HomeMy WebLinkAbout02/15/2022 AGENDA PUBLIC NOTICE
In association with Resolution No.
This notice is given pursuant to Tex. Gov't Code § 2254.1036.
A. The City of Beaumont, Texas ("City") intends to pursue claims for
monetary damages, declaratory relief, and other legal remedies
("Damages") against Netflix, Inc.,Hulu LLC, Disney DTC LLC, and
other video service providers ("VSPs") as determined for non-
payment of franchise fees as set forth under the Texas Video Services
Providers Act, Tex. Util. Code Sec. 66 (the "Litigation"). The City's
desired outcome in pursuing the Litigation is to recover from the VSPs
Damages owed to the City for failure to pay franchise fees and obtain
an order requiring the VSPs to pay the franchise fees going forward,
in addition to other relief allowed under the law. Therefore, there is
substantial need for the legal services.
B. The City wishes to engage the following three law firms
("Counselors"):McKool Smith,P.C.,Ashcroft Sutton Reyes LLC, and
Korein Tillery LLC. Details regarding their competence,
qualifications and experience are attached at Exhibit 1.
C. The relationship with the three Counselors would span from the time
of engaging them in the Litigation until it is completed. The City has
had no prior relationship with the Korein Tillery or Ashcroft Sutton
Reyes firms. The City was a member of a class of cities represented
by McKool Smith and Mr. Wolens to recover municipal hotel
occupancy taxes. The City was pleased with the representation
provided by McKool Smith and Mr. Wolens.
D. The legal services for which the Counselors are retained cannot be
adequately performed by the attorneys and supporting personnel of the
City. The City's budget is strained and has limited resources for its
legal department. The City Attorney's office is engaged in hundreds
of transactional matters and in overseeing, managing and litigating
hundreds of matters. In addition, the investigation, research, and
litigation of the claims will require the expenditure of large sums of
money and require the work of numerous attorneys, paralegals and
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others who are familiar with the VSPs' wrongful actions and/or
inactions.Thus,the City does not have the resources it believes will be
necessary to engage in protracted, time-consuming, and expensive
litigation.
E. The legal services for which the law firms are retained cannot
reasonably be obtained from attorneys in private practice under a
contract providing for the payment of hourly fees without regard to the
outcome of the matter for the following reasons:
(1) TIME: It is not economically feasible for the City to pay outside
counsel on an hourly basis for what the City anticipates will
require significant hours of attorney time and significant costs
advanced in pursing the relief the City expects to achieve.
The issues involved in the City's claim have not been
adjudicated and determined since the Texas Video Services
Providers Act was passed in 2005. As an unsettled matter of
law, the VSPs will likely aggressively oppose all aspects of the
Litigation. It will require the skill of attorneys who have
familiarity with complex litigation. It is the City's experience
that attorneys with this familiarity and experience have high
billable hourly rates and are not receptive to taking on
contingency fee cases such as this where recovery is not certain;
doing so would preclude them from taking other cases on an
hourly paid basis.
(2) COMPLEXITY/DAMAGES: Besides legal issues, determining
damages may be complicated to calculate. Damages will be
based,in part, on: 1)gross receipts of each VSP,with data going
back thirteen years to 2007, and 2) individual subscriptions to
residents of the City. It is unclear in what format the data is kept
to determine gross receipts, but it is anticipated to be complex
and difficult to understand. It will require experienced lawyers
with the assistance of experts to decipher the data and determine
a mathematical or formulaic calculation for each defendant for
receipts generated over 13-plus years. Because there are at least
three distinct defendants, it is likely that they have different
business practices and ways of maintaining their data.
(3) EXPENSES: Finally, the Counselors the City requests to
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employ have agreed to advance expenses in the case, which are
likely to be significant given the need for experts in several
fields and the general high expense oflitigation.These expenses
include but are not limited to: filing and service fees; costs of
investigative services; travel expenses; deposition expenses and
court reporter fees; outside trial services providers; expert
witness fees; trial equipment rental and operation fees;
preparation of exhibits and graphics; the costs of briefs and
transcripts on appeal; and miscellaneous copying, postage,
shipping, and courier expenses.
F. The advance of expenses is risky because,under the terms of the legal
services agreement, expenses are reimbursed only out of any recovery.
