The opinion
Filed 7/25/11
IN THE SUPREME COURT OF CALIFORNIA
ESTUARDO ARDON, )
) S174507
Plaintiff and Appellant, )
) Ct.App. 2/3 B201035
v. )
) Los Angeles County
CITY OF LOS ANGELES, ) Super. Ct. No. BC363959
)
Defendant and Respondent. )
___________________________________ )
In this case, we must decide whether Government Code section 910 (section 910)1
allows taxpayers to file a class action claim against a municipal governmental entity for
the refund of local taxes. In City of San Jose v. Superior Court (1974) 12 Cal.3d 447,
455 (City of San Jose), we held that section 910 permits a litigant to bring a class claim
against a local government. We later held in Woosley v. State of California (1992) 3
Cal.4th 758, 792 (Woosley), however, that class claims to recover tax refunds are not
permitted in certain situations because article XIII, section 32 of the California
Constitution prevents the judiciary “from expanding the methods for seeking tax refunds
expressly provided by the Legislature.” As we explain, neither Woosley, which
concerned the interpretation of statutes other than section 910, nor article XIII, section 32
of the California Constitution, applies to our determination of whether section 910
permits class claims that seek the refund of local taxes. We therefore conclude that the
reasoning of City of San Jose, which permitted a class claim against a municipal
1
All statutory references are to the Government Code unless otherwise noted.
1
government in the context of an action for nuisance under section 910, also permits
taxpayers to file a class claim seeking the refund of local taxes under the same statute.
FACTS AND PROCEDURAL BACKGROUND
Plaintiff Estuardo Ardon (Ardon) is a resident of defendant City of Los Angeles
(City). In October 2006, Ardon filed a class action lawsuit on behalf of himself and
similarly situated individuals challenging the City‟s telephone users tax (TUT) and
seeking refund of funds collected under the TUT over the previous two years. Ardon
asserted that the City‟s municipal code exempts all amounts paid for telephone service
from the TUT to the extent that those amounts are also exempt from the federal excise tax
(FET). Ardon contends that since the FET was improperly collected, so too was the
TUT. In December 2006, Ardon received a notice from the Los Angeles City Attorney
rejecting his attempt to present a tax refund claim on behalf of a class due to lack of legal
standing.
Ardon‟s complaint against the City sought, inter alia, injunctive and declaratory
relief to prevent continued unlawful collection of the TUT, declaratory relief alleging the
unconstitutional amendment of the TUT by the Los Angeles City Council,2 money had
and received in unjust enrichment, and violation of the due process clauses of the
Fourteenth and Fifth Amendments to the United States Constitution. The complaint
sought certain remedies, including certification as a class action, an accounting of the
TUT funds collected by the City, and return of money wrongfully taxed.
2
Subsequent to Ardon‟s filing his complaint, the City amended Los Angeles
Municipal Code section 21.1.3 to remove all references to the FET. The city council
passed the amendment to the ordinance on January 9, 2007. (L.A. Ord. No. 178,219.) In
the Court of Appeal, the City contended that Ardon must file the refund claim under Los
Angeles Municipal Code section 21.07 and former section 21.1.2 governing claims for
refund of overpayment of business or use taxes. As the court observed, however, those
code sections do not apply to Ardon‟s claim that the City‟s TUT was an illegal tax. The
City does not renew its claim here. Therefore, we do not address any issues involving
preemption of the municipal code provisions in this case.
2
The City demurred to Ardon‟s complaint and moved to strike all class action
allegations on the grounds that Woosley prohibited Ardon from filing a claim against the
City for the refund of taxes on behalf of a putative class. Instead, the City argued, each
member of the alleged class must file a government claim with the City before Ardon
could proceed with a class action lawsuit. The superior court granted the City‟s motion
to strike all class allegations. It also partially overruled and partially sustained the
demurrer without leave to amend, and stayed other causes of action. Ardon filed a timely
appeal from the interlocutory order striking the class allegations.
