what transient lodging is.

[00:14:01] Speaker 01:
I think the two are interlinked, Your Honor.

[00:14:05] Speaker 01:
Even if that's true, I come back to my question, which is, what in the statute allows the counties to define who is going to be responsible for paying the tax?

[00:14:16] Speaker 03:
Once you define what transient lodging or what lodging and transient lodging is, it becomes simple, if you allow me for just a moment to follow the logic here.

[00:14:28] Speaker 03:
The district court judge says providing lodging means you are the proprietor of the property and you're the one that hands the key to the guest when they walk in.

[00:14:39] Speaker 03:
Clark County ends up in their ordinance 4.0800516 saying that transient lodging, oh, I'm sorry, let me make sure that's the right one.

[00:15:04] Speaker 03:
The right to possess

[00:15:07] Speaker 03:
Park County says that it's not just providing a room that is providing lodging.

[00:15:13] Speaker 03:
Transient lodging includes transferring the right to possess the room.

[00:15:20] Speaker 03:
And in discovery, the limited discovery... How is that defining transient lodging?

[00:15:25] Speaker 03:
Because if you are taxing any person, any person that is engaged in providing lodging, if you are a person that engages

[00:15:37] Speaker 03:
in providing transient lodging the right to possess the room, then you fall within the enabling statute as a person that is providing lodging.

[00:15:49] Speaker 03:
So to then extrapolate and to say a managing agent who makes available the right to possess the room, then those two are interlinked in that fashion.

[00:16:00] Speaker 01:
So I want to follow up and then I'll let this go.

[00:16:03] Speaker 01:
I want to make sure I understand your argument.

[00:16:05] Speaker 01:
Is your argument that the county's definition is somehow developing the state statute definition of persons in the business of providing lodging, or is your argument that the county's definition of managing agent is somehow coming under the grant of authority to define transient lodging?

[00:16:24] Speaker 01:
I think it's both.

[00:16:27] Speaker ?:
Okay.

[00:16:27] Speaker 00:
Can I ask along these lines, what would be the state's position on a travel agent, like a traditional travel agent?

[00:16:34] Speaker 00:
Is that person, should they be, if they're taking receipts from somebody who's coming to visit Las Vegas, should they be paying this tax?

[00:16:42] Speaker 03:
travel agent relationship the travel agent does not collect the room rent at a discounted room rate then collect the transient decide what the transient lodging taxes are and then collect the transient lodging taxes it is a travel agent is an agent it calls and it makes an arrangement and books a reservation it doesn't transfer the right to a hotel room or the right to possess that the hotel does here

[00:17:12] Speaker 03:
The discovery itself and the contracts themselves say that the OTCs are transferring a right to possess.

[00:17:23] Speaker 03:
They have the contract with the consumer, not the hotel.

[00:17:27] Speaker 03:
The consumer isn't paying Orbitz or Expedia all this money to travel to Las Vegas, get a hotel room, pay the taxes, show up at Caesar's Palace and say, I booked my thing through Expedia and then only to find Caesar say, you don't have a room.

[00:17:48] Speaker 03:
Caesars has, with a contract with Orbitz, said, you guys can go ahead and sell our rooms.

[00:17:54] Speaker 03:
You can sell the right to possess our rooms.

[00:17:57] Speaker 03:
You can decide how much to charge for those rooms.

[00:18:00] Speaker 03:
You decide how much taxes to collect.

[00:18:03] Speaker 03:
You collect the taxes.

[00:18:04] Speaker 03:
You collect the amount.

[00:18:06] Speaker 03:
You manage that contract with the consumer.

[00:18:09] Speaker 00:
When was this statute put in place, the business of providing lodging?

[00:18:12] Speaker 00:
Do you know?

[00:18:13] Speaker 00:
I'm sorry?

[00:18:14] Speaker 00:
When was this statute put in place?

[00:18:16] Speaker 00:
the business of providing lodging, roughly.

[00:18:21] Speaker 00:
It's probably been around for a while.