Because the City has limited funds to advance for litigation expenses,
it is especially in the City's interest, and that of its residents,to have
attorneys advance those expenses and only be reimbursed by the City
out of any recovery if the City is successful. Entering a contingent fee
contract for legal services is in the best interest of the residents of the
City because it will allow the City to recoup franchise fees owed the
City since approximately 2007 and obtain a declaratory judgment
ordering the VSPs to pay the fees in the future. Franchise fees
recovered in the Litigation will be used to support other essential City
services.Retaining counsel who will advance expenses in the litigation
will allow the City to use those funds instead to support necessary city
services.
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EXHIBIT 1
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McKOOL SMITH P.C.
McKool Smith was founded in 1991 with offices in Dallas, Austin, Houston, Marshall, Los
Angeles, and New York. It represents clients in complex commercial litigation, insurance
recovery,intellectual property,bankruptcy,and white-collar defense matters.
In the past 15 years, the firm has secured 12 nine-figure jury verdicts and 15 eight-figure jury
verdicts. It has also won more VerdictSearch and The National Law Journal"Top 100 Verdicts"
than any other law firm in the country. Recent recognitions include:
Recognized by BTI Consulting as one of ten"Awesome Opponents,"the firms most feared
by senior in-house counsel,in its annual Litigation Outlook Report(2019-2020).
Ranked a "Tier 1" law firm for bankruptcy, commercial, securities, banking & finance,
intellectual property, patent, real estate, and regulatory enforcement litigation by U.S.
News &World Report-Best Law Counselors (2020).
Ranked as a leading firm for Commercial Litigation, Insurance Policyholder Litigation,
and Securities Plaintiff Litigation by Chambers USA(2020).
Ranked as a "Highly Recommended" Litigation Firm and Plaintiff Firm by Benchmark
Litigation(2020).
Awarded"Insurance Group of the Year"by Law360 (2020).
Recognized as a"Texas Powerhouse Firm"by Law360 (2019).
Awarded"Trial Group of the Year"by Law360 (2018).
Steven Wolens is a principal at McKool Smith. He has practiced law since 1976. He received a
B.A. with distinction from Stanford University in 1973, and a J.D. from Southern Methodist
University Law School in 1976. He represents clients in complex class-action claims and
commercial litigation. He is peer-reviewed as an AV rated lawyer by Martindale Hubbell.
In certifying a class action on behalf of 173 Texas cities in City of San Antonio v Hotels.corn, the
district court found"With regard to adequacy of counsel,the Court must determine whether class
counsel has the qualifications, experience and training to litigate the case to its conclusion...The
lead attorneys in this case are Steven Wolens and Gary Cruciani. Both attorneys have a wealth of
experience in complex litigation, including substantial class action experience." City of San
Antonio v. Hotels.com, No. SA-06-CA-381-OG, 2008 WL 2486043, at *8 (W.D. Tex. May 27,
2008).
For 24 years,he served as a member of the Texas Legislature and authored landmark legislation
covering partnerships and limited liability corporations, ethics reforms, antitrust laws,and
electric deregulation. Texas Monthly magazine named him one of the"Ten Best Legislator"in
the state on six separate occasions.He currently serves on the Texas Ethics Commission,which
he chaired from 2017-2019.
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ASHCROFT SUTTON REYES LLC
Ashcroft Sutton Reyes LLC (d/b/a/ Ashcroft Law Finn) was founded in 2008 by former U.S.
Attorney General, Governor, and Senator John. Ashcroft. Together with the select group of
seasoned, respected, and experienced senior executives he recruited to join him many of whom
helped to lead the U.S. Department of Justice during a significant time in our nation's history
following the attacks on 9/11—the Ashcroft Firm has earned a reputation for integrity and a track
record for accelerating successful resolutions of even the most complex matters.
In addition to General Ashcroft, the Ashcroft Firm is comprised of the former U.S. Attorney for
the Western District of Texas, former Deputy Assistant to the President of the United States,
former member of the Executive Administration of the Texas Attorney General's Office, former
Assistant United States Attorney,former Deputy Associate Attorney General and Chief of Staff in
the U.S. Department of Justice, former General Counsel and Assistant General Counsel to the
Special Inspector General for Iraq Reconstruction, former Assistant General Counsel to the
Governor of Texas, and several other highly skilled and experienced attorneys, all of whom know
and understand government.
The Ashcroft Firm's attorneys are litigators who have led multi-plaintiff lawsuits against
formidable foes,like the federal government, other states, and local government entities.Ashcroft
attorneys have appeared in federal and state courts throughout the United States and
internationally,ranging from the Supreme Court of the United States to municipal courts in Texas.