A divided Court of Appeal affirmed the trial court‟s order refusing to certify the
class. In so doing, the panel specifically rejected its own reasoning and contrary holding
in a factually similar case, County of Los Angeles v. Superior Court (2008) 159
Cal.App.4th 353 (Oronoz). The Court of Appeal dissent would have followed the
opinion in Oronoz, which held that under City of San Jose’s construction of section 910,
a “claimant” could be an entire class as well as an individual. (Oronoz, supra, at p. 367.)
We granted review to resolve the conflict in the appellate courts regarding permissible
class claims under section 910.
DISCUSSION
Before 1959, taxpayer and other claims against the state, local, and municipal
governments were governed by myriad state statutes and local ordinances. Finding this
system too complex, the Legislature enacted the Government Claims Act (the Act),
which established a standardized procedure for bringing claims against local
governmental entities. (Stats. 1959, ch. 1724, p. 4133, enacting former Gov. Code, § 700
et seq. [replacing more than 150 separate procedures for directing claims against local
governmental entities]; now § 900 et seq.) 3
3
Section 910 states: “A claim shall be presented by the claimant or by a person
acting on his or her behalf and shall show all of the following: [¶] (a) The name and post
office address of the claimant. [¶] (b) The post office address to which the person
presenting the claim desires notices to be sent. [¶] (c) The date, place and other
circumstances of the occurrence or transaction which gave rise to the claim asserted. [¶]
3
Section 910 does not specifically apply to tax refunds, but to all claims against
governmental entities. (See City of San Jose, supra, 12 Cal.3d at p. 454.) The purpose of
the claims statutes “is to provide the public entity sufficient information to enable it to
adequately investigate claims and to settle them, if appropriate, without the expense of
litigation.” (Id. at p. 455.) As originally proposed, the standardized procedures of the
Act embodied in section 910 would not have applied to “[c]laims under the Revenue and
Taxation Code or other provisions of law prescribing procedures for the refund . . . of any
tax . . . .” (Recommendation and Study Relating to the Presentation of Claims Against
Public Entities (Jan. 1959) 2 Cal. Law Revision Com. Rep. (1959) p. A-12 (proposed
former § 703, subd. (a), italics added.) However, the Legislature specifically rejected this
proposal and instead enacted former section 703, subdivision (a) (now § 905, subd. (a)),
which exempted from section 910 “[c]laims under the Revenue and Taxation Code or
other statute prescribing procedures for the refund . . . of any tax . . . .” (Stats. 1959, ch.
1724, pp. 4133-4134, italics added.)
The issue in City of San Jose was whether a class claim could satisfy the claim
requirements of section 910, or whether such class action claims could not be maintained
against governmental entities. (City of San Jose, supra, 12 Cal.3d at p. 455.) The
plaintiffs had filed a class claim against the City of San Jose under section 910, alleging
that aircraft noise, dust, vapors, and vibration arising from operations at the San Jose
Municipal Airport were a nuisance and diminished the market value of their property.
(City of San Jose, at pp. 453, 455.) This court adopted a two-part test for determining
whether the claim satisfied section 910: “Is there some compliance with all of the
(d) A general description of the indebtedness, obligation, injury, damage or loss incurred
so far as it may be known at the time of presentation of the claim. [¶] (e) The name or
names of the public employee or employees causing the injury, damage, or loss, if
known. [¶] (f) The amount claimed if it totals less than ten thousand dollars ($ 10,000) as
of the date of presentation of the claim . . . together with the basis of computation of the
amount claimed. If the amount claimed exceeds ten thousand dollars ($10,000), no dollar
amount shall be included in the claim. However, it shall indicate whether the claim
would be a limited civil case.”
4
statutory requirements; and, if so, is this compliance sufficient to constitute substantial
compliance?” (City of San Jose, at pp. 456-457.)