[00:18:23] Speaker 00:
We're here trying to parse this.

[00:18:27] Speaker 00:
Another solution given developments in online bookings would be, and you represent the state, for the state to just change the statute and more clearly encompass the defendants here.

[00:18:39] Speaker 00:
Why not just pursue this through that avenue?

[00:18:43] Speaker 03:
Well, first of all, we don't think that it is ambiguous at all.

[00:18:49] Speaker 03:
Second, such a solution would be forfeiting hundreds of millions of dollars worth of tax revenues that have already been collected by the defendants and that they have retained for their own profit.

[00:19:00] Speaker 03:
I mean, future legislation may work for future transactions, but it isn't going to help collect the money that these people have pocketed

[00:19:10] Speaker 03:
for years and years and years, charging taxes, telling the consumer that they're charging them the 13 percent tax, and then keeping it instead of giving it to the state.

[00:19:26] Speaker 00:
I mean, we're here in 2024.

[00:19:27] Speaker 00:
It's not like Orbitz and Expedia just came into being yesterday, right?

[00:19:31] Speaker 00:
They've been at this for some time.

[00:19:32] Speaker 00:
And so I hear you on the taxes you believe were owed, but this also seems to be a problem that has existed for some time under your state's laws.

[00:19:42] Speaker 03:
I don't disagree with that, your honor.

[00:19:45] Speaker 03:
Maybe if I ran Collard County 10 years ago, I would have tried to raise the suit earlier.

[00:19:51] Speaker 03:
But I didn't.

[00:19:52] Speaker 03:
They came to our law firm and wanted to pursue this after we filed on behalf of the state, and we took the case.

[00:19:59] Speaker 03:
I don't have much time left, but I would like to try and keep whatever I've got left for rebuttal.

[00:20:06] Speaker 03:
Thank you.

[00:20:32] Speaker 02:
Good morning, may it please the court, Thomas Peterson, I represent the Apple Ease.

[00:20:36] Speaker 02:
I'd like to start with Judge Forrest's question.

[00:20:39] Speaker 02:
There's nothing at the state level that authorizes the county to change the definition of who is responsible for the tax.

[00:20:48] Speaker 02:
that the provision that Your Honor referred to does in fact allow them to define types of lodging, that is campgrounds.

[00:20:56] Speaker 02:
It has a whole list of possible things that are or are not subject to the tax, but it does not allow them to change the definition of an operator.

[00:21:05] Speaker 02:
And that's important as against the background rule in Nevada, so-called Dillon's rule that says that unless an authority is expressly granted to the county, that it doesn't have it.

[00:21:16] Speaker 04:
What do you mean by it doesn't allow them to change the definition of operator?

[00:21:21] Speaker 04:
Is the definition of operator somewhere in the Nevada statute?

[00:21:25] Speaker 02:
It is, Your Honor.

[00:21:26] Speaker 02:
It's in the

[00:21:28] Speaker 02:
It's in the statute 3351 and 3352.

[00:21:32] Speaker 02:
It's not there.

[00:21:33] Speaker 02:
I have those in front of me.

[00:21:35] Speaker 02:
What are you referring to?

[00:21:36] Speaker 02:
Yeah, what I'm referring to is the part of the statute that speaks about it applying to persons in the business of providing operator.

[00:21:43] Speaker 02:
It doesn't use the word operator.

[00:21:44] Speaker 02:
No, it does not use the word operator.

[00:21:47] Speaker 04:
You can't get around that.

[00:21:50] Speaker 04:
you can't make your argument based on magic words in contracts.

[00:21:59] Speaker 04:
If someone's functional activities are in the business of providing lodging, no matter what they're called, they're subject to the tax, right?

[00:22:10] Speaker 02:
And Nevada has recognized that in the context of, yes, I agree with you.

[00:22:18] Speaker 04:
There's something about Dillon's rule or Nevada law which says that if the counties say that when an operator is performing their functions through a managing

[00:22:34] Speaker 04:
agent under Nevada law, which is pretty strict to be a managing agent, that somehow exceeds the county's power to say if basically you're using a proxy who basically has the type of discretion that a managing agent has, they're not responsible for the taxes, the counties can't do that?

