3 Cal.4th 758, S014557, Woosley v. State of California

Docket Nº:S014557
Citation:3 Cal.4th 758, 13 Cal.Rptr.2d 30, 838 P.2d 758
Opinion Judge:[12] George
Party Name:Woosley v. State of California
Attorney:[7] Charles Patrick Woosley, in pro. per., Donald C. Turpen, Gansinger, Hinshaw, Buckley & Schauer, Gansinger, Hinshaw & Buckley, James M. Gansinger, Busetti & Rolin, Busetti & Feinstein, John F. Busetti and Janice L. Feinstein for Plaintiff and Appellant. [8] Frear Stephen Schmid as Amicus Curia...
Case Date:October 26, 1992
Court:Supreme Court of California
 
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Page 758

3 Cal.4th 758

13 Cal.Rptr.2d 30, 838 P.2d 758

CHARLES PATRICK WOOSLEY, Plaintiff and Appellant,

v.

THE STATE OF CALIFORNIA et al., Defendants and Appellants.

S014557.

Supreme Court of California

October 26, 1992

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COUNSEL

Charles Patrick Woosley, in pro. per., Donald C. Turpen, Gansinger, Hinshaw, Buckley & Schauer, Gansinger, Hinshaw & Buckley, James M. Gansinger, Busetti & Rolin, Busetti & Feinstein, John F. Busetti and Janice L. Feinstein for Plaintiff and Appellant.

Frear Stephen Schmid as Amicus Curiae on behalf of Plaintiff and Appellant.

John K. Van de Kamp and Daniel E. Lungren, Attorneys General, Timothy G. Laddish, Assistant Attorney General, Edmond B. Mamer, Philip C. Griffin and Richard E. Nielsen, Deputy Attorneys General, for Defendants and Appellants.

McDonough, Holland & Allen, Robert R. Rubin and Mark A. Wasser as Amici Curiae on behalf of Defendants and Appellants.

OPINION

GEORGE, J.—

This is a class action challenging the practice of the State of California, acting through the Department of Motor Vehicles (DMV) and the State Board of Equalization (SBE), of charging annual vehicle license fees and use taxes on passenger vehicles1 originally sold outside California that were higher than the fees and taxes charged on similar vehicles first sold within the state.2 Also at issue is whether the DMV complied with the provisions of the California Administrative Procedure Act (Gov. Code, § 11340 et seq.) when, in November 1976, it altered its practice regarding

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the collection of use taxes for all vehicles, whether originally purchased in California or elsewhere. Finally, we decide whether the class claim filed in this case was authorized by statute. The state estimates that the current amount of the refund of vehicle license fees and use taxes due under the judgment appealed from exceeds $1 billion.

For the reasons that follow, we hold the state violated the commerce clause of the United States Constitution by imposing vehicle license fees and use taxes on vehicles originally sold outside California that were higher than the fees and taxes charged on similar vehicles first sold within the state. We also hold that even if the DMV failed to comply with the procedural requirements of the California Administrative Procedure Act when it altered its practice regarding collection of use taxes, the state cannot be required on that basis to refund taxes which properly were due under state law.

Lastly, we hold the class claim filed in this case was not authorized by statute. That claim is valid only as to Woosley in his individual capacity. Although our ruling does not automatically preclude continuation of this suit as a class action, the class may include only persons who timely filed valid claims for refunds. Our holding will necessitate that the trial court, upon remand, redetermine whether an ascertainable class exists for purposes of a class action. Because the composition of the class is uncertain at this time, and because the issues raised by the parties have been fully litigated and are of substantial public importance, we proceed to address the issues which prompted our grant of review.

Procedural and Factual History

On February 23, 1976, plaintiff Charles Patrick Woosley, a California resident, purchased a 1936 Auburn supercharged, two-door speedster for $25,000 from a private party in North Carolina, and on November 12, 1976, he attempted to register the vehicle in California. Had Woosley purchased from a private party an identical automobile that originally had been sold in California, he would have been charged a vehicle-license fee3 of $2 and a

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use tax4 of $6 by the DMV. Because he purchased a vehicle that originally had been sold outside the state, however, the DMV used different methods of calculation, as explained below, and charged Woosley a license fee of $427 and a use tax of $1,500.5

After filing claims for refunds on behalf of himself and all others similarly situated and pursuing administrative remedies, without success, on July 20, 1978, Woosley filed a class action against the State of California, and several state agencies, including the DMV and the SBE, for a refund of license fees and use taxes, and for injunctive relief. By stipulation of the parties, the liability issues were bifurcated from the issues involving certification of the class, and the liability issues were tried first.