In addressing the section 910 class claim, City of San Jose concluded that the word
“claimant” referred to “the class itself,” not to an individual class member. The court
“reject[ed] the suggested necessity for filing an individual claim for each member of the
purported class.” (City of San Jose, supra, 12 Cal.3d at p. 457.) The court reasoned that
“[t]o require such detailed information in advance of the complaint would severely
restrict the maintenance of appropriate class actions—contrary to recognized policy
favoring them.” (Ibid.; see Code Civ. Proc., § 382; see also Vasquez v. Superior Court
(1971) 4 Cal.3d 800.) The court did not believe that section 910 was “intended to thwart
class relief.” (City of San Jose, supra, 12 Cal.3d at p. 457.) Because satisfaction of
section 910‟s procedural requirements obliged a representative class plaintiff to supply
information detailing his or her name, address, and other specified information, any
information beyond this requirement to identify the class itself was sufficient to satisfy
the “ „some compliance‟ test.” (City of San Jose, supra, 12 Cal.3d at p. 457.) “Beyond
this, the sufficiency of the identifying information must be measured by the substantial
compliance test.” (Ibid.) A claim substantially complies with a claims statute if the
parties have stated sufficient information “to reasonably enable the public entity to make
an adequate investigation of the merits of the claim and to settle it without the expense of
a lawsuit.” (Id. at p. 456.)
Woosley was a constitutional challenge to the state‟s vehicle license fees and use
taxes imposed on passenger vehicles sold outside California. The numerous issues
included the question of whether the trial court had erred in certifying the claim as a class
claim. Woosley held that article XIII section 32 of the California Constitution compelled
an action for tax refunds against the state to be brought in the manner that the Legislature
specified under the statutes at issue. (Woosley, supra, 3 Cal.4th at p. 789.)4 The court
4
Article XIII, section 32 of the California Constitution reads, “No legal or equitable
process shall issue in any proceeding in any court against this State or any officer thereof
5
concluded that statutes dictating the procedural requirements for obtaining refunds of
vehicle license fees and use taxes did not authorize class action claims. (Woosley, at p.
788; see Veh. Code, § 42231; Rev. & Tax. Code, §§ 6901 et seq., 6486.) Rather, the
language of those statutes indicated that “a claim for a refund of vehicle license fees must
be filed by „the person who has paid the erroneous or excessive fee or penalty, or his
agent on his behalf.‟ . . . [T]he term „person‟ does not include a class, and a class
representative who files a claim on behalf of all others similarly situated, without the
knowledge or consent of such other persons, is not the agent of the members of the
class.” (Woosley, supra, at p. 790, quoting Veh. Code, § 42231.) Because article XIII,
section 32 of the California Constitution requires tax refund claims to be made in the
specific manner prescribed by the Legislature, we concluded that the particular statutes at
issue in Woosley did not authorize class claims.
Regarding class-based refunds for use taxes, Woosley observed that “[a]n
examination of the entire statutory scheme that governed requests for refunds of sales and
use taxes when Woosley's claim was filed in 1977 reveals . . . that class claims were not
contemplated. If the [State Board of Equalization] denied a claim, that entity was
required, within 30 days, to „serve notice of its action on the claimant in the manner
prescribed for service of notice of a deficiency determination.‟ ([Rev. & Tax. Code,] §
6906.) [Revenue and Taxation Code] [s]ection 6486, in turn, provided in 1977 that the
[State Board of Equalization] shall give written notice of a deficiency determination „to
the retailer or person storing, using, or consuming tangible personal property,‟ either by
mail or by „delivering it to the person to be served.‟ The language of section 6486
suggests that notice must be given to each individual taxpayer. No mention is made of
notice to a class representative. The requirement that notice of the denial of a claim must
be given to each individual taxpayer thus is inconsistent with the use of a class claim.”
to prevent or enjoin the collection of any tax. After payment of a tax claimed to be
illegal, an action may be maintained to recover the tax paid, with interest, in such manner
as may be provided by the Legislature.”
6
(Woosley, supra, 3 Cal.4th at pp. 790-791.) Woosley, therefore, addressed the limited
question of whether Vehicle Code section 42231 and Revenue and Taxation Code
sections 6901 et seq. and 6486 permitted class actions by citizens seeking refunds of
taxes and fees from the state. When construed in light of article XIII, section 32 of the
California Constitution, we concluded that the Legislature did not intend to authorize
class claims for the refund of fees and taxes under those particular statutes. (Woosley, at
pp. 789-792.)