[00:22:59] Speaker 02:
No, no, I'm not suggesting that you could, in fact let me just raise the best example of the classic managing agent, which is Leona Hotel, and I hire Sheraton to run it for me.

[00:23:11] Speaker 02:
No one would question that Sheraton is providing occupancy in that scenario.

[00:23:16] Speaker 04:
So you're not arguing that the 4.08.005 subsection 16 definition of operator is ultra-virus?

[00:23:28] Speaker 02:
What I'm saying is that you don't have to get, as the district judge did here, you don't have to get to it because I think you can get as far as you need to go in the concept of a proprietor or the person providing occupancy because I think that would include someone who is a true managing agent.

[00:23:48] Speaker 04:
But have you argued anywhere that the definition of operator in the county ordinance is ultra-virus?

[00:23:56] Speaker 02:
No, we have not.

[00:23:57] Speaker 02:
Our position is that we do just as well if you want to try the true definition of what a managing agent is.

[00:24:03] Speaker 02:
But like the district court, I don't think you have to get there because I think the concept of a proprietor is broad enough that it establishes that what the online travel companies do is not sufficient to qualify under a managing agent or a person providing transient lodging.

[00:24:25] Speaker 01:
So is it fair to say then that you don't have a problem with the county's definition of operator, but you have a problem just with the managing agent part of that definition?

[00:24:32] Speaker 02:
I have a problem with how they interpret what would qualify as managing.

[00:24:35] Speaker 01:
Oh, wait, wait, wait, wait, wait.

[00:24:37] Speaker 01:
So, I mean, I'm sort of talking about what authority does the county have to provide, you know, further understanding of the state statute.

[00:24:48] Speaker 02:
Yes.

[00:24:50] Speaker 01:
If your position is that the definition of operator is not inconsistent with the state statute, then why would there be a problem with the county's definition?

[00:24:58] Speaker 02:
It turns again on how you decide you're going to define managing agent.

[00:25:04] Speaker 02:
I think if you use the kinds of concepts that Judge Bennett was talking about in his questions based on the Knittinger case and also on some of the

[00:25:13] Speaker 02:
There's, for example, a 1989 opinion of the Nevada Attorney General, which makes very clear that we're talking about someone who is either the hotel proprietor or the person who runs the hotel.

[00:25:27] Speaker 02:
If we're talking about those kinds of people, then I don't have a problem with the concept that those people are covered.

[00:25:35] Speaker 02:
But we're not talking about that here.

[00:25:37] Speaker 02:
And perhaps a perfect example of why we're not is if you look at the amendment

[00:25:43] Speaker 02:
that the Nevada legislature adopted to specifically address hosting platforms and what are termed facilitators of accommodations.

[00:25:54] Speaker 02:
It adopted that, recognizing the need that its existing statutory scheme does not reach persons of that sort, but it only applied it in the context of short-term residential rentals and not hotels, which is what we're talking about here, which I think

[00:26:13] Speaker 02:
to one of Judge Bras's question.

[00:26:15] Speaker 02:
These laws, the two we're talking about, I believe were enacted in 1991.

[00:26:23] Speaker 02:
And so Nevada does have the authority and has exercised it to some extent to clarify and apply them in what I'll call the modern technology world, but not with respect to this kind of taxation that we're talking about.

[00:26:39] Speaker 04:
Well, other states have passed laws levying this type of tax on entities like your clients, right?

[00:26:51] Speaker 02:
And there are, yes, there are.

[00:26:54] Speaker 02:
But first, let's note that if we're looking at the, there's an array of decisions which have been handed down with respect to these taxes.

[00:27:02] Speaker 02:
Insofar as we're talking about jurisdictions that have the same operator type taxation, taxation tied to the provider, the OTCs have uniformly prevailed in all of those cases.

