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Case 3:07-cv-02174-MMA-WMC Document 310-2 Filed 05/17/12 Page 9 of 310 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 MICHAEL SHAMES; GARY GRAMKOW, Case No. 07cv2174-MMA(WMc) on behalf of themselves and on behalf of all 11 persons similarly situated, CLASS ACTION 12 Plaintiffs, STIPULATION OF SETTLEMENT 13 v. 14 THE HERTZ CORPORATION, et al., 15 16 Defendants. 17 18 19 20 21 22 23 24 25 26 27 28 Case 3:07-cv-02174-MMA-WMC Document 310-2 Filed 05/17/12 Page 10 of 310 1 This Stipulation of Settlement dated as of May 15, 2012 (the “Stipulation”), is made and 2 entered into by and among: Michael Shames and Gary Gramkow, on behalf of themselves and, 3 by Gramkow, on behalf of each of the Class Members, by and through Plaintiffs’ counsel of 4 record in the Litigation; and Defendants, The Hertz Corporation, Dollar Thrifty Automotive 5 Group, Inc., Avis Budget Group, Inc., Vanguard Car Rental USA, LLC, Enterprise Holdings, 6 Inc., Fox Rent A Car, Inc. and the California Travel and Tourism Commission, by and through 7 their counsel of record in the Litigation. The Stipulation is intended to fully, finally, and forever 8 resolve, discharge, and settle the Released Claims (as defined herein), subject to the approval of 9 the Court and the terms and conditions set forth in this Stipulation. 10 I. THE LITIGATION 11 On November 14, 2007, Plaintiffs filed the initial Complaint in this action, alleging, 12 among other things, that Defendants engaged in a contract, combination or conspiracy to fix 13 rental car prices at California airports by agreeing – pursuant to authority reflected in Assembly 14 Bill 2592 – to pass through their Airport Concession Fee and Tourism Commission Assessment 15 obligations as surcharges in violation of the Sherman and Clayton Acts and state law and that the 16 CTTC violated the Bagley-Keene Act. 17 On November 29, 2007, Plaintiffs filed a Motion for Preliminary Injunction against the 18 CTTC relating to the alleged Bagley-Keene Act violations. On December 12, 2007, the Court 19 entered an agreed interim order regarding the alleged Bagley-Keene Act violations. Thereafter 20 on January 25, 2008, all Defendants filed Motions to Dismiss. On April 8, 2008, the Court 21 granted the Defendants’ Motions to Dismiss and denied without prejudice Plaintiffs’ Motion for 22 Preliminary Injunction. 23 On May 1, 2008, Plaintiffs filed their First Amended Complaint. On July 24, 2008, the 24 Court granted the CTTC’s motion to dismiss in its entirety, and judgment was thereafter entered 25 as to the CTTC. Plaintiffs timely appealed the CTTC judgment. The District Court also granted 26 in part and denied in part the Rental Car Defendants’ motion to dismiss. The Rental Car 27 Defendants then answered the First Amended Complaint, denying all allegations of wrongdoing 28 and asserting numerous affirmative defenses. Plaintiffs continued to litigate the appeal against 1 07cv2174-MMA(WMc) Case 3:07-cv-02174-MMA-WMC Document 310-2 Filed 05/17/12 Page 11 of 310 1 the CTTC in the Ninth Circuit while simultaneously litigating against the Rental Car Defendants 2 in the District Court. 3 On June 8, 2010, the Court of Appeals for the Ninth Circuit rendered its initial decision 4 affirming the dismissal of, and judgment for, the CTTC. On June 29, 2010, Plaintiffs filed a 5 petition for reconsideration and rehearing en banc. 6 On July 16, 2010, the District Court entered a stay of discovery pending briefing on the 7 effect of the Ninth Circuit’s original opinion on the viability of Plaintiffs’ claims against the 8 Rental Car Defendants. On November 24, 2010, the Court of Appeals withdrew its earlier 9 opinion and reversed the District Court’s dismissal of the CTTC. On December 27, 2010, the 10 Mandate issued. On February 7, 2011, the CTTC answered the First Amended Complaint, 11 denying all allegations of wrongdoing and asserting numerous affirmative defenses. On 12 February 23, 2011, the District Court lifted the stay of discovery. 13 The parties engaged in extensive discovery and motion practice during the four-year 14 pendency of this case except during the period when discovery was stayed. In particular, the 15 Defendants collectively produced more than 700,000 pages of documents and voluminous 16 transaction data. Plaintiffs also took the depositions of more than 24 current and former 17 employees of the Defendants and other third parties. 