On December 27, 1983, following trial to the court, the court rendered its statement of decision on the issue of liability, and on November 13, 1984, rendered its statement of decision on the issues relating to class certification. On July 1, 1985, the court entered judgment in favor of plaintiff. After appeal by the state, the Court of Appeal affirmed the judgment. We granted the state's petition for review. Because neither party disputes the accuracy of the trial court's statements of decision, we accept the factual findings contained therein.

Vehicle License Fees

An annual license fee is "imposed for the privilege of operating [a vehicle] upon the public highways in this state ...." (Rev. & Tax. Code, § 10751.)6 The amount of this fee "shall be a sum equal to 2 percent of the market value of the vehicle as determined by the [DMV]." (§ 10752.)

As originally enacted in 1941, section 10753 directed the DMV annually to "compile and publish a list showing the market values ... of each class

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of vehicle subject to the license fee ...." (Stats. 1941, ch. 40, § 1, pp. 605-606.) Upon registration, the DMV would use the information in this "rate book" to assign to the vehicle a classification code from which its market value would be determined for the year of the sale and all subsequent years, regardless of any change in ownership. The DMV did not differentiate between vehicles originally sold within California and those originally sold outside the state.

In 1948, section 10753 was amended to require the DMV to determine the market value of vehicles "upon the basis of the California delivered prices as established by the manufacturers or distributors in their selling agreements with authorized dealers as of the time the particular make and year model is first offered for sale in California ...." (Stats. 1948, ch. 26, § 2, p. 129.) Manufacturers informed the DMV of the "delivered price" on each model, and the DMV entered this information in its rate book. Using a method described in section 10753.2 (enacted in 1948), the market value of each vehicle was determined from this "delivered price" according to a depreciation schedule set forth in the statute.7 As before, the same classification code was assigned to the vehicle and the same tax was imposed, whether the vehicle was purchased in California or elsewhere.

The DMV, however, urged the Legislature to alter the method for determining the vehicle license fee, because manufacturers objected to supplying information regarding prices, thereby causing delays at the beginning of each model year in updating the rate book. In 1967, the Legislature amended section 10753 to require the DMV to determine the market value of vehicles by reference to "the California suggested base price" (§ 10753, subd. (a)), which was defined as "the retail price of the vehicle suggested by the manufacturer ... as reflected on the price listing affixed to the vehicle pursuant to the Federal Automobile Information Disclosure Act of 1958 ...." (§ 10753, subd. (g), as amended by Stats. 1967, ch. 435, § 1, pp. 1647-1648.) The "price listing" is commonly referred to as the "sticker price" of the vehicle.8 Section 10753 defined the California suggested base price to include "destination charge[s]" and the cost of statutorily required

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"emission control devices," but not the cost of factory-installed "accessor[ies]" or "optional equipment."9 (§ 10753, subd. (g).) The statute further provided: "In the event the [DMV] is unable to ascertain the California suggested base price as herein defined ..., the [DMV] shall determine the market value upon the basis of the cost price to the purchaser of the vehicle as evidenced by a certificate of cost ...." (§ 10753, subd. (c).)

Consistently, the Legislature also amended section 10753.2, which, as described above, sets forth the depreciation schedule used in determining a vehicle's market value, to reflect that this process was based on "the California suggested base price, as defined above, of a vehicle or its cost price to the purchaser ...." (Stats. 1967, ch. 435, § 2, p. 1649.)

Based upon these amendments, the DMV ceased producing a rate book and began requiring dealers to provide, for each new vehicle sold in California, a "report of sale" listing the manufacturer's suggested retail price, destination charge, and the cost of emission-control devices as reflected by the "sticker" on the vehicle. As before, the DMV would use the information supplied by the dealer to assign to the vehicle a classification code from which its market value would be determined for the year of the sale and all subsequent years.

If a vehicle originally was sold in another state, however, the DMV would not receive a "report of sale" from the dealer and thus could not assign a classification code. When the owner of such a vehicle attempted to register it in California, the DMV took the position that the "California suggested base price" could not be ascertained, and the DMV instead determined the market value of the vehicle based upon the "cost price to the purchaser," requiring the owner to produce a certificate of cost. The DMV required a certificate of cost in such circumstances even if, as...

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