[00:27:14] Speaker 04:
But states aren't limited to that route in trying to tax

[00:27:21] Speaker 04:
entities like your clients.

[00:27:24] Speaker 04:
Nevada chose that route, but they weren't limited to that.

[00:27:27] Speaker 02:
You're right, Your Honor.

[00:27:27] Speaker 02:
And my clients have lost some of the cases where jurisdictions have focused the tax on sales rather than on operator.

[00:27:39] Speaker 02:
And in Hawaii, my clients lost on the GET.

[00:27:42] Speaker 02:
I am familiar with that.

[00:27:44] Speaker 00:
I think the discussion about the definition of operator starts to be a little circular in the sense that on the face of the county provision, it's hard to see how they've expanded it.

[00:27:59] Speaker 00:
That issue only comes into play if we start to talk about things that are far outside the plain text of

[00:28:07] Speaker 00:
the ordinance itself, and then that gets you to the issue of a managing agent.

[00:28:11] Speaker 00:
And we have some definitions of managing agent in the law, both from the Nevada Supreme Court and elsewhere, as talking about someone who has independent policy authority, discretion.

[00:28:23] Speaker 00:
Why do you think your clients don't fall into that category of managing agents?

[00:28:26] Speaker 02:
Because they don't have any of that kind of authority.

[00:28:30] Speaker 02:
What they are, they are facilitators.

[00:28:34] Speaker 02:
They are accommodation facilitators.

[00:28:36] Speaker 00:
Who sets the room rates?

[00:28:38] Speaker 02:
The room rates are set by the hotel.

[00:28:40] Speaker 02:
So let me just explain.

[00:28:42] Speaker 02:
What my clients do is they facilitate the placement of reservation, and they also offer a much broader service, which allows consumers to go explore different travel options.

[00:28:52] Speaker 02:
They can select the hotel they want.

[00:28:54] Speaker 02:
They can combine it with all sorts of other travel services.

[00:29:00] Speaker 02:
But in terms of the so-called right to occupy and in terms of the ability to actually enter the hotel, that's all controlled by the hotel.

[00:29:12] Speaker 02:
The hotel specifies the rate that it expects to receive in exchange for the room.

[00:29:18] Speaker 02:
My friend started his argument by saying something which is just slightly incorrect and contrary to the testimony of Ms.

[00:29:25] Speaker 02:
Camerota, which is in the record.

[00:29:26] Speaker 02:
He suggests that somehow the online travel companies are pocketing

[00:29:30] Speaker 02:
something they're describing as tax.

[00:29:33] Speaker 02:
That's untrue.

[00:29:34] Speaker 02:
What they do is the hotel tells the online travel company what it wants for the room, $100, and then the hotel tells the online travel company what is the applicable rate.

[00:29:46] Speaker 02:
So it includes in its charge, which is what the hotel expects to receive, the estimated tax, which the online travel company pays to the hotel,

[00:29:56] Speaker 02:
and the hotel pays to the jurisdiction, so it's not as though anybody's evading tax.

[00:30:00] Speaker 02:
And then there's service fees and facilitation fees for what the online travel company does.

[00:30:06] Speaker 00:
Okay, so your friend on the other side says, yes, but we needed more discovery on this to probe the mechanics of how this business works.

[00:30:14] Speaker 00:
So what's your response on that?

[00:30:16] Speaker 02:
They didn't need any more discovery because the undisputed facts are that my clients do not own, operate, or have any managerial authority with respect to any hotel.

[00:30:25] Speaker 02:
Let's also focus on what my friend told you that

[00:30:31] Speaker 02:
He was very specific about what he wanted by analogy to a couple of different cases where they drew attention to what was provided in those cases.

[00:30:42] Speaker 02:
Look at page 15 of his reply brief.

[00:30:45] Speaker 02:
He repeats it here.

[00:30:46] Speaker 02:
He says, what we needed were the materials that were available in the Arkansas and the Mississippi trial court cases.