Woosley also stated that “the holding in City of San Jose . . . should not be
extended to include claims for tax refunds.” (Woosley, supra, 3 Cal.4th at p. 789.)
However, we did not mean that City of San Jose forbids all class action claims for tax
refunds; rather, Woosley precluded class claims for tax refunds where the Legislature has
explicitly set forth procedures for obtaining those refunds and has refused to authorize
class claims under those procedures. Specifically, Woosley criticized “[s]everal decisions
of the Court of Appeal [that] extended the holding in City of San Jose to permit the filing
of class claims seeking tax refunds, reasoning by analogy to the claims statute construed
in City of San Jose that the existing tax-refund statutes could and should be interpreted to
authorize the filing of class claims.” (Id. at p. 788, italics added.) It is important to note
that none of the Court of Appeal decisions this court criticized in Woosley either
construed or applied section 910. (See Schoderbek v. Carlson (1980) 113 Cal.App.3d
1029, 1033 [property tax statute]; Lattin v. Franchise Tax Board (1977) 75 Cal.App.3d
377, 381 [income tax statute]; Santa Barbara Optical Co. v. State Bd. of Equalization
(1975) 47 Cal.App.3d 244, 249 [sales tax statute]; Javor v. State Bd. of Equalization
(1977) 73 Cal.App.3d 939, 948 [sales tax statute].)
Several cases decided after Woosley have concluded that article XIII, section 32 of
the California Constitution bars class claims and class actions for the refund of locally
adopted taxes absent specific state statutory authority. (See Batt v. City and County of
San Francisco (2007) 155 Cal.App.4th 65, 74-75 [sustaining demurrer to plaintiff‟s class
action challenging city‟s transient occupancy hotel tax]; Howard Jarvis Taxpayers Assn.
7
v. City of Los Angeles (2000) 79 Cal.App.4th 242, 249 [rejecting taxpayer suit
challenging a municipal home occupation ordinance]; Neecke v. City of Mill Valley
(1995) 39 Cal.App.4th 946, 961-962 [rejecting property owner‟s action challenging a city
property tax].) As Oronoz observed, however, these cases are distinguishable, because
they all considered statutes or municipal ordinances enacted to provide specific
procedures for filing tax claims against governmental entities — procedures that are not
applicable or required in this case. (Oronoz, supra, 159 Cal.App.4th at p. 365, fn. 9.) In
addition, like the Oronoz court, we specifically disagree with the overbroad statement in
Howard Jarvis Taxpayers Assn. 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 City.” (Id. at p. 249.) The statement is especially incorrect “as applied to claims
against local public entities that are not governed by specific tax refund statutes.”
(Oronoz, supra, at p. 365, fn. 9.)
The Court of Appeal here determined that the applicable claims statute in the
present case is Government Code section 910. Ardon asserts that section 910 claims
against government entities are to be presented by the claimant or by a person acting on
his or her behalf and that, as noted above, in City of San Jose this court held that the word
“claimant” in section 910 must be equated with the class itself and therefore permits the
filing of class claims. Ardon also claims that the Court of Appeal improperly extended
the reach of article XIII, section 32 of the California Constitution “beyond state entities
and their agents to a local government.”
By contrast, the City asserts that equating the term “claimant” with “the class
itself” is inconsistent with the strict compliance standard set forth in Woosley, supra, 3
Cal.4th 758, for tax refund claims. But, as Ardon observes, Woosley does not require
strict compliance with claims statutes in tax refund cases. The case requires that a court
analyze the claims statutes before it to determine whether the Legislature intended to
allow class claims under those statutes. Here, as City of San Jose, supra, 12 Cal.3d 447,
held, a class claim by taxpayers for a tax refund against a local governmental entity is
8
permissible under section 910 in the absence of a specific tax refund procedure set forth
in an applicable governing claims statute. Contrary to the City‟s argument, Woosley
simply does not apply here because section 910 allows the class claim.
