Sipple v. City of Hayward
170 Cal. Rptr. 3d 199
Cal. Ct. App.2014Background
- New Cingular (an AT&T affiliate) and four individual plaintiffs sued 115 California cities and 2 counties seeking refunds of local "internet access" taxes New Cingular had billed customers and remitted to those jurisdictions.
- The tax overcollection issue arose from nationwide class litigation; a federal MDL settlement authorized AT&T Mobility (including New Cingular) to file refund claims on behalf of class members and to pursue appeals if claims were denied.
- New Cingular submitted one refund claim to each jurisdiction with a CD listing each class member and the specific amounts allegedly paid; jurisdictions denied or did not respond to the claims.
- Defendants demurred, arguing plaintiffs had not complied with local refund ordinances and that New Cingular lacked standing to sue because it was merely a tax collector that had not itself suffered a loss. The trial court sustained demurrers without leave to amend.
- The Court of Appeal reversed in part: it held local ordinances imposing a "refund first" requirement or barring class claims were preempted by the Government Claims Act and that New Cingular, under the unique facts and contractually obligated by the settlement to seek refunds and assign recoveries to customers, had standing to sue. The individual plaintiffs lacked adequate pleading and their claims remained dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether local ordinances that bar class claims or require retailers to refund customers before filing claims can preclude a vendor from presenting class refund claims under the Government Claims Act | Section 910 permits a person to present a claim on another's behalf; McWilliams allows class claims despite local ordinances | Local ordinances can impose "refund first" or individual-claim preconditions | Local ordinances that effectively bar class claims or add "refund first" preconditions are preempted by section 910; New Cingular's claims complied with section 910 |
| Whether New Cingular had standing to sue for refunds after jurisdictions denied claims | New Cingular was contractually obligated by the federal settlement to pursue refunds, filed claims on behalf of named customers, and will assign recoveries to customers; thus it has a concrete interest | New Cingular merely collected taxes from customers and remitted them; it suffered no loss and is not the real party in interest absent assignments | Under the unique circumstances (contractual obligation, direct involvement, assignment of recovery, and risk of unjust enrichment of taxing entities), New Cingular has standing to sue; individual plaintiffs lacked particularized allegations |
| Whether the presentation of a single claim with a data disk identifying individual payors satisfied Government Claims Act requirements | Substantial compliance with section 910 is sufficient; the claim forms included required information and identified payors | Local codes require individual claims or other formalities that the single-submission format did not satisfy | The Court found New Cingular substantially complied with section 910 and McWilliams supports permitting such class-style presentations |
| Viability of additional causes of action (unjust enrichment, money had and received, due process) beyond refund claim | These causes are alternative grounds to recover improperly collected taxes | They are duplicative of the refund claim and not separate | The court treated these claims as duplicative of the tax refund cause of action; only the refund claim is effectively stated |
Key Cases Cited
- McWilliams v. City of Long Beach, 56 Cal.4th 613 (Cal. 2013) (city ordinance cannot bar class refund claims where Government Claims Act permits presentation by a person on another's behalf)
- Ardon v. City of Los Angeles, 52 Cal.4th 241 (Cal. 2011) (Government Claims Act governs presentation of tax refund claims; class or representative claims permitted absent an "applicable governing claims statute")
- Scol Corp. v. City of Los Angeles, 12 Cal.App.3d 805 (Cal. Ct. App. 1970) (retailer that merely collected taxes held to lack standing as taxpayer)
- TracFone Wireless, Inc. v. County of Los Angeles, 163 Cal.App.4th 1359 (Cal. Ct. App. 2008) (service provider had standing where it alleged it actually paid taxes and could not recover from customers)
- Delta Air Lines, Inc. v. State Board of Equalization, 214 Cal.App.3d 518 (Cal. Ct. App. 1989) (courts may intervene to prevent unjust enrichment where technical taxpayer rules would leave overpaid parties without a remedy)
- Decorative Carpets, Inc. v. State Board of Equalization, 58 Cal.2d 252 (Cal. 1962) (plaintiff allowed to recover tax refunds but must prove it will return monies to customers to avoid unjust enrichment)
- Javor v. State Board of Equalization, 12 Cal.3d 790 (Cal. 1974) (court-fashioned remedies, including joinder, to prevent taxing authority from abdicating responsibility and unjustly profiting)
- Andal v. City of Stockton, 137 Cal.App.4th 86 (Cal. Ct. App. 2006) (service providers required to collect and remit fees had standing to challenge fee constitutionality)