McWilliams v. City of Long Beach

McWilliams v. City of Long Beach

Opinion

 [***818]   [**887]  BAXTER, J.—Code of Civil Procedure section 313 provides that the “general procedure” for the presentation of claims for money or damages against a local government entity is prescribed by the Government Claims Act (Gov. Code, § 810 et seq.). In Ardon v. City of Los Angeles (2011) 52 Cal.4th 241, 251 [128 Cal. Rptr. 3d 283, 255 P.3d 958] (Ardon), we held that the Government Claims Act permits a class action claim by taxpayers against a local government entity for the refund of an unlawful tax “in the absence of a specific tax refund procedure set forth in an applicable governing claims statute.” In the case now before us, the defendant local government entity asserts that its municipal code contains an “applicable governing claims statute” barring class action claims for a tax refund. We find that ] a local  [*617]  ordinance is not a “statute” within the meaning of the Government Claims Act and therefore affirm the Court of Appeal.

Background

The current dispute arises out of a class action lawsuit filed in November 2006 by plaintiff John W. McWilliams, a resident of defendant City of Long  [****3] Beach (the City), filed on behalf of himself and similarly situated individuals challenging the City's telephone users tax (TUT) and seeking refund of the taxes paid. McWilliams asserts that Long Beach Municipal Code section 3.68.50, subdivision D exempted from the TUT all amounts that “are exempt from or not subject to” the federal excise tax on telephone service and that the City has for some time mischaracterized the charges subject to the federal excise tax.

 [***819]  The particulars of the mischaracterization are not at issue in this proceeding. It is enough for our purposes to relate that the Internal Revenue Service, following several adverse court decisions, announced in 2006 that it would cease collecting the federal excise tax on long distance and bundled services and allow federal taxpayers to obtain a refund by checking a box on their federal tax returns. In August 2006, McWilliams served a demand on the City and its officers to refund the money he asserted that the City had improperly collected on certain telephone services “during the prior two years.” The City did not respond. Instead, in September 2006, the City Council amended its TUT ordinance to remove any reference to the  [****4] federal excise tax—but did so without seeking the approval of the voters under article XIII C of the California Constitution, commonly known as Proposition 218. The complaint alleges that the City unlawfully collected and continues to collect the TUT “on services that have been conclusively determined  [**888]  to be non-taxable under the Federal Excise Tax.” ¹

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