[00:30:53] Speaker 02:
In both of those cases, with operator-type statutes, the state supreme courts reversed the judgments

[00:31:00] Speaker 02:
and directed judgment for the OTCs on the basis that the OTCs do not operate and are not hotel proprietors.

[00:31:08] Speaker 02:
So there's nothing to suggest that any of this discovery would have been at all material in any way to the outcome of this case.

[00:31:16] Speaker 02:
The district court certainly didn't abuse its discretion in deciding that it didn't need to look at those materials.

[00:31:24] Speaker 02:
It's also unfair to say that Judge Mahan refused to do that because he specifically says in his order denying the 59E motion for reconsideration that those materials were before him and they were not necessary for him to consider for purposes of his decision.

[00:31:39] Speaker 02:
What about what about the Nevada State Court case that's pending that was referenced?

[00:31:44] Speaker 02:
Yes, so the Nevada State Court case

[00:31:48] Speaker 02:
So first, my friend says the state has brought us.

[00:31:51] Speaker 02:
Are you counsel in that case?

[00:31:53] Speaker 02:
My law firm is, Your Honor.

[00:31:55] Speaker 02:
Frankly, I haven't been as involved in it, so I'm hoping I've learned enough about it to be able to answer your questions today.

[00:32:04] Speaker 02:
So first, my friend says that's a case brought by the state of Nevada.

[00:32:09] Speaker 02:
It's a key TAM case.

[00:32:11] Speaker 02:
So the attorney general of Nevada declined to take that case over.

[00:32:17] Speaker 02:
In that particular case, in addition in the mandamus briefing, which you have before you as an attachment to their motion to certify to the Nevada Supreme Court, you'll see that as Judge Bennett, you anticipated, there are all sorts of arguments they have for resisting the application of collateral estoppel, including issues about

[00:32:36] Speaker 02:
and so on, and also issues about whether the court should consider collateral estoppel.

[00:32:44] Speaker 02:
In that case, the Nevada Supreme Court has before it briefs.

[00:32:47] Speaker 02:
It's made no decision even as to whether it's going to decide the case.

[00:32:52] Speaker 02:
So like many mandamus petitions, I suppose it might never get anywhere at all.

[00:32:56] Speaker 02:
So it's a bit of speculation as to what it might lead to.

[00:32:59] Speaker 02:
The questions that you're asked to certify, those aren't the questions

[00:33:04] Speaker 02:
that are a part of that case.

[00:33:06] Speaker 02:
At page 11 of their motion to certify, they admit that it's purely collateral estoppel questions.

[00:33:13] Speaker 02:
And plus, again, the focus of Judge Mahan's decision here is all on this issue about whether someone is providing occupancy for purposes of the state law.

[00:33:25] Speaker 02:
And so those are the relevant analogous issues that are present in that case.

[00:33:31] Speaker 04:
Do I correctly assume

[00:33:33] Speaker 04:
that one of the arguments that's been made there in opposition to a request for mandamus is that the petitioner has an adequate remedy, an adequate appeal right remedy, and so even if they're right on the law, mandamus still doesn't lie.

[00:33:52] Speaker 02:
Your Honor, I'm pretty sure that's correct, and if my memory is faulty, you have the document, but I mean, I think that's a, your Honor's considered mandamus all the time, and in my experience, denied them routinely, precisely for that reason, so that's a possibility.

[00:34:06] Speaker 02:
So that's the status of the case, and in terms of why the trial judge in Nevada declined to,

[00:34:15] Speaker 02:
decline to impose collateral estoppel, it's a fairly complicated question having to do with a False Claims Act issue.

[00:34:23] Speaker 02:
There was an earlier decision in the Nevada Supreme Court that my friend alluded to where the court was asked to dismiss the case because there was a prior action brought by the state and the Nevada Supreme Court says, well, there's some differences as to the relevant parties.

[00:34:37] Speaker 02:
And so Nevada has a fairly Byzantine set of rules about who's the plaintiff and whether the state can sue for the county and all the rest of it.

