The city of San Diego has been sued for the second time in almost three months over a 2 percent tourism marketing levy that hotel guests have paid for the last several years.

The class-action complaint, which was filed last week, not only seeks to bar the city from continuing to levy the fee but also asks for the repayment of funds paid by hotel customers over a more than 3 1/2-year period. That sum, while not named in the suit, could total well over $100 million.

The premise of the suit and another filed in September by Irvine attorney John McClendon is that the tourism levy approved by the city and voted on by the city’s hotel owners is illegal because it is a tax, which requires voter approval under the state constitution.

The millions of dollars collected by the city since the tourism levy went into effect in 2008 is administered by a hotelier-run Tourism Marketing District, which doles out funds for the purpose of promoting San Diego as a tourist destination.


“The city’s retention of its ill-gotten gains would result in the unjust enrichment of the city at the expense of plaintiff and the class members,” attorney Ronald Marron says in his suit, calling the tourism fee an “unlawful hidden hotel tax.”

In addition to seeking a prohibition of any further tourism assessment collections, Marron’s suit also asks for an order that would block any more expenditures of TMD revenues.

Over the last three fiscal years beginning in mid-2013 through the middle of this year, the city’s tourism assessment collections approached $101 million.

The suit also questions whether the city is meeting its obligation to levy no more than what is necessary to cover the costs of marketing the city. The benefits to the participating hotels, the suit says, are “measured by a flawed return-on-investment (ROI) calculation that is based on speculation, conjecture, estimations, and misleading statistics.”


The city and Tourism Marketing District believed its legal woes had ended in September when a Superior Court judge dismissed a long-running suit filed by San Diego attorney Cory Briggs challenging the legality of the tourism marketing levy.

The dismissal came shortly after the San Diego City Council voted to eliminate the tourism surcharge for all small lodging businesses and home-sharing rentals under 70 rooms. That change paved the way for a dismissal of the Briggs suit.

The four-year-long legal battle with Briggs cost the marketing district more than $2.5 million in legal fees.

Marron is a class-action attorney who has pursued a wide variety of cases, going after insurance companies, mortgage brokers, food businesses and others. The suit names as a plaintiff a Pleasant Hill woman who has stayed at several San Diego hotels and is meant to represent a class of affected hotel guests.


As for the next step in the legal process, Marron said Wednesday that his client “would prefer to discuss the issues presented in the complaint with city representatives and see if we can work towards an amicable resolution.”

He added that he is aware of previous litigation on the issue, which he said created “some some animus, which my client and I hope to avoid.”

Briggs, who represented San Diegans for Open Government in his suit, declined to comment on the substance of the Marron filing. At the time of the dismissal of his case, he claimed victory, saying his litigation forced a change in the structure of the marketing district that exempted small lodging operators.

He noted Wednesday that his client had agreed in mediation to settle his suit in a way that would have immunized San Diego from further litigation on the tourism levy by validating the TMD levy as a legal assessment.


His understanding, he said, was that the marketing district attorney was not interested.

“I cannot fathom why they would have turned down a settlement that would not have cost them one penny more and would have provided them with insurance against both lawsuits,” Briggs said.

Briggs is still seeking attorney fees, and a hearing will be held to settle that issue.

Tourism Marketing District board chairman Bill Evans, a San Diego hotelier, declined Wednesday to comment on the Marron suit.


San Diego City Attorney Jan Goldsmith also would not comment, saying only that his office is currently reviewing the complaint.

After voting to renew the Tourism Marketing District in 2012, the City Council the following year agreed to hold back a total of $30 million in assessment revenue over the next several years to protect its general fund in case legal challenges forced the money to be returned to guests.

That litigation reserve is now up to $29 million and by fiscal year 2018, it will reach the required $30 million. That reserve, though, represents a fraction of what the lawsuits are seeking.


lori.weisberg@sduniontribune.com (619) 293-2251

Twitter: @loriweisberg