18 On February 9, 2011, the parties engaged in a settlement conference before Magistrate 19 Judge William McCurine, Jr. Thereafter, on April 13, 25, and 26, 2011, the parties participated 20 in mediation with the Honorable Ronald M. Sabraw (Ret.) of JAMS. After the April 2011 21 mediation failed to result in an agreement to resolve the Litigation, the Settling Parties engaged 22 in further intensive discovery and continued settlement negotiations both separately and through 23 Judge Sabraw. On and after October 17, 2011, the parties reached an agreement in principle on 24 certain economic terms to settle the Litigation with all Defendants. Subsequently, the Settling 25 Parties continued negotiations further, including three additional mediation sessions with Judge 26 Sabraw on November 14, 2011, December 16, 2011, and January 18, 2012, resulting in the terms 27 and conditions set forth in this Stipulation. 28 2 07cv2174-MMA(WMc) Case 3:07-cv-02174-MMA-WMC Document 310-2 Filed 05/17/12 Page 12 of 310 1 II. DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY 2 Defendants have denied and continue to deny each and all of the claims alleged by 3 Plaintiffs in the Litigation. Defendants expressly have denied and continue to deny all charges 4 of wrongdoing or liability against them arising out of any of the conduct, statements, acts or 5 omissions alleged, or that could have been alleged, in the Litigation. Defendants also have 6 denied and continue to deny, among other allegations, that they engaged in any contract, 7 combination or conspiracy in violation of the antitrust laws, or that they or any of them, violated 8 state law, that the Plaintiffs or the Class have suffered any damage, that the prices paid by renters 9 of cars at California airports were inflated by reason of the alleged conduct or otherwise, and that 10 the Plaintiffs or the Class were harmed in any way by the conduct alleged in the Litigation. 11 Defendants continue, as they always have, to recognize that the statutory scheme authorizing the 12 TCA leaves the decision of whether to separately state the TCA to consumers to the discretion of 13 each rental car company. The CTTC additionally denies that it violated the Bagley-Keene Act. 14 Defendants believe that the evidence developed to date supports their position that they acted 15 properly at all times and that the Litigation is without merit. 16 Nonetheless, Defendants have concluded that further conduct of the Litigation would be 17 protracted and expensive, and that it is desirable that the Litigation be fully and finally settled in 18 the manner and upon the terms and conditions set forth in this Stipulation. Defendants also have 19 taken into account the uncertainty and risks inherent in any litigation, especially in complex 20 cases like the Litigation. Defendants have, therefore, determined that it is desirable and 21 beneficial to them that the Litigation be settled in the manner and upon the terms and conditions 22 set forth in this Stipulation. 23 III. CLAIMS OF THE PLAINTIFFS AND BENEFITS OF SETTLEMENT 24 The Plaintiffs believe that the claims asserted in the Litigation have merit and that the 25 evidence developed to date supports the claims. However, Plaintiffs and their counsel recognize 26 and acknowledge the expense and length of continued proceedings necessary to prosecute the 27 Litigation against Defendants through trial and through appeals. Plaintiffs and their counsel also 28 have taken into account the uncertain outcome and the risk of any litigation, especially in 3 07cv2174-MMA(WMc) Case 3:07-cv-02174-MMA-WMC Document 310-2 Filed 05/17/12 Page 13 of 310 1 complex actions such as the Litigation, as well as the difficulties and delays inherent in such 2 litigation. Plaintiffs and their counsel also are mindful of the inherent problems of proof under, 3 and possible defenses to, the antitrust law and state law violations asserted in the Litigation. 4 Representative Plaintiff and Plaintiffs’ Counsel believe that the settlement set forth in the 5 Stipulation confers substantial benefits upon the Class, and that it is fair and reasonable. Based 6 on their evaluation, Representative Plaintiff and Plaintiffs’ Counsel have determined that the 7 settlement set forth in the Stipulation is in the best interests of the Class. 8 IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT 9 NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the 10 Plaintiffs (for themselves, and by Gramkow, on behalf of each of the Class Members) and the 11 Defendants, by and through their respective counsel or attorneys of record, that, subject to the 12 approval of the Court, the Litigation and the Released Claims shall be finally and fully 13 compromised, settled, and released, and the Litigation shall be dismissed with prejudice, as to all 14 Settling Parties, upon and subject to the terms and conditions of the Stipulation, as follows. 15 1. Definitions 16 As used in the Stipulation the following terms have the meanings specified below: 17 1.1 “Administrator” means the firm Kurtzman Carson Consultants.