Chimicles & Tikellis LLP, along with its co-counsel, won a victory in the Supreme Court of California on July 25, 2011, in a ruling allowing tax refund claims to be presented on behalf of a class of taxpayers. The lawsuit filed by C&T, Ardon v. City of Los Angeles, challenges the collection of a Los Angeles Utility Users Tax (“UUT”) on telephone services and seeks refunds on behalf of all taxpayers in the City of Los Angeles.
Reversing a 2-to-1 decision of the Court of Appeal, the California Supreme Court held that Plaintiff’s claim for tax refunds on behalf of all taxpayers was allowed under Section 910 of the California Government Code. The Court rejected the City’s argument that class claims should not be permitted because they could result in large liabilities, noting that the “public policy favoring fiscal certainty … does not justify precluding legitimate class proceedings for the refund of allegedly illegally collected taxes.” Los Angeles collects about $250 million per year under the challenged telephone tax.
Numerous amici curiae filed briefs in support of Ardon, including Tax Foundation, Utility Consumers’ Action Network (UCAN), Consumer Action, Consumer Federation of California, the National Association of Shareholder and Consumer Attorneys (NASCAT).