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Estuardo Ardon v. City of Los Angeles

July 25, 2011


Ct.App. 2/3 B201035 Los Angeles County Super. Ct. No. BC363959 Judge: Anthony J. Mohr

The opinion of the court was delivered by: Chin, J.

In this case, we must decide whether Government Code section 910 (section 910)*fn1 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 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.


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,*fn2 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.

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.


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.)*fn3

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 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.)*fn4 The court 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,] ยง 6906.) [Revenue and Taxation Code] [s]section 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." (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 ...

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