- California Supreme Court Upholds Class Action Claim for Refund of Local Tax
- July 28, 2011 | Author: Kelly J. Salt
- Law Firm: Best Best & Krieger LLP - San Diego Office
The California Supreme Court ruled this week in Ardon v. City of Los Angeles that a plaintiff may bring a class action claim on behalf of other taxpayers against a city for a tax refund. The court held that a taxpayer’s tax refund claim is permissible under California Government Code section 910 in the absence of a specific statutory refund procedure set forth in any applicable governing claims statute. This case is important because the state’s highest court disagreed with several earlier Court of Appeal decisions holding that California Constitution article XIII, section 32 bars class claims and class actions for the refund of locally adopted taxes absent specific statutory authority. It is important to note, however, that this decision does not apply to situations where other statutory procedures for refunds are applicable.
The claim in this case was filed by the plaintiff on behalf of himself, and all others similarly situated, for declaratory, injunctive, monetary and other relief, challenging a city’s telephone users tax (TUT). Among other things, the complaint sought certification of the matter as a class action and a refund of the TUT.
Government Code section 910 requires that a claim filed with a government agency include the name of the “claimant” or the person acting on his or her behalf. The Supreme Court rejected the Court of Appeal’s ruling that section 910 does not permit class action claims because the word “claimant” suggests that the statute applies only to “individual” claims.
The Supreme Court, however, held in its decision Monday, that a “claimant” under Government Code section 910 could be an entire class as well as an individual. Hence, absent a specific statutory refund procedure, a taxpayer may file a tax refund claim against a local public agency on behalf of a purported class pursuant to Government Code section 910. The court specifically rejected a prior Court of Appeal decision that found that class-action-type lawsuits seeking a refund of fees and taxes are barred unless each plaintiff has first filed an administrative refund claim with the local public agency, particularly when applied to claims against local public agencies that are not governed by specific tax refund statutes.