Our conclusion recognizes the limitations of both City of San Jose and Woosley in
addressing the availability of class claims for the tax refunds in this case. City of San
Jose simply held that section 910 does not preclude class claims against government
entities. (City of San Jose, supra, 12 Cal.3d at pp. 456-457.) The action there did not
involve a challenge to a local tax, but instead asserted nuisance and inverse condemnation
claims. (Ibid.) All that Woosley demands is that a court first examine the claims statutes
at issue in a claim for a taxpayer refund to determine whether the Legislature
contemplated a class claim under the applicable California code. (Woosley, supra, 3
Cal.4th at pp. 790-792.) The court did not analyze the applicability of section 910, and,
in contrast to the City‟s contention, there is no reason to construe section 910 in light of
Woosley. As we have discussed, the relevant governing claims statute here is section
910. In contrast to the two statutes at issue in Woosley, section 910 states specifically
that a “claim shall be presented by the claimant or by a person acting on his or her
behalf.” While the Act contains an exemption for “[c]laims under the Revenue and
Taxation Code or other statute prescribing procedures for the refund . . . of any tax,” the
claim here did not involve any applicable municipal code or statute governing claims for
refunds. (Gov. Code, § 905, subd. (a), italics added.) City of San Jose held that class
claims are permitted under section 910. (City of San Jose, supra, 159 Cal.App.4th at p.
367.) Therefore, class claims for taxpayer refunds against local governmental entities
brought under section 910 are also permitted in California.
In addition, the City contends that article XIII, section 32 of the California
Constitution mandates that the Legislature must expressly authorize actions for tax
refunds, and section 910 does not expressly authorize class claims. Article XIII, section
32 of the California Constitution states, “No legal or equitable process shall issue in any
proceeding in any court against this State or any officer thereof to prevent or enjoin the
9
collection of any tax. After payment of a tax claimed to be illegal, an action may be
maintained to recover the tax paid, with interest, in such manner as may be provided by
the Legislature.” Despite the first sentence‟s reference to tax actions against the state, the
City asks us to read the second sentence of article XIII, section 32 to also preclude tax
actions against local governments in the absence of express legislative authorization.
But even assuming article XIII, section 32 is equally applicable to tax actions against
local governments, we have already determined that section 910 provides the necessary
legislative authorization for class claims of taxpayer refunds against local governmental
entities. Indeed, there is nothing in the constitutional provision that would preclude the
present action.
The City further asserts that the public policy underlying article XIII, section 32
precludes the present action. In Woosley, we held that article XIII, section 32 “rests on
the premise that strict legislative control over the manner in which tax refunds may be
sought is necessary so that governmental entities may engage in fiscal planning based on
expected tax revenues. [Citation.]” (Woosley, supra, 3 Cal.4th at p. 789.) The City
argues that this policy is thwarted where the local government is faced with a potentially
huge liability in the form of a class action. But article XIII, section 32 simply prohibits
courts from “prevent[ing] or enjoin[ing] the collection of any tax” during the pendency of
litigation challenging the tax. (Cal. Const., art. XIII, § 32.) In fact, article XIII, section
32 does not purport to limit a court‟s authority to fashion a remedy if it determines a tax
is illegal, including its authority to issue an injunction against further collection of the
challenged tax. As Ardon observes, we have held that the important public policy behind
article XIII, section 32 “ „is to allow revenue collection to continue during litigation so
that essential public services dependent on the funds are not unnecessarily interrupted.‟ ”
(State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633, 638, quoting Pacific
Gas & Electric Co. v. State Bd. of Equalization (1980) 27 Cal.3d 277, 283.) This policy
is intended to ensure the uninterrupted flow of tax revenue, so that refunds that are
authorized must be processed in orderly procedures that the Legislature allows. That
10
policy favoring fiscal responsibility, however, does not justify precluding legitimate class
proceedings for the refund of allegedly illegal taxes, and is indeed satisfied here because
section 910 allows the present taxpayer class claim.