[00:34:44] Speaker 02:
And let me also just emphasize, because I think this bears also on the question of whether to certify, you have, in addition to what I regard as unambiguous statutory guidance here about Nevada law with respect to what does it mean to provide occupancy, if you get to the operator question, what is a managing agent, and you've got the amendment that was made with respect to hosting platforms, which is exactly what we're talking about here,

[00:35:14] Speaker 02:
And let me just add there, in terms of other states, just as Judge Bennett, you recognize that other states can impose taxes, in Mississippi, Maryland, and also in a third jurisdiction I'm blanking on, but it's in the brief, in each of those cases,

[00:35:33] Speaker 02:
the states determined that their lodging tax did not apply to the OTC because there had been separate laws enacted with respect to residential rentals and they specifically contemplated and took into consideration these platform type facilitating companies and so the court said quite logically as a matter of statutory interpretation

[00:35:56] Speaker 02:
that the specific controls, and if our general tax laws apply to people in this facilitating role, then the legislature wouldn't have had to specify them as the relevant entities for purposes of these short-term residential rental cases.

[00:36:14] Speaker 02:
Going back to the question to certify to the Nevada Supreme Court,

[00:36:18] Speaker 02:
The certification is supposed to be limited to situations where there is a significant difference in the relative competence of the federal court and the state court.

[00:36:29] Speaker 02:
It's a burden on the state court to send cases there.

[00:36:33] Speaker 02:
There's a very interesting concurring opinion, just as Rehnquist wrote many years ago in the Lehman case, which we pointed out.

[00:36:41] Speaker 02:
I was found surprising because it's a fairly much a long suggestion of why certification, which I know federal courts have developed a lot of enthusiasm before, has many more pitfalls that ought to be taken into account.

[00:36:54] Speaker 02:
It means it shouldn't be so readily adopted.

[00:36:58] Speaker 02:
We're talking about statutory construction, front, left, and sideways, in terms of the issues that you have before you, and it's notable that there's all sorts of federal cases that have decided these occupancy tax cases, and there's not a one

[00:37:14] Speaker 02:
that has ever certified to a state supreme court and there's also the Bedford Park case from the Seventh Circuit where the court went through and explained that it didn't make sense to certify because this is the classic kind of a situation where the federal courts have a perfectly capable of resolving.

[00:37:31] Speaker 04:
Do you agree that if we decided the relevant question was

[00:37:38] Speaker 04:
whether there is or isn't a triable issue of fact as to whether your clients are managing agents under the ordinance, that there's no controlling question to certify to the Supreme Court.

[00:37:54] Speaker 02:
I agree with that.

[00:37:55] Speaker 02:
And Your Honor, I'd go a step further.

[00:37:57] Speaker 02:
If you look at the questions they've certified, look at the second question, which you need in order to make the question relevant.

[00:38:08] Speaker 02:
the legal question.

[00:38:10] Speaker 02:
The second question presupposes that the online travel companies are selling the right to possess.

[00:38:17] Speaker 02:
That's not established in the record and it's contrary to the facts because as I mentioned to you a few moments ago, even at the reservation stage, the reservation that my clients facilitate is placed at the hotel.

[00:38:30] Speaker 02:
The hotel has to decide to give you the room.

[00:38:34] Speaker 02:
You have to have a credit card.

[00:38:36] Speaker 02:
You have to be of age.

[00:38:38] Speaker 02:
You have to not be intoxicated.

[00:38:40] Speaker 02:
And this is made clear

[00:38:43] Speaker 02:
to the guest by virtue of the various pages on the website that you see when you place the reservation.

[00:38:51] Speaker 02:
The hotel can only give you a reservation if it hasn't been oversold.

[00:38:57] Speaker 02:
The question has built into it.

[00:39:02] Speaker 02:
It's more factual than legal.

[00:39:04] Speaker 02:
Hence, it's not appropriate for certification.

[00:39:08] Speaker 02:
Excuse me.

[00:39:08] Speaker 02:
And it's not appropriate under rule five of the Nevada Rules of Appellate Procedure, which make clear that the court is only supposed to decide significant questions of Nevada law for purposes of the certification process.

