As of November, as reported by the Reader, boardmembers for the San Diego Tourism Marketing District have spent more than $2.1 million on outside attorneys trying to get a lawsuit dismissed.
Attorney Cory Briggs for San Diegans for Open Government filed the lawsuit, claiming the hotel tax collected by the marketing district is illegal.
The marketing district’s attorneys have questioned the legitimacy of San Diegans for Open Government and whether one of its members was in fact a member who paid the transient occupancy tax.
Judge Joel Wohlfeil will now weigh those arguments. If he sides with hoteliers, the tax will remain and San Diego's hotel owners and the nonprofit marketing district will continue to receive more than $30 million a year (2 percent of which is paid to the city) for the next 39 years to promote San Diego.
But if Wohlfeil sides with San Diegans for Open Government, the case will proceed to trial, where the larger question of whether a group of private citizens — in this case, hotel owners — can levy a tax without a public vote (as required by California's constitution).
Wohlfeil is expected to give his ruling by mid-January. Earlier this month the two sides submitted their written closing arguments.
In her closing argument, marketing district attorney Jennifer Pancake said, “This case raises untested constitutional questions of first impression important to tourism marketing districts, cities, and counties across California. The Court must ensure it has subject matter jurisdiction before disposing of these issues, however, and this Court must therefore review serious questions regarding San Diegans for Open Government's standing, existence as a bona fide entity distinct from its counsel, and its corporate capacity to bring this suit….
"[San Diegans for Open Government] lacks standing for another, independent reason: it is not a membership organization, but rather is the alter ego of its counsel. As [Briggs Law Corporation] is not obligated to pay the hotel assessment and lacks standing here for that reason, so too [San Diegans for Open Government], its creature.
"Simply put, the evidence firmly establishes [San Diegans for Open Government] is an abuse of the corporate form by a for-profit law firm, not a bona fide non-profit created and operated by community activists."
During the course of the past year, Pancake and the marketing district have challenged the legitimacy of Briggs and the nonprofit. Among their contentions, many of which written about in a series of reports on Briggs by KPBS-affiliate, Inewsource, was an allegation of conflict of interest between Briggs and his wife, who was a former employee of an environmental firm who conducted reports on municipal projects that Briggs and San Diegans for Open Government later sued over.
More recently, Pancake and her team have questioned the legitimacy of San Diegans for Open Government's members, namely Linda Perrine, who claims to have become a member before the lawsuit was filed and had paid into the transient occupancy tax after renting properties she owned. Specifically, the district's attorneys accuse Briggs and his law firm of doctoring a membership form that Perrine filled out in 2012. They say that form was made after the lawsuit was filed in a mad dash to prove it had standing to sue. To try and prove the argument, the district hired expert witnesses to prove that the forms were in fact post-dated.
For his closing argument, Briggs says that the accusations of conflict of interest and the targeting of the nonprofit group's members are a last resort to keep the case from going to trial.
"[San Diegans for Open Government] might not be run perfectly, but it's not run illegally by any stretch," wrote Briggs in his closing argument to Wohfeil submitted on December 19.
"If the [marketing district] tax is not invalidated, [hoteliers] will have managed to generate more than $30 million per year for 39.5 years, more than $1 billion in new revenues without a public vote. That means [hoteliers and their attorneys] have at least a billion reasons to lie, and to attack [San Diegans for Open Government's] counsel personally and repeatedly when [San Diegans for Open Government], in contrast, stands to gain nothing but a public vote on the tax not even a penny."
In his argument Briggs says that even if the nonprofit were his alter ego, it shouldn't have any bearing on the case.
"Accepting (only for the moment) [the district's] premise that [San Diegans for Open Government] was contrived by the undersigned for personal pecuniary gain in the course of vindicating significant public rights, so what? [State law] Section 1021.5 encourages that sort of socially beneficial behavior by lawyers. Indeed, even an attorney who is a member of an organization, e.g., as in-house counsel, may recover attorney fees under Section 1021.5 if the attorney meets the requirements of the private attorney general doctrine.
"Furthermore, Defendants have not cited a single statute that [San Diegans for Open Government] has tried to circumvent by hiring the undersigned and/or Briggs Law Corporation to represent the non-profit in the majority of its lawsuits.
"...[Hoteliers] offered no evidence for there is none to suggest that [Briggs] has any ownership or other interest in [San Diegans for Open Government] other than that of a trustworthy, effective legal advisor who shares the client's values and enjoys and appreciates the opportunities that the client's choice of cases provides to improve government. Similarly, there is no evidence that [San Diegans for Open Government's] counsel does anything that is not the result of an instruction given by [its] board of directors. The simple truth is that [San Diegans for Open Government] cannot afford to pay attorneys by the hour, and its counsel is willing to take cases on a contingency basis. For everyone except [the tourism marketing district] who ha[s] more than one billion reasons to hate it it's the perfect match."
Judge Wohlfeil is expected to give his ruling of whether San Diegans for Open Government has standing to sue sometime in mid-January. If allowed to move forward the trial is scheduled for early February.