CONCLUSION
Woosley, supra, 3 Cal.4th 758, does not apply to a potential taxpayer class claim
brought under section 910. In addition, neither the explicit language nor the policy
underlying article XIII, section 32 applies to prevent the present action. City of San Jose,
supra, 12 Cal.3d 447, is entirely consistent with our conclusion here. Class claims for tax
refunds against a local governmental entity are permissible under section 910 in the
absence of a specific tax refund procedure set forth in an applicable governing claims
statute. Consequently, we reverse the Court of Appeal judgment, and remand the matter
for further proceedings consistent with our opinion.
CHIN, J.
WE CONCUR:
CANTIL-SAKAUYE, C. J.
KENNARD, J.
BAXTER, J.
WERDEGAR, J.
CORRIGAN, J.
JACKSON, J.*
_____________________________
* Associate Justice of the Court of Appeal, Second Appellate District, Division
Seven, assigned by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.
11
See last page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Ardon v. City of Los Angeles
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 174 Cal.App.4th 369
Rehearing Granted
__________________________________________________________________________________
Opinion No. S174507
Date Filed: July 25, 2011
__________________________________________________________________________________
Court: Superior
County: Los Angeles
Judge: Anthony J. Mohr
__________________________________________________________________________________
Counsel:
Wolf Haldenstein Adler Freeman & Herz, Francis M. Gregorek, Rachele R. Rickert; Cuneo Gilbert & LaDuca, Jon
Tostrud; Chimicles & Tikellis, Nicholas E. Chimicles and Timothy N. Mathews for Plaintiff and Appellant.
Wolf, Haldenstein Adler Freeman & Herz, Francis M. Gregorek, Rachele R. Rickert; Cuneo Gilbert & LaDuca, Jon
Tostrud; Chimicles & Tikellis and Timothy N. Mathews for Willy Granados and Jon W. McWilliams as Amici
Curiae on behalf of Plaintiff and Appellant.
Patricia Sturdevant; Wilentz, Goldman & Spitzer, Kevin P. Roddy; and Timothy Bittle for NASCAT, Howard Jarvis
Taxpayers Association, Consumer Federation of California and Utility Reform Network as Amici Curiae on behalf
of Plaintiff and Appellant.
Patricia Sturdevant; Richard Holober; Shepherd, Finkelman, Miller & Shah, Patrick A. Klingman; Huskinson,
Brown, Heidenreich & Carlin and Paul E. Heidenreich for Consumer Action, Consumer Federation of California
and NASCAT as Amici Curiae on behalf of Plaintiff and Appellant.
Edward M. Teyssier; and Joseph D. Henchman for the Tax Foundation as Amicus Curiae on behalf of Plaintiff and
Appellant.
Alan M. Mansfield for Utility Consumers‟ Action Network as Amicus Curiae on behalf of Plaintiff and Appellant.
Rockard J. Delgadillo and Carmen Trutanich, City Attorneys, Noreen S. Vincent and Michael Nagle, Assistant City
Attorneys, Brian I. Cheng, Deputy City Attorney; Orrick Herrington & Sutcliffe, William Molinski, Valerie M. Goo
and Frank D. Rorie; Colantuono & Levin, Michael G. Colantuono, Sandra J. Levin, Amy C. Sparrow and Erwin M.
Benedicto for Defendant Respondent.
Page 2 – S174307 – counsel continued
Dennis J. Herrera, City Attorney (San Francisco), Julie Van Nostern, Chief Tax Attorney, and Peter J. Keith, Deputy
City Attorney, for The League of California Cities, The California State Association of Counties and The California
Special Districts Association as Amici Curiae on behalf of Defendant and Respondent.
Raymond G. Fortner, Jr., County Counsel (Los Angeles) and Albert Ramseyer, Principal Deputy County Counsel,
for the County of Los Angeles as Amicus Curiae on behalf of Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Francis M. Gregorek
Wolf Haldenstein Adler Freeman & Herz
750 B Street, Suite 2770
San Diego, CA 92101
(619) 239-4599
Sandra J. Levin
Colantuono & Levin
300 South Grand Avenue, Suite 2700
Los Angeles, CA 90071
(213) 542-5700