Additionally, the Ashcroft Firm provides legal and consulting services to world-leading clients,
including Fortune 500,nation states, elected officials, multi-national corporations, and corporate
executives. The Ashcroft Firm regularly leads large entities (government and private) through a
large range of regulatory matters including issues involving the FCPA, FATCA, OFAC, SOX,
ITAR,FCA,the FAR and the Bank Secrecy Act(Anti-Money Laundering).
Ashcroft attorneys have tried countless civil and criminal cases to verdict in state and federal courts
throughout the country. The legal experience and efforts of Ashcroft attorneys has resulted in
governmental entities recovering billions for contractual breaches,theft,tax evasion,waste,fraud,
and abuse.
KOREIN TILLERY LLC
Korein Tillery — based in Chicago and St. Louis — is one of the country's most successful
plaintiffs' complex-litigation firms, representing a broad array of clients in high-stakes lawsuits
and delivering over $18 billion in verdicts and settlements over the last 16 years. The National
Law Journal has consistently deemed Korein Tillery to be one of the country's top plaintiffs'firms
by naming it to its"Plaintiffs'Hot List"seven times in the past 16 years.In 2014 and 2015,Korein
Tillery was named by the NLJ as a member of its top 50 Elite Trial Lawyers.
Since 2007, Korein Tillery has represented Missouri municipalities in litigation that sought to
recover unpaid license taxes. In suits against wireless and wireline carriers, Korein Tillery
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recovered hundreds of millions of dollars of license tax revenues both retrospectively and
prospectively for more than 350 cities throughout Missouri. Korein Tillery has recovered more
than$1 billion for Missouri municipalities. As a result of their work in these cases, the Missouri
Lawyers Weekly recognized Korein Tillery partners with awards in the "largest plaintiff wins"
category in 2007, 2009, 2010, 2015, and 2017. On two separate occasions corporate defendants
have secured state legislation banning the litigation. In both instances Korein Tillery has
successfully challenged the legislation as unconstitutional in the Supreme Court of Missouri.See,
e.g.,State ex rel. Collector of Winchester v. Jamison, 357 S.W.3d 589 (Mo. 2012).
Steven Berezney is a partner in Korein Tillery's St. Louis office. He received his J.D. from the
University of Illinois in 2003, where he served as Editor-in-Chief of the Law Review. After
graduation, Mr. Berezney served as a judicial law clerk for Judge Laura Denvir Stith of the
Supreme Court of Missouri.
While in private practice at Husch Blackwell, Mr. Berezney was part of the team that won a$1
billion judgment that, at the time, was the fourth largest patent infringement jury verdict in U.S.
history,according to Bloomberg.Monsanto Co. v. EL DuPont de Nemours&Co., 4:09-cv-00686-
ERW(E.D.Mo.Aug. 1,2012).At Korein Tillery,Mr.Berezney managed and litigated all aspects
of multi-billion-dollar cases in federal trial and appellate courts against Wall Street investment
banks arising from misrepresentations made about residential mortgage-backed securities. Mr.
Berezney played a significant role in obtaining over $5 billion in recoveries. Mr. Berezney has
also been part of the team litigating Sherman Act price fixing conspiracy claims raised against 16
investment bank defendants in In re:Foreign Exchange Benchmark Rates Antitrust Litigation,No.
13-cv-07789-LGS (S.D.N.Y.),resulting in$2.3 billion in recoveries to date.
Garrett Broshuis received his J.D. from Saint Louis University,where he graduated valedictorian
and served as Editor-in-Chief of the Law Journal.Before law school,Mr.Broshuis played six years
as a pitcher in the San Francisco Giants' organization, working at all levels of minor league
baseball.
Since joining Korein Tillery, Mr. Broshuis has represented minor league baseball players in a
novel case seeking to increase the players' pay,which recently had its class action status affirmed
and expanded by the Ninth Circuit Court of Appeals.Senne v.Kansas City Royals Baseball Corp.,
934 F.3d 918, 922(9th Cir.2019).He also represents classes of Missouri municipalities in several
actions against Fortune 500 and other large companies.
Mr.Berezney and Mr.Broshuis are both responsible for litigating the first known filed lawsuit(in
Missouri)seeking to require streaming companies to pay franchise fees to municipalities.They are
litigating similar cases in Indiana and Georgia.
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4862-0916-4809