48 Cal.App.5th 354
Cal. Ct. App.2020Background:
- Inmates in nine California county jails (and their families) sued counties challenging exclusive inmate-phone contracts that pay the counties large "site commissions" (often >50% of call revenue) to be deposited in county inmate welfare funds.
- Plaintiffs allege the commissions inflate phone rates paid by inmates/families, are not tied to reasonable cost, and thus constitute unlawful taxes under Proposition 26 (no voter approval) and violate other statutes.
- Plaintiffs also asserted disparate-impact discrimination under Gov. Code § 11135 and a Bane Act (Civ. Code § 52.1) claim alleging coercion by forcing choice between exorbitant calls or no calls.
- Defendants demurred; the trial court sustained the demurrer without leave to amend. Plaintiffs appealed.
- The Court of Appeal affirmed: it held plaintiffs lack standing to seek refund under Proposition 26, and separately rejected the § 11135 and Bane Act claims.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to seek refund under Proposition 26 (tax claim) | Plaintiffs (inmates/families) effectively paid the unlawful tax because providers passed commissions onto customers; thus they can seek refunds and vindicate Prop 26's purpose | Only parties who paid the charge to the taxing authority or are legally obligated to do so have standing; plaintiffs paid providers, not counties | No standing; plaintiffs did not pay the tax to the counties or have legal obligation; court did not reach merits of taxation claim |
| Disparate-impact claim under Gov. Code § 11135 | High phone charges disproportionately burden African-American/Latino inmates and families; state-funded county jails receive funds so § 11135 applies | Comparator must be the affected program's population (the inmate population); inmates are treated alike; statutory scheme (Pen. Code § 4025) rationally explains commissions | Claim fails: plaintiffs used wrong comparator (general population); no pleaded differential treatment of inmates; statutory rationale undermines disparate-impact claim |
| Bane Act (threat, intimidation, coercion) | Forcing families to pay exorbitant fees or forgo calls is coercive interference with rights (including Prop 26 rights) | Economic pressure from fees is not the type of threat/intimidation/coercion § 52.1 was enacted to address; plaintiffs allege only payment/choice, not independent coercion or specific intent | Claim fails: no coercion beyond the economic burden; plaintiffs cannot show independent coercion (Shoyoye) or the specific intent required in Cornell; monetary pressure alone insufficient |
Key Cases Cited
- Blank v. Kirwan, 39 Cal.3d 311 (Cal. 1985) (standard for reviewing demurrer and leave to amend)
- TracFone Wireless, Inc. v. County of Los Angeles, 163 Cal.App.4th 1359 (Cal. Ct. App. 2008) (entity that paid tax to authority had standing to seek refund)
- Loeffler v. Target Corp., 58 Cal.4th 1081 (Cal. 2014) (limits consumer suits to recover taxes embedded in vendor prices; exclusive tax procedures prevent proliferation of litigation)
- Javor v. State Board of Equalization, 12 Cal.3d 790 (Cal. 1974) (limited remedy permitting joinder of taxing authority where retailer paid erroneous sales tax and would not seek refund)
- Shoyoye v. County of Los Angeles, 203 Cal.App.4th 947 (Cal. Ct. App. 2012) (Bane Act requires coercion independent of the wrongful act itself)
- Cornell v. City and County of San Francisco, 17 Cal.App.5th 766 (Cal. Ct. App. 2017) (where unlawful arrest pleaded, Bane Act coercion requires specific intent to violate rights)
- McKesson Corp. v. Florida Alcohol & Tobacco Div., 496 U.S. 18 (U.S. 1990) (due process requires meaningful postpayment relief when taxes paid under a scheme later found unconstitutional)