R2022-023 2022-02-14RESOLUTION NO. R2022-23
A Resolution of the City Council of the City of Pearland, Texas, authorizing
participation in certain litigation to recover non-payment of franchise fees
required in the Texas Video Service Providers Act and authorizing a legal
Service Contingency Fee contract.
WHEREAS, the 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
required in the Texas Video Service Providers Act, Texas Utilities Code Sec. 66 (the
“Litigation”); and
WHEREAS, the City’s desired outcome in 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;
and
WHEREAS, the VSPs deliver video programming to their customers via broadband
internet through wireline facilities located at least partially in the public right of way; and
WHEREAS, the VSPs do not pay franchise fees to the City as required in section
66.005 of the Texas Utilities Code; and
WHEREAS, the City has a substantial need of the legal services of counsel to
represent it in the Litigation; and
WHEREAS, the City requires legal counsel that specialize in complex litigation and are
highly knowledgeable and experienced in the legal issues surrounding the non-payment of
franchise fees by the VSPs; and
WHEREAS, the City now desires to enter into a contingent fee contract (“Contract”) for
legal services with McKool Smith, P.C., Ashcroft Sutton Reyes LLC, and Korein Tillery LLC
(“Counselors”) to represent the City in the Litigation; and
WHEREAS, Subchapter C of Chapter 2254 of the Texas Government Code (“Chapter
2254”) requires that a political subdivision of the State of Texas, including the City, may enter
into a contingent fee contract for legal services only after: (i) the governing body of the political
subdivision has provided written notice to the public stating certain provisions enumerated within
DocuSign Envelope ID: 11C2288B-DD13-4051-A3C5-D9E190FF70CE
Chapter 2254; (ii) the governing body of the political subdivision approved such contract in an
open meeting called, in part or in whole, for the purposes of considering such contract; and (iii)
the governing body of the political subdivision stated in writing certain findings made by the
governing body upon the approval of such contract; and
WHEREAS, before the contingent fee contract for legal services is effective and
enforceable, the City must receive approval of the Contract by the Office of the Attorney
General of Texas or the Contract is otherwise allowed under Tex. Gov’t Code §2254, as
amended; and
WHEREAS, the City has caused notice of this resolution, this meeting, and certain
provisions enumerated within Chapter 2254 to be provided to the public in accordance with the
Texas Open Meetings Act and Chapter 2254; and
WHEREAS, the meeting at which this resolution is being considered is an open
meeting called, in part or in whole, for the purpose of considering: (i) the City’s need for legal
counsel to represent it in the Litigation; (ii) terms of the Contract; (iii) the competence,
qualifications, and experience of the Counselors; and (iv) the reasons that the Contract is in the
best interest of the City and complies with Chapter 2254; and
WHEREAS, the City Council hereby finds and determines that the adoption of this
resolution is in the best interests of the residents of the City, now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That the recitals contained in the preamble hereof are hereby found to be
true, and such recitals are hereby made a part of this resolution for all purposes and are
adopted as a part of the judgment and findings of the City Council.
Section 2. That the City Council hereby finds that: (i) there is a substantial need for
the legal services to be provided in the Litigation; (ii) the legal services to be provided in the
Litigation cannot adequately be performed by the attorneys and supporting personnel currently
employed by the City; (iii) the legal services to be provided in the Litigation cannot reasonably
be obtained from attorneys in private practice under a contract providing only for the payment of
hourly fees, without regard to the outcome of the matter, because of the nature of the Litigation
DocuSign Envelope ID: 11C2288B-DD13-4051-A3C5-D9E190FF70CE
and without imposing an unnecessary cost and burden on the City’s finances; and (iv) the
relationship between the City or the City Council and the Counselors is not improper and would
not appear improper to a reasonable person.
Section 3. That based on the findings by the City Council described above, the City
Council hereby authorizes the City Manager to execute a legal services contract with McKool
Smith, P.C., Ashcroft Sutton Reyes LLC, and Korein Tillery LLC, approved as to form by the
City Attorney, effective only upon approval by the Office of the Attorney General of Texas or as
otherwise allowed under Tex. Gov’t Code §2254, as amended.
Section 4. That it is officially found, determined, and declared that the meeting at
which this resolution is adopted was open to the public and public notice of the time, place, and
subject matter of the public business to be considered at such meeting, including this resolution,
was given, all as required by Chapter 551 as amended, Texas Government Code.
Section 5. That the City will pay the Counselors a contingency fee and expenses in
accordance with the rates in Attachment A to this resolution and contingent upon the recovery, if
any, by the City in the Litigation.
Section 6. That this Resolution shall take effect immediately from and after its
passage in accordance with the provisions of the Charter of the City of Pearland, and it is
accordingly so resolved.
PASSED, APPROVED and ADOPTED this the 14th day of February, A.D., 2022.
________________________________
J.KEVIN COLE
MAYOR
ATTEST:
________________________________
CRYSTAL ROAN, TRMC, CMC
CITY SECRETARY
APPROVED AS TO FORM:
________________________________
DARRIN M. COKER
CITY ATTORNEY
DocuSign Envelope ID: 11C2288B-DD13-4051-A3C5-D9E190FF70CE
ATTACHMENT A
The fees for legal services provided by the Counselors in connection with the Litigation are
contingent upon the recovery by the City of Damages in the Litigation and will be paid out of
such recovery, if any, as follows:
If the City obtains a recovery and collection on behalf of the City before a trial or appeal, the
Counselors will receive attorneys’ fees in the amount of Thirty Percent (30%) of the gross
recovery. If recovery for the City occurs after (1) the beginning of trial (at the beginning of
opening argument), or (2) upon appeal of any judgment, the Counselors will instead receive
attorneys’ fees in the amount of the Thirty-Three and One-Third (33 1/3%).
The Counselors will advance all costs associated with the Litigation. The City agrees to
reimburse the Counselors for all reasonable costs out of its share of the gross recovery.
DocuSign Envelope ID: 11C2288B-DD13-4051-A3C5-D9E190FF70CE