[00:39:24] Speaker 02:
So let me just take a quick look here.

[00:39:26] Speaker 02:
I think I've covered the main points that I wanted to touch upon, unless your honors have.

[00:39:34] Speaker 02:
questions for me?

[00:39:37] Speaker 04:
No.

[00:39:38] Speaker 04:
All right.

[00:39:38] Speaker 04:
Thank you.

[00:39:39] Speaker 04:
Thank you.

[00:39:39] Speaker 04:
And Council, we will give you 2 minutes for rebuttal.

[00:40:25] Speaker 03:
Thank you, Your Honors.

[00:40:27] Speaker 03:
As to Council's arguments regarding setting the room rates and also relates to the managing agent issue, I would like to highlight footnote 10 of our opening brief

[00:40:41] Speaker 03:
in which the rate information, this comes directly from the contract between Expedia and the Venetian.

[00:40:50] Speaker 03:
Hotel authorizes Expedia to calculate on behalf of hotel and in accordance with this agreement the relevant rates as provided on a single day basis as well as the relevant room prices together with any hotel fees, taxes and other amounts payable based on the information entered by hotel

[00:41:11] Speaker 03:
through its approved third party connectivity partner.

[00:41:15] Speaker 03:
And any such action by Expedia to derive such rates, hotel fees, taxes or other amounts shall be deemed hotels action for purposes of this agreement.

[00:41:27] Speaker 03:
Hotel agrees to honor all standalone or packaged bookings made during the term at the rate in the Expedia partner central and the room price shown in the Expedia system.

[00:41:43] Speaker 03:
There is no doubt that it is the OTCs that set the price.

[00:41:49] Speaker 04:
Couldn't you fail to read a sentence that says,

[00:41:52] Speaker 04:
Notwithstanding the foregoing, Hotel acknowledges that it will promptly notify Expedia if Hotel believes that Expedia has incorrectly derived any rates, etc.

[00:42:01] Speaker 03:
Sure.

[00:42:02] Speaker 03:
I mean, that's in there, but you couldn't have a clearer expression of the designation of an agency than is set forth here.

[00:42:12] Speaker 03:
Now the question is then becomes, is it a managing agent?

[00:42:16] Speaker 03:
But further, when they say you don't get a right to possess the room, that's not true.

[00:42:21] Speaker 03:
This provision itself says that the hotel will honor and must honor that contract between the hotel.

[00:42:28] Speaker 03:
The second thing as to the Mississippi and the Arkansas cases, I want to point out that those were not managing agent cases.

[00:42:36] Speaker 03:
They may have to use the word operator, but the question here that we're talking about is managing agent.

[00:42:43] Speaker 03:
The final point that I'll make, and it is to highlight, it deals with what seems to be the argument that you must be a proprietor or an owner to be subject to taxation under the enabling legislation.

[00:42:58] Speaker 03:
One of the cases that was cited by defendants is very similar, at least has some similar discussion about enabling acts.

[00:43:07] Speaker 03:
It's Louisville, Jefferson County, Metro Government v Hotels.com LP.

[00:43:14] Speaker 03:
And that can tell- Counsel, why don't you conclude, please.

[00:43:16] Speaker 03:
I will.

[00:43:17] Speaker 03:
That Kentucky statute says, the rent for every occupancy of a suite room or rooms charged by all persons, companies, corporations or other like or similar persons, groups or organizations during business as motor courts, motels, hotels, inns or like or similar accommodations businesses.

[00:43:39] Speaker 03:
That is a limitation to the proprietors.

[00:43:43] Speaker 03:
Our statute is persons, all persons, who are in the business of providing lodging.

[00:43:50] Speaker 03:
So we can get back to that definition.

[00:43:52] Speaker 03:
Thank you.

[00:43:53] Speaker 04:
All right.

[00:43:53] Speaker 04:
We thank counsel for their arguments, and the case just argued will be submitted.